Go gold! This is what we all hear. Truth be told, there is a lot of money in gold these days. It is more fluid and can offer you more to retire on later. Buying gold does not come without its fair share of issues though. You do need to be careful. You need to be careful that you are not making some of the mistakes other have made.
There are 3 common mistakes people make when buying gold and pro gold within the Forex Markets and FX handel. Here is a rundown of what they are and what you need to do to avoid them.
1)Do not get ripped off
This may be harder to say than do, but they are ways to avoid this. he conventional wisdom is that a gold coin is about 5-10%. This goes for the metal coins too. They are usually made at a 4% markup. The retail margin for this is going to be about 1-3%.
Take the spot price and subtract it from the price you are being quoted. Now, you divide this answer by the spot price and multiply by at least ten times.
Say something is selling for $1225.00. The spot price is going to be about $1200. The markup is going to be at 2.1%. You will have to have this increase in order for you to break even on the investment.
Why do you want it? Is it for a long-term thing? Is it for a short-term thing? Those who are buying in the long-term need to it as close to the spot price as you can get it. Are you looking to use it as money? You then need to invest in something smaller and you will pay the premium.
They are tempting, but they will only offer a 3 to 1 chance for leverage. Stick with an investment that offers more leverage. You want to have something for your money to show for it. Some people tend to buy more than they should. There are some gold stocks and pro gold stocks that are not worth buying. You need to do a cost-benefit-analysis of the situation. You need to know that your return is going to be worth the cost of buying. As I said before, some gold is not worth it.
“It looks good on paper, but that is as far as it goes”.
3)You do not own anything
This is another big mistake many investors in gold assume. You do not own anything physically. The funds will have gold and issue shares. You will own the paper copy of that representation. That is all.
What happens when a specific metal coin is in high demand? They will buy contracts from Comex, not the Bullion. When you let your contract expire you will get a certificate of the commodity, but that is all. Say you invest in ETF’s for Pro Gold. Some speculate the actual gold may not exist.
Some also assume they trade in their certificate for the actual gold. You are only allowed to do this up to 2,500 on the 15th of each month. Some terms and conditions may apply to this. See this link.