Top 5 Mistakes Investors Make When Buying Gold
We here at Gold Prices Today Live know that gold investing is serious business for a lot of our readers. We’ve also learned that many gold investors, especially those relatively new to the game, are making some very common and deadly mistakes. Here are those most common mistakes and how you can avoid them.
Mistake 1 – Unrealistic Short-Term Expectations
Probably the most common gold buying mistakes that we see from new investors center around their expectations for their investments. Gold is a long term investment, not a short-term gainer. Sure, your investment today might gain $50 tomorrow as gold jumps for some reason, but most gains are slow and even over time. At the very least, gold will always gain at inflation’s pace, even if the economy is otherwise perfect. At best, it can skyrocket in a relatively short amount of time. Those jumps, however, are rarely overnight and take time.
Mistake 2 – Overpaying Premiums
Gold’s spot price is not the same as what you’ll pay to purchase bullion. Most people who purchase physical gold buy coins – usually from a well-known mint. The premium you pay will depend upon the mint as well as the handler (seller’s) markup. If you’re investing as part of a financial portfolio and not as a collector, then don’t overpay the premium just to get a “good mint.” Standard “rounds” like the American Eagle and Canadian Leaf are lower-cost and just as accepted amongst gold investors as the Credit Suisse.
Mistake 3 – Discounting Ownership of Physical Commodity
Many investors only invest in one kind of gold, often ETFs or futures. That is only one type of gold and is not guaranteed against market crashes. Physical gold (whether stored by yourself or someone else) is one of the best ways to solidify a portfolio.
Mistake 4 – Numismatics as Your Only Choice
Numismatic coins are nice and can be nostalgic for many investors, but they are not the same as .999 fine rounds. Most of their value is in their collectability – something that fluctuates wildly and is more market-dependent than simple gold value. IF collectors can’t afford to keep collecting, the market dries up. New finds in the same series or type of coin may also drive down values unexpectedly.
Mistake 5 – Nuggets and Jewelry
The largest problem with owning pure gold nuggets or gold jewelry is that its value is a matter of opinion. They can be a great part of an investment portfolio, but by themselves they are some of the least portable options for gold investing. The value of jewelry is dependent on what someone is willing to pay for it and whether it can be tested for its actual gold content. Nuggets are similar, though not as difficult.
Avoiding these five mistakes and keeping a diverse, rounded, and thoughtful portfolio of gold to fit with the rest of your investment goals is the key to maximizing both the returns you can expect over time and the security of your finances.
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