The Beginner’s Guide to Investing in Precious Metals

Investing in precious metals is a smart way to diversify your portfolio and protect your wealth against economic downturns. As a beginner, your first step on the journey is understanding the types of metals available and the different ways to invest. Buying gold or silver, opening self-directed IRAs, and investing in Exchange-Traded Funds (ETFs) and stocks all have unique advantages and potential downsides. 

In this guide, we’ll help you explore investing in precious metals so that you can make an informed decision based on your financial goals. 

Types of precious metals for investment

Precious metals offer a unique way to diversify your portfolio. Gold and silver are popular choices because they are seen as a stable and accessible way to store value. Platinum and palladium are rarer metals with industrial applications. Understanding the qualities of each metal will help you choose the best investment. 

Metal	What to know
Gold	Stable, highly liquid, inflation hedge; Storage fees may apply
Silver	Affordable entry; Used in electronics and solar
Platinum	Automotive applications; Growth potential: Rare
Palladium	Automotive applications; Rare

Gold 

Gold is the most recognizable precious metal because of its cultural and historical value. Investors often turn to gold as a long-term hedge against inflation or market volatility. Gold is highly liquid, which means it’s easy to sell—via digital investments, such as exchange-traded funds (ETFs) and gold mining stocks, in particular.

Owning physical gold, including bars and coins, comes with the added costs of secure storage fees and insurance. For more details on how to buy gold, see our beginner’s guide.

Silver

Silver is an affordable way to begin investing in precious metals. As a hedge to inflation, it’s similar to gold, and it has industrial applications in electronics and solar energy. You can buy silver in the form of bars, coins, ETFs, and stocks. Our guide to buying silver covers the pros and cons of investing in silver and takes a deeper dive. 

Keep in mind that, like gold, silver can have storage costs, depending how you decide to own it.

Kyle Ryan, CFP®

Platinum

Platinum is a rare metal primarily used in the automotive industry as a key component in catalytic converters. Its industrial demand and scarcity make it a valuable asset. You can buy physical platinum or invest through ETFs and mining stocks. 

Palladium

Palladium is another rare metal used in the automotive industry in catalytic converters and exhaust systems. It’s more expensive than platinum and has gained popularity over the years. You can buy physical palladium, ETFs, or stocks in companies that produce or use palladium. 

5 methods for investing in precious metals

Options for investing in precious metals include buying physical metals, investing through individual retirement accounts (IRAs), purchasing stocks in mining companies, or trading futures. You can also purchase precious metal certificates that represent a certain amount of bullion owned by the issuer of the certificate. 

Finding the best method of investing depends on your risk tolerance and ability to store precious metals. 

Investment method	Best for
Physical metals	Investors who want tangible assets
IRA	Retirement-focused investors
ETFs and stocks	Exposure without physical ownership and a liquid, easy-to-sell investment
Futures and options	Expert investors comfortable with risk
Certificates	Investors who want ownership without the hassle of storage

Physical metals 

Physical metals include bars, coins, and other bullion that you own. This method of investing comes with the added costs of storage fees and insurance. Physical metals are best for investors who want tangible assets. 

IRA

Precious metal IRAs let you hold metals in a self-directed retirement account and offer tax advantages. Eligible metals include gold, silver, platinum, and palladium, but there are certain restrictions on purity. This is the best option for retirement planners who want to hold long-term and benefit from tax-free savings or deferred taxes. 

If you have a traditional IRA, you will pay tax on that growth. A Roth IRA will have tax-free growth if certain criteria is met.

Kyle Ryan, CFP®

ETFs or stocks

ETFs let you buy shares in funds that track the price of specific precious metals without the added cost of holding those metals physically. This investment is highly liquid and has low maintenance fees, so it’s easy for beginners to get started. However, you do not personally own the metals in the funds, but you own the companies. 

Investing in precious metals mining stocks can give you indirect exposure to the metals market without holding the physical asset. This approach offers growth potential because the stocks benefit from rising metal prices. However, keep in mind that the stock price is tied to the mining company’s performance. 

Futures and options

Futures and options are contracts that let you speculate on the prices of metal without owning it. The simplest way to describe them is that you agree to buy or sell a metal at a set price on a future date. This method of investing is high-risk and only suitable for experienced investors. 

Certificates

Precious metal certificates are documents issued by financial institutions that confirm your ownership of a specific quantity of precious metals. This is a convenient way to trade large amounts of precious metals because you don’t need to physically transfer the bullion. The United States used gold certificates as a form of currency until 1933. 

Pros and cons of investing in precious metals

Here is a closer look at the main pros and cons to consider before investing in gold, silver, platinum, and palladium.

Pros

• Hedge against inflation

  Precious metals, especially gold, historically hold their value when other currencies decline and can be used as a long-term hedge against inflation and economic downturns.

• Diversity

  Metals are not directly tied to the stock market so they can balance out your portfolio and reduce your risk. 

• Value

  Precious metals have intrinsic and tangible value. Gold, silver, platinum, and palladium have practical applications in the electronics and automotive industries. 

• Liquidity

  Precious metals are easy to buy and sell. Depending on how you own it, you can often quickly convert metals to cash because of the well-established global precious metals market. 

Cons

• Secure storage and fee 

  Physical metals require secure storage, which involves added fees for vaults and insurance. 

• Market fluctuations

  Precious metals are a stable long-term investment, but they can experience significant price swings in the short term. 

• No passive income

  Unlike stocks, precious metals do not generate interest, dividends, or passive income. You must rely on the price appreciation alone. 

• Premiums

  Buying precious metals from dealers almost always involves a premium attached to the spot price. These costs reduce potential returns, and you might need to pay a commission on the sale.

Precious metals have their place in most people’s investment portfolios. This, as always, depends on the risk tolerance of the individual and the time horizon of their investment account. 

Historically, the U.S. stock market has outperformed the price appreciation of precious metals, so a risk-averse investor with plenty of years before they need to touch their money may seek more traditional investments versus an inflation hedge, such as a precious metal.

Generally speaking, we don’t recommend that an investor has more than 10% of their investments allocated to in precious metals.

Kyle Ryan, CFP®

How to get started with precious metals investing

Now that you’re familiar with the types of metals and investment forms available, you’re ready to take the first steps toward precious metals investing. One of the most important choices you’ll make is selecting a reputable dealer or IRA company. 

Look for companies with transparent pricing, strong customer service, and a solid track record of secure, reliable transactions. Consider companies that offer educational resources, detailed market insights, and easy access to buy, sell, or store your investments.

The most common mistake I’ve seen beginners make is not paying attention to maintenance costs and fees. These can and will eat away at your returns.

Also, understand that investing in a metal miner is not the same as investing in something that follows the spot price of a precious metal.

Kyle Ryan, CFP®

To help you get started, we’ve listed three of our top-rated gold IRA providers below. Each of these companies offers unique advantages, so you can find the support that aligns best with your investment goals.

American Hartford Gold

Best Overall

4.9 _/5

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Why we picked it

American Hartford Gold is a top choice for beginners due to its commitment to making precious metals investing accessible and understandable. With extensive educational resources and a straightforward pricing structure, it’s easy for newcomers to feel confident in their investment choices. 

American Hartford Gold also offers a price match guarantee, which ensures you’re getting great value. We recommend this company for its beginner-friendly approach and transparent guidance, making it easier to enter the precious metals market with confidence.

• Price match guarantee
• Extensive educational resources
• High customer satisfaction rating

• Limited international options
• Minimum investment requirements may apply

Priority Gold

Best Price Charts

4.6 _/5

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Why we picked it

Priority Gold is an excellent choice for beginners who want clear, up-to-date pricing information as they explore the market. The company’s real-time price charts provide a clear picture of market trends, which can be useful for those new to precious metals. 

With competitive pricing and a streamlined platform, Priority Gold helps beginners make informed choices in a user-friendly setting. We recommend this company for its easy-to-use tools and resources, which give beginners a solid foundation as they start investing in precious metals.

• Real-time price tracking tools
• Competitive pricing
• Flexible investment options

• Limited physical locations
• Fewer product options than some competitors

Patriot Gold Group

Best for Quick Setup

4.4 _/5

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Why we picked it

Patriot Gold Group is well-suited for beginners because of its investment support. It offers an informational guide you can request either online or via a phone call. If you submit a request online, a representative will call you to confirm your address and answer any questions you may have. 

Patriot also offers waiving fees for life when your gold IRA portfolio is valued at $100,000 or more.

• 5-star customer ratings
• Free gold IRA investor guide
• 24-hour account setup

• Doesn’t offer platinum or palladium
• Difficult to get info without submitting contact details
• Can’t opt out of marketing materials

How we rated our recommended precious metals investment companies

LendEDU evaluates gold dealers to help readers find the best precious metal IRAs and inventories for direct purchase. Our latest analysis reviewed 550 data points from 25 dealers, with 22 data points collected from each. This information is gathered from company websites, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

Recap of our recommended precious metals investment companies