3 Things I Wish I Knew Before I Started Buying Gold and Silver

Starting my journey into gold and silver investing, or "stacking," as many in the industry refer to it, was like setting out on a lifelong treasure hunt. I enjoyed the thrill of pursuing deals and exchanging my hard-earned fiat for portable, hard assets. That feeling never went away.

But looking back, I can pinpoint early mistakes and misconceptions about precious metals investing, from navigating dealer premiums to managing an ever-increasing stack of metal. In today's discussion, we'll highlight three essential tips to arm buyers and sellers in their pursuit of gold and silver bullion.

Let’s get started!

The paper spot prices listed at the top of any online bullion dealer's website are the prices at which commercial gold and silver bars (400oz and 1000oz, respectively) enter the physical market. Beyond the paper spot price, dealer premiums are the extra costs for delivering retail bullion products, from minting to distribution. This concept eluded me during my initial purchases, leading to a rude awakening when I realized how much I was paying above the spot price. Premiums can vary significantly between products and dealers, and they can make a substantial difference in the cost of your holdings.

Guidance for New Investors: Shopping around and comparing premiums among various dealers is essential. You'll find that some products, like generic silver rounds and bars, carry lower premiums than sovereign coins. Buying in bulk can also reduce costs, as many dealers like PIMBEX offer discounts on larger purchases. Understanding these nuances can help you maximize your investment and avoid overpaying for metal along the way.

Liquidity refers to how easily you can convert your gold and silver into cash. This is a critical aspect of investing in precious metals, as not all bullion products are created equal in the eyes of the retail buyer. Some of my earliest purchases were into high-premium, low-mintage coins. While these modern numismatics were fun to collect, ultimately, they were less liquid than initially hoped. When the time came to sell, the smaller retail buying base meant lower bids from bullion dealers. eBay worked well for selling collectibles, but it was a high-effort endeavor.

Advice for Ensuring Liquidity: To maintain liquidity in your stack, opt for widely recognized bullion coins such as American Eagles or Canadian Maple Leafs. These coins are universally popular and easy to sell to anyone, anywhere. Also, confirm that your dealer will purchase your metal back. Here at PIMBEX, we're always buying!

One of the most unanticipated aspects of stacking silver was grappling with its bulk physicality and the space it demands. Silver bullion, while more accessible per ounce than gold, quickly grows into a substantial collection that challenges both your storage capacity and your lower back! As my stack grew, I faced the puzzle of securely storing this ever-increasing mass of metal. This is where gold made its entrance. The yellow metal’s compact size and higher value density meant that shifting some of my focus to gold alleviated the storage concerns without compromising purchasing power.

Navigating the Shift: For investors watching their silver holdings burgeon, it's prudent to consider the pivot to gold. This doesn't mean abandoning silver but rather balancing your portfolio to accommodate the practical aspects of storage and security. Investing in gold allows you to maintain, or even increase, your ounces of precious metals in a more manageable form, ensuring your investments remain both secure and scalable.