Myths and Mistakes in Silver and Gold Portfolio Building

Starting out on gold and silver is an easy three step process:

  1. i) Buy at the lowest possible value
  2. ii) Hold for as long as you can make profit out of it
  3. iii) Sell at a higher price than what you bought it for

Simple right? Well. there certain things that you need to be aware of before you decide to proceed.

The list below is some of the mistakes that we observed many people make when they first started out:


1. Not building up any cash reserves

There have been plenty of cases where we find clients having to sell off their gold and silver BEFORE they could achieve their financial, asset and personal goals because their gold and silver is the ONLY liquid asset they ever have.

Even though gold and silver have plenty of advantages, relying solely on gold and silver for your financial security is still unwise. Gold, and especially silver, is part of the commodities class of investment instruments (eg oil and gas, coffee, iron, copper, cotton etc). In the investment world, commodities market is made up of hedge funds and speculative derivatives that make prices of silver and gold extremely volatile.

We understand that saving cash may be difficult for some people. But to be devoid of cash to use in case of emergencies spells trouble, and the solution is simply to take a good hard look at your finance and being honest with yourself about it.

Creating a portfolio without an emergency cash is unwise.

Remember to be able to afford groceries after your gold and silver binge.

2. Buying beyond budget

Another common mistake made is to buy silver and gold beyond what your monthly budget allows. Simply put if you are not able to afford it, you shouldn’t buy it, no matter how much of a bargain you think the price of gold and silver is currently at.

Remember, gold and silver don’t usually make crazy profits overnight (especially physical bullion). So you may be forced to liquidate your overbought gold and silver and sell it at a lost.

3. Treating silver and gold as an all-in-one solution

Although it is possible for gold and silver to replace your key financial products like insurance (and in some cases, it may be the ONLY solution), it would require a substantial amount of precious metals for it to be a viable alternative. In the early stages of your gold and silver portfolio building, it is wise to protect yourself against critical illness and life-changing events that may put a big dent in your financial plans.So

So it is really critical to have basic protection for yourself and your family in. Do talk to your financial advisor about your needs, and discuss with them your plan to include gold and silver as part of your overall portfolio.

Cash remains a popular asset to have because of its tangibility, portability and practicality. The same can be said for gold and silver.

5. Getting yourself caught in scams/Ponzi schemes involving silver and gold

The most prominent and damaging consequence of not understanding the realities of gold and silver investing is losing money through gold and silver scams or Ponzi schemes.

Unfortunately, it is not always easy to detect Ponzi schemes, as they are often disguised under legitimate products or service. However, it is possible to identify them based on common clues that are similar with all Ponzi schemes. We are going to list out the common hallmarks, based on what we hear from our clients who used to be victims of such schemes:

  • They offer GUARANTEED returns, often when you sell back to them after a fixed period of time (No investment is ever truly guaranteed).
  • Their gold and silver products are sold at prices way above market prices (Investment grade bullion are sold or traded for as close to the market price as possible).
  • They encourage you to engage your friends, families, and acquaintances to sign up so that YOU can make even more money (There are a few non-scam gold dealerships that use the MLM business model, though).

Ultimately, the number one rule to keep yourself safe from such things from happening to you is: if it sounds too good it probably is.

In Chapter 4…

We learn the crucial information you need to know about silver and gold