Gold is an investor’s best companion in times of economic recession and uncertainty. However, to maximize this “Golden opportunity,” you need to make the right decision as to why, when, where, and how you buy your gold bullion. Ordinarily, adequate research and preparation on your part should be enough; nevertheless, there are some common mistakes and pitfalls you should be on the lookout for.
Below are four (4) Mistakes to avoid when buying Gold.
Stacking Excessive Gold
It is fair enough that Gold is a good investment for diversifying your portfolio, but buying too much has its adverse effect. Many investors often fall prey to shady gold dealers who use fraudulent tactics to compel them to acquire Gold in excess. Some investors may go as far as placing up to 70% of their entire portfolio in Gold.
As an investor, be wary of any dealer trying to convince you to buy Gold by appealing to your emotions rather than financial reasons. As a general rule, try to limit your investments in Gold to about five to ten percent of your portfolio. You can further diversify by investing in other precious metals.
Paying way above the spot price
Spot price represents the market-approved price for Gold which is publicly available for all investors to consult. When you buy an ounce of Gold, you pay the spot price plus any premium assigned by gold dealers. This premium covers the services these gold dealers offer and can either be on a high or low side, depending on the gold dealer involved.
Many novices and inexperienced investors often fall for the urge to buy gold bars and coins with a high premium. They fail to notice that this high premium can quickly add up to reduce subsequent profit margins. To curb this risk, it is essential that you purchase gold bullion from a reliable dealer with competitive pricing.
Disregarding the logistics behind Gold
Investing in gold bullion goes beyond merely buying gold bars and gold coins. There are other logistics that can influence the value of your gold bullion. These range from the premium paid, storage fee to insurance and other miscellaneous payments. Investors should pay close attention to these logistics and subscribe to whichever one complements their investment portfolio. For instance, you may decide to store your purchased gold bars with a storage provider, at a bank, or in your home.
Gold as a short-term investment
Many newbie investors often misunderstand the essence of gold investments. Gold bullion is generally suitable for long-term investments. Although it is possible to make hasty profits in the short-term, substantive returns mainly occur in the long term. So, instead of fretting at every short price fluctuation, you should buy gold bars and coins to hold for a more extended period while slowly accumulating profits.
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