Opinion

Can You Invest in Precious Metals Online?

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The short answer is yes. The long answer is that investing in precious metals online has different costs and risks involved depending on the method of investment you choose.

Methods of Storing Precious Metal

First, you must decide whether you intend to purchase the precious metals directly and store them yourself or whether you would like to invest in a third party to store and secure them for you.

The five primary choices of precious metal are gold, silver, platinum, rhodium, or palladium. Of the five, investing in gold and silver is the most common. However, storing these precious metals yourself means taking on the cost of the delivery, long-term storage, and their security yourself. For a standard solution, you can ship through registered mail and store the precious metals in a safe deposit box or safe.  


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The second option involves investing in a precious metal Exchange Traded Fund (ETF) that specializes in the precious metal of your choosing. The costs associated with the delivery, storage, and security of the metal are then taken up by the management fee of the fund, with the security provided by a reputable bullion bank. An ETF will buy more of its reserve precious metal if demand for shares goes up and sell off its precious metals when demand goes down. In this way, the fund’s share prices will closely match the real price of the underlying precious metal. 

There are also closed-end bullion funds with a set number of shares and corresponding amounts of precious metal purchased at their inception. These funds can go up and down in price based on their own particular popularity and don’t necessarily match the price of the underlying precious metal. Be sure this is what you want if you invest in a closed-end fund.

The third option is buying precious metal certificates, which kind of lies between the two options above. These are promissory notes from a bullion bank available to exchange for the specified amount of precious metal on the note. It does not signify real ownership of that metal, nor must the bullion bank have enough of that precious metal on hand to provide it if all the certificates they gave out were to be exchanged at the same time. 

Differences in Risk 

In terms of risks, storing precious metals yourself puts all the responsibility on you to keep your assets secure. However, that also means you have complete control over the physical metal in the case of an emergency. With shares in an ETF, you can’t be sure what will happen. In the absolute worst-case scenarios, your ownership might not prove as helpful as having the physical gold or silver on your own person.

A similar risk exists with certificates, which might prove impossible to exchange if there’s a major market crash. And so it really depends on what kind of buyer you are.  Are you trying to mitigate even the worst-case scenario or are you investing long-term and looking to keep your costs down and benefits up?

Why invest in precious metals online?

The main investment benefit of precious metals is their defensive properties against many different types of risk.

  1. Inflation protection. Precious metals cannot have more of themselves printed. Printing more money can lead to inflation, devaluing the currency. The same thing can’t happen to precious metals, which have a limited supply.
  2. Stability during a market crash. Precious metals tend to be low or negatively correlated with the stock market. This means they often run counter in value to stocks in general, providing a hedge in the case of a market crash.
  3. Catastrophe insurance. When all else fails, gold and other precious metals are a proven investment class that has held its value throughout all peoples for all of history. Incans, Mayans, and Egyptians have all admired gold since early civilization, and that trend has shown no signs of slowing down.

For these reasons and more, people have been investing in precious metals as their final safeguard against the worst kinds of disasters.


Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone

The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur.


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