There are innumerable reasons why an investor might seek to line his or her portfolio with gold. Gold offers a great way to protect against a crumbling economy, a rising rate of inflation, and a declining dollar. It’s also great for diversification, and it provides investors with the chance to secure their wealth—to amass real savings.
With that said, it is certainly possible for novice investors to make critical errors that weaken their gold investments. Below are four of the most common ones. Make sure you avoid these as you seek to become a gold investor yourself.
Error #1: Mistaking Gold Stocks or ETFs for Gold
One of the great things about gold is that it allows you to have actual value, value you can hold in your hands—unlike with a bond, which is contingent upon a borrower keeping his promise, and unlike paper money, which is a form of debt-backed savings. The thing is, this is only true for those who have direct ownership of gold. Don’t assume that a piece of paper, promising you gold, is just as good as actual gold. Gold mining stocks and gold ETF funds carry much more counter-party risk than physical gold does.
Error #2: Assuming Bullion is the Best Way to Invest in Gold
For some investors, bullion may make the most sense. It depends on your goals. However, it is erroneous to assume that bullion is just better, across the board. In reality, numismatic coins often appreciate at a greater rate than bullion and are far more private, so it is often going to prove the better investment.
Error #3: Buying Gold from a Retailer
There are a lot of companies advertised on the TV or on the radio that sell gold on a retail basis—and as you might imagine, the prices are hiked up significantly to cover the costs of those marketing campaigns. There are ways to invest in gold without having to spend quite so much money on the front end. Reach out to a precious metals wholesaler for more information.
Error #4: Failing to Educate Yourself
Perhaps the greatest error you can make, when investing in gold, is doing so blindly, without properly educating yourself as to what a gold investment really looks like. Buying gold is not like buying a stock—in many ways, it is much more advantageous—but you need to take the time to educate yourself before committing any money. Find out what makes gold unique, make sure you get the right gold to reach YOUR goals and understand why it plays a very important role in your investment portfolio and savings.
With that said, it is certainly possible for novice investors to make critical errors that weaken their gold investments. Below are four of the most common ones. Make sure you avoid these as you seek to become a gold investor yourself.
Error #1: Mistaking Gold Stocks or ETFs for Gold
One of the great things about gold is that it allows you to have actual value, value you can hold in your hands—unlike with a bond, which is contingent upon a borrower keeping his promise, and unlike paper money, which is a form of debt-backed savings. The thing is, this is only true for those who have direct ownership of gold. Don’t assume that a piece of paper, promising you gold, is just as good as actual gold. Gold mining stocks and gold ETF funds carry much more counter-party risk than physical gold does.
Error #2: Assuming Bullion is the Best Way to Invest in Gold
For some investors, bullion may make the most sense. It depends on your goals. However, it is erroneous to assume that bullion is just better, across the board. In reality, numismatic coins often appreciate at a greater rate than bullion and are far more private, so it is often going to prove the better investment.
Error #3: Buying Gold from a Retailer
There are a lot of companies advertised on the TV or on the radio that sell gold on a retail basis—and as you might imagine, the prices are hiked up significantly to cover the costs of those marketing campaigns. There are ways to invest in gold without having to spend quite so much money on the front end. Reach out to a precious metals wholesaler for more information.
Error #4: Failing to Educate Yourself
Perhaps the greatest error you can make, when investing in gold, is doing so blindly, without properly educating yourself as to what a gold investment really looks like. Buying gold is not like buying a stock—in many ways, it is much more advantageous—but you need to take the time to educate yourself before committing any money. Find out what makes gold unique, make sure you get the right gold to reach YOUR goals and understand why it plays a very important role in your investment portfolio and savings.