How to account for precious metals (gold, silver, platinum, etc.)?

I have recently put interest in buying gold and silver. Since these precious metals are without a fixed price, which changes from time to time, I need to track it in my account somehow and enter exchange rates accordingly. Unfortunately, nothing like gold or silver is listed in currency accounts (however Bitcoin is). It seems obvious that precious metals could also be listed in currencies, so it would be easy converting money into it.
The only plausible solution I have though of was putting it in my Fixed assets and by adjusting accumulated deprecation, but this sounds strange, because on you sell your metals, you are left with disposed value despite of entering new value as you buy gold, etc.
Is there a way to enter a new currency like XAU ir XAG and just adjust its exchange rates from time to time? That would be more than a simple solution.

You definitely should not account for precious metals as fixed assets because they don’t depreciate. They are commodities. Their value fluctuates. You would be better to account as inventory items. That way, they have an initial basis that contributes to average cost of the item. When you sell, you realize a gain or loss, exactly like you would if you stocked any other merchandise and sold it at a profit or loss.

Trying to treat a commodity as a currency is problematic because you don’t readily convert one to the other in an account. You buy or sell individual lots of the commodity.

Not necessarily true. Most currency brokers do work with precious metals as they would with other currencies (EUR, USD, GBP…). Actually, most of currency exchange rates databases include a ‘rate’ for gold, silver, etc.

A workaround I come across (considering current Manager’s features) is to create a mock Inventory account for the gold (for example). Problem is, that doesn’t ease the work of updating the value of the commodity (you’ll have to calculate outside of Manager and record a journal entry to update the value for the whole ‘Inventory’ hold). :confused:

If I were you, I register in inventory as 0 value, whenever you bought the gold, ensure the value is entered as when you purchase, then tag it in description something like current market price as of date to differentiate among the batch of gold, in accounting is always on historical value, not futures.

Gold has intrinsic value and it is constant, what not constant is the currency (fiat money), You can only determine the value by manually calculate outside of manager, in other words in manager only relevant recording as physical stock count.

I did highlight before about custom currency, something like token exchange between associates. but it was silent.

Then there is someone bought up a bitcoin currency. Then again is not developer’s priority yet.

Which is exactly the same as share market companies listed on Stock Exchanges - without a fixed price, which changes from time to time (in fact daily).

Then treat their purchases as “investment” Inventory

Not exchange rates, you do market valuation adjustments as @danielgalindezm described with “you’ll have to calculate outside of Manager and record a journal entry to update the value for the whole ‘Inventory’ hold” - read post #4 in this topic for an example

If you want to track share and other monetary investments, I would suggest that an accounting package is not your best option. Google Microsoft Money Sunset edition and MSMoneyQuotes for a free alternative

Depending upon what you mean by “track”, but why ?
Have been using Manager for years for such purposes as all related transactions have to go a bank or cash account.

MS Money also has bank, credit card accounts, etc. It isn’t a double-entry system in the same way as Manager but does enable you to follow investments and will calculate returns, capital gains/losses etc. It is a different tool than Manager

Sorry, I stick to Manager Accounting, no need for other software.

I think I will stick to accounting it for in my Inventory items. Too bad that developers do not have plans to add it to currency account as they did with Bitcoin. Thank you everyone for your answers and help. Appreciated!

Bitcoin is a currency, gold / silver etc are not a currency but a commodity which have a currency valuation.
Just like Amazon, Microsoft, Apple shares are a commodity with a currency valuation.

You can have gold / silver etc = to USD or Bitcoin valuation, or you can have USD = to GBP, Euro or Bitcoin valuations but you can’t have a gold ounce = to silver ounce valuation just as you can’t have a Amazon share = to Microsoft share valuation.

Hence gold / silver, like Amazon, Microsoft, Apple shares will never be currencies.

Gold / SIlver can be currency when they are minted @brucanna, just like libya, USA government and IMF hate it. Now waiting for China ditch US currency and made their Yuan Minted in gold. hehehehe. I have Canadian minted gold which is legal tender. Maple gold.

Keyword: Bretton Wood System

Yes, but 1) the topic is not about minted coins which only form part of a currency and 2) they generally have a fixed value which is why they are legal tender.

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The easiest way would be to account it as an inventory item and ascertain the gain/(loss) at the time of sale. i.e. Cash basis vs. accrual.

The alternative would be to update the price on a daily basis by buying and selling the commodity at the respective open and close price.

You can read more on this at :
Mark-to-Market accounting

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That will not update values. Inventory items are carried at average cost, reflecting all past purchases.

It will show you the profit or loss made on the purchase and sale of the commodity on a notional / actual basis.

@Siddharth, are you suggesting buying and selling the entire stock of a commodity every day in sham transactions for the purpose of revaluing inventory?

Yes. I have assumed Andrius is using this to keep track of his personal finances.

Not for accounts that are to be audited.