How to buy silver and gold on TD Ameritrade. Beginner investing in gold bars, coins, stocks, ETF's, and mutual funds on Etrade.

How to Invest in Gold and Silver on TD Ameritrade

Looking back through human history, gold and silver are perhaps the oldest continually accepted forms of money or storing value. They are commodities that have withstood the tests of time for centuries, while during this same time hundreds of fiat currencies have come and gone.

Adding gold and silver to your portfolio is a great way to add diversification and hedge your portfolio against inflation, and the good news is that there are ways to get this exposure without actually storing physical gold in your home. In this article we will look at the different ways you can buy gold and silver both in your TD Ameritrade account and in real life.

Why Invest in Gold and Silver?

Two of the primary reasons investors add gold and silver to their portfolios is because it is a hedge against the inevitable inflation that governments create in fiat/paper currencies and it generally performs well during global crises, such as the financial crisis of 2008. The supply of gold that is readily available on Earth is limited, and more of it cannot be produced – two qualities that make it a desirable choice to store value in a world full of paper currencies.

Gold and Silver ETFs on TD Ameritrade

The good news is you can buy gold and silver through ETFs, allowing you to avoid the obvious risks (i.e. theft) that would come with storing the physical commodities in your home. The two most popular and liquid ETFs that track the spot prices of gold and silver bullion are SPDR® Gold Shares (GLD) and iShares Silver Trust (SLV) respectively. GLD is the largest of the two with more than $30billion in AUM and an expense ratio of 0.40%, while SLV has $5billion in AUM and a 0.50% expense ratio.


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The ETFs hold physical gold and silver to back the shares they issue, however investors should be aware that they cannot actually redeem their shares for the physical commodities unless they are a significant holder (and even then the prospectus allows the ETF manager to satisfy the redemption in cash if they choose). So while the ETFs are a great way to gain exposure to the precious metals and their prices track the spot prices very closely, GLD and SLV shares technically do not give you legal claim to any physical gold or silver. This is why some investors choose to hold physical gold and silver, which we’ll get into later.

Gold and Silver Mutual Funds on TD Ameritrade

In addition to ETFs, TD Ameritrade also offers several mutual funds that provide exposure to both gold and silver as well as the companies that mine the precious metals. One of the largest gold mutual funds they offer is the Fidelity Select Advisor Gold Fund (FGDAX), which has $1billion in AUM and an expense ratio of 1.18%, which is a bit on the higher side. This fund focuses on capital appreciation by investing mostly in companies that are engaged in gold-related activities (i.e. gold-mining), but also invests up to 25% of its assets directly in physical gold and other precious metals.


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You may be wondering whether you should invest in a gold ETF, like GLD, that tracks the spot price of the metal or a mutual fund, like FGDAX, which invests mostly in gold-miners. Generally speaking, the price of gold-mining stocks and gold itself move the same directionally, but miners are more volatile (i.e. they outperform the yellow rock when it goes up but underperform it when it goes down). This is because the mining companies have high fixed costs, which turns it into a leveraged investment relative to the commodity itself.

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Investing in Physical Commodities – Gold/Silver Coins and Bars

For those who don’t trust owning “paper gold and silver” via ETFs or mutual funds, there are easy ways to purchase the physical commodities, most commonly in the form of coins and bars, however you obviously cannot do this through TD Ameritrade. One such website where you can purchase these is silvergoldbull.com, which we will discuss next.

Silvergoldbull.com Overview

Silvergoldbull.com offers easy access to physical silver and gold in various forms, including bars, coins, rounds, wafers, and collectibles. They offer free, insured shipping on orders over $99, and alternatively they also offer to store your precious metals for you for a fee if you’d rather not take delivery right away.


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Coins vs. Bars

An important thing to be aware of when purchasing physical gold and silver is to know exactly what you want to avoid paying more than you need to. For example, there are many different 1 oz gold coins to choose from, some of which are older or rarer, and are therefore considered collectibles. These will cost you considerably more than paying for a random recently minted gold coin, such as the 1oz American Eagle Gold Coin. If you aren’t a coin collector and are strictly looking to own an ounce of gold in place of buying a gold ETF you shouldn’t pay extra for a collector’s coin. This takes us to our next point, what should you pay for physical gold?

The Price of Physical Gold and Silver

You may be watching the spot price of gold real-time and be wondering why an ounce of physical gold on silvergoldbull.com is selling for a 3% premium over the spot price – why are they charging more? In reality, the transport, storage, and secure delivery of physical gold and silver is not free, and on top of that silvergoldbull.com needs to make a profit as well to stay in business. This is why whenever you buy physical commodities, you will always find the prices are 2-3% above the actual spot rate, with discounts being offered for larger purchases. But you should never have to pay more than 3% over spot price as a general rule, unless of course you’re buying a collectible.

Conclusion

Whether you’d prefer to invest in gold and silver more easily via ETFs or mutual funds in your TD Ameritrade account or you want to be able to hold the yellow and silver metal in your hand, precious metals are a great way to diversify your portfolio and protect your wealth from inflation and global crises.

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