Although gold and other precious metals have been around for thousands of years, they are still considered alternative, or even “exotic” investments that not many people understand.
When you take into consideration some very basic facts, it seems that the reason why Wall Street tends to look down on precious metals investing is because they really are not able to do much with them. Therefore they can’t charge the juicy commissions that more sophisticated trading strategies entail.
They are basically a special form of currency that can be used to help preserve the value of your portfolio in the event of an economic downturn. So the next time you speak to a precious metals-averse broker, consider the following common lies they like to repeat to see if they have your best interests at heart.
1. Investing in precious metals is too risky for the average investor.
Wall Street bankers make their money on the commissions they generate. The more exotic the trade, the higher their commission payouts get to be. However, when it comes to investing in precious metals, they are not able to charge their clients high commission fees.
Since no one likes working for cheap money, they tend to discourage selling hard assets like gold to their client base. In fact, some will go as far as labeling these investments as high-risk trades that could potentially wipe out your portfolio.
Fortunately, all you have to do is look at how precious metals behaved during the crash of 2002 and the crisis of 2008 to see how precious metal investors actually benefited higher risk-adjusted returns.
2. It’s better to own bullion coins than bars.
You’ll often hear advisors talking about how owning bullions coins are a better investment than owning bullion bars. What you won’t hear is how they charge higher premiums on coins, and thus earn bigger commission payouts.
In case you didn’t notice, the days when we could go to the local market and purchase groceries with gold coins are long gone. Whether you own coins or bars, you’re going to hold them in a special account in its physical form, not in your pockets.
Whether you’re an average investor or an institutional client, buying precious metals in bullion bars gives you the chance to own a safe asset at a discounted price vs buying bullion coins.
3. Gold pays neither dividends or interest, therefore it shouldn’t be in your retirement account.
While this point is actually true, it's important to highlight why investing in gold can make sense as a way to preserve the value of your overall portfolio. Although stocks can payout dividends and gold cannot, you can use gold to store value as it has been used for thousands of years.
You can’t buy an iPhone with gold coins or bars, but you can use it as an effective insurance policy against events that are out of your control like an economic collapse
If you’re on the fence about investing in gold and other precious metals, talk to a local investment advisor who won’t repeat these unfounded lies. Also, read as many customer reviews as possible, to see real world experience. The best investments are those that give you peace of mind, and some potentially nifty returns too.