What Are The Biggest Mistakes First-Time Gold Buyers Make?
Buying gold as an addition to your asset holdings is a big decision, and it’s important to proceed carefully in order to ensure that the purchases made will have the potential to bring you the most value possible. If individuals who are interested in buying gold for the first time don’t take the time to educate themselves and give their gold purchases proper contemplation, there are a number of errors that could be made. Here are a few of the biggest mistakes made by first-time gold buyers:
Setting Inaccurate Expectations
Many first-time buyers of gold approach the decision as though it’s a purchase with short-term implications. In our opinion, precious metals should be considered a long-term commitment (i.e., 3-to-5 years or more). Also, it is important to keep in mind that with any precious metals purchase there is risk. Market prices are unpredictable and may rise and fall over time. However, one reason to add gold and other precious metals to your holdings is to add tangible value to your collection of assets that may potentially help protect your assets for years to come. As such, it’s essential that gold buyers make their purchases in the knowledge that it’s a decision that will impact their affairs in the long term and to choose their gold products strategically.
Buying The Wrong Amount Or Type Of Gold
It can be difficult for first-time buyers to know how much gold is enough to make a real impact on their holdings, so it may help to think in strategic terms. If you’re buying because you want a potential hedge against fluctuations in paper-based assets, you’ll want to consider what proportion of your assets would actually make a difference, if it was in gold or precious metals. On the other hand, many people limit their purchases of gold so they can also pursue other asset opportunities. In our opinion, customers should not put more than 20% of their available funds in precious metals. Take time to think what makes sense for your unique circumstances.
In addition to understanding how much gold you consider purchasing for the best potential value, it’s important to know what type of gold could best help you accomplish your goals. Individuals typically have the option to purchase gold in bullion or numismatic form from a given precious metals firm, and their value as an additional component of your asset holdings can vary depending on their metal content and assessed market value. Speaking with a precious metals specialist about which types of gold are available as possible additions to your specific holdings can be very beneficial for first-time buyers. Again, take your time – gold is going to be around for a long time to come.
Not Doing Enough Research On Your Gold Company
A concern for many first-time gold buyers is that they’ll inadvertently end up working with a precious metals company that scams their customers. This can be the case when buyers don’t take the time to perform thorough research into the companies with whom they’re considering doing business. To avoid getting scammed by an illegitimate business, it can be wise to do the following:
- Research your potential gold companies’ return policies, shipping costs, any added fees, and buy-back policies
- Request a written customer agreement, and read it carefully to ensure that you have an accurate understanding of the terms of the transaction you’ll be completing with a given gold company.
- Keep an eye on movements in the gold market, and consider using a gold price historical chart as a reference point. It’s not always a direct reflection of the rate you’ll get with the gold company you work with, but it doesn’t hurt to be as well-informed as possible on the field in which you’re conducting business.
- Research industry terms. Understanding key terms such as spot price, liquidity, and face value can help with your precious metals purchase. Also knowing the difference between bars, bullion, and ingots can help.