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5 Mistakes You Could Be Making When Investing in Precious Metals

5 Mistakes You Could Be Making When Investing in Precious Metals

Even if you’ve invested in stocks or other types of assets in the past, investing in precious metals is a different ball game. Therefore, it would be wise of you not to rush your decisions but rather be careful with each step you make when acquiring precious metal investments. In doing so, you’ll be able to enjoy the huge benefits of that particular endeavor. In addition, you’ll avoid taking unnecessary risks and also get to diversify your investment portfolio.

But while investing in precious metals is a step in the right direction financially, there are a couple of mistakes you might be making as an investor. This is likely true for you if your investment ends up being less profitable than you’d anticipated. To help you avoid costly repercussions, here’s a guide on what you may be doing wrong when investing in precious metals.

Having Unrealistic Expectations

The goal of many investors is to make millions of dollars by investing only hundreds or thousands of dollars. While that’s not impossible, it’s unlikely that you’ll ever achieve that. Keep in mind that it’s hard even for the value of precious metals such as gold and silver to double in one year. This is because investing in precious metals isn’t a get-rich-quick scheme but rather a long-term commitment. Therefore, you shouldn’t invest in precious metals if you’re hoping to see results in a matter of weeks or months or within a year.

Your primary motivation to buy precious metals from companies like Oxford Gold should be hedging yourself and your assets against geopolitical and economic downturns such as inflation and currency depreciation. Therefore, you shouldn’t expect any increase in the price of gold or any other precious metal to be so significant that it can replace your primary source of income or turn you into a millionaire overnight.

Investing Too Much

When investing in precious metals, you should always remember this advice, “Never put all your eggs in one basket.” Not following that advice is a common mistake made by many novice traders who invest all their savings with two goals in mind:

  • Get guaranteed security in that their investment doesn’t lose value over time
  • Enjoy substantial payoffs

Although putting more money into a good venture is generally acceptable, you must only invest what you can afford according to your financial goals. Invest in smaller units of precious metals in the beginning and increase your investment gradually. By doing this, you’ll be able to monitor the value of your assets and better gauge the market conditions. As a result, you’ll be in a great position to make more informed investment decisions in the long term.

Not Using Your Individual Retirement Account

You can invest in precious metals in the form of stocks or funds using your individual retirement account (IRA). This is an excellent platform that allows you to grow your investment in precious metals and enjoy the tax-deferred benefit, making it a good savings vehicle. Because you don’t pay any taxes, your precious metal investments can keep growing steadily. It’s best to maximize the use of your IRA and all the options available to you if you want to reach your financial goals as quickly as possible.

Assuming Physical Metals and Exchange-Traded Funds Are The Same

Another mistake that many inexperienced investors make is thinking that physical precious metals and exchange-traded funds (ETFs) are the same. If that’s your assumption, then you’re in for a huge surprise when the time comes and you want to withdraw your shares as physical metals. This is because investing in an ETF means investing in assets backed by a precious metal like gold and getting a piece of paper referred to as a promissory note and not physical gold.

When looking to sell, you’ll need to request permission from the ETF trustee before redeeming your shares. Another restriction is that you’re only allowed to redeem 100,000 shares at a time, which is around USD$13 million.

Buying Precious Metals from Unverified Sellers

When buying precious metals, you need to be extremely vigilant as the market is filled with cons posing as legitimate dealers. One sure way of ensuring you don’t fall victim to such swindlers is by researching before buying precious metals from a particular seller. You should also resist the temptation of saving money by buying precious metals from a cheap dealer. This is because such sellers will sell you precious metals, be they gold or silver, that are either fake or impure.

Another way of detecting a fake dealer is if they claim that they can provide you with free storage or if you experience an unreasonably delayed delivery. Those are clearly red flags, so you must avoid transacting with that kind of individual.


Precious metals, like many other assets, do come with some degree of volatility. Therefore, you need to be aware of the common mistakes when buying metals such as gold or silver and steer clear of them. Otherwise, your investments won’t yield good returns no matter how much money you spend.

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by Dirk DeBie // Contributor to Businessing Magazine.

Opinions expressed by contributors are their own.