5 Common Gold Investing Mistakes

Posted - September 29, 2023
common gold investing mistakes

Investing in gold for the first time can be a daunting task. Everywhere you turn, you’ll find gold dealers trying to sell you on the precious metal using high-pressure, intimidating tactics. It can be hard to find reliable information, especially if you’re new to the investment scene as a whole. Complicating the investing process is the fact that new investors frequently make some of the most common gold investing mistakes. 

A simple slipup can cost you thousands. We don’t want you to make expensive gold investing mistakes. Channeling our decades of combined experience in buying, selling, and investing in gold bullion, we’ve compiled a list of the 5 most common gold investing mistakes that new investors often make. 

How to Invest in Gold Bullion

Investors often want to know about the most common gold investing mistakes we see. Investing in gold bullion shouldn’t be difficult. As one of the oldest investment vehicles in the world, gold coins and bars should be easy to buy and sell. Still, failing to research your investment can be a costly mistake. Below, we’ll cover some of the core steps of how to invest in gold bullion – from start to finish. 

Researching Coins and Bars

Your investment journey should always start – and end – with research. Before you decide on the best gold bullion bar to buy, consider a few important questions. What is your investment objective? What kind of budget and time horizon are you working with? Do you prefer coins with high numismatic value, or is your goal simply to buy as much pure gold as possible for your cash? Questions like these can help you to decide on both which gold dealer to buy from and what products you should consider buying.

How do you research gold coins? There are a number of different options for collectors who want more information about the world’s most famous gold coins and bars. We recommend reading investor guides like the ones you’ll find on Hero Bullion’s Bullion Academy. For specific coins, coin pricing guides can be a great resource. 

2023 1 oz Canadian Gold Maple Leaf Coin
1 oz Gold Canadian Maple

Don’t rely too heavily on price guides. These guides are often reliable, but one type of common gold investing mistakes happen when collectors use pricing guides as their only resource for determining gold coin values. We recommend researching coin values using a combination of pricing guides and real-time auction results. 

Comparing Prices

Research doesn’t stop at approximate coin values. It’s also important that you compare prices across multiple dealers. Some precious metal sellers sell their gold coins at ridiculous markups, while others might try to send you cull coins for a price much closer to spot. While the amount you’re willing to pay for a gold coin should depend primarily on your budget and investment objectives, nobody wants to overpay for their gold investments. 

One of the most common gold investing mistakes we see happens when investors fail to shop around before buying their first coin, bar, or other gold product. Never buy a gold coin from the first dealer you come across on the internet. In addition to a wide range of online dealers, you can also check out prices and inventories at the coin shops near you to find the best price possible. 

Don’t be afraid to research different investment opportunities. Some first-time investors have their sights set on the world’s most popular coins but eventually find higher value dealing with smaller government mints from around the globe. We find that investors can benefit greatly from entering the investment process with an open mind. 

Research can help you find the perfect coin for your budget and investment objectives – and failing to do the research up front is one of the most common gold investing mistakes we hope you’ll avoid. 

How to Store Gold Safely

As you’ll note later in this guide, most of the common gold investing mistakes happen before you even make your first purchase. But one of the biggest mistakes you can make while investing happens days, months, or even years after your new gold bullion coin arrives in the mail. We’re talking, of course, about improper storage. 

Most gold bullion coins and bars are sold and traded in BU or AU condition. For new investors, these acronyms stand for “Brilliant Uncirculated” and “Almost Uncirculated.” Coins that are handled improperly or exposed to the elements will become damaged over time, and this decreases both their coin grade and their total value on the secondary market. 

This common gold investing mistake can be avoided by choosing to invest in a temperature-controlled safe. While junk silver, copper rounds, and some other inexpensive bullion coins can be stored in a simple cabinet without much financial risk, gold bullion coins should be kept away from animals, children, and thieves. A safe may cut into your profits initially, but this small investment can save you thousands in the long run. 

Top 5 Most Common Gold Investing Mistakes

We’re finally here. This is the part of our guide you’ve been waiting for. We’re discussing the five most common coin investing mistakes below. In each subsection, we’ll also discuss tips for how to avoid making this common gold investing mistake. What are the most common gold investing mistakes that new investors make? Here are our top five picks: bad investment timing, confusing spot price with total cost, poor price comparison, investing in the short term, and failing to diversify. Learn how to avoid these extremely common mistakes below. 

Bad Investment Timing 

We’ll start with bad investment timing. This is a common gold investing mistake, especially for new collectors. When you start stacking gold, you’re going to come across quite a few high-pressure sales tactics. Some over-eager coin dealers might tell you that the market is about to explode – or that economic turmoil means that gold coin prices may skyrocket in the next few months. 

Timing is the most important part of any investment. We won’t bore you with things you already know. Obviously, your goal is to buy when prices are low – and sell when they’re high. But there are also elements of timing the gold market that might be harder to spot. Because some coins come with numismatic value in addition to their melt value in gold bullion, you’ll need to familiarize yourself with premium costs before making your first purchase. 

2024 1 oz British Gold Britannia Coin Angle
2024 Gold Britannia Coin

Is Gold a Good Investment During Economic Turmoil? 

Some gold dealers try to inflate the price of gold by scaring consumers about the state of the global economy. It is generally true that gold prices tend to climb during periods of economic turmoil, we don’t recommend spending thousands on gold coins just because the market enters a recession. You should pay careful attention to the market. When things begin to turn sour, investing in non-correlated assets like gold, silver, and platinum might be a good call. 

But once you’re being harassed by gold pumpers about how prices will inflate considerably because of the flailing world economy, it’s already a bit late to cash in on profits from investing in gold. Be proactive in your research, and you won’t fall victim to price pumping schemers. 

Confusing Spot Price with Total Cost

Another common gold investing mistake happens when collectors confuse spot price with total cost. Spot price refers to the value of one troy ounce of pure gold bullion. Many investors dream of buying gold for their portfolios at spot price. But the reality is that this almost never happens. Regardless of which type of gold product you choose to buy, expect to pay at least some additional price over its melt value in gold. 

What’s the Difference Between Spot Price and Premiums? 

Premiums can vary from product to product. Gold bullion bars offer lower premiums than most other gold items. By comparison, expect to pay a significant premium over spot on numismatically valuable gold coins. Some common gold investing mistakes happen when collectors confuse the basic melt value of a gold bullion coin with its total value on the open market. To get the best value out of your first – or next – gold purchase, make sure to consider your purchase’s total value, including all relevant premium costs. 

2023 1 oz Mexican Gold Libertad Coin Obverse
1 oz 2023 Gold Libertad

Poor Price Comparison

Common gold investing mistakes often start in the same place: poor price comparison. Investors lose millions of dollars every year by failing to compare prices across multiple different dealers. Buying a gold coin from the first seller you come across is an easy way to hurt your chances of profiting from your investment. Whether you buy from an online dealer or a local coin shop, take the time to check other sellers to see if better offers are available. 

Shameless plug: Hero Bullion offers some of the most competitive prices in the industry for the world’s favorite gold coins and bars. Take some time to check out our available stock to see if we may be able to help you expand and diversify your investment portfolio. 

How to Shop for Gold the Right Way

Investors who want to avoid the most common gold investing mistakes should always shop around. We talk a lot about the advantages of comparing prices, so we won’t spend much time on the subject here. Instead, let’s take a look at some of the best resources you can use to evaluate coin prices. 

Coin pricing guides are always a great place to start. Guides from NGC Coin and the Professional Coin Grading Service are usually up-to-date and provide an excellent foundation for your growing numismatic knowledge-base. Reviewing the results of auctions can also be an extremely helpful tool. For numismatic and rare coin collectors, public auctions often serve as an essential research assistant. When you check auction sale results, you can get an up-to-date estimate of how much coins actually sell for to collectors. 

Investing in the Short Term

There’s nothing wrong with a short term investment. This is usually the case, but it might not be true for precious metal investors. Gold price movements can sometimes be volatile, but significant price action for precious metals most frequently happens over a much longer period of time than most short term investors might be comfortable with. In other words, gold might not be the best investment for you if your goal is to sell quickly after making your next purchase. 

Short term investment profits are also taxed differently than long term capital gains. While we’d recommend working with a certified tax specialist to decide if short or long term investments work better with your investment objectives, it’s important to note that you’ll likely take a larger hit during tax season if you plan on selling within twelve months of purchasing.  

Is Gold a Long or Short Term Investment? 

Gold is generally considered an excellent long term investment. Gold has held intrinsic value for thousands of years, and price charts over the last decade have been favorable for long term holders of gold coins and bars. While some short term investors may be able to time the market and secure a tidy profit, most financial experts advise against trying to play the market and sell gold in the short term. To avoid this common gold investing mistake, your best bet is to buy some gold and sit on it until prices increase over time. 

Failing to Diversify 

This isn’t just one of the most common gold investing mistakes. Failing to properly diversify has been the bane of financial advisors for decades. Whether you’re buying gold bullion or common stocks and bonds, diversification is key. Below, we’ll explain how to diversify your gold portfolio and avoid one of the most common gold investing mistakes in the industry. 

How to Diversify your Gold Portfolio

Diversification refers to the process of investing in a wide range of different commodities and assets. A properly diversified portfolio might survive and remain profitable, even when some key investment types take a hit. Can you diversify a portfolio with only gold? It’s definitely possible to diversify without buying different types of metals. 

We recommend that collectors mix some rare and numismatically valuable gold coins into their stacks. Doing so means that you’ll still accrue profit over time – even when gold’s price depreciates. 

Final Thoughts: How to Avoid the Most Common Gold Investing Mistakes 

If you’re wondering how to avoid the most common gold investing mistakes, we’ve got some good news. Most mistakes we see from new investors can be avoided if you take the time to do some research. Research should happen both before and after you buy your next gold coin or bar. With Hero Bullion’s extensive catalog of new investor resources and guides, it should be easy for collectors to sidestep some of the most common gold investing mistakes. 

Still have questions? 

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About The Author

Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.