When you buy gold and buy silver business, it is a great way to diversify your portfolio. Researching the field of precious metals is very important if you are going to invest. Along with money and possibilities of growth, come the pitfalls that could happen in the process. Being aware of the pitfalls that can occur is the key to any business venture. Knowing what to do in the gold and silver business is just as important as knowing what not to do.
Buying Gold – Beware
One common pitfall is known as the bait and switch method. There are ads online that have great deals on bullion coins. Once you click on the ad, the company tries to obtain your phone information. They will then call you and try to get you to buy bullion and numismatic coins that are beneficial for them to sell and not beneficial to your portfolio. When buying numismatic (rare coins), you are automatically in the hole and have lost value. There is the cost of the coin, the dealer’s cost, and the numismatic premium charge. If you try to sell this coin in a couple months, you will not be able to get what you paid.
Another pitfall and myth in the coin business is that coins are not able to be confiscated or reported. The dealers that sell these coins charge higher premiums after stating these myths. This is mentioned when they are discussing pre-1933 coins that were not turned into the government. These coins are considered rare and untraceable, but this is also not true. When you buy gold, there is always a chance that it could be tracked (depending on the amount invested) and possibly confiscated under a Presidential initiative.
Some investment companies also use a way of investing called leveraging. They basically get you to borrow currency in order to invest. Large sums are invested up-front and then regular payments are made to pay back the amount borrowed, plus interest. Supposedly there will be an increased amount of returns over a longer period of time, when compared to traditional investments. However, investments can be great and increases can occur, but the fact that you can lose 100% and even more is the problem with these types of investments. These types of leverage investments are very risky and should only be handled by professionals. Buy gold and be safe.
Most people tell you to do your research and look at the Better Business Bureau for information on the actual brokers. However, there have been 20/20 investigations that have shown with a certain amount of money; you can get that rating put to an A+. However, looking at the types of complaints and magnitude of complaints can still help determine if this is a business you will want to work with. Another way to check a company’s reputation is to search the company name and add in “scam” or “rip-off” and see what comes up in your search.
Another issue is the Exchange Traded Funds, where you purchase a fund that is investing in gold and silver, but you don’t actually get to physically obtain the gold or silver. The fees to manage these types of funds, costs more than the fees to store and fully insure your own gold and silver. Also, if the fund collapses and the gold market is still intact, you will still lose your investment.
Do your research when buying Gold and silver!
In closing, it is important you do your research prior to investing. The broker must be reputable and know what they are doing. Take advice and information from brokers who have been in business for years and not newly-opened brokers that are trying to make a killing based on improper business tactics. It also seems best to buy gold and buy silver, physically. When purchasing stocks or certificates, you can possibly lose, even if the gold market is still alive and well. Make sure to research rates and follow the gold and silver price trends to ensure you are not being overcharged with excessive fees. And finally, leave numismatic coin purchases to the professionals. There are too many variables involved for the average person to make any money of these types of coins. Buy silver and buy gold bullion.