In the time of economic uncertainty, the traditional investment such the stocks and mutual funds can leave investors with an inconsistent return. Since 1970, gold has appreciated by 3,792% compared to the Dow Jones Industrial Average that estimated a return of 1280% over the same period. With the price appreciation llike that, it is easy to understand why gold has continued to be a popular investment for many years.

One thing that makes the precious metals an attractive investment is that there are many opportunities to participate in the market. Physical gold and silver can be bought in bar form of various weights and sizes from major banks and coin dealers. This is probably the purest form of investing in precious metals and involve actual ownership of the commodity.

Another option is to buy the coins. This value is based on the weight of the bullions plus a premium for the condition, rarity and demand. This allows investors to combine elements of hobby with a strategy of seeking price appreciation. Bullion and coins can be a great way for entry-level market participants to get started without having to put up a large amount of funds immediately. Due to the size as small as a gram can be bought, it offers a flexible option that can be adapted to almost any budget. The biggest disadvantages of buying the actual physical metals are limited liquidity and the added responsibility of finding safe storage. Unlike share of stocks, which can often be sold with a single mouse click, converting the gold bars or coins to cash need finding a willing buyer on your own when you are ready to sell.

For those who are more comfortable to operate through a broker, exchange traded funds like the GLD (SPDR Gold Trust) of SLV (Shares Silver Trust) can be considered. The shares of these funds follow the spot prices of the underlying precious metals and moves accordingly. They offer an alternative to hold physical gold or silver and the shares can be traded just like any other stocks or exchange traded fund. In addition to ETF, the shares or mining and exploration companies can offer additional options to gain exposure to the metals. This can carry a little more risk than a pure play on the spot price of a particular metal because of the additional factors such production output, growth, cost and management.

Although the historical price appreciation has been impressive, most financial experts would caution against relying solely on the precious metals to drive your portfolio. While there have been times when the gold prices have outperformed the overall market, there have also been periods of under-performed as well. Throughout the history, well-researched  diversification has been proven to be one of the best strategy investorss can use to produce consistent profits.

Keyword terms to this post: