Investing in gold and silver;

If you're considering buying gold and silver for the first time you may be wondering about the best ways to invest and whether or not now is the right time to buy.

Whilst many investors are proclaiming that gold is in a bubble, (after all, it has been rising steadily over the past decade, surely it must be due to pop) others claim that investing a minimum of 10% of your portfolio into precious metals is a sensible safety precaution to take in the current economic climate of endless money printing.

What are the common thoughts that most precious metals investors share;

The fact that rising prices due to inflation will erode the value of their hard-earned savings.

That gold and silver is real money unlike its fiat (paper) counterpart.

That gold is a store of wealth; its price has risen steadily at the same pace as inflation.

That the current financial system based around debt and money printing may be close to breaking point, and should it collapse will result in eventual devaluation of paper currencies and a severe reduction in consumer purchasing power.

That if precious metals look expensive now, they will almost certainly become out of reach to the average investor should there be a financial collapse and large funds looking for a safe haven move their assets into gold and silver causing a huge price spike.

If you are considering moving some of your assets into precious metals or simply want to start saving in gold and silver, two popular options include:

Buying gold and silver coins or bullion bars for home storage;

Physical gold and silver bullion either in the form of widely recognized gold and silver coins such as the Canadian Maple Leaf, American Eagle or Austrian Philharmonic, or recognized bullion bars such as Johnson Matthey or Credit Suisse are popular choices. You can buy online through reputable gold and silver bullion dealers such as Apmex. Alternatively you can choose to buy over the counter from your local bullion dealer.

Pros

Coins and bullion bars can be bought in a range of sizes. Some of the smaller gold coins start at 1 tenth of an oz and bullion bars at 1 gram, which may be a consideration for those on a smaller budget.

Keeping coins and bullion in your own private possession means that you have immediate access to them should the need arise.

By storing your own metals you are effectively removing counter party risk. They are yours, you can see them and they can be held in your hand.

Cons

Premiums, (additional charges) paid above spot (the daily price set for the underlying metal) can be high, particularly on smaller coins and you may want to shop around to find the best prices.

Exposure to security risks such as theft. Metals should be stored securely in a bolted down safe, tucked away discretely, or hidden in plain view.

Liquidity; If you need to convert your metal holdings quickly into cash, you may not have the flexibility that alternative ways of investing could offer.

Purchase allocated bullion stored in a secure vault facility;

Some online companies offer to store your metals in secure vault facilities and charge a small fee. Two well-known reputable online companies are BullionVault and GoldMoney where metal can be purchased online fairly close to spot price starting with as little as 1 gram purchases.

Pros

Attractive option for those concerned about the security of home storage.

The ability to buy metal close to spot price.

Suitable for those concerned about possible gold confiscation. In 1933 Roosevelt signed Executive order 6102 "forbidding the hoarding of gold coins and bullion" within the US. In the current financial climate some investors are concerned that this may happen again. For this reason such companies usually offer customers the choice of purchasing and storing their bullion outside their country of residence.

Liquidity: metal can be bought and sold online quickly with funds paid into your bank account the next day.

Cons

To a certain extent you are introducing a layer of counter party risk in that the metal is not in your own possession, is linked to your bank account, and relies on the effective operation of the internet.

Similar Companies

Mike Maloney and David Morgan, both well-known within the industry have similar schemes. Through Mike Maloney's site customers can choose to buy and store bullion coins or bars and take delivery at any time and is worth visiting if only for the wealth of information articles and videos he provides.

David Morgan's SiverSaver program allows customers to save for gold and silver by using regular set monthly amounts, although this is currently only available to residents of America and Canada and metals are stored within the US.

Other Options;

Some investors gain exposure to gold and silver prices through an ETF (exchange traded fund) It's important to note however, that with an ETF you are tracking underlying price, you do not own or have the right to take possession. Owning gold and silver mining shares, or investing through an IRA are further options a prospective gold or silver investor might want to explore.

A word of caution, as with any other investment it is essential that you do your own research and weigh the options carefully before reaching a decision based on your own personal needs and circumstances. Similarly, acquiring metals on a dollar cost average basis (buying a regular set amount each month) rather than going 'all in' might be a more prudent way as this would balance out price fluctuations.

It certainly does not look like the money printing is about to stop any time soon and as a sensible way to protect yourself from the ravages of inflation, dipping your toe into the gold and silver pool in 2012 might be the wisest small step you ever decide to take.