subject: What Are The Other Ways To Own Precious Metals? [print this page] The three most common ways to own precious metals are thru physical, certificates and stock. Many investors use a combination of all three to maximize this commodity. Physical possession is an insurance policy; gold and silver can always be used to buy life's necessities. Certificates are rights to coins and bars held in the investment company's vaults. Stock is riskier but offers greater potential for profits.
When investors think of precious metals they have visions of dipping their hands into shiny gold coins and feeling the valuable gold flow through their fingers. This popularity is based on how easy it is to convert gold and silver to other commodities or services no matter what the economy is like or where in the world the transaction takes place. Because these valuable coins and bars are small, easily hidden and effortlessly transported from one area to another, physical precious metals have been a favorite of pirates, kings, queens and aristocrats especially in times of civil unrest. Owning a few gold coins or bars locked in a safe deposit box or hidden in a home is a good insurance policy; the owner of these shiny medallions will never be penniless and broke.
Purchasing precious metal certificates allow someone else to be responsible for safely storing this valuable product. Each certificate is good for a certain amount of gold or silver coins or bars. Two types of certificates are issued; one is for a specific piece of gold or silver and the other is for one or some of these products held safely in the protected vault. Costs like insurance and storage space may be charged for these services.
Precious metal stocks are riskier as these are shares in mining companies. As long as the price of the metal rises and the mine produces, the value of the stock should go up. This market is speculative especially on startup mines; there is a lot of money to be made if gold or silver is found and can be mined economically. If these precious metals are not found, or are too expensive to mine, or the mine claim is invalid, the stock will be worth little or nothing.
Investing in silver and gold provides great liquidity and is an insurance policy as it protects against political unrest and economic turmoil. Nervous investors hedge their exposure in stock and currency markets by diversifying to precious metals. Smart investors spread their risks in this market by taking possession of some coins and bars and buying certificates and stock.
