Precious metals investing is considered by some to be a niche investment and many people are wary about it altogether, which may have something to do with the wild myths surrounding precious metal investing. By dispelling the myths and learning the facts, you may find that this type of investment is worth researching and putting into fruition.
The Market is Inaccessible to Small Investors
The truth is small investors may actually find it easier to get started in precious metals than in more traditional kinds of investments. You will be required to pay a markup on smaller quantities of gold and silver, but that will put the cost just a small percentage of spot prices. Precious metals investors invest anywhere from $100 to $100,000.
Prices are Controlled by Banks and Governments
This is another fallacy, though banks have attempted to control the price of spot metals. Those attempts fail relatively quickly, however. Just like any investment, the prices of precious metals are dictated by the law of supply and demand. For example, when there’s a higher demand for gold, the price will rise. Investors earn or lose profits based on this rule, not on the whims of any financial institutions.
Investing in Mining Stocks is a Better Alternative
It’s rare, but mining stocks have been known to perform better than the metals themselves. However, this is not often the case. In fact, when the market takes a downturn, mining stock prices drop significantly faster than the prices of the precious metals.
The Government May Confiscate Your Gold
This myth was born out of paranoia and a period in the 1930s when President Roosevelt did place a ban on private ownership of gold. At the time, our currency was still backed by gold, providing an incentive for the government to inhibit private ownership of the precious metal. Today, that’s no longer a concern and, even back in Roosevelt’s time, private collections weren’t raided. The future sale of gold was simply restricted.
Once you get past the unfounded fears that chase most people away, it becomes apparent that investing in precious metals can be profitable. Like any investment, there is still a degree of risk involved, but no more so than in stock or bond investments. Doing your own research can help you allay your fears and may lead to a worthwhile endeavor.