Investing in Precious Metals

 Armchair often gets asked about investing in precious metals such as gold or silver.

Investing may not be the right word here. As Warren Buffet will gladly tell you, gold pays no interest nor dividends to you. Metals are more of a traditional store of value, a hedge against inflation, or a good way to prepare for the inevitable Zombie Apocalypse.

Buying precious metals is not something a lazy, relaxed, armchair investor should do. Please go back to Be Rich as well as How to Invest.

That being said, for more sophisticated investors who have already accumulated a good nest egg of wealth, it certainly doesn’t hurt to put part of your portfolio (say 5 percent) into precious metals for the reasons stated above.

Avoid mutual funds and ETFs that deal in gold and silver. They’re just paper. Some are of dubious intent and may or may not be backed by the full amount of physical product. That won’t help you when the Zombie Apocalypse hits and you’re bartering for guns and ammo.

If you’re going to do this, buy physical bullion. Find find a safe place to store it – preferably not in your bank’s safe deposit box, because that’s the first place the zombies will look. And don’t buy it through your bank either, because they keep meticulous records (more than what is required by law) even for small purchases. They will also charge you way, way too much.

Buy it through an established and reputable bullion dealer in your city. Establish a good relationship with them, and they will be happy to see you and to quickly buy your bullion back from you when you’re ready. At an honest and fair price, with only the minimal paperwork as required by law.

As many of our current readers reside in Ottawa, Armchair highly recommends Ottawa Bullion. They are very professional in their dealings, they operate in a safe and secure environment, and their pricing is always transparent and fair.

Before making any foray into metals, be sure to learn as much as you can and do a lot of reading. A great source of historical metals pricing, charting, current spot pricing, and journalistic discussion can be found at Kitco. There are also many sources of commentary on precious metals, some more reliable and thoughtful than others.

Surf and enjoy. Metals are an interesting product and they have captivated the attention of people throughout history – have your heard the term ‘gold bug‘?

A final caveat if not already apparent – metals are volatile. They go up and they go down, often for reasons that are not readily apparent nor rational. Buy at your own risk, do your own due diligence, and whatever you do, don’t bet the proverbial family farm! That’s what trips to Vegas are for…



Popular posts from this blog

Creating an All-Weather Portfolio - The Comfy Armchair

Investing the Warren Buffet Way

When should I take the CPP?