Investing in precious metals, particularly the more commonly traded ones like gold and silver, can be a smart way to diversify your portfolio. However, as is the case with any investments, there are possible risks worth considering. It’s important to fully understand the nature of this type of investing before you move forward with your plans. We spotlight some of the potential risks of investing in precious metals below.

Price-Related Risks

Generally, precious metals have a fairly consistent value. Still, there can be market fluctuations that affect your ability to easily buy and sell at times, at least in a way that’s profitable for you. Minimize this risk by keeping a close eye on the precious metals markets specific to your investments.

Trading Disruptions

While not common, special circumstances can lead to trading disruptions or interruptions. The potential risk here is that once trading resumes, prices may shift from where they were prior to the interruption in a way that’s not beneficial for you.

Identity Theft (with Online Investments)

If you’re doing your precious metals investing online, which isn’t uncommon today, there’s the potential for identity theft. Mitigate personal security risks of this nature by having a strong password and using secure platforms to do your trading or investing.

Quality Issues with Physical Precious Metals

With bullion, or physical precious metals, there’s the potential for quality issues. In other words, you may end up with gold or silver that isn’t as pure as what was stated. This is a risk that can be reduced by only investing in physical precious metals from reputable sellers. Also, make sure to obtain documentation of value and quality.

Overpaying

It’s reasonable to expect a markup from the spot price when buying precious metals from dealers. The potential risk is you could pay more than what’s typical for certain precious metals. Overpaying is more likely to be an issue with gold, since this is a commonly traded commodity. Minimize this risk by:

• Doing your own price research
• Asking questions before you move forward with your investments
• Determining a “reasonable” markup for your preferred precious metal(s)

When they’re not sure about fair prices for precious metals, including gold and silver bars, Carlsbad residents should seek the advice of an experienced, reputable precious metals dealer.

Stock-Based Investment Risks

It’s also possible to invest in precious metals by purchasing stock in mining or manufacturing companies. In this case, the biggest risk is that such investments rely heavily on what’s happening with a particular manufacturer or mining company at any given time.

Putting All Your Eggs in One Basket

Lastly, there’s the potential risk of focusing all your precious metals investments on one specific metal. What this does is leave you solely dependent on how one precious metal is performing. You’ll gain added peace of mind and options if you mix things up with precious metals investments. 

Whether they’re looking for expert advice on investing in precious metals pricing or they want to buy gold, Carlsbad 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 760-253-8072.

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.