Questions to Ask Before You Purchase Precious Metals 

Precious metals are some of the most familiar items that you have heard of. Gold, silver, platinum, and palladium are a few of the ones that are better known. These are the ones that you see used in jewelry and other luxury items.

You can learn a lot about these precious items by doing some research. You can look at Nationwide Coin And Bullion to see what advice they have for you. They can help you to find out information about metals you can invest in.

This article will give you some questions that you should ask before you purchase the gold and silver. It will help you to decide which type is best for you and your needs. You can also do more research to find out more information.

Questions to Ask

Do You Want Physical or Paper?

The best thing for you to do is to have physical gold or paper that is backed by physical gold. Paper that is backed by physical gold would be exchange-traded offerings. There are other papers that can be backed by precious metals. 

You don’t want to buy paper based precious items such as gold certificates or futures contracts. These don’t do as well, and you could lose money quickly. These items are a bigger risk for owning gold and silver, and you never really own it anyway. You own paper, but not precious items.

You should only consider buying the real thing that you can hold yourself or exchange-trade offerings that are completely backed by the real thing: https://www.finra.org/investors/investing/investment-products/exchange-traded-funds-and-products. You don’t want to risk your hard-earned money for something that may not pay off for you. 

Should You Buy Allocated or Unallocated Metals?

Allocated metals are the way that you want to go. These items will provide the best chance of investor safety. These provide you with the best chance of complete, unencumbered ownership. 

Allocated metals can’t be leased or lent to anyone else and will be completely yours. This means that they are completely in your hands and no one else’s. This is the best way for you to buy your metals.

Unallocated metals are those that can be lent and leased to other people. Read more about unallocated metals here. You don’t completely own it yourself. If the items are unallocated, they can also be oversold for more than they are worth. You don’t want to have that happen, so buy only allocated items. 

Is There a Mark-up?

There is usually a mark-up to precious metals from their spot prices. This can be up to 8% of what the spot prices are. If gold is trading for about $1,250 on the spot market, the dealer will add up to 8% on top of that. 

The dealer might sell sovereign coins of up to one ounce such as the South African Krugerrand that will go for about 2% over the spot price. This price is based on things such as purity, rarity, volume, and dealer supply. The price can vary from dealer to dealer because of these things.

You could buy exchange-traded funds, or EFTs, for close to the spot prices that are advertised. In exchange, you will be paying annual management fees for the funds. These types of funds usually benefit the manager more than you. 

Where are My Precious Metals Stored?

The biggest reason that you want to own gold is to hedge against risks. This means that you don’t want to store your items with a risky storage bank. You want to store your items with someone that is trustworthy and has a good reputation. 

You need to be careful because even the best and biggest financial institutions can have problems. This means that even if you choose a reputable storage bank, you could have issues later. Do some research and find one that hasn’t had issues for many years, and you will have a better chance of keeping your metals safe.

Can I Take Delivery of My Items?

You can do this, especially if you are buying coins and bars. There are issues with this because you will have to deal with markups on the metals and having to carry them to a place where they can be stored. You want to store them in a safe deposit box or a safe at your home.

If you are just buying a few coins or bars, this won’t be too much of an issue. If you are buying thousands of dollars’ worth of coins or bars, this begins to be a problem. They aren’t easy to carry to the place where you want them to be safe.

What are the Costs?

There are ongoing costs that go along with owning precious metals. You will have to pay for insurance and storage fees. If you have ETFs, you need to pay for management fees that last a lifetime. 

It is important for you to consider all the costs involved in owning these metals. There are more to it than just purchasing them. There are management costs that will add to your costs each month. 

How Liquid is My Investment?

Your investment is liquid if you are able to sell it easily. Even if you intend to keep your investment for many years, you still need to know how liquid it is. There are always emergencies that come up and you will need to sell it. 

If you are selling coins and bars, it can be a tricky process. It is easier to sell ETFs and closed-end funds. These can be traded on the stock market floor all day long.

How Will My Investment be Taxed?

In the United States, your investment is similar to classic art, fine wine, and rare books. These are all collectibles just like your precious metals. Right now, they are susceptible to capital gains taxes that are about 28%. 

The amount of capital gains taxes is higher than for other investments. Other investments are about 15% to 20%, much lower than for precious metals. EFTs are taxed at about the same amount as the gold you hold. 

Which Ones Should I Invest In?

The most popular precious metals right now are gold and silver. There are more than this that you can invest in, though, such as platinum and palladium. There are others that you can invest in, but they aren’t as well known.

Gold is the best investment that you can make out of all the other metals. It has been around many thousands of years. It has been used as currency throughout time and has been collectible since it was first discovered. 

Silver is the next best investment that you can make. It has also been around forever and has been used for currency. It is less expensive than gold and that allows you to invest in more silver for the same price as gold.

Platinum and palladium are the next best for your investments. They have many properties that make them collectible. They are also very popular for making jewelry.

How Do I Protect Myself from Counterfeit?

The process of making counterfeit metals has gotten better over the years. China is the leader of making counterfeit and they produce coins and bars the most. Gold and silver used to be the biggest counterfeit items, but platinum is catching up quickly.

These counterfeit items are flooding the market right now, so you need to be careful about what you are buying. They have also improved in looks so that it is more difficult to tell if it is fake or real. Even the American Numismatic Association, or ANA, has some difficulty determining the fake from the real. 

You want to make sure that you only deal with reputable dealers so that you are more likely to get the real thing. Two places that you can deal with are the US Mint and the Royal Canadian Mint. You will be sure to get the real thing from these two entities.

Conclusion

There are many questions that you need to ask before you buy gold, silver, platinum, and palladium. You want to be sure that you are getting your money’s worth when you buy these items. Asking these questions will help to ensure that you do.

You want to make sure that you only deal with reputable dealers. It is best if you work with the US Mint or the Royal Canadian Mint directly to make sure that you are getting what you are paying for. Even reputable dealers can be fooled by the counterfeit metals that are coming out today. 

You also need to be aware of the extra costs that go along with buying these items. You will need to pay storage fees, management fees, and other fees to keep your metals safe. You also need to be aware of costs that go above the spot prices that dealers charge. 

If you have all these questions answered, you will be more likely to get the real thing and be able to store the metals in a safe place. You will be able to buy the right metals, such as gold, metal, platinum, and palladium. 

Author: Sanjib SahaSanjib is a finance based writer who has a deep knowledge in stock market, cryptocurrency and mutual funds. He is also a co-founder of Financesrule.com

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