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Risk Reduction: How to Manage Risks When Investing in Precious Metals

Risk Reduction: How to Manage Risks When Investing in Precious Metals

You may be knowledgeable about the risks that you may encounter when dealing with stuff like cars, real estate or even healthcare, but nobody talks about how risky investing in precious metals like gold and silver can be.

So, let’s go through some risks that may occur when you invest in precious metals and how you can reduce them.

1. Fraud Risk

Arguably the biggest risk associated with investing in precious metals is fraud, but only if you don’t take your time to do some heavy research about your dealer.

Whether you’re buying precious metals through a physical store or an online one, try to learn as much about your dealer as you can. Read testimonials from other customers and find out the dealer’s certifications and experience in the market.

Agencies like the Federal Trade Commission (FTC) and Commodity Futures Trading Commission (CTFC) help investors against fraud risks so follow their guide before you invest.

2. Taxation Risk

Legally, precious metals dealers are not allowed to sell at prices which include a capital gains tax rate of more than 28%. If you end up buying from someone who violates this rule, you can be punished by the IRS too.

You can mitigate this risk by buying from companies that offer you a 401k account or an IRA account. These accounts can only store precious metals which are approved by the IRS and provide tax-deferment benefits like high rollover.

3. Contractual Default Risk

To buy precious metals from a dealer, you must enter a contract. There is usually no guarantee that even the top investment companies will respect the terms of the contract and not default.

You can protect yourself against this risk by making sure your dealer is approved by the IRS and authorized by the PCGS (Professional Coin Grading Service). These measures are put in place to hold dealers accountable so make good use of them.

4. Liquidity and Storage Risks

Even though precious metals like gold and silver are thought to be highly liquid assets, they must be inspected before they can be traded and that process often takes a long time.

To reduce this risk, choose a precious metals investment company that can store your metals in an online storage account. These accounts let you liquidate your precious metals in an instant.

We Can Help You Manage Your Investments

If you’re looking to invest in precious metals but concerned about the risks, Orion Metal Exchange can help you out!

We are a PCGS (Professional Coin Grading Service) Authorized top investment company and have been successful in the American precious metals exchange market for over 50 years.

Get in touch with our expert team who will resolve all your concerns and help you make secure investments in precious metals!

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