How to Make Money Buying Gold & Silver

There are numerous ways to make money from buying precious metals. Gold and silver are among the most readily available precious metals that you can buy and sell on the open markets, and are generally considered excellent investments during any economy. Whether you want to trade a few stocks on a stock exchange, buy gold or silver coins to stash under your mattress, or maybe even buy a few gold bricks, investing in gold and silver is simple.

Difficulty: Moderate

Instructions

Things You'll Need:

• Computer with Internet Adequate funds Brokerage account

Investing in Precious Metals

1. Purchase gold or silver coins directly from the U.S. Mint. This is the best way to purchase gold or silver due to the safety of the transaction, quality of the goods and fair pricing. Collectible coins like the American Eagle are generally sold for a premium on the secondary market, so buying from the U.S. Mint directly protects you from scams and shady coin dealers.

2. Buy or sell gold coins or bullion (bars) in private transactions. Gold and silver can be purchased and sold at traditional brick-and-mortar collectible establishments, trade shows, or on websites like eBay.com. Scams, underpricing and counterfeiting plague the precious metals market, so be sure to check the reputation of the people with whom you're doing business. If the deal seems too good to be true, it probably is.

3. Purchase gold or silver bullion that's stored in a vault. This lesser-known method of buying gold or silver bullion is often better suited for high net worth investors. Having private companies store the precious metals you purchase in a vault often saves money because you will not need to provide security or insurance. Websites such as BullionDirect.com offer this service.

4. Sell old and unused jewelry. It's not advisable to buy jewelry in order to sell it immediately since most jewelry is not made of pure gold or pure silver. When selling, beware of dealers who may try to undercut the current value of gold, or lie about the total content of gold in your jewelry.

Purchase Gold and Silver Stocks

5. Purchase stocks in individual gold and silver mining companies, such as: Barrack Gold: ABX, Agnico-Eagle Mines Limited: AEM, Silver Wheaton Corp: SLW, and Pan American Silver Corp: PAAS. Many more gold and silver mining companies are traded on the stock market beyond this short list.

6. Buy or sell Exchange Traded Funds (ETFs) that track the price of gold and silver commodities. An ETF is an investment vehicle that trades on a stock exchange just like regular stocks. ETFs can contain a collection of stocks, bonds or commodities. The change in price is determined by the changing net value of assets held in the ETF. Three commonly traded gold and silver ETFs are: S&P Spiders Gold Trust ETF: GLD, iShares Gold Trust ETF: IAU, and iShares Silver Trust ETF: SLV.

7. Trade leveraged ETFs (2x) that yield double the price change in gold value. Examples include: ProShares Ultra Gold ETF: UGL, and ProShares Ultra Silver ETF: AGQ. These ultra ETFs yield twice the daily change in gold or silver bullion prices by using leverage. Ultra ETFs are high risk, high reward investment vehicles and should only be purchased by active traders for short term investment purposes. These ETFs are primarily traded by active traders or day traders, so use caution when trading volatile commodity ETFs.

Tips & Warnings

• Gold and silver prices can be incredibly volatile during times of economic uncertainty, so use some caution when investing in these commodities. The main benefit of gold and silver ETFs is the ease and speed with which they can be bought and sold. Physical gold is much harder to sell, but may offer more security during times of economic crisis.
• Beware of scams and infomercials pitching precious metal commodities as recession-proof investments. This is especially prevalent in gold coin infomercials, advertisements and coin collectors. Buying and selling ETFs is just like buying stocks in the stock market. They can increase and decrease substantially in a single day, and should only be purchased after you have considered your comfort level with losing all or part or all of your original investment.

Resources

• Wikipedia Information on Exchange Traded Funds (ETFs)
• S&P Spiders Gold Trust ETF: GLD
• iShares Silver Trust ETF: SLV
• U.S. Mint Online Product Catalog
• How to Sell Used or Unwanted Gold Jewelry for Maximum Profit

[jsears]

on 10/2/2009 When purchasing physical precious metals, check the dealer's reputation with the Better Business Bureau (bbb.org) -- they vary widely. I ended up on APMEX. Definitely shop around for the lowest premium over spot, and factor in any shipping/insurance charges. Don't buy based on based on it's beauty or collectability. It's price is the only relevant issue. Look for bullion instead. Don't bother with currency based coins, unless you need to cross international borders. The premium over spot is too high. It'll also be more liquid (easier to sell during a bull market) if it's from a COMEX acceptable refiner. Johnson Matthey or Engelhard bars are a good example. Make sure it's pure (silver .999 or gold .9999 fine). Also look for a dealer with a small spread (difference between their buy and sell prices). G'luck!

[maria122]

on 8/25/2009 You can try the Silver and Gold Exchange for selling and determining sale value. They have a live price chart on their website at http://SilverAndGoldExchange.com They show the prices they pay for scrap gold and silver as well as bullion and silver coins. They pay much more than anyone else I have seen out there and I had a very good experience with them.