Buy Sovereign Gold: The Benefits and Risks of Investing in Gold

When investors need a go-to safe haven they always buy gold. The precious metal can reap large investors some great short-term gains and long-term investors are virtually guaranteed to make a profit providing you buy and sell at the right times. There are of course, risks as well as benefits when buying sovereign gold.

The first risk when investing in gold is the chance of loss and theft. If you intend to buy physical gold to keep at home with you, make sure you have somewhere safe and secure to store it. Your alternative is to store the gold in a safety deposit box at a bank or high-security storage facility – which is considered a safer option than keeping it at home, but again is not 100% guaranteed.

Volatile gold prices

The precious metal market is volatile because of the amount of activity it receives on a daily basis. Gold prices are therefore changing all the time, sometimes quite dramatically during the course of the day. There is no set pattern to dips and spikes, as these change from day today depending on a variety of factors, although mostly based on data from central banks and political activity.

For example, recent gold prices have been affected by the US threat on Syria, when gold dipped and the US congress strike which saw gold rally as investors feared a potential collapse of the US dollar. Because of these external factors that are beyond the control of investors you have to make a judgment call when you buy and sell gold – after which hope for the best!

Politics also poses a threat to the casual investor of gold also as they can change the investment regulations which subsequently have a knock-on effect on your gold stock.

It would not be beyond the powers that be to prohibit gold ownership at some point in the future considering the precious metal will expire in about 20 years time.  If you don´t think this will happen, brush up on your history – Franklin D. Roosevelt passed such a law in 1934.

Gold scams

Several gold scams have been reported in recent years. Fake websites have been set up or e-mails sent to people claiming they have a kilo of gold to sell for lower prices than the current gold rate – but you never get you gold. Always use reputable agents you can trust like coininvest.com.

It is not something that we like to think is true, but there is the potential for bank corruption. In 2005, Morgan Stanley was fined US$4.4m dollars to settle a claim against them for fraud. They were selling gold to customers and charging the investor monthly storage fees. However, the bank was not actually storing gold in their vault so had no right to request a storage fee. If you have to pay a storage fee, ask your bank if you can visit to have a look at the gold. They cannot refuse, it´s your property!