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How to Invest in Precious Metals

Many investors are returning back to the tried and true investment concepts of precious metals. If you are looking in the direction for your hard earned dollars, you will want to follow some easy guidelines in how to invest in precious metals.

An investor that is experienced in the topic of precious metals knows the five rules: Look for the tangible bars and coins, the certificates for the same, the mutual funds market for precious metals, an alternative to the tangible is stock in the mining companies themselves, as well as metal or gold futures.

If your interests are toward the tangible, you will need to know the differences between shopping for gold coins (minted) and bullion. Bullion is almost pure gold and may be a better investment of dollars. Minted coins can be an excellent investment when balanced with the age or limited quantity. A good rule of thumb for coins may be to purchase in one troy ounce. This is popular due to their ease of storing as well as saleability. Coin values will vary based on age as well as condition.

When considering purchasing either coins or bullion, make sure you buy from a credible dealer. They should have been established in business for a longer time period and find out if they sell all types of precious metals or if they specialize in a particular market slant.

Certificates are an easy route to go if you don't want to actually have and store the precious metal. It is simply paper that reflects ownership and the actual item is stored elsewhere.

The stocks and funds choices are another option. When examining your choices of how to invest in precious metals, you might think about the stability factor of the funds choice. Stocks are a bit trickier and less stable as you are investing in one company only.

Buying into the precious metals futures will require a more in depth knowledge of the market itself. In essence, you are selecting the precious metals based on the viability of predicting the increased value of the precious metal. Futures involve an actual contract for the purchase or sale of precious metals at a specified point. Before you invest in futures, you will need a long term history of the precious metal, the market and a good understanding of the economic ebbs and flows. Your investment in futures will be completely dependent upon the value of the precious metals during the contract time period.

Other factors that you will need to consider will be your overall portfolio, the amount of money you want to invest and the potential risk factor if the investment does not move forward well. You might want to start with two to three precious metal types. Request and read up on the prospectus. Due diligence is also required and you should subscribe to e-newsletters and periodicals on the topic. Use Morningstar to keep up on the latest precious metals status and you also might want to consult with an investment counselor. The counselor is usually more aware of some of the information that you might miss and it can be easily shared.