10 Tips to Investing in Gold & Silver
Morris & Watson aims to provide as much information as possible to investors in Gold & Silver. Many ask for tips to successful investing in Gold & Silver or how to invest in Gold & Silver, so here is some helpful tips supplied by Adam Van Sambeek, Treasury Manager at Morris & Watson, Auckland, with over 17 years experience in Financial Markets and Commodity trading.
“After the global financial crisis of 2008 and the collapse of a number investment institutions, many investors are taking a greater control of their own financial future. Many have turned to buying bullion due to its tangible attraction. Below are some points that a bullion investor should consider when investing in bullion.”
Here are our tips:
- Is now the best time to invest? It’s always difficult to determine if now is the right time to invest. The fact that gold prices have risen for each of the last ten years without fail, and that expectations are for this will continue, should provide some comfort that you’re following a strong well established trend. Ultimately, the choice depends on your read of economic markets, and your intention in investing.
- Remember your investment objective. Set your objectives (short and long term), make the appropriate investment selections and stick with your plan. Don’t abandon your strategy on daily market changes.
- Do not over commit. Only invest as much as you can afford. It may be better to invest smaller amounts with the view to build up a position over time. Dollar cost averaging will ensure you don’t over commit at any one price.
- Buying Gold or Silver is only half of the investment equation: When buying a US dollar denominated commodity such as Gold or Silver it’s important to be aware of currency risk. If you’re holding Gold, you essentially have a long US dollar exposure. The relationship between the US dollar and NZ dollar is therefore important when calculating the value of your investment – Seek advice on how to eliminate currency risk.
- Remember the Golden Rule: He who holds gold makes the rules. After the lessons of 2008’s GFC investors are wary of counterparty risk. There is only one market in gold. Don’t be left holding worthless paper certificates of gold.
- Always buy/sell through a respected, reputable dealer. Going directly to a refiner can sometimes mean getting a better price and piece of mind.
- Aim to hold 10-15% of your investment portfolio in precious metals. This increases the degree of diversification and protects your portfolio against fluctuations in value of any one asset type.
- Buying physical gold can present storage and insurance problems. However, small ingots or coins, such as sovereigns and Krugerrands, are portable and easily stored, and given that they are a physical asset they can provide some comfort during uncertain times.
- Bullion is an imperishable investment. Whereas a business can go under and shareholders could risk losing everything. You don’t have that worry with Gold. An oz. of gold will always be an oz. of gold. There are many different risky investments that people make because they crave quick returns in a short period, and end up with nothing to show for it.
- Sit back, relax and enjoy your investment. It’s a long term investment so don’t fret the day to day movements. You‘re investing in tangible wealth, the stuff of gods, immortality, and wealth itself.