Investing in Gold & Silver For Dummies

Investing in Gold & Silver For Dummies

by Paul Mladjenovic

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Overview

Diversify your portfolio with gold and silver

Investing and trading in gold and silver is always a sound idea—and that goes double in a time of unusual market fluctuation. As people look for safe places to diversify their investment risk, you’ll likely see the value of your investment go up where other stocks are vulnerable. Gold and silver saw increases in value of 16% and 15% respectively in 2019—putting them among the top ten most desirable commodities out there—and are projected to experience even more of a bear market as the dollar wobbles in an uncertain post-COVID world. This year, 2020, gold and silver are set up to have their best year of price appreciation over the past 40+ years.

Written in an easy-to-follow, no-jargon style by CFP and bestselling author, Paul Mladjenovic, Investing in Gold & Silver For Dummies explains the different complex processes and vehicles for buying gold and silver. You’ll find out the best ways to add these to your portfolio, how to balance risk and reward, and how to adapt time-tested investing plans and strategies to your goals.

  • Identify your goals and form a plan
  • Buy gold and silver safely to diversify your portfolio
  • Use ETFs and options to profit from market ups and downs
  • Understand when a gold and silver investment is legitimate
  • Use technical analysis to time your market entries

Whatever your current familiarity with gold and silver, this book gives you the extra expert knowledge you need navigate your gold and silver investment portfolio safely through a bear or bull market.



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Product Details

ISBN-13: 9781119723998
Publisher: Wiley
Publication date: 12/03/2020
Series: For Dummies Books
Pages: 336
Sales rank: 213,645
Product dimensions: 7.30(w) x 9.10(h) x 0.80(d)

About the Author

Paul Mladjenovic is a renowned certified financial planner and investing consultant. He has authored six editions of the bestselling Stock Investing For Dummies and is frequently interviewed by media outlets including MarketWatch, Kitco, OANN, and more.

Table of Contents

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 2

Beyond the Book 3

Where to Go from Here 3

Part 1: Getting Started with Gold and Silver 5

Chapter 1: Exploring the World of Gold and Silver 7

Considering Gold and Silver for Your Situation 8

Assessing the world’s financial issues 9

Knowing how gold and silver can help you 9

Taking Action Before You Invest in Gold and Silver 10

Reviewing your portfolio 10

Boosting your cash position 11

Using your talents in your spare time 11

Doing your research on gold and silver 11

Chapter 2: Understanding Gold and Silver’s Greatest Benefit 13

Looking at Counterparty Risk in Today’s Investments 14

Stocks 15

Bonds 15

ETFs and mutual funds 16

Cash and bank investments 17

Real estate 18

Futures and options 18

Bitcoin and other cryptocurrencies 18

Knowing That Gold and Silver Have Risks, Too 19

Chapter 3: Adding Gold and Silver to Your Portfolio Mix 21

Defining Saving, Investing, Trading, and Speculating 22

Saving 22

Investing 22

Trading 23

Speculating 23

Building Your Financial Profile 24

For the conservative investor 24

For the growth investor 24

For the speculator 25

For the trader 25

Making Other Portfolio Considerations 26

Deciding on a percentage to put in metals 26

Choosing gold, silver, or both 27

Investing for income 27

Chapter 4: Recognizing the Risks 29

Exploring Different Kinds of Risks 31

Physical risks 31

Market risks 31

Futures exchange risks 32

Political risks 33

The risk of fraud 34

Minimizing Your Risk 35

Gaining knowledge 35

Being disciplined 36

Having patience 36

Using diversification 37

Keeping some risk management tools in your arsenal 38

Weighing Risk against Return with the 10 Percent Rule 39

Part 2: Spanning the Gold and Silver Landscape 41

Chapter 5: Investing in Gold 43

Comparing Gold to Other Investment Assets 44

Gold versus the financial world in general 45

Gold versus stocks versus currencies 46

Understanding the Gold Market 47

Gold demand 47

Gold supply 49

Going Over Gold’s Recent Bull and Bear Markets 49

The 1970s bull market 50

The 1980s bear market 50

The 1990s range-bound market 50

The bull and bear markets of 2000–2008 51

The bull market and bear market of 2008–2018 51

Making the Case for Gold Today 52

Chapter 6: Surveying Silver 55

Comparing Silver and Gold 56

Silver’s similarities to gold 56

Silver’s unique qualities 56

Digging into the Silver Market 57

Silver demand 58

Silver supply 59

Future drivers of silver 61

Starting with Silver’s Modern History in the 1970s 61

Picking Apart Silver’s Performance during 2000–2020 62

The first silver bull market (2000–2008) 63

The bull market of 2009–2011 and the bear market of 2011–2018 63

Silver versus the financial world in 2020 and beyond 64

Resources for Informed Silver Investors 66

Chapter 7: Making the Most of Mining Stocks 69

Examining the Essentials of Stock Investing 70

A profitable company 71

A growing industry 72

A healthy balance sheet 73

Knowing What to Look for When You Evaluate Mining Stocks 74

Value that isn’t cheaper than dirt 74

Management that you can dig 75

Politics: Not in my backyard 75

Distinguishing Different Types of Mining Stocks 76

The majors 77

Midtier mining companies 77

Junior miners, eureka! Exploratory companies 78

Considering the Risks of Mining Stocks 78

Boosting Your Returns 79

Generating income 79

Leveraging with warrants 80

Checking out mining stock indexes 82

Spotlighting the Pros 83

Rick Rule 83

Doug Casey 84

Chapter 8: Examining Mutual Funds and ETFs 85

Choosing Mutual Funds 86

The advantages of mutual funds 86

The downside of mutual funds 89

Keys to success with mutual funds 92

The prospectus: Netting it out 93

Mutual fund resources 94

Selecting Exchange-Traded Funds 94

The pros and cons of ETFs 95

The world of precious metals ETFs 96

Other ETFs for the metals-minded 97

ETF resources 98

Part 3: Looking at Other Gold and Silver Investing Vehicles 101

Chapter 9: Going Direct: Buying Bullion 103

Weighty Matters: Troy Ounces 103

Making the Case for Physical Ownership 104

What could go wrong with paper assets? 105

Bullion versus numismatics 106

The risks of owning physical metals 107

Going for Gold Physical Bullion 108

American Eagle Gold Bullion Coins 108

The American Buffalo Gold Bullion Coin 109

The Krugerrand 110

The Canadian Maple Leaf 110

Other gold bullion 111

Seeking Out Silver Physical Bullion 112

American Eagle Silver Bullion Coins 112

One-ounce rounds 113

Junk silver bags 113

The $1,000 bag of silver dollars 114

The 40 percent silver bag 114

Silver bars and ingots 115

So what kind of silver is best? 116

Gold and Silver Commemorative Coins 116

Bullion Costs, Fees, Dealers, and Resources 117

Chapter 10: Numismatic Coins and Collectibles 119

Understanding the Basics of Numismatic Coins 120

Aiming for profitable coin investing 120

Making the grade 121

Checking out information sources 122

Considering Collectible Coins 123

Gold coins 123

Silver coins 124

Other coins 125

A special category: Commemoratives 126

Exploring Coin Organizations and Services 126

Information sharing 126

Grading services 127

Selling Your Coins 128

Potential buyers 128

Pricing information 130

Chapter 11: Leveraged and Inverse ETFs 133

Feeling Bullish: Leveraged ETFs 133

Discovering what makes an ETF leveraged 134

Some advantages of leveraged ETFs versus futures and options 136

Checking out a real-life example of a gold and silver leveraged ETF 136

Feeling Bearish: Inverse ETFs and Inverse Leveraged ETFs 139

Using Leveraged and Inverse ETFs during the Market’s Ups and Downs 140

Bullish moves 141

Bearish moves 141

Other considerations 142

Looking at Resources for Leveraged and Inverse ETFs 142

Chapter 12: Focusing on Futures 145

Back to the Futures 145

How the futures market works 147

What can be traded as a futures contract 148

The Players in the World of Futures 149

The U.S exchanges 149

The international futures exchanges 150

Speculators 150

Hedgers 150

Regulators 151

The Fundamentals of Futures Contracts 152

A specified size 153

Specified quality 153

Specified prices 153

A specified delivery date 154

Metals Futures Contracts 154

Precious metals contracts 155

Mini-futures contracts 156

Pass the margin 156

Leverage: The double-edged sword 158

Basic Futures Trading Strategies 158

Basic strategy #1: Going long 159

Basic strategy #2: Going short 159

Basic strategy #3: Spreads 160

Using Fundamental and Technical Analysis with Futures 162

Futures versus Options on Futures 165

Futures Resources 166

Chapter 13: Considering Options 167

Discovering How Options Work 168

The call option 168

The put option 172

Placing Orders for Options 174

Options: Offering Something for Everyone 174

For those seeking gains 175

Income strategy #1: Writing covered calls 175

Income strategy #2: Writing puts 176

Minimizing Risks with Options 177

Trying Some Profitable Combinations 178

The zero-cost collar 178

The straddle 179

Checking Out Options in the World of Precious Metals 180

Options on mining stocks 180

An option with no expiration? 181

Options on ETFs and indexes 182

Options on futures 182

Following Golden Rules for Options Success 183

Consulting Options Resources 185

Part 4: Digging into Gold and Silver Investing Strategies 187

Chapter 14: Trying Out Trading Approaches 189

Like a Scout: Being Prepared 190

Be a voracious reader 190

Have your plan 190

Decide your market 191

Practice with simulated trading 192

Picking Out Your Vehicle 192

Selecting Your Trading Strategy 193

Choosing your market outlook 194

Stock trading coupled with options 194

Futures trading coupled with options 195

Trading the Gold-to-Silver Ratio (GSR) 196

Getting a little background on the GSR 197

Investing with the GSR 198

Trading with the GSR 198

Chapter 15: Using Technical Analysis 201

Defining Technical Analysis 202

Comparing Technical Analysis versus Fundamental Analysis 202

The guts of technical analysis 203

How about both? 204

The tools of the trade 205

Tracking the Trend 205

Trend lengths 207

Channels 207

Resistance and support 208

Checking Out Charts 209

Line charts 209

Bar charts 210

Candlestick charts 210

Point and figure charts 210

Picking Apart Chart Patterns 210

Head and shoulders 211

Reverse head and shoulders 211

Cup and handle 211

Double tops and bottoms 212

Triangles 212

Flags and pennants 212

Wedges 213

Gaps 213

Assessing Moving Averages 213

Simple moving averages (SMA) 213

Other averages 215

Investigating Indicators 215

Oscillators 215

The relative strength index (RSI) 215

Moving average convergence/divergence (MACD) 216

Crossovers and divergence 216

Bollinger bands 217

Focusing on the Short Term versus the Long Term 217

Resources for Technical Analysis 218

Chapter 16: Using Dealers and Brokers 219

Starting with Some General Points on Dealers and Brokers 220

Working with Gold and Silver Dealers 221

Sticking to major bullion coins 221

Investigating a dealer’s reputation and reviews 222

Getting at least three price quotes 222

Understanding ancillary charges 222

Deciding whether to get physical metals online or visit a local dealer 222

Picking apart a buy back policy 223

Getting the Scoop on Stock Brokerage Accounts 223

Beginning with types of stockbrokers 224

Assessing account types 224

Opening a stock brokerage account 225

Distinguishing Types of Orders 226

Stock brokerage services 226

Margin in a stock brokerage account 228

Introducing Types of Futures Brokers 230

Selecting a Futures Broker 231

Dealing with Futures Accounts 233

Seeing how margin works in a futures account 233

Watching out for problems in your futures account 234

Opening a futures account 235

Checking out futures account commissions and fees 236

Making futures orders 237

Considering managed futures accounts 240

Chapter 17: Tax and Retirement Considerations 243

Assessing Taxable Activity in Different Accounts 244

Regular investment accounts 244

Individual retirement accounts 246

Understanding Capital Gains and Losses 246

Looking at Tax-Deductible Activity 247

Surveying Special Tax Considerations 248

Gold and silver as collectibles 248

Tax rules for traders 249

Tax Resources to Keep You Up-to-Date 250

The IRS (of course!) 250

Helpful tax websites 251

An ounce of prevention 251

Adding Physical Precious Metals to an IRA 252

Precious metals allowed for IRAs 252

Companies where you can establish an account 253

Part 5: The Part of Tens 255

Chapter 18: Ten Reasons to Have Gold and Silver 257

Gold and Silver Provide Diversification 258

Gold and Silver Allow for Privacy 258

Gold and Silver Are Portable Wealth 259

Gold and Silver Ease Retirement Concerns 259

Gold Is a Safe Haven Asset 260

The Value of Gold and Silver Is Never Zero 260

Gold Retains Its Value in Bear Markets 261

Gold and Silver Have Enduring Demand 261

Gold and Silver Make Good Inflation Hedges 262

Gold Guards against Financial Bubbles 263

Chapter 19: Ten Ways to Add Gold and Silver to Your Portfolio 265

Major Gold and Silver Stocks 266

Junior Gold and Silver Stocks 266

Mutual Funds 266

Physical Metal ETFs 267

Bullion Coins 267

Numismatic Coins 268

Leveraged ETFs 268

Junk Silver 268

Gold and Silver Cryptocurrencies 269

Buying through Goldmoney and OWNx 270

Chapter 20: Ten (Or So) Tips for Gold and Silver Speculators and Traders 271

Focus on a Specialty 272

Do Research and More Research 272

Be a Contrarian 273

Limit Your Grubstake 273

Stagger Your Entry 273

Use the Right Speculative Vehicles 274

Have Multiple Positions 275

Use Technical Indicators 275

Do Some Hedging 275

Take a Profit 276

Use Brokerage Orders 276

Part 6: Appendixes 277

Appendix A: Resources For Gold and Silver Investors 279

Appendix B: Gold and Silver Investments 293

Index 299

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