When it comes to investing, it is essential to diversify your investments, not only to minimise the risk of capital losses that are always possible, but most importantly to preserve the value of your assets as much as possible. With this in mind, gold and silver are vital to this, since their primary purpose is to preserve value. However, you should bare a few things in mind before buying gold and silver.
- Be wary of scams and counterfeit gold and silver
A lot of people will never end up buying any silver or gold, or any precious metals at all, because they are worried they will be scammed or sold counterfeit products. This is definitely a possibility, and it happens a lot in the industry. However there are some precautions you can take to avoid being scammed. The first step to take is to buy a test kit. These test kits range from chemical, magnetic to x-ray machines. They are readily available and are affordable and inexpensive. If you don’t want to buy a test kit, you can walk into any jewellery store as they will have a handheld x-ray device that can test purity in a matter of seconds. In addition to this, you should only buy from a reputable dealer, and you should know how to do a bit of a background check before you buy from any dealer.
2. The amount you should invest varies
Gold and silver investing can be beneficial for those of all ages, and the specific amount you should have in your portfolio varies from person to person. This is because people younger in age, for example, who have a longer investment horizon in front of them, will do best by investing more in gold than older investors who are closer to retirement age who will need more income-producing investments.
The general rule is that gold should be limited to no more than 10% of your overall portfolio, although how much of that 10% you utilise will depend mostly on your age and your personal financial situation.
3. It doesn’t produce income like other investments will
Gold and silver is a very smart way to protect your hard earned cash, although there is a reason why experts say you should limit how much you invest. That is because gold and silver, unlike some other investments, isn’t known for producing immediate income. If your primary goal is to produce immediate income, you may want to stay with stocks and bonds.
Although that being said, stocks and bonds can be volatile and you can make money as quickly as you could lose it. That is why gold and silver are reliable back ups for when the market changes and inflation rises. Just don’t expect to buy low and sell for a high profit straight away.