How to Invest in Precious Metals: Physical vs ETFs, Stocks & Futures

Overview

Investors use gold and silver to diversify and hedge currency and market risk. As of November 2025, US policy rates remain elevated (Fed funds upper bound ~4.00%), which keeps demand for non-correlated assets in focus [1].

This guide compares the main ways to gain exposure—physical bullion, ETFs, mining stocks/funds, and futures—and when each fits different goals and constraints.

Physical Bullion (Coins & Bars)

What it is. Direct ownership of 0.999/0.9999 fine bars and widely recognized sovereign coins (e.g., Krugerrand, Maple Leaf, Eagle).

Pros

• No ongoing management fees; you own the asset outright.
• Sits outside brokerage/counterparty layers.
• Premiums on specific products can rise with scarcity (e.g., popular sovereign coins in tight markets).
• Broad dealer buyback and easier inheritance planning.

Cons

• Buy/sell spreads and shipping.
• Storage and insurance considerations for higher values.

Storage options (quick guide)

• Home safe: Immediate access; ensure high-grade safe + insurance rider.
• Bank safe-deposit box: Low cost; bank hours apply.
• Third-party depository: Segregated or allocated storage, audit trails; recurring fees.

Reporting note (US)
Businesses must file Form 8300 for cash payments > $10,000 [2][3]. When selling certain reportable bullion items back to a dealer, 1099-B information reporting can apply (with 24-hour aggregation rules) [4][10][11]. Keep documentation and ask your tax professional for advice.

Best for: 5–10+ year holders focused on wealth preservation and direct control.

Gold & Silver ETFs

What they are. Exchange-traded funds designed to mirror spot prices, typically backed by physical bars in vaults. Shares are created/redeemed by authorized participants; retail holders cannot redeem bars directly [5][6][7][8][9].

Pros

• High liquidity and tight spreads in brokerage accounts.
• Easy to rebalance and hold in tax-advantaged accounts (as rules permit).

Cons

• Expense ratios and no direct access to the metal.
• Market-hour trading; introduces intermediary/counterparty layers compared to holding coins/bars.

Best for: Tactical allocations or investors keeping everything inside a brokerage wrapper.

Mining Stocks & Mutual Funds

What they are. Equity exposure to miners and royalty/streaming companies.

Pros

• Potential upside leverage to bull markets; some pay dividends.

Cons

• Adds corporate/operational risk and equity-market beta; can decline even when spot rises.

Best for: Investors comfortable with equity volatility seeking potential upside beyond bullion’s price move.

Futures Contracts

What they are. Standardized contracts requiring margin; good for hedging and short-term speculation.

Risks

• Leverage, roll costs, and potential margin calls. Typically unsuitable for long-term retail investors.

Coins vs Bars (fast decision helper)

• Coins (Eagle, Maple, Krugerrand): Highest recognizability/liquidity; generally higher premiums.
• Bars (10 oz, 1 kg, 100 oz): Lower premium per ounce beyond certain sizes; confirm brand and assay trail.

How Much to Allocate?

Common guidance ranges 5–20% of investable assets depending on risk tolerance, liquidity needs, and time horizon. This is educational, not advice—speak with a qualified advisor for your situation.

In the San Francisco Bay Area?

If you prefer an in-person experience—sell gold, get transparent prices, or discuss allocations—visit our SF location or start on our Sell to Us page.

Contact us for a quick quote or to speak with an Account Executive.

FAQs

Are gold ETFs physically backed and audited?
Leading funds (e.g., GLD/IAU) publish holdings and are backed by bullion held with appointed custodians. Shares are created/redeemed by authorized participants; investors can’t swap shares for bars [5][6][7][8].

Do bullion purchases or sales trigger IRS forms?
Cash > $10,000 received in a trade or business triggers Form 8300 [2][3]. Certain dealer buybacks can trigger 1099-B reporting (24-hour aggregation applies) [4][10][11]. Keep records; consult a tax professional. IRS+1

What storage option is best for $5k vs $50k vs $250k?

• ~$5k: small bars/sovereign coins; quality home safe.
• ~$50k: mix of coins/bars; consider bank box or insured depository.
• ~$250k: depository with segregation/audit + insurance; maintain an inventory list.

Disclaimer

This article is for educational purposes only and is not financial, legal, or tax advice. Always consult a qualified professional for personalized guidance.

References

[1] Board of Governors of the Federal Reserve System. “Federal Reserve Issues FOMC Statement — October 29, 2025.” 2025. https://www.federalreserve.gov/newsevents/pressreleases/monetary20251029a.htm (accessed Nov 9, 2025).

[2] Internal Revenue Service (IRS). “Form 8300 and Reporting Cash Payments of Over $10,000.” Updated July 24, 2025. https://www.irs.gov/businesses/small-businesses-self-employed/form-8300-and-reporting-cash-payments-of-over-10000 (accessed Nov 9, 2025).

[3] Internal Revenue Service (IRS). “Instructions for Form 8300 (Rev. December 2023).” 2023. https://www.irs.gov/pub/irs-pdf/i8300.pdf (accessed Nov 9, 2025).

[4] Internal Revenue Service (IRS). “2025 Instructions for Form 1099-B.” 2025. https://www.irs.gov/pub/irs-pdf/i1099b.pdf (accessed Nov 9, 2025).

[5] SPDR® Gold Trust (GLD). “Prospectus.” State Street Global Advisors. https://www.ssga.com/library-content/pdfs/etf/us/SPDR_GOLD_TRUST_PROSPECTUS.pdf (accessed Nov 9, 2025).

[6] SPDR® Gold Shares. “GLD FAQs.” (PDF). https://www.spdrgoldshares.com/media/GLD/file/SPDR_GLD_FAQs.pdf (accessed Nov 9, 2025).

[7] iShares® Gold Trust (IAU). “Prospectus.” BlackRock. https://www.ishares.com/us/literature/prospectus/p-ishares-gold-trust-prospectus-12-31.pdf (accessed Nov 9, 2025).

[8] BlackRock iShares. “What Is an ETF? (Shares are not individually redeemable; APs handle creations/redemptions).” Updated Nov 15, 2024. https://www.ishares.com/us/investor-education/etf-education/what-is-an-etf (accessed Nov 9, 2025).

[9] SPDR® Gold MiniShares® Trust (GLDM). “Prospectus.” State Street Global Advisors. https://www.spdrgoldshares.com/media/GLD/file/GLDM/SPDR-GoldMiniShares-prospectus-march2020.pdf (accessed Nov 9, 2025).

[10] National Coin & Bullion Association (NCBA). “NCBA Gains IRS Clarification on Reporting Requirements for Certain Precious-Metals Transactions.” Mar 26, 2024. https://www.ncbassoc.org/article_content.asp?article=211&edition=3&section=8 (accessed Nov 9, 2025).

[11] National Coin & Bullion Association (NCBA). “Understanding Reportable Items and Approved Brands for 1099-B Reporting.” 2024. https://www.floridagoldexchange.com/build/assets/ncba-understanding-reportable-items-f6cd9eae.pdf (accessed Nov 9, 2025).