how much money you want to save or invest, what your time frame of investment is, risk tolerance, what your investment goals are, etc.
If you are saving a little money and want to buy hard assets, silver may be a better deal at the moment. If you have only $1000 or so, I would suggest buying 40 ounces of silver rather than a fraction of an ounce of gold. Having a physical asset in your possession is a good insurance policy, but most people say that should only be a fraction of your savings. If you have $100,000 to invest, that is a different story.
Mining stocks have been beaten up the last two years, but they can go down a lot more. No one knows for sure. There are a number of gold and silver mining companies paying 2-3% dividends right now (AUY, AEM, GG, NEM, and others) and selling for a lot less than they did 2 years ago. If you want an income stream and are willing to take a risk, I think mining stocks are a bargain right now.
There are also precious metals mutual funds (like TGLDX) that own physical metal and mining shares. The mutual funds are a good way to diversify when you have a small amount to invest. The drawback is you have to pay a fee of ~1-2% to the managers of the fund. Most mutual funds also have a minimum to buy in. Sometimes that minimum first purchase is only on the order of $1000, sometimes quite a bit more.
The ETFs (like GLD) are paper claims on gold that cannot actually be converted to physical gold unless you own millions of dollars worth of shares. Sprott has some ETFs that are more tightly linked to physical metal. However, I personally think ETFs are just a trading/gambling vehicle. They don't pay dividends and I personally wouldn't buy them.
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