Investing in physical gold is a great way to protect your financial future, but there are a few things you should know before jump-starting on saving or investing in gold bullion.

Top 6 Mistakes Beginner Investors Make When Investing in Gold 

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Investing in gold can be a great way to diversify your portfolio and protect your wealth, as it has historically been considered a safe-haven asset. But if you are a beginner investor, it’s easy to feel confused and 

Even if you're not new to investing in gold, 

it never hurts to brush up on your knowledge 

and make sure you're making the best decisions. 

 that people make when buying gold, and provide tips to help you avoid them. 

a world map with golden chess pieces on top

1. Buying gold only during economic or geopolitical turmoil

One of the most crucial things to avoid when investing in gold is making decisions based on emotions, rather than a well-thought-out investment strategy. 

A common mistake beginner investors make is 

buying physical gold only when a significant economic or geopolitical crisis erupts

, which often makes the price of gold skyrocket.

However, this approach can be misguided, as it assumes that gold is solely a crisis commodity. In reality, as part of a diversified portfolio, gold can be an 

essential part of your long-term investment strategy

, providing protection against inflation, currency fluctuations, and other uncertainties.

By only buying gold in times of crisis, you may miss out on potential gains that could have been made by investing in gold beforehand.

One way to maximize the advantages of your gold investment is to buy gold and precious metals without waiting for a crisis to arise and to keep adding to your gold savings on a regular basis.

This way, you will be able to take advantage of its potential for long-term growth and 

, where you invest the same amount regularly, regardless of the current price of gold.

a computer screen with pie charts and graphs on a light grey background

2. Not doing enough research before investing in gold

As with any other investment, when it comes to buying gold bullion, don't just jump in blindly as it is important to do your research and 

Not doing your homework can lead to some potentially serious mistakes. For example, if a gold reseller asks for money upfront when buying gold online, it's a 

, as is lack of transparency, when they are hesitant to give you all the details about the gold they're selling. 

reputable reseller should be transparent about the purity and quality of their gold

, the fees associated with the transaction, and any other important details.

 Doing your research is key to avoiding the risks that come with choosing the wrong gold dealer. You can start by talking to several resellers to find the one you can trust and ensure that you're investing in high-quality gold products that will help you reach your investment goals.

a 50 g PAMP Suisse gold bar with an hourglass on a green background

3. Considering gold a short-term investment 

Of course, everything depends on your investment strategy and goals. While it's possible to speculate on gold's price, it's generally not a short-term investment due to its historical price fluctuations and 

 As with any other physical product you can buy (cars, clothing, etc.), resellers will apply a fee at purchase (for precious metals, this fee is often called the “premium”) which includes production and logistical costs as well as the reseller’s margin. 

Therefore, after their purchase, gold investors and savers will have to wait for the gold price to rise enough to cover this initial cost before they can start seeing a profit. And as we know, gold tends to move slowly, and historically increases in price over the long term.

Which ties in to our first point: if you avoid buying only during troubled economic times, when the price is usually higher, you are more likely to cut down on that waiting time to recoup your initial cost.

 When investing in gold, it's important to keep in mind that it's not so much a source of income as 

 through price appreciation over time. Also, as with any other investment, be sure to use funds that you're comfortable with.

a 1 kg PAMP Suisse 999.9 fine gold bar, a 50 g PAMP Suisse 999.9 fine gold bar, and a 1 oz Canadian Maple Leaf gold coin on a light green background

4. Not buying the best gold product for them

Beginner investors may put all their money into buying just one type of gold product, such as gold coins. 

, gold bars may be a better choice, simply because the production of gold coins involves more time, money, and craftsmanship costs, which are reflected in their prices. So, if you're looking to get more gold for your money, bars may be the way to go.

On the other hand, if you are interested in 

 or if you want to gift gold to someone special, coins or collectibles might be a better option. Additionally, 

in small amounts than bars because of their lower weight and smaller size, often making them a more flexible choice for investors.

consider diversifying your portfolio and savings with various types of physical gold products, such as bars, coins, and collectibles, while also remembering that there is

 when it comes to diversification, and you should determine the best strategy based on your specific investment goals.

a pie chart with gold, cash, and real estate investments on a dark green background

5. Overlooking the importance of diversification

Many gold investors might already know about diversification, it might even be the reason they started buying gold.

Diversification is the action of buying different assets within different asset classes to spread the risk of their investment and to balance their portfolio between risk and safety. 

But after that initial gold purchase, as you keep investing in different assets, 

it’s easy to forget to check if your portfolio is still balanced and well diversified

. It’s not rare that investors who think themselves as risk-averse end up with way too many stocks or crypto investments and not enough gold for their strategy, making their portfolio unbalanced towards risk.

, as its price is often uncorrelated, or negatively correlated (meaning it tends to go up when other assets go down) to most other assets, and particularly stocks.

regularly check how your general investment portfolio is balanced to make sure it fits your strategy. If you feel like you have too many risky assets and not enough safe-haven assets like gold, it might be time to sell some of your risky assets, or to buy a bit more gold. Depending on the level of risk you’re comfortable to take, experts often talk about 

keeping between 5% and 20% of your portfolio in gold and precious metals.

How to avoid it: regularly check how your general investment portfolio is balanced to make sure it fits your strategy. If you feel like you have too many risky assets and not enough safe-haven assets like gold, it might be time to sell some of your risky assets, or to buy a bit more gold. Depending on the level of risk you’re comfortable to take, experts often talk about keeping between 5% and 20% of your portfolio in gold and precious metals.

6. Not paying enough attention to gold purity

Another thing that many investors overlook is the purity of the gold they are buying.

purity of gold is determined by the amount of pure gold that is present in the product

. For example, if a gold coin is made of 24-karat gold, it means that it is made of 99.99% pure gold (the highest possible gold purity). But, if it is made of 18-karat gold, it means that only 75% of the coin is pure gold, while the rest is made up of other metals.

 to be considered investment gold, a product must have a purity level of 99.5% and above

. Any purity level below that will be great for jewelry or industrial use, but not for investment.

 the purity of your gold products affects their value, durability, and liquidity. So, when you invest in gold, make sure you are buying high-quality, pure gold to ensure that your investment retains its value and is 

Avoid buying gold only during economic or geopolitical turmoil

 as it assumes that gold is solely a crisis commodity, and you may miss out on potential gains that could have been made by investing in gold beforehand.

Do your research and find a trustworthy reseller to avoid potential mistakes. 

A reputable reseller should be transparent about the source of their gold, any fees associated with the transaction, and any other important details.

Consider taking the long-term approach when investing in physical gold

, and keep in mind that it's not so much a source of income as a means to build wealth and savings through price appreciation over time.

Choose the correct type of physical gold products for you

, such as bars, coins, and collectibles, based on your specific investment goals.

Make sure your portfolio remains diversified,

 check it regularly, and don’t hesitate to buy or sell some of your gold to rebalance your portfolio if needed.

 to make sure your investment retains its value and is easy to resell when you need it.

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