Hey everyone, welcome back. We all want to cut
through the noise and get right to what matters,
right? So today we're going to really zero in
on gold investing, specifically how to avoid
some of the biggest and most common mistakes
people make. Right. It's such a fascinating area,
but also one where, honestly, it's easy to trip
up if you're not careful. And to help us navigate
these potential pitfalls, we're turning to Doug
Young and his bulletin, Gold Investing Mistakes
to Avoid. I mean, this guy's got over 20 years
of experience across the board, from commodity
trading to, of course, precious metals. Yeah,
Doug's been there, done that. And what I appreciate
is his focus on really empowering people to make
smart decisions. So with this deep dive, our
goal is to extract that real actionable advice
from his bulletin, the stuff that will really
help you navigate this. whole gold investment
landscape effectively. Absolutely. And avoid
some of those costly mistakes that, let's be
honest, a lot of people fall into. So let's jump
right into it. Mistake number one, and this is
a biggie, investing in gold with a short -term
horizon. Doug really emphasizes the importance
of taking that long view. And there's a good
reason for that. I mean, historically, the value
of gold has generally trended upwards over time.
But in the short term, yeah, its price can jump
around quite a bit. So there's that natural volatility.
But beyond just the price swings, what's the
real danger of going in with that short -term
mindset? Well, think about the mechanics of actually
buying and selling gold. There's this thing called
the spread, which is basically the difference
between the price the dealer is paying for gold
and what they're selling it for. So you're already
starting a little bit in whole right off the
bat. Precisely. So if you're trying to, let's
say, make a quick profit and the gold price isn't
moving much, that's what we call a period of
consolidation, you could easily end up having
to sell for less than you initially paid. even
before factoring in any fees or commissions.
Yeah, it's not as simple as just buying low and
selling high, especially if you're in a rush.
Exactly. And let's face it, trying to day trade
gold, that's a quick way to potentially get burned.
And you definitely wouldn't want to put money
into gold that you might need next month for,
say, a sudden car repair or something, because
you might be forced to sell at a loss. Makes
perfect sense. So gold might be a good hedge
against inflation or economic uncertainty in
the long run. Right. Those are typically longer
term strategies, right? But it's definitely not
a get rich quick scheme. No, not at all. It's
more about preserving wealth and building a solid
foundation. OK. Mistake number two. Relying too
heavily on gold ETFs, specifically GLD, instead
of holding actual physical gold. Doug makes a
pretty strong case for having that tangible asset
in hand. Yeah. And this is where things get interesting.
It's about understanding the fundamental difference
between holding something physical, you know,
those actual gold bars or coins you can see and
touch, and having shares in a financial product
like an ETF. Right. So an ETF like GLD is meant
to track the price of gold, but it's not quite
the same as owning the metal itself. That's exactly
it. You're essentially buying shares in a fund
that holds gold, but you don't actually possess
the gold directly. And this is where Jug brings
up the concept of counterparty risk. And he specifically
highlights this with GLD because of the way its
prospectus is written. OK, counterparty risk.
Can we break that down a bit? I'm sure some folks
are thinking, what does that even mean? Sure,
it's a fancy term, but in this context, it basically
boils down to the risk that the other party involved.
In this case, the trust that holds the gold on
behalf of investors might not be able to meet
their obligations. Like in a really extreme scenario,
right? So let's say in some very unusual market
conditions, something happens and the fund can't
actually deliver the gold that backs your shares.
Yeah, and that's where things get tricky. Doug
points out that GLD's prospectus has clauses
that if things were to really go south, could
actually favor the trust, leaving investors in
a potentially precarious position. So it's kind
of like you're trusting that everything will
run smoothly and that the fund will always be
able to back up your investment with actual gold.
And most of the time it probably will. But Doug's
point is that if true security is your aim, if
you really want to know that your investment
is safe, Physically holding that gold might be
a more direct route. Makes sense. Okay, let's
move on to mistake number three. Investing in
gold jewelry. I know a lot of people who think
their gold chains and bracelets are a solid investment.
Yeah, it's a common misconception, but Doug is
pretty clear on this one. Gold jewelry is not
the way to go if your goal is purely financial
return. Right, it's more than just the price
of gold that determines the value of a piece
of jewelry. Exactly. You've got the design, the
craftsmanship, the brand name, all these other
factors that play a role. And then there's the
sentimental value that people often attach to
their jewelry, which has no bearing on its actual
market value. So that beautiful gold ring you
bought might be worth a lot less than its weight
in pure gold if you tried to sell it just for
the metal content. You're paying a premium for
the artistry, the design, the whole experience.
And that's fine if it's something you cherish.
But as an investment, eh, not so much. Right.
You're not getting the same kind of direct exposure
to the price of gold as you would with, say,
a billion coins. And that's why Doug recommends
sticking with those standardized gold coins if
your aim is investment return. Their value is
much more transparently tied to the current spot
price of gold. Good to know. All right. Let's
tackle mistake number four, which ventures into
the realm of numismatic coins. you know, those
rare and collectible gold pieces. And Doug seems
to advise a pretty cautious approach here. Yeah,
and for good reason. Numismatic coins can appreciate
significantly in value, but it's a very specialized
area. You really got to know what you're doing.
Exactly. And the biggest risk is encountering
counterfeit or forged coins. Oh, wow. Yeah, I
hadn't even considered that. It's a real problem.
And there are definitely people out there who
will prey on those who aren't familiar with the
nuances of numismatics. You know, they'll try
to pass off fakes as the real deal. And if you
don't know what to look for, you could easily
get scammed. So unless you're a seasoned coin
collector with a deep understanding of grading,
rarity and authentication, you're probably better
off steering clear. That's Doug's advice. For
the average investor, sticking to standard bullion
coins like American Eagles or Canadian Maple
Leafs is a much safer bet. Right. Those are widely
recognized, easy to verify, and their value tracks
the prevailing gold price much more closely.
Makes sense, right? Now, this brings us to a
crucial question for you, our listener. How much
do you really know about the specific type of
gold you're thinking about buying? I mean, have
you done your homework? It's easy to get swept
up in the excitement, but knowledge is power,
especially when it comes to investing. Okay,
mistake number five. Falling for those too -good
-to -be -true offers. We've all seen them. Those
are ads promising unbelievable deals on gold.
What's Doug's take on these? He's pretty straightforward,
be very wary of any unsolicited offers, especially
those cold calls or emails. pushing gold investments.
Yeah, those are always a red flag. While there
are definitely legitimate opportunities out there,
Doug emphasizes that many of these deals are
simply not what they seem. And he particularly
cautions against falling for these traps in the
numismatic coin market, where the potential for
inflated prices and counterfeits is even higher.
It's like that old saying, if it sounds too good
to be true, it probably is. Exactly. And when
it comes to something as valuable as gold, it's
always better to err on the side of caution.
Buy from established and reputable dealers. That's
the key. Protect yourself. Don't let the allure
of a great deal cloud your judgment. And that
leads us to Doug's sixth and final mistake to
avoid, neglecting due diligence, which can lead
to falling victim to scams. And with more and
more people turning to gold, especially in times
of uncertainty, it seems like those scams are
only becoming more prevalent. Absolutely. And
Doug points out that these scammers can be very
convincing. They know what to say, how to appeal
to people's fears and desires. That's why doing
your research, that due diligence, is so important.
You need to really vet the companies you're considering
doing business with, understand the products
being offered, and be wary of high -pressure
sales tactics. Don't be afraid to ask questions.
Dig deeper. and seek independent verification.
You're investing your hard -earned money. You
deserve to be confident in your choices. That's
a great point. It's not enough to just decide
you want to invest in gold. You need to invest
the time and effort to ensure you're dealing
with legitimate players. So, just to recap, Doug
Young's wisdom boils down to these six key takeaways.
Prioritize a long -term perspective when it comes
to gold investing. Understand the differences
between physical gold and those ETFs like GLD.
Don't fall into the trap of thinking gold jewelry
is a primary investment. Approach rare coins
with extreme caution unless you're an expert.
Be suspicious of those two good -to -be -true
deals. And always, always do your research to
protect yourself from scams. Yeah, he lays it
all out pretty clearly. And honestly, his advice
is incredibly valuable for anyone considering
gold, whether you're a seasoned investor or just
starting out. Absolutely. And as you our listener,
think about your own financial goals. Consider
which of these pitfalls might be most relevant
to your individual circumstances. What are your
objectives? What's your risk tolerance? These
are the questions to ask yourself. And here's
one final thought for you to chew on. Given that
long -term focus that Doug emphasizes, what may
be one specific strategy for incorporating physical
gold into a diversified portfolio while mitigating
those risks we've discussed? Really interesting
question. Food for thought, for sure. We hope
this deep dive has given you a solid foundation
for making more informed decisions about gold
investing. Keep exploring, keep learning, and
as always, thanks for joining us.