The Disadvantages to Owning or Buying Gold or Silver Bullion

What are some disadvantages to owning or buying gold or silver bullion, or are there any? This question needs to be answered before investing so as to make the best choice possible. Though some say there are none, or almost none, there are a few. If an informed investment is to be had, then all aspects of the decision need to be considered.

In a vacillating economy, many people think that precious metals are the ideal investment. Well, this may be, but there are still some negative considerations. One such consideration is that of deflation. During deflation, the dollar increases in value. This makes it more desirable, and people typically cash in other investments for the dollar. The attempt to cash in gold and silver in mass quantities will lower their value, and make them harder to sell because there will be fewer customers.

For silver, a big disadvantage is that of having such a small market to start with. Thus, it seems the ups and downs are more severe. One must have the intestinal fortitude to weather these ups and downs with a sense of doom about each decrease in price.

One disadvantage to owning or buying gold or silver bullion is the costs associated with storing, and insuring security of the bullion. Other types of investments do not have the same disadvantages.

Bullion is both bulky and heavy, meaning a problem with handling. Just 1000 oz of bullion requires a huge space and the ability to handle that much weight. This adds to problems with storage and security.

Other disadvantages include the volatility of these metals. Prices go up and down frequently. You also do not earn interest or dividends with them. This must be taken into consideration before making your decision to buy.

Over the last four decades, the economy has shown a big growth. Companies such as Microsoft and Wal-Mart have made great gains. This is reflected at the same time by a huge growth in gold and silver. This tends to make investors overlook the trend and think that they are getting a better bargain than they really are. Historically, these metals have had a lower rate of growth than other investments, which is seen as a disadvantage to them.

The purity of the bullion that is bought and the likelihood of getting less than the percentage expected is another disadvantage to owning or buying gold or silver bullion. An added cost when either buying or selling bullion is that of assessing the percentage of purity. This decreases the amount of profit in a sale, and increases the cost when buying. Therefore, your investment does not yield as much as it otherwise might.

Though these metals are good investments, they are not without certain risks. When deciding on whether or not to invest in them, all the pros and cons should be considered. They are good investments if all the advantages and disadvantages are considered, but not so if either is ignored. Like all things in life, there are risks involved. Overriding these risks, though, might well be the satisfaction of owning these precious metals.

Source by Stephen Huston

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