How to Invest in Precious Metals

There are various ways to diversify your wealth, each offering different benefits and risks. As you look for ways to prepare your savings for the future, it's up to you to decide how you want to save your money and how much work you're willing to put in.

If you're looking for an option to hedge your savings and investments, precious metals can be a smart choice. You can purchase several different types of precious metals, and you can enjoy inflation protection due to their historical trend of increasing in value over time. While various factors can shift the price of precious metals, gold, silver and other precious metals have served as great methods for diversifying wealth.

Before you begin buying precious metals, it's important to compare the different metals available and do your research to ensure you're making a financial decision in your best interests. Understanding the risks and benefits of investing in precious metals can help you better prepare for the future, so you can make a smart purchase that works for your budget, goals, and risk tolerance. Want to learn more about how to purchase precious metals and begin saving? Here's everything you need to know.

Types of Precious Metals to Invest In

When it comes to buying precious metals for beginners, it’s important to understand what precious metals are and which ones you can invest in. Precious metals are a group of rare metals that are high in value as a result of their rarity. These metals are naturally occurring, just like other metals, but they're found in lower quantities. While there is a steady supply of precious metals being mined and entering the market each year, there's no way to mass-produce precious metals. Because gold and silver can't be printed like paper money can, they’re better protected against inflation and other forms of volatility. So, ready to start investing in precious metals? Explore your options below.

Gold

Gold is what most people think about when they think of precious metals. Gold is commonly used in jewelry, as a currency and in smartphones and electronics. There are various other industries that use gold as well, including the medical, automotive and aerospace industries. As a rare metal with several uses, gold can be a smart savings option.

Rarity is one of the biggest reasons why gold is so valuable. Some metals can be found in the earth in large quantities, but the existing supply of gold is much larger than the new influx of gold that's being mined. The United States has the most gold out of all the countries, with more than eight thousand metric tons of gold in the American gold reserve.¹

There are several different forms of gold you can purchase. For example, you can purchase bars, rounds, bullion coins, numismatic coins, proof coins or fixed mintage coins.

Silver

Silver is another leader in the world of precious metals, renowned for its beautiful, almost white hue. This metal is very conductive and isn't chemically reactive, making it a common application in electrical contacts. Silver is also commonly used in jewelry and coins. While there are some key differences between buying gold and silver, both metals are great options and can be used to save in a precious metals IRA.

Overall, silver has a higher demand than gold due to its use in industrial applications, such as automobile electrical systems, medical devices and smartphones. However, this tie to industrial applications makes its price more volatile compared to gold, as economic factors that impact industries that rely on silver can cause greater fluctuations in price. While there is high demand for silver, it’s also produced in much higher quantities than gold, resulting in an imbalance in supply and demand between the two. Gold is scarcer, and this rarity is what makes it more expensive than silver. Despite the fact that silver is not as scarce as gold, it can be an excellent option to diversify your wealth.

Buying gold can be a good way to hedge against inflation, but buying silver at the wrong time can potentially lead to losses. That being said, the volatility of silver can be used to your advantage if you purchase at the right time.

Platinum

Platinum might not be the first metal that comes to mind when you think of precious metals, but it's right up there with gold and silver. Platinum is soft and silver in color, and it's corrosion-resistant, similar to gold and silver. You can find platinum in jewelry, electronics, catalytic converters and dentistry equipment. Depending on your investment strategy, adding platinum to your portfolio can be a smart move.

Because platinum is used for a wide range of practical purposes, it's in high demand. On top of that, there's a finite amount of platinum in the mines we know about, and those mines are depleted more and more each year. At the same time, the demand for platinum is increasing because it's used in so many of the products people use.

Palladium

Palladium is the rarest of all precious metals, which makes it a unique investment opportunity. In a lot of ways, palladium is similar to platinum; it has a silver-white color and is highly resistant to corrosion. You can find palladium in a lot of the products you use on a regular basis, including your smartphone, car and various electrical contacts.

Because palladium is both rare and useful, it's a popular precious metal for those looking to diversify their savings. However, palladium is similar to platinum in that it's more volatile than gold and silver, so understanding the risks and benefits can help ensure you make a strong investment decision. You may also want to avoid palladium depending on your saving strategy, which is why it's so important to do your research and talk with an advisor before you make a purchase.

How Do I Invest in Precious Metals?

The simplicity of buying precious metals is one of the reasons it's so popular. Once you know where to purchase precious metals, you can start saving. You have two options when it comes to precious metals: a self-directed IRA (SDIRA) or making a cash purchase to take physical possession of your precious metals. An SDIRA allows for tax-deferred purchases, whereas a cash buy of physical possession of precious metals does not. However, both saving strategies can be effective, but there are additional requirements when you're saving through a precious metals IRA. You can learn more about your options below.

Precious Metals IRA

A precious metals IRA, also called a self-directed IRA (SDIRA), is a retirement account that allows you to make investments in alternative assets, such as real estate, commodities and precious metals. Similar to conventional IRAs, there are four different types of precious metals IRAs, including Traditional precious metals IRAs, Roth precious metals IRAs, SEP precious metals IRAs and SIMPLE precious metals IRAs.

• Traditional Precious Metals IRA: With a Traditional IRA, you're contributing pre-tax dollars to your retirement account, which means your withdrawals are taxed as ordinary income in retirement, but your overall tax liability for the year you contribute is reduced.
• Roth Precious Metals IRA: Roth precious metals IRAs allow you to pay taxes as you contribute to your retirement account, which means you don't have to pay taxes upon withdrawal in retirement.
• SEP Precious Metals IRA: A Simplified Employee Pension (SEP) precious metal IRA allows employers to contribute a certain percentage of their salary for themselves and their employees. With a SEP IRA, the employer makes contributions on behalf of the employee.
• SIMPLE Precious Metals IRA: A Savings Incentive Match Plan for Employees (SIMPLE) precious metal IRA is only available to companies that have fewer than 100 employees. Unlike a SEP IRA, which requires employers to contribute on behalf of their employees, SIMPLE precious metal IRAs allow employees to contribute on their own.

You can contribute gold, silver, platinum and palladium to your precious metals IRA, but there are purity standards. Any gold you contribute to your precious metals IRA has to be at least 99.5% pure, with the exception of the American Eagle coin, which only requires 91.67% purity. Silver has the highest purity standard of any precious metal if you're saving through a retirement account; any silver you contribute must be at least 99.9% pure. Platinum and palladium both have purity standards of 99.95%, similar to most types of gold. If you're purchasing precious metals for an SDIRA, make sure your precious metals meet the required purity standards.

Physical Possession of Precious Metals

If you want to start saving outside of a retirement account, you can also take physical possession of your precious metals by making a cash purchase. Birch Gold Group has several types of precious metals available, including gold, silver, platinum and palladium. We also offer different forms of precious metals, so you can purchase anything from a platinum coin to a silver bar. All you have to do is choose the precious metals you want to purchase and send us a check or wire. As soon as we receive your payment, we'll securely ship your precious metals to the address you provide.

Making a cash purchase of physical precious metals is a simple way to diversify your savings. Through physical possession, you can have complete control over how you choose to store your precious metals. For example, you can decide to store your precious metals at home or you can use a precious metals storage provider. Additionally, there are no reporting requirements when making a cash buy of precious metals. However, you will need to report sales of physical precious metals on your taxes at the end of the year. Physical gold and silver sales should be reported on Schedule D of your 1040 form when filing your taxes.

Investing in physical precious metals also allows you to explore options that aren’t available for placement in a precious metals IRA, such as collectible precious metal coins like numismatic coins, along with jewelry. When considering a precious metals investment, think about why you want to invest in precious metals, such as hedge against inflation or portfolio diversification, along with the pros and cons.

What Are the Benefits of Buying Precious Metals?

Choosing the right investments can be challenging, but there are several reasons you might want to consider precious metals. With a handful of different metals to choose from and various ways to purchase, buying precious metals can be a good way to safeguard your money. Here are some of the benefits of buying precious metals:

• Asset protection: It's nice to have cash flow that you can use to save and support yourself, but it's also smart to invest in tangible assets. Precious metals are one of the best tangible assets to have around, and they're easy to protect with precious metal storage. You can securely store your precious metals without keeping them in your home, which provides an additional layer of asset protection.
• Diversification: You never want to put all your eggs in one basket when it comes to saving, so diversity is key. Even if you're already saving through other assets, adding precious metals to your portfolio can be a smart move. For example, if the value of one asset drops, your precious metals can continue to safeguard your savings and preserve your wealth.
• Hedge against inflation: Inflation is one of the biggest factors to consider when saving. Because the value of the dollar can fluctuate based on political and economic events, product prices can increase, and the money in your savings account may lose some of its value. If you have precious metals instead of cash, the intrinsic value of your precious metals can help to insulate you from inflation.
• Growth potential: Because precious metals are in limited supply and high demand, there's always an opportunity for growth. Precious metal prices are changing all the time, and you can benefit from those changing prices if you start saving at the right time.
• Tangible asset: Buying precious metals allows you to invest in real assets, whether in the form of jewelry or bars, rounds and coins that you can physically possess or place in an IRA.

What Are the Risks of Investing in Precious Metals?

While investing in precious metals offers a wide range of benefits, from portfolio diversification to a hedge against inflation, as with any financial decision, there are considerations to keep in mind. One of the primary risks centers around storage. When taking physical possession of precious metals and storing them at home, they can be subject to loss or theft if not stored properly. Or, if you place your metals in a safe deposit box or in a precious metals depository, as required by a precious metals IRA, you will be responsible for paying for storage and management fees. Additionally, if you purchase collectible precious metals, the IRS will tax them as collectibles at 28 percent, which is higher than the capital gains tax rate.²

Precious Metals Investing FAQs

Key Takeaways: How Do I Invest in Precious Metals?

Getting started with saving can seem overwhelming, but you don't have to dive into complex investments right away. Buying precious metals can be a good way to build your portfolio, whether buying precious metals for physical possession or for placement in a precious metals IRA. With Birch Gold Group, purchasing precious metals is as simple as choosing your metal and contacting our team. Check out our information kit or contact Birch Gold Group to learn how to buy precious metals and start saving today.

BGG - About the Author

About Peter Reagan

Peter Reagan has covered precious metals and the economy for Birch Gold Group for over 15 years. His articles have been featured in several leading publications, including Newsmax and Zerohedge. At Birch Gold Group, Peter leverages his deep market insights to help educate website visitors and customers on why they should consider diversifying their savings into gold and other precious metals, and how that process works. Due to this commitment to education, his content has become a trusted source of information throughout the industry.

BGG - About the Reviewer

About the reviewer Phillip Patrick

Phillip Patrick is a Precious Metals Specialist and spokesman for Birch Gold Group. Born in London, he earned a degree in politics and international relations from the University of Redding, and began his career as a wealth manager at Citigroup in London’s financial center. Since joining Birch Gold in 2012, Phillip has become a trusted voice on economic policy and precious metals, appearing as a guest on dozens of television and podcast platforms, including Newsmax, The Ben Shapiro Show, The Megyn Kelly Show, and Stephen K. Bannon’s War Room. In addition to his contributions on Birch Gold Group's blog, you can watch his interviews on Rumble and follow him on Gettr.

Sources

1. Statista. Gold reserves of largest gold holding countries worldwide as of 2023. https://www.statista.com/statistics/267998/countries-with-the-largest-gold-reserves/
2. Internal Revenue Service. Topic no. 409, Capital gains and losses. https://www.irs.gov/taxtopics/tc409