Buyer beware: What you need to know about investing in precious metals

Thinking about investing in precious metals? Here’s what you need to know first.

Gold, silver, and platinum are some of the names that come to mind whenever we hear the term ‘precious metals’. Investing in precious metals like these is considered favourable because of the low risks associated with it… or at least that’s what many people believe!

Precious metals are considered to be good portfolio diversifiers, but they’re not risk-free. Indeed, for beginners, investing in precious metals can be a risky affairs. Of course, no investment is 100% risk-free, but the amount of money you could lose while trying to build your portfolio through the likes of platinum and gold can be very significant.

Trethowans
Trethowans

That’s why, whether you’re a seasoned investor or just making your first foray in the market, it’s important that you are extra-vigilant in every decision you make. And the very first precaution you need to take is working with only the top rated gold dealers, to reduce your chances of being scammed in this industry, which is tainted with fraudulent players. 

If you want to learn more about safeguarding your investment in precious metals, then read on in our buyer’s guide. Here’s what you need to know.

1) You’ll always face risks

Don’t be misled by marketers who try to make precious metals seem like risk-free investments. To avoid regretting a transaction, it’s important to learn all the risks involved before investing your money. And be aware that you could lose all your money, because nothing is ever guaranteed. 

However, you can avoid these kind of consequences by consulting your financial advisor or an experienced investment consultant. These people will tell you whether you’re on the right track or they may recommend a few changes that could enhance your success.

Someone with experience in this field will explain to you all the potential methods of investing in precious metals, including precious metal securities, futures contracts, and physical metal. Make sure that they also mention the possible risks when employing any of the methods.

Another issue that you’ll have to contend with is the fact that precious metals experience some of the highest rates of price changes. Of course, this can be regarded as a benefit to those professional traders working in highly volatile markets. However, the frequency of price swings might not be ideal for some traders. Therefore, it’s imperative that you remain wary of these changes as they can significantly affect your profits.

2) Promises of low-risk profits are rarely true

There have been many misconceptions regarding the profitability of precious metals. For someone with no experience, they believe that it’s a smooth ride and that they can only wait to reap their fruits once they’ve put in their money. This is partly true but, as noted before, there are some unique risks involved that every buyer needs to understand. 

Some sellers, however, take advantage of innocent first-time buyers by promising them what can’t be fulfilled. In this unfamiliar market, it’s quite easy to get lost in the middle of all the technical terms and processes. Also, many investors have lost a lot of money by falling for the unsolicited pitches coming from these sellers. There are many cases where one has paid huge amounts of money in the hopes of obtaining a promised set of precious metals not knowing that it was a fraudulent investment. 

The worst part is that most sellers involved in these acts are legally registered with the relevant authorities. As such, it becomes quite difficult for an ordinary investor to see any red flags. So, if you’re a beginner in this industry, it would be prudent to read and understand a reliable guide to precious metals.

Once you already have a good idea about the whole procedures concerning this form of investment, you should consult some of the most experienced players in the market to further broaden your knowledge, helping you become a wise investor.

3) Know the red flags to look out for

If you consult an experienced precious metal investor, they’re likely to mention a few things that you should be wary of as a first-timer. As stated earlier, many beginners and a few seasoned investors may fail to note even the most obvious red flags because of the overwhelming excitement that they experience in this situation. 

If you open your third eye in such scenarios, you’ll most likely end up making good investment choices.To prevent you from falling into the traps of precious metal fraud, here are some red flags to look out for whenever you interact with a seller.

An overly assertive seller

Be wary of sellers who seem pushy while marketing their businesses. For instance, anyone who uses the phrase ‘act now’ in the world of precious metal investment is likely to be a scammer. This is something that’ll need huge investments and should be treated as such. Therefore, anyone forcing you to make quick decisions doesn’t want you to think through all possible repercussions.

Low-risk promises

Everyone wants an investment whose benefits outweigh the risks involved. The precious metal industry works with the same model but the risks aren’t as low as some sellers would like you to believe. Therefore, any promise that involves very low risks is too good to be true. 

That’s not to say that you should dismiss every seller that comes with this punchline, but make sure you do your due diligence.

Planning to invest in precious metals?

Given the range of benefits and possible profits, investing in precious metals is something that anyone can dream of. However, if you’re planning to join the party for the first time, it’s important that you watch your steps to avoid falling into the traps of fraudulent activities. 

Beware of sellers that promise too much from the onset. Always remember that when the deal is too good, then it’s prudent to walk away. 

The unfortunate truth is that many people have been scammed huge sums of money because of ignorance and lack of genuine advisors. Regardless of reports about fraud investments in the market, this industry still remains as one of the best options for you to consider as an investor.