The 10 biggest mistakes when buying precious metals

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When purchasing precious metals, it's essential to be mindful of potential pitfalls to avoid costly mistakes. We have compiled a list of ten common mistakes to steer clear of. If you find you have committed one (or more) of these mistakes in the past, don't worry, we've all been there. Now is a great time to review to avoid these mistakes in the future.

1. Lack of Research

The number one mistake we see buyers make when purchasing gold and precious metals is a lack of research. We emphasize to our customers over and over the importance of educating yourself regarding the precious metals market, including current prices, trends, reputable dealers, and authentication methods. Here in our Learning Center[link], we offer answers and suggestions to questions we've received from our customers. We want to help you understand the basics and make informed decisions when collecting and investing in precious metals. However, we are not financial advisors. We recommend consulting with financial advisors who can provide guidance based on your specific needs as you consider your long-term investment goals.  

2. Not Buying from Reputable Sources

Unfortunately, this world is full of scammers trying to grift you out of your hard-earned money. Buying from untrustworthy or unfamiliar sources can be incredibly risky. We highly recommend sticking to reputable dealers, authorized mints, or established bullion companies with a solid track record. Conduct your due diligence, read customer reviews, and ensure the seller has a good reputation for authenticity and customer service.

3. Overpaying

Paying excessive premiums or inflated prices is a mistake that can easily erode your potential gains. Be cautious of high-pressure sales tactics or limited time offers that seem too good to be true. We at believe in transparency as a trusted gold and precious metals dealer, and we provide you with premium pricing comparisons [link], so you can be sure you are getting the best deal.

4. Ignoring Authenticity and Verification

Authenticity is absolutely crucial when buying precious metals. Invest in well-recognized bullion coins or bars with proper authentication, such as reputable mint marks or hallmarks. Counterfeiters [link] are continuously improving their techniques, making it challenging to identify counterfeit coins. Counterfeit items can undermine the value of your investment, so we recommend verifying the authenticity of the products you purchase.

5. Inadequate Storage and Security

Neglecting proper storage and security [link] measures can be incredibly risky. Precious metals should be stored securely to protect them from theft, damage, or loss. We highly recommend considering purchasing a robust fireproof home safe, opting for safe deposit boxes, or investing in professional storage facilities to ensure the safety of your investment.

6. Failing to Diversify

Over-concentrating on a single type of precious metal or neglecting other investment options could be a mistake for the average investor. Diversification can help spread risk and protect your portfolio. We recommend consulting with a financial advisor to consider diversifying across different metals, such as gold, silver, or platinum, as well as other asset classes like stocks, bonds, and/or real estate.

7. Emotional Decision-Making

Letting emotions drive your investment decisions can quickly lead to poor choices. When purchasing high value assets or investments avoid impulsive buying or selling based on short-term market fluctuations or fear of missing out (FOMO). We recommend taking a long-term perspective to help make rational decisions based on your planned investment goals and research.

8. Not Considering Total Costs

Focusing solely on the purchase price and ignoring additional costs can be a pricey mistake. By considering factors such as a dealer's premiums, shipping fees and insurance, and any other potential transaction fees, you can better calculate the total cost of your investment. Additionally, you should consider the cost of storing and insuring your precious metals once they are purchased.

9. Timing the Market

Trying to time the market perfectly is challenging, even for the most experienced investors. It's difficult to predict short-term price movements, which can be especially true for gold and precious metals that can change hourly. Instead, we recommend focusing on the long-term fundamentals and consider dollar-cost averaging, which involves regularly investing fixed amounts over time to average out price fluctuations. Consult with a financial advisor to help you make the best, most informed decision to help you meet your investment goals.

10. Neglecting an Exit Strategy

When purchasing precious metals, we've found many new investors don’t consider a clear exit strategy. It is important to determine your preferred investment horizon, financial goals, and circumstances under which you would consider selling your precious metals. Is this a long-term investment or is quick liquidity important? Even if you plan on holding your precious metals as a generational investment strategy, having a plan in place can help you make stronger strategic decisions and/or avoid panic selling during market downturns.

By being aware of these common mistakes, conducting thorough research, and seeking advice from reputable sources, you can help minimize your risks and make more informed decisions when purchasing precious metals.