Mistakes to Avoid in Gold Trading

Investing in gold is no joke, and a lot of information associated with it can confuse people. Since the gold market is an extremely volatile market, caution and a lot of research are needed when investors decide to commit to gold investing.

Although using the services of an experienced gold broker makes the task of gold investing easier, it’s still necessary for investors to get a good grasp of investing, especially when making decisions for their own resources. Remember, only you have control over your assets so consider these tips to avoid whenever you decide to buy or sell gold.

Peer Pressure

This is a common beginner’s mistake. Just because everyone is buying or selling physical gold or stocks doesn’t mean you should do the same thing. Remember why you bought gold investments in the first place. Did you buy it for the exact purpose of covering your assets in times of high inflation? Then you should never sell it unless absolutely necessary. Did you decide to buy so you can sell when the prices are good? Then you must study the price movements yourself and decide whether it’s the best time to keep or sell gold. Bullion Vault’s live price chart shows that today’s gold spot price costs around $1,240 per ounce. If you bought gold in the year 2000 where prices are only at $280 per ounce, now’s a good time to sell gold.

Overpaying for gold

Never pay high premiums for gold. The rule of thumb is to never pay more than 5% of the price of spot gold. If your broker is asking for more than 5%, you should look for another one who doesn’t rip off his or her clients.

Choosing “hot” gold stocks

If you’ve decided to invest in gold stocks instead of the real thing, make sure to choose companies with a good long-term plan. Don’t invest in stocks just because they’re “currently” hot right now. The keyword is “currently.” Don’t go for it and instead look for “long-term” ones. For example, is mining company X going to produce a significant amount of gold in the next few years? Are and mine only in safe areas? How about its technology? Is it currently looking for new ways to mine gold because, according to experts, the world is reaching a peak gold status? These are only some of the things that investors should consider when looking for gold mining stocks. Remember; research everything, from a company’s historical background to its future plans for development.

After familiarizing yourself with snares of gold investment, it will be easier for you to make sound decisions. Always keep yourself in the loop with what’s happening to the economy and study the price movements regularly in order to avoid investing mistakes.