Gold investments are a great way of stabilizing one’s financial portfolio. Physical gold bouillon has been regaining popularity as a safe-haven asset, acting as a safety net in times of economic instability. Despite being a store of value, gold investments present a unique set of challenges, which may limit returns or lead to losses. To get the most out of this investment, here are a few common mistakes to avoid while investing in gold:

1. Failing to do adequate research
Just like any other form of investment, one needs to exercise caution when investing in gold. The following tips can help one make an informed decision:

– Before making a purchase, one must verify the authenticity of the seller and their merchandise. One can check the NFA (National Futures Association) database to get the dealer’s regulatory history, licensing, and sanctions. Here, one should also check their certification and avoid paying any fees or deposits until the seller’s legitimacy is established.
– Speaking to several dealers or resellers and shopping around for quotes can help one choose the best option.
– One should explore online forums for more information regarding potential companies, dealers, and investments.
– One should choose gold bars and products that are stamped and have serial numbers.
– One should not fall for deals that sound too good to be true. Here, it is important to check the dealer or reseller’s transparency about the quality and purity of gold they are selling, as well as any associated fees or charges that may apply.

Failing to conduct adequate research may result in expensive losses.

2. Investing at the wrong time
Another important mistake to avoid is purchasing gold at the wrong time. Gold is a volatile commodity; that is, its price fluctuates throughout the year. As a result, one must time their purchase well. To do so, one should keep the following things in mind:

– One should conduct thorough research to know when the price may fall and buy when the market is favorable.
– One should avoid buying gold during times of economic or geopolitical crises, as during this period, the price of gold tends to skyrocket. Instead, one should make gold a part of the regular portfolio to ensure long-term security.
– One should not panic about small price dips (around 3%). These dips are cyclical in nature and tend to correct themselves over time.

3. Looking at gold as a short-term investment
Unlike stocks and bonds, gold is not a short-term investment. Experts recommend taking a long-term approach when investing in physical gold, as prices can significantly rise over time. As with other material investments, one also needs to consider the overall cost, including gold reseller’s fees, production, and logistics when trading gold. Instead of looking at gold as a short-term investment, one must think of gold as a tool to build savings and wealth in the long run.

4. Choosing the wrong type of gold
One of the biggest misconceptions about investing in gold is that there is only one way to do it. That is just not true. Today, investors can choose from a variety of options, such as a gold IRA, gold ETFs, digital gold, gold mining stocks, sovereign gold bonds, physical gold, gold bouillon, etc. After evaluating individual risk tolerance, it is important to consider the pros and cons of each of these options and decide carefully. Some dealers may also try to sell numismatic coins for investment purposes. Be wary of such purchases because while these coins are great for collectors, they do not hold investment value. Additionally, their price varies based on factors like rarity, grade, mintage, and popularity.

5. Over-investing in gold
While gold can be a great savings option for a rainy day, experts recommend that it should not make up more than 5-10% of one’s portfolio. Instead, one must focus on diversifying their portfolios to ensure improved returns and create a balance between risk and safety. To maintain this, one must regularly check their general investment portfolio and ensure that it aligns with their long-term financial goals.

6. Ignoring associated fees
Depending on the type of gold purchased, one may also need to cover additional fees, which can impact their returns. For instance, when buying gold jewelry, one may need to cover making charges, while for ETFs and mutual funds, one may need to consider management charges and other associated fees. One should carefully analyze these related costs to choose an option that aligns with their overall investment strategy.

7. Not considering purity
A factor that many people overlook when buying gold is its purity. The purity rating determines the amount of pure gold actually present in the product. This impacts its value, durability, and liquidity. For instance, a 24-karat gold coin contains 99.99% pure gold, whereas an 18-karat coin contains 75% pure gold along with other metals. To be considered an investment, the gold one is investing in should come with a rating of 99.95% or above.

After completing a gold purchase, one must be cautious about sharing the news. Talking or sharing too much information about the purchase can put one at risk of theft or burglary, compromising the investment. Further, one must ensure that physical gold is stored in a secure place, such as a safe, safety deposit box, or precious metals depository, to keep it out of harm’s way.