Are you interested in bullion investing? Gold and silver offer unique qualities as investment vehicles that can help your savings weather uncertainty and economic downturns.
Gold and silver play a specialized role in your portfolio as defensive assets that help preserve your savings in times of crisis or uncertainty. Historically, they have performed better than stocks and bonds during recessions and financial crises.
These tips will help you find the best way to buy bullion and how it can serve your financial interests.
How to Buy Gold and Silver
There are several ways to gain exposure to the bullion market, and choosing one can be a matter of preference. They include:
- Bullion: Gold and silver coins and bars are the most direct way to gain access to the metal. You will need to consider storage and insurance.
- Commodity ETFs: These are funds similar to a mutual fund that owns gold or silver and related investment products. You can purchase shares in the fund, gaining exposure to bullion without direct ownership.
- Mining stocks: Buying equities in mining companies gives you an investment adjacent to gold and silver prices, but you’re also betting on the performance and management of that mining company.
Bullion is the most direct way to own precious metals. While you will have to find a storage and insurance solution, you won’t have to pay ongoing fees like with an ETF or have to bet on a mining company’s profitability.
Where to Buy Gold and Silver in Canada?
If you decide bullion is your best option, the next step is to find the best place to buy it. When you’re looking to buy silver coins in Canada, going straight to a bullion dealer should be a reliable way to reduce your premiums and get the best products for investment purposes.
They usually sell coins made by sovereign mints from around the globe, as well as bars manufactured by private refiners. The price of coins and bars will be based on spot prices plus a premium that covers the dealer’s expenses and the costs of manufacturing the product.
You can often save on premiums by buying larger quantities of bullion. New investors often start with silver for this reason, as it is much more affordable to buy larger quantities of silver.
How Much Bullion Should You Own?
Bullion can play an important role in your investment portfolio, but it’s by no means an all-in type of investment. It can help balance out your other assets and mitigate risks by providing diversification.
As a general rule of thumb, if you’re going to invest in bullion, it should account for no more than 5% to 10% of your portfolio. The difference depends on your risk tolerance to an unconventional asset.
Allocating 5% to 10% of your portfolio provides you with a reasonably-sized defensive position without over-committing. Putting too much money into bullion can lock you out of higher-growth assets like equities during bull markets.