5 Disadvantages of Investing in Gold

If you’re looking to make a keen investment that will generate healthy future returns, then it’s likely you’ve considered investing in gold as an option.

However, as with any good investment, it is right that you should carry out good research to first understand the advantages and, in this case, the disadvantages of investing in gold.

1. No ongoing dividends or payouts

Compared with, for example, renting out a property, an investment in gold doesn’t allow you the opportunity to receive ongoing payouts.

Rental yields are in many cases a favoured method of investment as you realise you’re increasing wealth over a period of time, rather than just when it comes to selling your holdings.

2. No leveraging to build your wealth

Again with the example of property investments, you are able to use financing as a leveraging tool to boost your wealth.

However, you are limited in the amount of gold you can invest in by the current amount of cash you hold.

3. Jewellery has major drawbacks

If you choose to invest in gold jewellery, then you are immediately at a loss once purchased.

This is because there are ‘making charges’ and ‘wastage charges’ to the jeweller themselves who, upon selling in the future, will not consider these initial charges you faced.

On top of there is the risk of impurity in the gold.

4. Storage Costs and Security

Of course, you want to make sure your investment is safe whilst you hold it and that means physically storing the gold.

This can be costly and worrying, and not to mention the added expense you face whenever transporting the gold to its place of storage.

5. Mining has its risks

Another popular method of investing in gold is investing in a company who get a certain number of mines underway that are in search of the “Jackpot” load.

Of course, they often never find any gold and your investment goes completely to waste.

Gold mining has big potential payoffs but a higher level of risk so is normally limited to those with a much larger bank account to play with.

This is not to suggest that investing in gold is a bad route to go down and you should, before reaching any decision, check out the advantages as well.

But just be aware that, as with any investment opportunities, there is risk involved so you should never over leverage yourself with an investment that could turn sour.

Zachary Wyatt

Zach lives on the coast in the UK, with one eye fixated on the City. Prior to his writing, he got his feet wet with forex trading platforms.