Based on how unstable the economy can be at times, investing in gold can be seen as a very intelligent investment idea. This is because not many asset classes can offer the kind of stability that this precious metal offers.
For as long as time, gold has been considered a safe haven investment. This means that this asset can maintain its value and even increase it during economic hard times when other assets aren’t doing too well. Read this article to learn more about safe haven investments.
There are so many benefits to be gotten by adding physical gold to your investment portfolio, so it is no wonder that you are looking into it. But, when it comes to investing in physical precious metals, buying the asset can be a bit of a challenge. This is because the investor can easily get ripped off or scammed.
Hence, when you want to buy gold, you need to be sure you are doing it in the safest way possible. Some buyers often make some common mistakes when they buy this asset. One way to prevent yourself from falling into the same pitfalls is by knowing these mistakes and avoiding them. Below, we will list out some of these common mistakes and how you can avoid them so you can buy your gold as safely as possible.
1. Going for the Lowest Deal to buy gold
When buying this asset, the price is one of the many things you need to consider. If you get a deal that is unbelievably too good, then chances are it may be an avenue to scam you. So, while you want to make a fair deal, you have to be cautious of dealers that offer exaggerated claims and overgenerous incentives.
These outrageously good deals sometimes may be well below the spot price. This typically should not be because this asset can be sold at any time to dealers at their complete value. Hence, nobody has a reason to sell at a loss when dealing with precious metals.
So, if the dealer is legitimate, they would be losing money should they ever sell their products for lesser than the spot price. The price you get typically should even be higher than the spot price because the seller will need to include additional fees which they need to keep their business operational.
2. Buy gold When the Value Increases
There is usually no bad or wrong period to buy this asset. However, even though it is a safe haven, it is still subject to the economic Law of Supply and Demand. So, sometimes, when demand is more than supply, this asset’s price can be affected.
Buying at a time when the price is high usually isn’t a smart choice.
3. Do Not Check The Dealer’s Reputation and Experience
The safest place to buy gold is usually at any dealer that has been proven to be reputable and has experience doing the business. So, before you buy this precious metal from anybody, you need to ensure that they are as reputable as they come.
Look for sellers that have repeat customers, this means customers that have patronized their business multiple times. If a seller offers bad services, they typically won’t have people patronizing them more than once.
You can check gold investment online forums to find out more about dealers you are contemplating, all you need to do is ask those that are on these forums. Also, some forums even go as far as posting warnings about dealers that are scammers.
You can also check their reputation by checking NFA records. On their page, you can find out whether a dealer is registered or not, if they’ve been sanctioned, or if they’ve even been banned from doing the business. You should even be more worried if the dealer you are considering isn’t on this record.
You can also check Better Business Bureau and find out if the dealer is on the list there. If they are, find out their ratings, check out reviews about them, and also check how long they’ve been in the business.
4. Buy Lesser Purity
One pitfall some new investors make is buying gold that has a lesser purity level than what they need it for. Now, all gold products aren’t the same. The purity level can vary between 97 percent-100 percent.
If you have a specific need for the asset, let’s say you need it for investment reasons, then you need to be sure of the purity requirement. Gold used for investments typically needs to be about 99.5 percent pure.
So, you always need to check the asset’s purity before you make your purchase.
5. Rare Coins As Investment Assets
Some dishonest coin dealers may want to sell coins with numismatic value (collectible coins) to you for investment. They typically lure buyers to do this with sweet talks and sadly, many investors have fallen prey to this deceit.
Coins with numismatic value are mainly for collection purposes but as investment assets, they are very bad choices.
When considering the value of collectible coins, gold’s spot price isn’t all that is considered; other factors like its mintage, rarity, and grade are usually considered too. This is what makes it an unwise choice for investment.
Conclusion
Gold can be that asset that can help you properly balance your portfolio risks. But, if you do not take care while purchasing this precious metal, you may end up putting yourself at risk of getting scammed or ripped off. Many other investors have fallen prey to certain pitfalls, and we believe the best way to avoid them yourself is to learn from the mistakes others have made.
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