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The Top 10 Precious Metals Investment Risks to Watch Out For

Thank you for taking the time to read the Certified Gold Exchange’s “Top 10 Precious Metal Investment Risks”. Although we try to cover the most common risks associated with gold, silver, platinum and palladium investing, we are sure there are others we have not considered in this document. Proper due diligence is always recommended before making a precious metals investment. As always, you will find no small print or jargon from the Certified Gold Exchange, Inc so enjoy.

The Certified Gold Exchange is a 100 percent client directed gold dealer. That means we don’t tell you what, when, where, why, or how to buy or sell any item(s). You alone direct our actions. The Certified Gold Exchange, Inc and its team do not give investment advice. We sell precious metals investments and give advice in regards to the tangible products we offer for sale or buy-back. We also don’t tell you how much you should invest in metals. This is something you alone must decide because the results (or lack of results) of your actions are something you alone will have to live with.

Precious Metals Investment Risks

Precious Metals Volatility

Precious metals can be volatile. In fact, gold’s (the most conservative metal) largest quarterly loss since 1920, is 28 percent. Even during gold’s long-term bull markets, it has unleashed volatile price fluctuations. You could easily buy into the gold market prior to one of these downturns. If that were the case you could end up holding a long time before prices recover. It is advised that you look at long-term charts to evaluate the price swings yourself before investing.

Precious Metals Pay No Dividends or Income

Precious metals pay no dividend and produce zero income. Therefore anyone needing to earn income from their capital is advised to avoid investing in precious metals. Forecasts and projections are just opinions and never facts.  One thing we know for sure is that the opinion giver has a 50 percent chance of being right and a 50 percent chance of being wrong.

Precious Metals Past Performance is not Proof of Future Performance

Precious metals markets’ past performance is not proof of future market performance. Just because something happened in the past does not mean it will happen again in the future.

Guaranteed Buyback of Precious Metals

If a company guarantees to buy back your precious metals, hang up the phone. It’s illegal and entirely unrealistic to guarantee. For example, let’s say Company A sells $500 million annually in gold for 10 years. And the price goes up 200 percent and everyone wants to sell. Does this company have $15 billion dollars on hand? Of course not! So guaranteeing to buy metals back makes is less than honest, and not a good attribute for a precious metals supplier. We can say however, that we have bought back clients metal every time in the past. We highly encourage you to call us when selling, and we will always check all major exchanges to bring you our best buy price.  All dealers make a two-way market for their products, but realistic ones will never guarantee it.

Minimum Time to Hold Your Investment

There is a risk that you may need to sell your precious metals before you have covered their buy/sell spread (difference between a dealer’s buy and sell prices). This would mean you would be selling for less than you paid. Additionally, the market price may drop adding to the time it would take to break even. This is why it’s suggested that 3-5 years be a minimum hold if you are buying the precious metals in the hope of appreciation in value.  Also, holding long-term is not a guarantee that the coins will rise above your purchase price.

Precious Metals IRA’s

The Certified Gold Exchange, Inc works with many clients that want help putting precious metals into an IRA. We can assist you in doing the paperwork to ensure a seamless transaction. And we will ship your precious metals to the depository. We can also keep you updated on the accounts current value and help with liquidation. We are 100 percent independent of the custodian and depository that hold your precious metals and should not in any way be held responsible for their actions. All the IRA custodians we work with are self-directed, that means they offer no investment advice. You alone will direct your money. We will be here to offer advice on buying or selling precious metals only.

Capital Gains on your Precious Metals

If you don’t pay your capital gains taxes you risk IRS fines or maybe even a tax fraud criminal complaint. If you put a penny in a gumball machine and a dime comes rolling out, you have capital gains of 9 cents. This is how precious metals work, and if you take out more money than you put in, you have capital gains. So be sure to notify your accountant anytime you sell precious metals (classified as collectables for tax reasons) for more or less than you originally paid. Always pay Caesar first! Collectables can have a higher capital gains rate than traditional investments so please consult your tax adviser. CGE will not offer any tax advice other than the very general information in this paragraph.

We Do Not Offer Investment Advice

CGE staff and precious metals specialists are not licensed investment advisers. We don’t know of any company that has certified or licensed investment professionals as sellers of metal. But please know that this is not a normal policy within the metals industry as many dealers will offer investment advice to the general public. You should take such advice with a grain of salt and imagine you’re talking to your barber and not a full service licensed investment professional.

Counterfeit Products

The Certified Gold Exchange, Inc has never had a single claim of counterfeit products. This is not the industry norm as counterfeit metals are a growing problem and a serious danger to investors.  It’s always better to invest in PCGS and NGC certified gold and silver coins. Every PCGS and NGC coin is handled and inspected by at least two independent numismatists whose experience and knowledge far outweigh most gold dealers’ shipping and receiving departments. They do carry premiums above generic bullion but also buy-back at a premium under most market conditions.

Overpaying for Precious Metals

Overpaying for metals is last on this list but the number one risk to gold investors. In fact, 1000’s of buyers overpay by 20-60 percent for their gold and silver investments. Many companies even have a business model that is structured to take as much money out of your pocket as fast as they can. What can you do to avoid overpaying for your metals? First avoid investing with a Southern California company. Second never sign on the dotted line (for IRA deals) or agree to a purchase before calling other companies to verify pricing. The Certified Gold Exchange does a nationwide search and delivers the results to the client before completing any order. This way you’re seeing the three lowest quotes the day of your investment and it’s guaranteed.


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