In today’s volatile economy, investors often turn to the precious metals sector as an alternative to traditional securities such as stocks and bonds. Unfortunately, the metals market is filled with myths, half-truths and urban legends that too many take for fact. Here are some of the more common myths potential investors might encounter:
Small investors can’t get into the metals markets.
Unlike some products in the securities market, gold and silver are well suited to the smaller investor. While the fees are slightly more expensive for small buys, anyone looking to buy an ounce of gold or silver will pay just a few extra dollars on small-scale purchases. A reputable broker such as Birch Gold Group based in Burbank, California with clients across the USA can help you better understand how to break into the precious metals market and mitigate fees.
Governments control the price of precious metals and no one can make a profit.
While there are a few cases of governments trying to manipulate the precious metals market, these gains and losses are typically short term and don’t affect the smaller investors who are in it for the long term. The fact is that bullion markets are primarily dictated by supply and demand and when large groups of investors want to buy (more gold) the price will go up.
Buy mining stocks because they deliver bigger profits.
While stocks in the actual mining companies can do very well in the short term, these are very volatile stocks that fluctuate especially in declining markets. Physical metals tend to hold their value over longer periods of time.
Storage is a big problem.
For peace of mind, the cost of storage is insignificant. Whether you choose a bank safety box or a safe in your home (though not recommended in light of the increasing savviness of today’s burglars), the cost of these protective services is negligible in the long term.
Another option is to not take possession of the metals at all. With an allocated account specific gold pieces will be allocated to you and many banks will hold the gold for you in their vaults for a small fee, and with an unallocated account, their fees are non-existent.
The profit is in “investment-grade” rare coins rather than bullion.
Owning rare gold and silver coins is akin to owning antiques and collectible art. While they hold their value, it takes an expert to know what they are doing and to do it well. Much of the value is in the rareness of the coin itself and when it comes time to sell these coins they can be much harder to offload at a profit that simple bullion.
Coin dealers will of course tell you differently.