Investing in gold is a great decision for your financial future. Many experts agree that a strong financial portfolio should include gold and other precious metals. If you’re new to investing in gold, there are some common pitfalls that must be avoided. Here are five of the most common mistakes that new gold investors make and how to avoid them.
1. Minimal Market Research
With any investment you make, it’s important that you do your research. You need to understand the trends regarding this kind of investment and what to expect. You need to know how this type of investment has done in the past and what you can expect for the future, based on market conditions. This will inform how much you invest and when, and help you plan future investments.
Without the right market research, you’re throwing your money into a hole and hoping more will come out the other side.
2. Investing in Gold Mining Companies
If you’re not careful, you might find yourself investing in gold mining companies rather than actual gold. Someone might even convince you that this is preferable, the idea being that your gold mining company will see the value of their gold rise for only their costs of production, rather than having to buy gold at a certain price and hope it appreciates.
However, the data shows that overall, gold bullion has appreciated more than the index of the most popular gold mining companies. Furthermore, when you own gold bullion, you own a tangible asset whose value is not dependent upon the success of a company, which is why you invest in gold over stocks or bonds in the first place.
3. Purchasing From Unreliable Sources
When you buy gold from an unverified source, it’s hard to know what you’re getting. The gold they sell you may not be as pure as they say it is. Or, if they set themselves up as the trustees of your gold, there may not be any gold at all. For all you know, you may be buying into a Ponzi scheme where the company just hopes they can get the money from other investors if you ever decide to sell any of your “gold.”
When dealing with something as valuable as gold, you must go through a reputable source.
4. Undermining Premium Over Spot Prices
The spot price is the market price of gold at that moment. You pay a premium to the entity that delivers you the gold for their service to you. But paying overly high premiums can really cut into your investment. When investing in gold, you can’t expect to get the exact spot price, but you should look for a gold broker who can get you as close to the spot price as possible.
5. Thinking ETFs and Physical Gold Are the Same
In a gold-based ETF, a group of people invest in the same gold. The idea is you can buy more gold and your fortunes are spread over all of the investors, thereby lowering your risk. Of course, you are also lowering your potential gain.
Furthermore, having a piece of an ETF isn’t the same thing as actually owning your gold. You can’t tell the manager of the ETF to show you your gold, or let you examine it or take it home with you. You can’t even sell your gold — just your interest in the fund. If you really want to own gold, an ETF isn’t what you need.
Fortress Gold Group can solve all these problems for you if you’re interested in investing in gold. As the Inc. 500 #1 Gold Firm in America, you know that Fortress Gold Group is a name you can trust. We’ve done all the research for you, and you can be sure you’re getting real, physical gold at a fair price. There’s no need to take anything on faith.
To learn more about precious metal investment products, call Fortress Gold Group today at 1-800-777-6177.