How Can I Invest in Physical Gold and Silver?

Cold coins and bars.

If you're looking for ways to diversify your portfolio, investing in physical gold and silver may be an excellent way to achieve this. Many people view precious metals as a safe haven and a means to preserve wealth, especially during times of economic uncertainty.

Benefits of investing in physical gold and silver

Market volatility, political instability, currency weakness, and just about anything you can imagine that brings economic uncertainty—all of these can be mitigated to a certain degree by precious metals. That’s why investors, many financial institutions, and most central banks turn to precious metals (particularly gold) when the economic horizon looks gloomier than usual.

Silver and gold have been used as money for thousands of years because they are chemically distinctive, physically rare, and easily malleable. While their prices can be volatile, they nevertheless have a strong track record of storing wealth and maintaining value over time.

Let’s just go over a the basic benefits of holding physical gold and silver:

  • Your portfolio is protected in times of economic uncertainty, particularly inflation
  • You can protect yourself from a weakening dollar and government spending excesses
  • Precious metals offer growth potential
  • Metals are an effective means for diversifying your portfolio
  • Physical gold and silver are free of credit risk
  • They aren't overly correlated to equities, debt instruments, or real estate
  • Precious metals retain their global purchasing power despite inflation or currency depreciation over the long term

The next question: how might someone invest in precious metals?

How to invest in physical gold and silver

You can purchase precious metals in coins or bars from a trustworthy dealer. Since these are tangible assets, you would need to store them in a safe deposit box at a bank, at home, or with a third-party depository. You can also buy metal in an allocated account at a bank, which will safeguard the bullion for you. The gold will then belong to you in its entirety. 

Gold and silver coins and bars can also be purchased online from several online retailers. These are organizations that have physical locations but sell bullion globally.


American Buffalo gold silver invest

Investing in Coins

Recently-minted bullion coins may be the most appealing aspect of investing in precious metals, especially silver. With gold's much higher price, purchasing a single one-ounce gold bullion coin may be difficult for small investors. If you're strapped for cash and don't have much money to invest, silver bullion coins, which are available for a fraction of the price of gold bullion coins, may be a better option.

Coin dealers in your area sell gold and silver coins. However, they may have limited stock and the markups will often reflect the supply and demand conditions. So keep that in mind when comparing the price of coins to their spot metal equivalent.

Gold Bars

Investing in Bars

If coin design is something you’d rather not deal with, as there are so many of them to choose from, then you might want to go straight for gold or silver bars The sizes of the bars vary from 1 to 400 ounces. 

Bars have a lower markup and are a better approach to buying a larger quantity of either metal. So, if you’re interested in holding the metal minus the aesthetic qualities that can add more value to coins, then bars might be more suitable for your portfolio.

Rare coins. gold silver invest

Numismatic coins

Investing in rare numismatic coins

What characterizes a numismatic coin? A quick answer would be that numismatic coins. were minted over the last century (or past centuries) and sold for a much higher premium than their bullion value. This is owing to the coins' popularity among collectors and the fact that they are becoming rare. 

As numismatic coin prices are often higher than their spot metal price, they can also sell for more than their metal value, indicating that their value is based on various other criteria in addition to the metals’ spot prices.

And perhaps the best way to assess the value of a numismatic coins is by using the Sheldon Coin Grading Scale.

What is the Sheldon Coin Grading Scale

Dr. William Sheldon devised the Sheldon Coin Grading Scale in 1949, a 70-point scale for assessing a coin's condition and value. The Sheldon Scale is the industry standard for grading US coins, and it is recognized by all of the leading third-party grading agencies worldwide.

When considering the grading scale, the higher the grade, the better the coin's condition and the more expensive it is. 70 is immaculate and flawless, with no imperfections, minor scratches, or hairlines. If you want to learn more about the Sheldon scale, check out our primer here.

Three ways to invest in gold and silver

Investing in physical gold and silver can come with many benefits. Precious metals are often independent of other financial assets, and like all financial assets, they too have their own opportunities and risks.

This makes them especially well-suited for portfolio diversification. There are various ways to invest in physical gold and silver: newly issued coins, historical numismatic coins, and bars. Which of the three might best suit your portfolio? It really depends on your financial goals.

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