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The cost of a mistake when buying gold coins can be very high. So, if one first thinks about buying gold coins, he usually starts with studying financial and investment sites. Unfortunately, not all of them provide true information.
Today, we try to understand the mistakes people make when investing in gold coins.
Mistake #1: You Buy Gold Coins during the Growing Demand
The first mistake you should avoid when buying coins is buying during the growing demand. Usually, when people buy up gold coins, their prices rise. It greatly reduces a profit opportunity and even inflation risk hedging in the future. If you have gold coins, you should sell them when the gold price rises, not buy them.
Mistake #2: You Invest Unnecessarily
It is important to figure out gold coins are not an asset quickly paying dividends or providing cash inflows. Coins can significantly lose in value, so investing all your money in their purchase isn’t cost-effective. Use no more than 5% of your investment money to buy gold coins.
Mistake #3: You Listen to Your Friends
Do not ask for advice from your relatives or friends about buying gold coins. Each person has widely different investment goals. Some of us are looking to make quick profits while trying to benefit from minor price volatility in gold. The others prefer very expensive gold bullion coins with high premiums. Do your market research and stick to your investment plan.
Mistake #4: You Know Nothing About Spot Price
You would be surprised to find out how many people buy gold coins without checking first what an ounce of gold costs on the date of purchase. Never buy blindly! Look for free gold price charts and keep track of changes to make a good investment.
Mistake #5: You Buy Rare Coins without the Necessary Knowledge of Numismatics
You should have the appropriate experience to assess the coin state and the characteristics of the minting. You should know what such coins are for and other specific information.
Mistake #6: You Buy ‘Dark’ Coins
One of the main mistakes many beginning investors make is buying coins from unverified sources. If you don’t know what ordinary bullion coins are like, you can buy a fake or overpay for genuine coins. If you want to trust your dealer and be sure of the genuineness of coins, buy here — https://www.pacificpreciousmetals.com.
Mistake #7: You Buy Rare Coins for Investment Proposes
Some dishonest coin dealers try to sell commemorative coins as bullion ones. Don’t trust them! These kinds of coins are not for investment, but for collecting. Collector’s coin prices depend not only on the spot price of gold, but also on many other factors, such as rarity, quality, and mintage. These factors can significantly raise coin prices. If you want to invest in gold, buy only well-known low premium bullion coins.
Mistake #8: You Forget about Silver Coins
Despite the high price of gold, many people want to buy only gold coins. But silver coins are great for use in a worst-case scenario, especially when the price of silver is much lower than gold.
Mistake #9: You Forget about the Costs Related to Holding Gold
Owning a gold billion means paying dealer bonuses and spending money on holding gold in a bank. Some investors choose not to own physical gold or keep it in vaults. Experts warn such a scenario could backfire in case of bank failure.
Mistake #10: You See No Difference between Investing in Gold Bullion Coins and Other Ways of Investing in Gold
Many people mistakenly believe they would rather choose alternative ways to invest in gold (for example, shares in gold mining companies, gold ETFs, and gold futures) than deal with holding physical gold. All of these investing ways do not always depend on the spot price, as physical bullion does. To invest in shares, futures, and ETFs, an investor should have developed analytical skills and deep knowledge of the market. Not all beginning investors can boast about it.
If you can avoid these beginning investor mistakes, you can be sure that you buy certified gold coins at a good price from a reliable dealer.
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