Watch Out For These Common Mistakes When Buying Gold
Gold has an allure for humans that has lasted millennia - and is likely to last many years to come, too. However, as with any other investment, you have to be careful not to get carried away with any romantic notions when it comes to buying. In today’s guide, we’re going to go through a few different issues that crop up with regularity when people buy gold. So, if you fancy investing in this area, keep your eyes - and ears - open for some of these potential problems.
Watch out for the price
It’s surprising that so many buyers of gold still fail to keep an eye on the metal’s spot price. This is the true value of gold, and it changes all the time. However, when you buy gold, you will do so through a dealer or broker - and the price they charge you will come with a commission. Not all of them are upfront about the spot price - so it’s important to keep up to date with gold bullion prices whenever you can. You will pay a commission whenever you buy - it’s just the part of the process. But, without knowing the spot price, you risk paying more than you should.
Once you have the spot price knowledge, make sure you are shopping around. As we mentioned above, dealers will charge you different levels of commission. It’s important, then, that you have a look at the entire market rather than plumping for the first dealer you come across. You can expect to pay, on average, between 2 and 5 percent on top of the value of the gold. As you can tell, this can make a significant difference on how much the gold costs.
Investing in scrap
Not all gold is of equal value - especially when you are buying things like jewelry. Most jewelry gold is cut with other metals and is less pure than, say, gold coins. So, when you buy it, you will need to melt and fabricate the gold - which is going to add to your costs. Some companies manage to turn a nice profit doing this, of course. But, they buy and sell on an industrial scale - which isn’t something an individual will be able to match.
Not checking for purity
There is far too much impure gold out there on the market, and people with an eye for a deal will often be sucked in and buy it. However, buying impure won’t help your investment, and the purer you can find, the better. High-quality gold tends to be 99 percent pure while inferior gold can be as low as 90 percent pure. Make sure you invest in the right kind of purity.
Buying too much
Because of gold’s allure - and its reputation as a stable investment - it’s tempting to go wild. But, try not to overinvest in gold. While it is a reliable investment, the price still fluctuates a lot - and that’s going to cause problems. Always buy gold as part of a diverse portfolio. And, understand that however much you have, it won’t make you cash rich. Your mortgage payments, car fees, and living expenses all cost money - not gold. So, don’t rely on it as your only method of savings.