People have been investing in gold and silver since the times of ancient Egypt. Due to its worldwide appeal and since their values are not dictated by currency, gold and silver still remain a popular item to invest in today. Many men and women choose to invest in gold and silver during times of economic crisis so that they can still bring in money, even when the worth of the U.S. dollar sinks.
Before you start investing in gold and silver, there are some cons to this process that you should be aware of.
There is No Leverage Funds
If you are going to buy gold and silver, you need to do so with cash instead of leveraging funds the way that you can do with other kinds of investments. Leveraging bigger sums to invest in, whether it is purchasing stocks on margin or real estate funding, allows you to gain larger net returns. For instance, if you were to make a $10,000 investment in gold that rises in value three percent in a fixed time will yield a profit of $300, where as an investment of $100,000 in the real estate market with a down payment of $10,000 that appreciates three percent over the same amount of time can bring in $3,000 for you.
Storage Fees
If you invest in tangible pieces of gold and silver, including bullion, bars and rare coins, you may be worried about their security and safety and not feel comfortable storing them in your home. You need to provide a protective place for your precious metal investments, such as in a safe deposit box or an in-home safe. Both of these options can cost money.
No Dividend Earning and Rental Revenue
One of the most obvious negative aspects of investing in gold and silver instead of investing in the markets is losing dividend potential. While the price of stock investments can go up at the same rate as the value of precious metals, stocks will also be able to pay their share holders with dividends as part of the revenue-sharing contract. With this, you can have the chance to earn a secondary revenue stream from your investments and rental income. When you invest in gold and silver, you waive these kinds of earnings as long as you are investing in precious metals.
Appreciation Costs
Precious metals rise in value at their fastest rate when the value of paper currency slips. Despite the fact that people invest in gold and silver to help them in economic crisis, these large value appreciations can be offset by the decline in value of the currencies that measure their worth.
Even though a lot of people think that investing in gold and silver is a smart idea, like anything else, it includes its drawbacks. It is important to be aware of the downside of precious metal investing so that you know if it is right for you or not. This will help you.
