Despite the convenience of Mint.com for tracking personal finances, it’s not flexible and in-depth for my needs. I’ve stuck with Quicken as a desktop program for many years. It’s unlikely I’ll move my data to the “cloud” until Mint.com or a similar service provides all the functions included in Quicken.
Even the desktop version of Quicken isn’t as complete as I’d like. While it is the best overall software for tracking investments, there are a few areas where it still falls short of the ideal tracker. There is no way to track bullion investments. With silver and gold spot prices hitting highs recently and volatility in the dollar, more people are turning to precious metals to stabilize their wealth and protect against inflation.
I don’t think now is a great time to invest in gold or silver — the best time would have been when the values were at their lows. Nevertheless, holding bullion in round or bar form is a common investment, and it’s pretty much ignored by Quicken.
Configuring your precious metals account
It’s not too difficult to get around this, though. Start by adding a new investment account, held at a brokerage. Choose the brokerage option even if your gold and silver is kept in a safe in your home, in a safe at a bank, or at a private investment firm. For the name of your brokerage, you can use whatever you like, because your holdings will not be downloaded automatically into Quicken; any changes need to be made manually. I chose “Precious Metals,” but you may choose “Safe at Wells Fargo” or “Harry’s Private Investments and Fine Shoes.”
Give your account a name. I also chose the uninspired “Precious Metals” for the name of my account, but you may be more creative.
I entered a starting date of the beginning of the year for the account, and started with a cash balance of zero. This will allow my purchase of a metal — and in my case, silver — become a transfer into this account.
After entering the starting balance, Quicken asks for investments. In order to track prices, I suggest using ETFs. Even though you are not owning the ETF, you’re owning the underlying investment, using the ETF to track values will save you a lot of effort. Otherwise, whenever you wanted to analyze your net worth, you would need to manually enter gold and silver spot prices. This is one of the situations where the programmers behind Quicken should consider improving the software. Because you can’t define custom investment classes and automatically download prices for metals, the workarounds include using a regular brokerage account and ETF prices.
Enter GLD and SLV if you intend on owning gold and silver. For the security names, enter “Gold – One-Tenth Ounce” and “Silver – One Ounce.” Using these names will help distinguish your investment from other investments you may have in these exchange-traded funds.
The SLV exchange-traded fund tracks the price of one ounce of silver, so you do not need to make any further adjustments. On the other hand, GLD tracks the price of one tenth an ounce of gold, so when you enter your investments, you’ll need to multiply your quantity by ten. For example, if you buy two ounces of gold, you would enter this as a purchase of 20 shares rather than two.
In order to continue configuring the account in Quicken, you’ll need to choose “other” on the next screen to indicate the investments of GLD and SLV are neither stocks nor funds. Indicate that this account will not be a “single mutual fund” account. This will complete the account set-up.
Entering your first transaction
There may be additional fees to consider when you buy gold or silver, and to be complete, all of this information should be recorded in Quicken. If you were to purchase silver from APMEX rather than from your local dealer on foot, you will have to pay for shipping. Once you make the purchase, create a new transaction in your payment account for Quicken. For example, enter a new transaction in your checking account. Split the categories so that the shipping charges are an expense and the remainder is a transfer into your Precious Metals account. By keeping the shipping charge separate, you can more accurate track the performance of your investment. In this example, I transferred $91.86 for the purchase of two one-ounce American Silver Eagles.
Now view your Precious Metals account in Quicken and enter the investment transaction. This is a “Buy – Shares Bought” transaction. Choose the purchase date, the metal, the total ounces, and enter your total price. Make sure to include any investment fees if there are any. I don’t consider the spread between the bid and ask prices fees — this will just be part of your cost basis.
Note: If there is no shipping fee, and the total you pay is the price of the metal like it may be for an in-store purchase, you could skip the transfer from your checking or credit card account and when you enter the purchase in the brokerage account, you could choose to use the cash directly from your other account, making this what Quicken calls a “BoughtX” transaction.
As soon as I entered my transaction, my immediate loss was apparent. Because the price of silver is less than the price I paid per ounce, my $91.86 was reduced to a book value of $76.60. Verifying the most recent spot price on Kitco, an ounce of silver is $39.17, so the downloaded value of the ETF is pretty close. Just by purchasing the silver, I’ve experienced a 16.61% immediate loss. Consider this when you buy your investment. It could take a long time to make up that 16.61%.
One of the reasons for this loss is the high price I paid for the silver. Since I chose American Silver Eagles rather than cheaper silver rounds, I paid a hefty premium over the spot price. When you invest in silver or gold, the main concern should be getting a price as close to spot as possible. That’s possible with APMEX, particularly if you’re willing to buy in bulk.
Before investing in gold and silver, ensure you’re not attracted to metals due to recent hype. While precious metals can be an important part of a portfolio, understand the risks — which, for commodities, often include the opportunity cost of missing out on better performing investments.
Updated August 5, 2014 and originally published April 5, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.