Top 4 Mistakes to Avoid When Investing in Gold
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Putting your money in gold can be pretty rewarding. When added to a diverse investment portfolio, this precious metal will balance out fluctuating investments. Gold tends to rise in value when other assets fall. However, avoiding the common mishaps associated with putting your money in gold can help maximize your investment. Outlined below are the top four mistakes to avoid when investing in gold.
1. Buying from unreliable sources
Not all gold dealers are genuine. Some are scammers with illegitimate businesses. Buying from unreliable precious metal companies is among the top blunders you’ll likely make when investing in gold. You may be lured into purchasing gold bars and coins from unknown online sellers, which can lead to you receiving impure or fake gold.
Buying gold from reputable, well-known precious metal companies, such as Preserve Gold, is crucial to avoiding this mistake. Before purchasing gold from any precious metal company, consider:
- Reading testimonials and reviews from past customers
- Verifying registration and licensing
- Comparing fees and prices
- Checking for memberships and accreditation
- Assessing communication and transparency
2. Ignoring gold purity
Gold’s purity is calculated in karats, with the purest gold weighing 24 karats. It significantly impacts investment decisions because it determines gold’s value, authenticity, and quality. Impurities and contaminants can reduce gold’s purity, affecting its durability and value. Investing in low-karat gold is risky because it tarnishes over time, reducing its resale value. Ensuring a high purity level when buying gold can help you maximize your investment’s value. To verify gold’s purity, consider:
- Using a gold testing kit: It uses a mix of acids to determine gold’s purity accurately
- Inspecting the hallmark: Checking the stamp showing the purity level can help determine how pure gold is
- Performing a magnetic test: Since gold isn’t magnetic, it might be impure if a magnet attracts it
- Consulting an expert: When unsure, you can get a professional appraisal from a reliable gold dealer
3. Failing to do comprehensive research
Gold investing requires a lot of due diligence. Putting your money in this precious metal without doing enough research may cause you to fall prey to scams. Buying gold without checking its current market price can result in purchasing counterfeit gold or making an overpayment. To avoid this blunder when investing in gold, consider:
- Checking market prices: Gold prices constantly fluctuate, so keeping track of it is important. You can look at the current gold market prices on various financial news sites
- Consulting with an expert: If you’re a beginner investor, consulting with a professional before investing can give you insights into the gold market and enable you to make informed investment decisions
4. Not understanding the various forms of gold investments
Understanding the different types of gold investments, plus their risks and benefits, is key to making informed investment decisions. You can invest in gold in the following ways:
- ETFs (exchange-traded funds): They’re listed on stock exchanges, exposing you to gold via the convenience of modern investment products. With gold ETFs, you don’t have to trade its physical form directly or worry about its safe-keeping
- Bars and coins: This means buying gold in its physical form. Note that take care of its storage, insurance, and delivery
Gold certificates, mining stocks, IRAs, and futures are other gold investments.
Endnote
While gold investments are lucrative, mistakes can compromise your investment. Familiarize yourself with the top mistakes to avoid when investing in gold, including buying from unreliable sources, not doing enough research, and ignoring gold purity.
