Money

10 Risks of Investing in Precious Metals

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As with any investments, there are things to watch out for.  Many scams can be avoided if you just do your homework. Be sure to read up on things and ask questions if they arise.  Many investment companies are very helpful and ready to answer your questions with an honest answer.  

1. Getting scammed

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When you are looking to invest in precious metals be sure to do your research.  It is easy to get scammed as with any investments, scammers are everywhere. Be sure to check out the companies information they have online.  Look for reviews done by people that are in the industry and you can see they are in the industry. Ask a lot of questions and take notes to review for later.  Look at their reviews on social media and maps. There are all kinds of ways to check up on a company, so do it.  

2. Risk of Loss

Precious metals have a very low level of this, but it is still something you should be aware of.  Their value is based on the want and needs of the material. You can stand there holding your precious coins but if nobody wants them, then you have nothing.  History shows us that there are bouts of times such as these but they are few and far between.

3. Theft

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Your precious coins and bullion are physical objects.  Sometimes you store them in your safe at home or at the bank.  Wherever they are stored, they should be insured for theft. 

4. Loss

Physically lose them.  They are physical objects and you could potentially lose them.

5. Liquidity Risk

Sometimes it is hard to find the right buyer for the price they are worth.   If the are rare collectible coins this can be even harder. Don’t be caught holding your coins without a buyer.  

6. Fashion Risks

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Sometimes coins are more valuable because they are popular and there is more of a market for them and sometimes it is the complete opposite.  Don’t buy something because it is popular, this is an investment and you should be thinking about your investment.

7. Investment go Bad

Till now we have mostly written about if you had physical coins or bullion.  However, you could be investing in the groups that actually do the mining of the materials.  For this, you run the risk of losing everything if they don’t have success. This is very risky but very rewarding if it works out.  

8. Can be costly to liquidate

Liquidating gold through a dealer can be costly.  Dealers are there to make a profit too, so they are not going to give you top dollar.  However, sometimes you need the money more than you need the gold. This can be a reason why people need dealers.  If you have a lot of gold, this can really add up.

9. Can be Volatile

In short periods of time gold prices can be very volatile, but hard to get rid of at the same time. You will have to find a buyer that is willing to pay market prices.  

10. Gold EFTs could lead to nothing

You purchase an EFT. Then you find out that the company will not give you the value of the amount of gold you purchased.  This may be because you purchased from a company that sold more shares of gold than they own.  

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TUT Staff
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