Investing 101 — How to Invest in Gold and Silver

During the past decade, speculators have made a killing on gold and silver. The
same cannot be said for stocks or any other asset class, for that matter. The
performance should put to bed critics claiming commodity prices have become the
next bubble ready to pop. The dynamics that resulted in gold and silver prices
increasing tenfold remain today. Nations printing money in hopes of propping up
local economies has done nothing more than to fuel inflation. The value of
currencies including King Dollar have been falling. Those declines help
solidify price gains in gold and silver. At the same time, there is a real fear
that modern capitalism as we know it is failing. While I don't believe in the
fear-mongering claim of an apocalypse or anarchy, there is some merit to the
idea that civilization deterioration increases the risk of chaos. There, too,
gold and silver will be more valuable as a safe haven for those looking to
protect assets during a time of crisis. With demand ensured, investors would be
wise to keep a portion of their portfolio in gold or silver. It is not enough to
simply horde jewelry or family heirlooms. Instead, determine a proper allocation
to these precious metals and acquire positions just as you would a stock or a
bond. While it is entirely possible for an individual to buy large quantities of
gold and silver, doing so is not very practical. Unless you really believe in
the doomsday scenario, it is not necessary to take physical delivery of your
purchases. You don't do so with stocks, so why should it be any different with
gold or silver? The single-best option for investors to gain exposure to gold
and silver is to utilize exchange-traded funds (ETFs) that do take physical
delivery of the underlying commodity. One of the more popular ETFs is the SPDR
Gold Shares (NYSE: GLD ). This fund has more than $72 billion in assets. It is
rock-solid, easily traded and reputably managed. Another option would be to buy
individual stocks of companies that mine gold and silver. These stocks track
closely to the actual price of gold or silver and can be cheaper than buying the
actual metal. Gold prices in particular have risen sharply. Gold mining stocks
have lagged behind those increases as investors take a wait-and-see approach to
whether those prices will stick. However you decide to obtain exposure, the key
is to have some exposure to these attractive precious metals.