Gold and silver have a distinct and useful place in a well-diversified portfolio. If yours doesn’t already include precious metals, you may be more interested than ever in changing that due to the current climate of economic uncertainty and a weakening U.S. dollar.
To help you succeed, we’ll examine six mistakes to avoid when investing in gold and silver.
1. Buying jewelry for investment purposes
Yes, gold and silver jewelry can technically be thought of as an investment. And as a bonus, its wearability makes it more practical than simple gold bars or rounds. The problem is that you’ll almost certainly pay substantially more than you’ll manage to sell it for.
This is because when you buy jewelry, you’re paying for much more than just the gold or silver content. You’re also paying for design, labor, even brand. Take your jewelry to a dealer, and they’ll typically quote you a price based on the melt value—not all the other costs that went into crafting the piece.
To boot, much jewelry isn’t a high enough purity to be considered investment-grade precious metal. Gold must be at least 99.5% pure and silver 99.9% pure to be investment grade (though there are some exceptions). That means standard sterling silver and non-24k gold will be tougher to sell, as the value isn’t quite so obvious.
2. Buying the wrong type of gold or silver for your goals
Not all gold and silver products are created equal. If you’re not diligent, you could end up purchasing a precious metal that doesn’t jive with your investment plan. For instance:
- Not every gold or silver product qualifies for all investment types. For example, if you want to invest in a gold IRA, you’ll need to buy specific IRA-eligible products from approved mints and refiners. They must meet the IRS purity standards, as well.
- “Numismatic” coins are valuable not just for their precious metals content, but also for their rarity and collector demand. If you’re after a simple hedge against inflation, you may not be interested in buying a coin that perhaps has lower purity but greater collectible value. It’ll likely be a more involved process to sell.
- Precious metals ETFs aren’t the same thing as owning the metals themselves. If you buy a gold ETF, you won’t be able to take delivery of your portion of the gold fund.
- Getting precious metals exposure can come in many different forms, but not all of them serve as a store of wealth. For example, buying gold stocks is an investment that theoretically will benefit you when the price of gold increases. However, your investment is in the companies involved in exploring, mining for, or refining gold. That means your money could do better or worse than the metal itself based on the success of the company.
Decide upfront why you’re investing in precious metals in the first place. What job do you want them to do in your portfolio?
3. Overlooking storage and insurance costs
You may like the idea of owning gold or silver—and even be okay with the more cumbersome nature of buying, storing, and selling it. But don’t ignore the extra money you’ll inevitably pay, as well.
Keeping your precious metals can be expensive. Whether you do it at home in a safe, in a bank safe deposit box, in a professional vault, etc., it’ll cost money to ensure your bullion or numismatic pieces are properly secured. Dollar-for-dollar, silver can even be more expensive than gold because it requires more real estate to house it. At the time of writing, $5,000 in silver bullion takes up more than 60 times the space of $5,000 in gold.
4. Making precious metals too much of your portfolio
Experts often recommend keeping your precious metals investment to a maximum of 15% of your total portfolio. There are a couple reasons for this.
First, gold and silver can both be volatile in the near term. They historically have proven to buoy investors during inflation periods or market stress, but they can also spend long stretches underperforming stocks (we’ll talk about that shortly).
Gold and silver also don’t themselves produce income for you. Unless you’re buying stocks in gold companies, the money you make will be primarily from an increase in the value of the metals.
On a related note, it’s unwise to invest too heavily in any single asset type—not just precious metals.
5. Treating gold and silver like growth investments
Gold and silver don’t behave like more traditional investments (like the stock market). You won’t earn interest or dividends with them. Again, your wins and losses come mostly from the performance of the metal itself. If you buy gold and silver expecting your investment to skyrocket, you’re barking up the wrong tree—though, admittedly, metals have experienced bursts of steeper upward trajectories since early 2025.
The aforementioned exception is if you invest in precious metals companies rather than the metals themselves. These are proper stocks that are intrinsically tied to the performance of gold and silver, but they come with more risk. They can far outperform precious metals, but they’re also susceptible to variables that investing in gold and silver directly aren’t, such as bad management and operational issues.
It will also behoove you to insure your purchase of physical gold and silver, as mentioned earlier, which is another monthly expense that can effectively lower your investment’s gains (or deepen its losses).
6. Ignoring the ease of resale
The simplicity of reselling your gold and silver investments is a big deal. You may not be interested in day trading, and in fact be intent on keeping your metals for the foreseeable future. But if the time comes that you do want to sell, know that you’ll need to find a buyer willing to pay what you’re asking. This can involve some shopping around. If you need to sell in a hurry, you may have to sell at a discount.
Digital gold and gold ETFs give you exposure to gold and generally allow you to sell within seconds like a stock. It’s something worth considering if convenience is a high priority to you.
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The takeaway
Investing in gold and silver may seem straightforward, but there are many factors to consider before you make your purchase. Do you know all the ancillary fees that will come with your specific investment type? Do you value the ability to sell quickly? Are you looking for an investment that will grow in a short amount of time?
These are questions to ask yourself to avoid making mistakes when diversifying your portfolio with precious metals—and to empower you to make smart money moves when parking a portion of your wealth in these stores of value.
Frequently asked questions
How do I tell if a gold or silver dealer is reputable?
The best way to tell if a gold or silver dealer is reputable is to check both the amount and quality of online reviews. If the company has been around for several years, that’s also a good sign that they are legitimate.
What’s the difference between spot price and the price I actually pay for gold?
Put simply, the “spot” price of gold is the live market price. However, the price you pay will always be higher. It’s called the “premium,” and it includes dealer markups that help them to pay their bills and make a profit.
How can I avoid overpaying when I buy gold or silver coins?
You can avoid overpaying when buying gold or silver coins by looking at the disparity between the spot price and sale price. The wider that gap, the worse the deal. Shop around to find the narrowest premium.
Is it a mistake to buy collectible coins instead of simple bullion?
It’s not necessarily a mistake to buy collectible coins instead of simple bullion—as long as it’s intentional. Collectible coins take more savviness to buy and sell than bars or rounds that are valued purely for their metal content.
What fees should I watch for when opening a gold IRA?
A gold IRA typically includes costs such as account setup fees, annual custodial fees, storage fees, and transaction fees.
