All investments come with some degree of risk, including ones involving precious metals. Granted, there are certain “safe haven” investments of this nature, like gold and silver, which investors often prefer due to generally consistent performance and value. Still, even the top precious metals have inherent risks. The key to lowering these risks is to be aware of the ones that are fairly common, which we go over below.
The precious metals market is notoriously volatile at times. On a positive note, this is often balanced out by long periods of stability. The volatility associated with precious metals largely comes from the many factors that can affect value and market price, some of which include:
• Current supply
• Demand at any given time
• Global and/or national economic conditions
• Other events that affect investor trends and preferences
No Dividends or Passive Income
Unless you buy stocks related to precious metals or consider similar options, you’re not going to passively make money with these investments. Physical forms of precious metals don’t generate income or pay you dividends from the act of making a purchase and hanging on to what you bought. That being said, you can still make money from these investments if you strategically buy and sell.
If you opt to sell your precious metals investments and you make a profit by doing so, you have capital gains. This needs to be reported to the IRS for tax purposes. There are some fluctuations in capital gains associated with precious metals. In general, collectibles (e.g., rare or special-issue coins) tend to generate higher capital gains. As long as you keep track of what you buy and sell and how much you make when doing so, you should be fine.
Past Performance vs. Future Performance
Precious metals, by their nature, are in limited supply. This is one reason performance trends from the past don’t necessarily indicate what you can expect in the future. This applies to all common investments but even more so to precious metals due to the volatility mentioned above.
All precious metals sellers add a markup to the asking price to make a reasonable profit. The risk here is that some not-so-reputable sellers inflate their prices, which could result in buyers overpaying. This is a risk that can be minimized by learning more about current rates and price trends before you invest. When they’re not sure about fair prices for precious metals, including gold and silver bars, Scottsdale residents should seek the advice of an experienced, reputable precious metals dealer.
The Final Word—Investing Wisely
Gold, silver, and other frequently traded and preferred precious metals aren’t typically considered “high-risk” investments if you do your homework and invest wisely. Let’s say you prefer to earn some income from precious metals without having to buy and sell too often. In this instance, you may prefer to include gold or silver stocks as part of your investment strategy. If you’re a newer investor, a good starting point is to seek advice from a trusted professional familiar with precious metals investments.
Whether they’re looking for expert advice on investing in precious metals or they want to buy gold, Scottsdale residents should work with trustworthy precious metal dealers who offer high-quality service and have years of experience. Call on the industry-leading professionals at First National Bullion when you’re ready to invest in precious metals, including gold, silver, platinum, and palladium. Give us a call today at (480) 546-5089.
The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.