05/23/2024 03:30:22 PM

It should come as no surprise that we think investing in precious metals is a good idea. However, in the interest of honesty, we have to say that gold and silver are not perfect investments.

Like any investment, there are risks to buying and selling precious metals. There are also rewards, of course, and we think that the latter outweighs the former. We want you to have all the information and decide for yourself, though. So, here is a guide to all of the risks and rewards you’ll encounter with precious metals investing.



The Risks

Let’s dive into the negatives first. It may not be pleasant but forewarned is certainly forearmed. Understanding potential negative outcomes is a big step in avoiding those outcomes.

Prices go the wrong way

The first risk that you’ll encounter is the simplest. The price of your precious metal simply doesn’t go in the direction most favorable to you.

So, you buy some gold, and the price goes down. You sell some metal, and the price goes up. In either case, you’re facing an unexpected loss.

The best thing to do is to make sure that you diversify both your entire investment portfolio and the specific metals you keep. Don’t just invest in precious metals. Don’t just have one type of metal. Diversity helps you avoid the tides of fate more deftly.

Verifying the weight and purity

Precious metals like gold and silver suffer from a particular weakness in their weight and purity. It is possible that bad actors in the market – either buying or selling – will be looking to get more value from you than they should.

Part of the problem is common with car mechanics – one party in the transaction knows much more about the subject than the other. A shady dealer or trader might try to deceive you about how pure (or not) your metal is or try to play fast and loose with the ounce/troy-ounce discrepancy.

There are two things you can do to guard against these risks. The first thing is to educate yourself about your holdings or the items you wish to buy so that you’re harder to fool.

The other step is to do your best to research and find reputable dealers or traders on both sides of the deal. BGASC operates with integrity, but don’t just take our word for it. Investigate and make sure that we – or whomever you choose as your precious metals dealer – are completely above board.

The risk of storage

The physical reality of precious metals investing is one of its greatest attributes, in that you can hold your investment in your hands. However, this reality also presents a challenge to you, in that you now must bear the risk of storing gold and silver in a secure location.

Both gold and silver are known as a store of value, wherever you go. In other words, even the most basic criminal would see the value in getting their hands on your precious metals. So, your ownership and control of them increases your risk of theft, and you must take steps to protect yourself and your metals.

The best thing you can do is find a secure storage repository that specializes in the protection of precious metals. Though these facilities are certainly targets themselves, they offer professional levels of security and protection for your investment at a level that you simply cannot match.

Avoid using a home safe if possible. Although having a home safe may seem cool and seductive, it places the center of any criminal element’s focus on your home. The last thing you want to do is incite some sort of home invasion or violent burglary because word gets out that you have gold and silver onsite.


The Upsides

Now, those three risks aren’t anything to ignore. However, it’s also important to understand why those risks are worth bearing. Here are the best reasons why you may want to invest in gold, silver, or other precious metals.

Buying and holding

There are few things better to own long-term than precious metals. They are the most reliable stores of value, and they have occupied that position for thousands of years.

It’s especially true in modern times. The days of fiat currency and floating exchange rates – where money is valued only as it relates to other currencies – mean that there are no hard bastions of value left.

Except for precious metals. If anything, as the value of money decreases due to the now-permanent inflation feature of fiat currency, gold and silver are set to continue to rise in value. After all, they can’t print more gold.

Diversifying your wealth

Precious metals are also a key component of a diverse wealth portfolio. You need to have at least some gold, silver, platinum, palladium, or copper under your control.

You need precious metals the same way you need stocks, bonds, treasury bills, and certificates of deposit. You need all of them because the economy moves on its own, and you need assets that are affected differently by the way the market proceeds.

Precious metals are often the hedge against those situations. Because they stand alone as tangible stores of value, they should occupy a special place in your wealth picture.

Stacking is just cool

Finally, you can’t deny the pride you feel when you just look at your collection. A stack of gold or silver is just cool.

It’s not scientific to list this reward, but it’s the truth. As you enjoy a diversified portfolio that helps you guard against inflation, you can go see part of that portfolio in the flesh – in its gleaming glory.

Of course, you probably shouldn’t do that too often because of the robbery risk we mentioned, but it’s nice to know that you have something of value that grows physically. It’s a special kind of comfort knowing that you have some gold and silver socked away.