Does buying a gold or silver ETF match your objectives?
Many people purchase gold or silver because they believe that it is a store of value and a safe haven during troubled economic or political times and will provide a hedge against the ravages of inflation. With the allure of convenient ways to buy gold and silver, many lose sight of these objectives when they purchase their gold or silver via Exchange Traded Funds (ETFs) like GLD or SLV or via digital gold & silver providers.
While “buying” gold or silver in these manners may be convenient, with convenience often comes costs and trade-offs. While gold and silver ETFs provide convenient exposure to the prices of precious metals, they often do not offer a physical delivery option and if they do, the circumstances under which you can redeem your ETF shares for physical precious metals are generally very limited and often only available to those holding institutional sized positions.
While considering which type of gold or silver you would like to buy, here some of the advantages of buying physical gold and silver vs. the disadvantages of buying precious metals via ETFs or in digital form.
No reliance on third parties
Once you gain possession of your gold, you own it. There is no need to make requests to third parties for it or to wonder if your gold really exists in the investment vehicle your purchased. You can see and hold your gold and silver. You also are not reliant on third parties to store and insure your metals. Also when you hold precious metals you are not subject to the malfeasance or bankruptcy of the entity holding or insuring your metals.
24/7/365 access to your gold and silver
When you hold physical gold and silver you have unfettered access to your gold. You are not reliant on having your bullion sent to you and you can realize the value of your metals whenever you choose. When you buy a gold or silver ETF you are subject to the limited stock market trading hours. This means you can access the value of your gold or silver only during normal business hours. Stock markets are closed on weekends and holidays and during extraordinary events.
If you are buying gold or silver to insure against bad events like stock market crashes, bank holidays, stock market closures or natural disasters that cut off your access to electricity or the Internet, your gold or silver ETF will not be available to you to trade. Only gold or silver in your possession will give you the insurance when you need it most. With physical bullion you can exchange it for cash or use it to barter for goods and services. Your gold or silver is not available during events that prevent you from accessing the market where your ETF or digital gold or silver are held.
With physical gold or silver you can transact small or large purchases easily.
Types of Physical Gold and Silver
In deciding which type of physical gold or silver to puchase consider there are a wide variety of silver and gold coins (minted by sovereign issuers) silver and gold rounds and bars (generally issued by private mints) and “junk silver” (legal tender coins containing 90% silver issued by the United States prior to 1965).
Here is some information on the more popular physical gold and silver buying options:
U.S. Mint American Gold and Silver Eagles
The most recognizable gold and silver coins are the American Gold and Silver Eagles.
About the American Gold Eagle
About the American Gold Eagle coin: American Gold Eagle coins are 22K (91.67% gold with the remainder of the coins containing 3% silver and 5.33% copper). The obverse of an American Gold Eagle coin boasts the same design as the obverse of the “Saint Gaudens” U.S. $20 gold piece, or “double eagle” that was minted from 1907 – 1933. The front of a Saint Gaudens and American Gold Eagle coin features a walking lady liberty depiction designed by famed sculptor Augustus Saint- Gaudens. American Gold Eagle coins are struck in 1/10, 1/4, 1/2 and one ounce sizes. Each coin contains 1/10, 1/4, 1/2 or one ounce of pure gold.
The One Ounce American Gold Eagle Coin
The One Half Ounce American Gold Eagle Coin
The One Quarter Ounce American Gold Eagle Coin
The One Tenth Ounce American Gold Eagle Coin
Click here to learn more about the American Gold Eagle.
About the American Silver Eagle
American Silver Eagle coins are .999 pure silver (ASE’s contain .0007 copper), rather than .9999 silver. The obverse of an American Silver Eagle coin boasts the same design as the obverse of the “Liberty Walking” U.S. $.50 piece that was minted from 1916-1947 of 90% silver and 10% copper. The front of a Liberty Walking Half Dollar and an American Silver Eagle coin features a walking lady liberty depiction designed by Adolph A. Weinman who also worked with Augustus Saint Gaudens, whose design appears on the U.S. gold Double Eagle coin (1907 – 1933) and the contemporary American Gold Eagle coin (1986 – present).
Click here to learn more about the American Silver Eagle.
Junk Silver refers to pre 1965 U.S. coins minted of 90% silver. These coins are available in dimes, quarters and half dollar and are ideal for barter situations.
Click here to browse all gold buying opportunities.
Click here to browse all silver buying opportunities.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.