How to Invest in Gold and Silver

As you learn about investing, you'll eventually hear experts talking about gold and silver. Most of us think of gold and silver as jewelry, but these precious metals are a popular investment. The prices of gold and silver are often listed along with the most popular stocks. They are typically bought and held as long-term investments. Gold has returned 12.44% over the past 10 years, 9.84% over 20 years, and 8.3% over 30 years. Interestingly, over the past few years gold and silver have seen dramatic increases in price. As of today, the price of gold is $4,528.60 per ounce. The price of silver is $73.02 per ounce. However, it is important to note that while gold and silver have had decades of above average returns, there have also been decades where the returns were flat. All of that said, as teenagers we are investing for the long-term. By that I mean 20, 30, or even 50 or more years. If you buy gold or silver, plan on keeping the investment for decades, since that will increase the chances of a positive return.

Why Invest in Gold and Silver?

There are numerous reasons to invest in gold and silver. Here are few of the key benefits to owning precious metals.

• There is weak or no correlation between gold prices and stock market prices, meaning when the stock market struggles gold and silver tend to increase in value. (However, today stocks and gold/silver are near all time highs).

• Owning gold and/or silver diversifies your investment portfolio, so your money is spread out between several different kinds of investments.

• There is a global demand for gold and silver, like jewelry, finance, and industrial use, too.

How to buy Gold and Silver

There are a number of ways you can buy gold and silver. Below I have listed the most common.

• Buy gold or silver coins or bars (bullion) such as American Gold Eagles, American Silver Eagles, or the Canadian Maple Leaf. Gold and silver bars come in sizes from 1 gram to 400 ounces. If you buy coins or bars make sure to use a reputable dealer and have a safe place to store your precious metals.

• Buy stocks, mutual funds or ETFs that track the price of gold or silver. You can make these investments through your custodial brokerage account.

• Invest in companies that mine for gold or silver by buying their stock. This adds risk. On the one hand, it could provide you with a potentially higher return, on the other, it could be lower if the company is not successful, or worst case, you could lose your entire investment.

• Invest in mutual/index funds that buy a group of mining companies. This adds some diversification.

• You can also buy gold and silver jewelry, because the weight of the gold or silver in the jewelry is tied to the per ounce price.

Price per ounce of silver (left) and gold (right) since the year 2000 (Source: Yahoo Finance )

In conclusion, gold and silver help diversify your investments, and therefore add a layer of protection for your money. So buying either or both is a good way to add some stability to your investment portfolio. Though gold and silver are not typically investments that provide an above average return in value year to year, they have increased in value over time. Remember, choose an investment approach that best fits your goals. Start small, and focus on long term returns rather than quick profit.

Thanks for reading!