Getting Started in Bullion Investments?

Success in investing in precious metals (or anything else) will be more likely to result if your investment strategy is sound. If you are considering getting started, we offer a few suggestions.

Is Bullion Appropriate?
First ask if bullion investing is appropriate for you. In considering precious metals investment, read references and trade publications. Consult a registered financial advisor who you can trust to help you. The thoroughness of your due diligence will pay dividends.

For What Portion?
If precious metals are a good investment choice for you, then determine the portion of your investment capital you will commit to bullion products. 5%? 20%? Should you commit to one metal, or diversify? Do you have some risky or underperforming assets that should be sold for precious metal? Will you purchase gradually in small amounts with cash flow?

Timing?
Next, determine your purchase timing. Frequent and smaller purchases suggest a different product than infrequent and larger purchases. Maybe you plan to time purchases with market dips. Doing so will require what analysis tools? If this is your strategy, make sure your analysis is realistic and flexible. You could find yourself waiting for a product to dip to a point to which it might not reach.

Reputable Dealer.
Buy from a reputable dealer. This is especially important if you’re purchasing over the internet. Look for a well-established dealer with history and stability in the business. Does the business have a real brick and mortar location or just a website with a telephone number? The merchant should be able to tell you the price of your items, whether they are in stock, and the estimated ship date. Will the merchant keep you informed via email or otherwise of every stage of the purchase?

Too Good to Be True?
Be wary of extreme bargains. Deals that are too good to be true usually are. Highly worn coins, or unusual weights and purities can be difficult to resell. Standard products have a slight premium for a reason. Strive to buy at a fair price, not the absolute lowest price. While you may find a great deal at a neighbor’s garage sale, accumulating a precious metals portfolio in this way is rarely sound strategy. Also, delaying your purchase to save some small change may leave you empty handed when big moves occur in the metals.

How much to commit?
Don’t commit all your funds at once. The market could well move against you, and if all of your capital is committed, you have lost money. Leave some cash to pick up a bargain if an unexpected fall in price occurs.

A Plan for Selling
Finally, a sales plan should be a part of your stragegy to meet your overall investment needs. Will you accumulate until the bullion you hold hits a certain price, and then liquidate all? Will you follow a time honored method of selling some on strength and buying on weakness to take incremental profits? Will you sell a major portion for a new large cash need such as a new business or to buy a home? Investor interest often seems to rise dramatically when prices have already risen dramatically, which may not be a good time to buy, but it may be a good time to sell. If you develop a solid plan, you will be more likely to make rational investment decisions, and not let your emotions rule.