Before buying gold, investors should understand the mistakes to avoid. Sven Hoppe/Photo in association with Getty Images
It’s hard to escape the 2024 gold price news. With numerous price records broken so far this year and others likely to be broken in the final two months, many investors are now considering the benefits of adding gold to their portfolios. I am aware of this. On January 1, the price of gold was just $2,063.73 an ounce; today, the price of the same amount of the precious metal is approaching $2,800. And some experts predict its price will reach $3,000, perhaps by the end of the year.
While some investors may be deterred by rising prices, others may want to buy now while prices are still affordable. But gold doesn’t work in the same way as other asset classes and requires a more nuanced and informed approach. This is especially true for beginners just starting out in the precious metals industry. While there are important moves behind this price rally, there are equally important gold investment mistakes beginners should avoid this November. We will discuss three of them in detail below.
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3 mistakes gold investors should avoid this November
Considering entering the gold market? Be sure to avoid these three timely (but costly) beginner mistakes.
waiting for the price to drop
Not only is it highly unlikely that the price of gold will fall (it’s up about 33% since the beginning of the year), it’s actually more likely to rise again. There are many proponents of increasing the price of gold due to prevailing factors such as geopolitical tensions, inflation, and interest rates.
Then waiting is a mistake. And if you can’t afford to buy at today’s prices, it may be worth considering smaller amounts. This allows you to add the protection that gold provides to your broader portfolio without having to overpay to acquire it.
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Investing in types better suited for veterans
Gold has many different investment types, and not all or most are suitable for beginners. For example, gold mining stocks require more knowledge about the gold market than a gold IRA. Similarly, gold futures may be too risky for beginners who are not familiar with broader trends in the gold investment market. Explore all your options. However, be careful about what kind of gold you end up pursuing. Each is not equally beneficial to your financial situation.
Portfolio becomes overcrowded
Whether you’re a beginner or a seasoned investor, gold is a valuable asset in your portfolio. However, it is just one asset in a diversified portfolio that should consist of a variety of asset classes. So, avoid the temptation to overbuy now that prices seem to be on a never-ending rise. Instead, keep in mind the traditional advice of investing up to 10% of your overall portfolio in gold. By controlling your investment in gold, you can avoid overcrowding your portfolio and allow more volatile sources of income, such as stocks and bonds, to perform as intended.
conclusion
Beginners looking to take advantage of gold this November and in the months that follow will need to take a prudent approach to alternative assets. This includes getting the timing right (and not waiting for the ideal price drop to occur). But it also applies to investing in the right type and not over-investing. By avoiding these simple but easy-to-make mistakes now, beginners can start their gold investing journey on the right foot and set themselves up for financial success both in November and in the months that follow. You can.
matt richardson
