Investing in precious commodities like gold, platinum, or silver is a risky affair. People are more than concerned about these precious assets, especially when it comes to investing in them. Investment in Silver in India or any other country depends on the market flow and how superbly one could predict the market future. Below, I have compiled some of the prominent risk factors that shouldn't get ignored while investing in metals like gold or silver.
Risk 1: The opportunity cost
Metals like Gold, Silver and Platinum are offered with a share of tradeoffs. First in this race is the opportunity cost. The human mentality is prudent to less risky things. Therefore, each penny invested in precious metals could get invested in passive instruments capable of earning interest.
Risk 2: The Tax Risk
Next in the queue is Tax Risk. If you aren't astute about which precious metals vendor use, you might end up violating IRS storage adjustments regarding trusted third parties. As per IRS, precious metal trading and the metal exchange-traded funds (ETFs) have been categorized under collectibles. Assets like these are subject to a maximum long-term capital gains rate of 28%.
Risk 3: The Liquidity Risk
Many people must not be aware of this face, but both Gold and Silver aren't legal tenders everywhere. To minimize the liquidity risk, you can opt for a precious metals supplier that offers online storage accounts for instant liquidity. With the help of an online account, your funds can dispel in one to three days after the transaction gets settled.
How to minimize risk while investing
Now when you know some of the risks involved in silver forex and investing in gold, you better be prepared for them. To help you with this, start with investing in physical bullion held by the insured and IRS-approved third-party custodians. There could be a case when physical gold and silver would not pay you heavy dividends but can assure you peace of mind and a much sturdy portfolio designed to retain more value during the economic deterioration.
