Investors looking for a way to protect their savings with an asset that works as both a hedge against inflation and is not exposed to the same risks as the stock market should look toward gold and silver bullion. If you aren’t already investing in bullion, this is the why and how of getting started.

Getting Started with Bullion: Why You Should Diversify Your Portfolio

When you start saving and investing, you’re likely putting your money into things like mutual funds, stocks, Exchange-Traded Funds, bonds, or term deposits. These investments range from low to high risk, but they all tend to be the first financial products investors buy or that financial advisors will recommend.

This is a great way to start a portfolio, and products like mutual funds and term deposits are ideal for long-term growth, but they are exposed to risks like inflation, recessions, and stock market crashes. Portfolios like these can quickly lose money, or the returns can be outpaced by high inflation, even if they have a positive long-term outlook.

That’s where alternative assets like bullion come into play. Gold and silver are often seen as safe haven assets thanks to their resilience to inflation. When investors get worried about stock market performance or high inflation eating up cash reserves, many diversify their portfolios by including gold and silver. This way, at least part of their portfolio enjoys the upside of recessions and tougher economic times, partially offsetting losses in other areas.

How to Start Investing in Gold and Silver

If the idea of a safe haven against inflation and recessions sounds like something you want to include in your portfolio, you’ll need to know how to get started.

There are several ways you can introduce bullion to your portfolio:

  • Physical bullion
  • Gold ETFs
  • Mining stocks

When you buy physical bullion, you go directly to professional bullion dealers and purchase investment-grade bars or coins. These investment products are usually 99.9% or higher pure gold or silver, and they are best stored in a safe or safety deposit box.

Gold Exchange-Traded Funds are a way of indirectly gaining exposure to bullion markets. You do not own any of the bullion yourself. Instead, you own shares in a fund that buys and sells bullion itself. This bullion usually remains in vaults, and you pay a management fee to the fund.

Mining stocks are an even less direct way of getting into the bullion market. Gold and silver prices are not the only factors that affect mining stocks, as they are also impacted by management practices and expenses.

Why Buying Physical Bullion Is a Safe Bet

Buying physical bullion is many investors’ preferred method of investing because it eliminates unnecessary risks and provides direct ownership. You don’t need to worry about mismanagement, fraud, or concerns about the misuse of “paper gold.” There are some concerns that the volume of gold traded on paper far exceeds real, physical gold by a massive ratio. The concern is that if everyone who owns paper gold, such as gold futures, expected delivery instead of trading their position, there would not be enough real gold to satisfy all of those orders.

Bullion can play a useful role in your portfolio by providing a sense of financial security. Start investing in bullion to diversify your assets.

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