When building family wealth, you want to play it smart. Once you achieve a comfortable income stream, diversifying your investments can help you further define and finance additional goals, including college funds, estate planning, retirement, and second properties.
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Beyond stocks and bonds, diversifying your portfolio with alternative assets, such as gold and silver, can help you hedge against inflation, preserve your purchasing power, and protect your household’s savings. Precious metals are also safe-haven assets during times of economic uncertainty, a crucial consideration for families.
Here’s a detailed breakdown of the different types of gold and silver bullion, cash investments vs. precious metals, liquidity, market volatility, storage, and security.
Types of bullion
If you’re considering investing in silver or gold, familiarize yourself with the various types of bullion offered. Researching an industry-standard catalog, such as Pimbex, will shed further light on coins, bars, and current prices. For example, you can navigate to the gold coins section to learn about the following alternative assets:
- American gold coins (Buffalo and Eagle)
- Australian gold coins (Kangaroo)
- Austrian gold coins (Philharmonic)
- Canadian Gold Maple Leaf
For instance, if you navigate to the American gold eagle coin section, you’ll find listings ranging from the $400 range to the $4,000 range. You can also learn about the specifications that make these coins so valuable, from purity (karats) to the U.S. and Royal Canadian Mint.
Gold assets are also available in bars. They offer high-value densities for families who want to purchase larger quantities more efficiently.
The next asset class is silver.
Gold is significantly more valuable than silver, with about 75 ounces of silver equating to one ounce of gold. There are a few reasons for this, one being that gold is simply rarer than silver. However, investing in silver allows you to capitalize on its great industrial demand and growth potential.
Silver is also available in coins and bars from the same Mints.
Cash vs. gold and silver
Compare precious metal assets to traditional investments, such as cash, to find additional clarity for your investing strategy.
For instance, it’s generally recommended to devote just 5% to 15% of your portfolio to gold and silver. This lets you build an inflation hedge without slowing down the long-term growth of your portfolio.
Remember, cash offers immediate liquidity, which can be used for unexpected costs like sudden relocations, health emergencies, or structural damage to your home. While precious metals are still liquid, you must sell the bullion back to a gold or silver dealer to access liquidity. Fortunately, these assets can be converted easily into fiat currency should the need arise.
Market volatility also has an impact. For instance, while a $20 bill will always be $20 regardless of the market, volatility does affect purchasing power. So, inflation affects what you can actually buy with that same $20 bill.
Meanwhile, historical trends show that gold and silver values rise when the U.S. dollar loses buying power. During such volatility, gold and silver spot prices often fluctuate in response to market sentiment. That’s why they appear more volatile in the short term but more stable in the long term.
It’s also important to note that the face value of cash is equal to its spendable value. Gold and silver, on the other hand, always come with premiums. Minting costs, distribution, and dealer margins factor into premiums.
Asset storage
Suppose you inherited $20,000 from a relative. You may deposit this sum into a savings account to earn interest on the inheritance or perhaps invest a portion of it into a stable stock.
However, storing gold and silver requires a physical, secure safe. Gold is actually the easiest to physically store since it’s much denser than silver. A sizable chunk of family wealth can be stored in just one safe.
Precious metals aren’t just highly valuable; they also require strict humidity control and handling protocols. Many families choose to store their gold and silver in bank safe deposit boxes or professional depositories.
If you decide on home storage, absolutely invest in a heavy, bolted-down UL TL-30 rated safe. TL-30 means the safe can withstand a 30-minute burglary attempt. Consider upgrading to a TL-30X6 safe, which offers the same 30-minute protection but for all six sides of the home safe.
Keeping a home safe also requires a robust home security upgrade. Installing a smart home security system will allow you to check your safe location from your smartphone when you’re not at home.
Start building
Assess your current wealth-building strategy to see how gold or silver can benefit your family’s long-term wealth goal.
Start by researching the different types of bullion and price ranges. Compare gold and silver to cash investing to understand how to effectively use each asset class. Consider the best storage plan for your assets.
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