(Joshua D Glawson, Money Metals News Service) So it’s a new year, and with the big move up we saw in gold and silver, more folks may be thinking about the precious metals.
But there are several big mistakes to avoid. Especially when one is just starting his gold and silver investment journey.
To help folks avoid some of the biggest beginner pitfalls when investing in gold and silver, this article lays out the Top Five Precious Metals Tips for 2025…
TIP #1: Avoid Precious Metals Dealers Advertising on TV Using Celebrity Spokesmen
Everybody’s seen it. You are watching your favorite political talk show on cable television when you suddenly see an advertisement about buying gold and silver.
These ads often include a famous talk show host or actor – someone people trust.
These celebrities get involved with promoting such companies because they rarely know anything the industry — or its bad actors – and the big endorsement fees paid would certainly be alluring to those seeking to monetize their fame.
In general, the reason these gold promoters can afford cable TV ads and celebrity spokesmen is simple – they’re usually overcharging investors… by a ton.
Your signup for a “Free Investor Kit” offered by one of these TV advertisers will usually be followed by relentless phone calls from a high-pressure commission-based salesman. They badger people into buying proof coins, supposedly rare coins, commemorative, or oddball special issue items.
Regular readers and customers of Money Metals already know the best value for your money is a bullion coin, bar, or round priced near the spot price of the metal. But you’ll have to fight these TV-based dealers to be able to buy such things, if they sell them at all.
Given the abuses, it’s not uncommon for the TV-based dealers to get hit with lawsuits from investors – or from state or federal regulators. Some firms go belly up – and owners have even fled the country. Others may move on to launch a new company running the same questionable scheme under a new name.
Aside from avoiding these high-pressure dealers altogether, it’s vital to learn how to determine the melt value of the metal you are buying – and compare that to the price being charged for the item. Anything you buy shouldn’t be a heck of a lot more than the spot price at any given time. And most certainly not 50%, 100%, or 200% more!
TIP #2: ETFs and Other Paper Gold Instruments Are No Substitute
A gold or silver Exchange Traded Fund (ETF) is a security that seeks to track the value of gold or silver in the global market, often using indirect exposure to the metals stored via intermediaries. Although ETFs are efficient for those wanting to trade in and out, the risks of ETFs for longer-term holders are not worth it.
The most obvious risk associated with ETFs is that an investor does not actually own the gold or silver directly. There are layers of counterparties between you and the metals.
Meanwhile, the annual fees ETFs charge are actually higher than the storage fees charged on holding metal directly, especially when compared to the Money Metals Depository.
TIP #3: Don’t Go All In at Once, Or at All
Sometimes, a new investor in gold or silver will become so convinced by the profit potential of precious metals – and/or so convinced of the dollar’s doom – that they will put most or all of their investible funds into them.
Don’t!
An all-in strategy can be detrimental to any investment plan, whether it be stocks, cryptocurrency (e.g., Bitcoin), real estate, or even precious metals like gold and silver.
The Great Depression is an example of people foolishly believing they could put all of their earned and borrowed money into one asset class, i.e., stocks, and that it could never be lost.
Failure of crypto coins, such as TerraUSD (UST), which lost over $45 billion in a week, has been the norm for cryptocurrencies.
Real estate can experience major swings and bubbles, much of which is dependent on Federal Reserve interest rates, inflation, bank solvency, housing liquidity, politics, and general market conditions.
Remember the wisdom originating from the liberty-minded book Don Quixote (aka Don Quijote): “It is the part of a wise man to keep himself today for tomorrow, and not venture all his eggs in one basket.”
The same goes for gold and silver.
TIP #4: Don’t Overlook the Benefits of Fractional Gold
For people who cannot afford to buy one troy ounce or more of gold, fractional gold is a great option.
By definition, fractional gold is gold that is less than one troy ounce. Money Metals has a wide range of fractional gold sizes to choose from, including 1/1000th oz to numerous other sizes less than 31 grams (a troy ounce is around 31.1035 grams).
The downside of fractional gold is that it tends to have higher premiums, so it’s not the most efficient way to own gold. (The premium is dependent on manufacturing costs, dealer overhead, profits, and market conditions in general).
By contrast, the greater the weight of a gold bullion coin, bar, or round, the lower the premium over spot (as a percentage) tends to be. So, a one-ounce bar of gold will almost certainly have a lower premium than a fractional bar of gold.
That said, if your goal is to make small, financially manageable, purchases to maintain your purchasing power, switching funds into gold is typically better than sitting on Federal Reserve notes. The sooner a person can trade their dollars for gold, even fractional gold, the better off they may be in the long term.
The bottom line is to buy fractional gold if you cannot afford to buy an ounce of gold or more at one time.
TIP #5: Don’t Forget About Silver
Gold is not the only precious metal worth considering when investing. Silver is also a great option.
The benefits of investing in silver include a much lower price per ounce compared to gold, silver tends to maintain its value in the long-term, it is easy to stack (silver investor lingo for buying and physically stacking), and it is also highly liquid (meaning it can be sold relatively quickly and easily).
For those who cannot afford gold, investing in silver is a great second choice. The price of silver increased by over 20% in 2024. Like gold, silver appears poised to outperform inflation and help savers preserve purchasing power over the long term.
There are also indicators that the price of silver has been suppressed, given the high amount of financial leverage used in the silver market compared to the physical ounces available. And silver tends to rise much further and faster than gold during the latter part of a gold bull market.
Some analysts believe the price of silver may surpass $100 within the next few years. But silver tends to be way more volatile than gold – both to the upside and to the downside.
Over the past 25 years, silver has “only” risen about 500%, while gold has risen about 800%. We believe silver is likely to rise more than gold in the coming years, even as it will almost certainly be a bumpier ride.
Definitely accumulate some gold, but don’t forget to acquire some silver, too.
