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What are risks in Gold Investments?

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Risks Involved In Gold Investments

The risks involved in gold investments can be understood by the type of dealer, investment objectives and a comprehensive knowledge about the gold markets. The investor must properly frame his goals, choose a good dealer and also gain knowledge about the working of gold market.

For every investment, there is a promise. Yes. You have the right to earn profits. But every investment also carries risk. For instance, the investment in stocks faces risks of collapse of the stock market. Similarly, while investing in gold, the investor also faces certain risks.

Choosing the right product

Risks are attached with the kind of gold product. If you are investing in gold for a short duration, then you may opt for gold bars or coins. With these products, the prices of gold bullion can be tracked. If you have bought certified gold coins, then you must have paid higher price for it. Hence, it must be held longer in order to earn profits. After certain period of years, the physical gold can surely provide you with substantial amount of gains.

Know your broker

The dealer can also turn your profits into risks if he is not competent enough. A dealer who enjoys name and reputation in the market will not assure you with fake promises of future gains. He will give you realistic picture of the market. He will guide you how you must act in the gold market. If your dealer is honest enough, he will never force you to buy gold when the prices are too high. Hence, you must properly select your broker. You must have past background about the broker. It is to be noted that it is risky to handle your investments to an incapable broker. So, be careful about it!

What is your objective of gold investments?

Do you want to earn money within a few years? Or you want to have lot of money after 10 years? If you are looking out for short term investment, you must go for gold bullion. And if you are looking for long-term gains, then certified gold is your choice. Let us study what happens if you go for vice versa. You buy certified coins for a short-term, and then you won’t be interested at a later stage to recover your investment costs. If you have invested in bullion for a long-term, then the impact may not be favorable enough on your gains. And it may also face the risk of getting confiscated.

Need to understand – Where am I?

You can decrease your risks in investing gold by observing the changes in gold prices. You must also understand the history of the gold market. It will make you realize the importance of investing long term in certified gold coins. Before stepping your foot, you must know the working of the gold market.

It is true that you have to face certain risks in gold investment such as the product you choose, your dealer, your goal and the working of the gold market. It is really a big and useful task to frame these elements before investing in gold.

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5 COMMENTS

  1. Gold investment is a type which is going to yield profit now or then. Of course the price of gold are always on a roller coaster ride, but we need to keep a close watch on the rate and invest accordingly. The article helps to know the risks that are involved in this investment and also notifies the reader as to what to do and what to do. It advises the reader to be very careful when investing in gold- to know about the broker, to keep a watch on the price of gold etc. In all a good effort!

  2. Even though gold investments are an excellent way of diversifying your assets but on the same hand there are also various risks involved. The knowledge about the risks involved in gold investment is the first step to foresee and reduce them. Good job Ankita! You have well explained the risks involved and what should be done.

  3. After reading all about gold coins and gold futures… it is nice to know some ways to protect my investments and to protect myself!
    I don’t want my investment taken from me by confiscation, or by a shady broker. I don’t want to see my investment ruined by a simple thing I can control. Just have to make goals and choose wisely… so I’m off to get some bullion now hahahaha 🙂

  4. Garima is right, this article does a great job detailing the risks and different products available and cautioning the reader about to look out for when investing in gold. After reading this article, gold does sound like a good long term investment if the funds are available to invest with.

  5. Investing in gold is always a wise choice as it is diversifying the portfolio. Gold for short term or long term usually earns provided the risk factors are taken into consideration. Forseeing the risk and avoiding it is the first step to earn in gold market.

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