Mistakes to Avoid When Investing in Gold During its Bull Market Run

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The Importance of Gold Investment

Gold has reached a record high, making it a popular choice as an inflation hedge and diversification tool among investors. However, it’s important to note that gold often underperforms compared to high-yielding assets like stocks and bonds. Experts also caution against over-investing, timing the market, overlooking fees, and skipping your research when it comes to investing in gold.

Gold Performance in 2024

Throughout 2024, gold has been on a bull run and reached a record high in October. The decline in the purchasing power of the US dollar has led to a surge in investor sentiment favoring the gold market.

Why Invest in Gold?

“The primary reason to invest in gold would be to keep up with inflation,” says Drew Martino, wealth manager at Savvy Advisors. “Gold doesn’t pay dividends or interest like stocks and bonds; you simply rely on price appreciation.”

In addition to being an inflation hedge, gold is also used as a means of diversifying portfolios for greater stability and decreased risk. However, there are several mistakes to avoid when investing in gold.

Top Mistakes When Investing in Gold

1. Over-investing

While gold generally appreciates over time, it underperforms compared to high-yielding market-linked investments like stocks and bonds. Over-investing in gold can limit your ability to capitalize on other market opportunities.

2. Attempting to Time the Market

Timing the market is a common mistake among investors, regardless of the asset. Rather than trying to make quick profits based on market speculation, adopting a long-term perspective with a buy-and-hold strategy can be more beneficial.

3. Ignoring High Fees

Storing and securing physical gold can be costly and can erode potential returns. It’s crucial to account for these high fees when considering investing in gold.

4. Failing to Do Adequate Research

“I would say that those people who are afraid of missing out — and they’re seeing these record highs — they should seriously consider doing their own research,” advises Colin Bosher, COO and cofounder of Nuway Capital.

Understanding the history of gold as an investment, the strategies for investing in gold, and the potential risks involved can help in making informed investment decisions.