© Jan_S / Shutterstock.comThe choices for gold and silver investors and speculators today are truly varied (fabulous dah-ling!). No one should say “I don’t know how to get it into my situation” or “but I have a 401(k) plan so forget about precious metals!”
By the way, in this article you’ll see some gold- and silver-related considerations for your portfolio that are new and different.
Major gold and silver stocks
For standard, relatively conservative investors, you can add some major gold and silver mining stocks that are available on the New York Stock Exchange (NYSE). I think a few quality shares in your regular brokerage account or your retirement account are a good consideration, especially when you’re in the midst of an extended bull market (as we are during 2020–2022 or longer).Make sure the stock is profitable with good fundamentals and a solid portfolio of mines with provable reserves. Top that off with good reviews from industry analysts, and you’re good to go!
Junior gold and silver stocks
For those who are seeking more aggressive growth potential in your stock portfolio, junior mining stocks are good speculative choices. They tend to be low-priced stocks, so buying a few hundred shares isn’t that expensive. If the share price is less than $10 per share (and often less than $5 a share), then the risk from a financial point of view isn’t that great. In other words, if you have 100 shares of a $3 stock, the worst that happens is that you may lose most or all of that $300 risk capital.Unless you’re eating hot dogs and ramen noodles every night, it’s not a life-changing amount. But what if the stock does strike gold (literally!) and it’s in the middle of a historic bull market? Then it could be a life-changing windfall. Imagine how many cases of hot dogs and ramen noodles you could get (all cash, of course)!
Mutual funds
For those who want exposure to precious metals but don’t want to keep watching it, then consider mutual funds — an investment that has been popular and in use for a very long time. There are all types of mutual funds, but for our purposes, we seek a sector (or industry) fund that specializes in precious metals.Typically, it would have a portfolio of mining stocks. As a mutual fund, the investment managers actively buy, sell, and hold a portfolio of various mining stocks. The managers choose the stocks using their selection criteria. Essentially, you choose the industry, and the managers of the fund choose all the individual securities. If the industry is doing well, then your mutual fund will do well, too.
In the late 1970s, for example, the most prominent gold mining mutual at the time earned more than 1,000 percent gain during that gold bull market that lasted from 1976 to January 1980 (when gold and silver had their highs), but the fund was among the biggest losers in the subsequent years. So, the lesson is clear: Choose your sector fund when that particular sector is doing well — in a bull market!
For 2020, gold- and silver-related mutual funds were among the big gainers. If the bull market continues in 2021 and beyond, the gains can continue, too.
Physical metal ETFs
After physical bullion coins (see the following section), the next safest way to get gold and silver into your portfolio is through physical metal exchange-traded funds, or ETFs. A physical metal ETF is the safest (all things being equal) vehicle you can add to your stock portfolio (whether it’s a regular stock brokerage account or a retirement account). It’s not leveraged or speculative, so it can be a conservative way to add exposure conveniently with a few mouse clicks.Bullion coins
It’s easier than ever to buy physical gold and silver, and investors should consider some of both in their portfolio for the 2020–2025 timeframe (give or take a month). Besides all the practical and financial reasons cited, these coins are also beautiful works of art that would definitely grace your vault.Numismatic coins
Getting some quality (and I mean quality) gold and silver numismatic coins can be a great long-term investment (holding five years or longer) — long term because it takes time to appreciate enough to offset what can be a large part of the initial purchase, which is the dealer markup. Of course, this is an issue only if you plan on selling back to dealers down the road when you’re ready to cash your coin(s) in.When I say “quality,” I mean that your selection is a top grade (brilliant uncirculated or Mint State 60 or better) and that the other numismatic aspects of it (coin series, scarcity, professionally certified grade, and so on) are also excellent. Numismatic coins are beautiful and can easily grow in value, especially when a bull market in precious metals is sandwiched nicely between when you bought it and when you’re selling it.
Leveraged ETFs
For those who want to speculate with gold and silver but are too skittish to get into aggressive vehicles, such as futures, and don’t want to settle for merely matching gold and silver’s gains, leveraged ETFs are a happy medium.Because leveraged ETFs are regularly rotating positions offering some combination of futures, options, and other derivatives right inside the portfolio, I like them because they don’t have the risk of expiring, which is the primary risk with options.
A good approach (to minimize risk) is to stagger your purchases of a leveraged ETF. Perhaps buy 50 shares in the beginning and buy some more shares in a week or so to take advantage of a pullback.
Junk silver
Junk silver is a reference to silver coins (usually dimes, quarters, and halves dated 1964 or earlier) that have been in circulation and have no collectible or numismatic value. The coins are bought essentially due to their silver content and are actually a convenient way to put silver in your physical portfolio. These coins do have currency value and you could use them to buy goods and services — but don’t! They are much more valuable as bullion, and their value grows as the price of silver increases.Besides simply finding them in your change much the same way you find other coins more valuable than their mere face value (such as Lincoln wheat cents dated 1909–1958), you can actually buy a quantity with most gold and silver bullion dealers.
Junk silver is based on silver content and no other consideration, so do price-shop this one. Ask for price quotes from multiple dealers, including any shipping and insurance charges, for the lowest cost.
Gold and silver cryptocurrencies
Cryptocurrencies (such as Bitcoin) hit the general investing public’s consciousness during 2017–2018, and they quickly became attractive alternatives on the financial landscape. They were “the new kids on the block,” and after some roller-coaster times during 2018–2019, they seem to have found a sound footing as an alternative for those dabbling with currencies.During 2020, there are at least five new cryptocurrencies available with a nice twist — backed by precious metals. Those that are backed up by gold and silver offer some strength and advantages that aren’t present in the conventional cryptocurrencies.
Gold- (or silver-) backed cryptocurrencies have the dual benefit of being today’s digital means of transactions while being supported by metals with a 5,000-per-year track record, so yeah, I’d take this route if I was enamored with cryptocurrencies.
Buying through Goldmoney and OWNx
Now this isn’t a new twist on gold and silver as if it were a stock or ETF or other vehicle; it’s simply a neat way to buy, sell, and accumulate purchases in gold and silver. These are buying services, and it lets you easily set up a purchase plan to buy a set amount of gold or silver on a schedule that you choose. What’s that? You want to buy $50 of silver per week or $100 of gold per month? Not difficult at all.The transactions are done through a website account, and every week you can see how much of either (or both) metals you accumulated. If you need to sell a portion or all of your metal holdings, you can do it in a few clicks (or taps). Silver is purchased in ounce units, and the minimum for gold is 1 gram.
To find out more, go to their websites:
Be sure to find out about their fees and service charges and see whether they make sense for you.