You know what’s funny? I’ve watched people lose more money on gold than I care to admit, and it’s almost always the same handful of mistakes. Not “almost always.” It’s literally always the same mistakes.
I’m talking about folks who think they’re being smart, playing it safe with precious metals, and then they end up holding the bag. Or worse, holding nothing at all because they got taken for a ride.
Let me walk you through what I’ve seen over the years, and maybe you’ll avoid the financial equivalent of stepping on a rake.
Paying Ridiculous Premiums Without Knowing It
Here’s the thing about gold: the metal itself has a price, and then there’s what you actually pay. That gap? That’s where beginners get absolutely destroyed.
I once knew a guy who bought a one-ounce gold coin for $400 over spot price. He thought he was getting some kind of collectible. Turns out, he just got sold a regular bullion coin by a dealer who saw him coming from a mile away.
The premium is supposed to cover minting costs, dealer margins, and shipping. It shouldn’t be a second mortgage. For standard bullion coins, you’re looking at 3% to 5% over spot price if you’re being reasonable. Anything much higher and you’re basically donating to someone’s vacation fund.
And here’s the kicker: when you go to sell, you don’t get that premium back. The market doesn’t care that you overpaid.
Thinking Every Coin Is an Investment
This one drives me nuts because it’s so common. Someone walks into a coin shop, sees a shiny “limited edition” something or other, and thinks they’ve found the next big thing.
Look, numismatic coins (that’s collector coins, for normal people) are a completely different animal than investment-grade bullion. You’re paying for rarity, condition, historical significance. That’s fine if you’re a collector, but it’s terrible if you’re trying to build wealth.
The problem is liquidity. When you need to sell that “rare” coin, you’re at the mercy of finding another collector who wants exactly that coin. With standard bullion, there’s always a market. Always.
Falling for the Home Storage Trap
I get it. You want your gold close. You want to be able to touch it, know it’s there, maybe show it to your nephew at Thanksgiving. Very human impulse.
But storing gold at home is like playing Russian roulette with your net worth. I’m not even talking about theft, though that’s obviously a concern. I’m talking about insurance.
Your homeowner’s policy probably covers something like $200 in precious metals. Maybe $500 if you’re lucky. Everything else? Gone if someone breaks in or your house burns down. And good luck explaining to your insurance company that you had $50,000 in gold sitting in your closet without a rider.
Professional storage costs money, sure. But it’s actual insurance, actual security, and actual peace of mind. Do the math on what you’re risking versus what you’re saving.
Buying from the First Dealer They Find
This might be the most expensive mistake on the list, percentage-wise. People treat gold dealers like they’re all the same, like buying milk at different grocery stores.
They are not all the same.
I’ve seen spreads between dealers that would make you physically ill. Same product, same quantity, differences of 10% or more. That’s real money disappearing because someone couldn’t be bothered to make three phone calls.
Check at least four or five dealers. Compare their:
- Buy-back policies
- Shipping costs and insurance
- Actual inventory (not just what they advertise)
- Reviews from multiple sources
- How long they’ve been in business
The lowest price isn’t always the best deal if they’re going to nickel-and-dime you on shipping or make you jump through hoops to sell back. But the highest price definitely isn’t the best deal either.
Ignoring the Tax Implications
Oh boy, here’s where it gets fun. Physical gold is classified as a collectible by the IRS. That means when you sell at a profit, you’re looking at a capital gains rate of up to 28%.
Not the standard long-term capital gains rate that stocks get. A higher rate, because apparently the government thinks you’re having too much fun with your shiny metal.
People buy gold thinking it’s this tax haven, this secret wealth preservation tool. Then they sell after five years, make a decent profit, and get hit with a tax bill that eats up a quarter of their gains. The look on their faces is something else.
I’m not saying don’t buy gold because of taxes. I’m saying know what you’re getting into. Plan for it. Maybe talk to someone who understands this stuff before you commit serious money.
Going All-In on Gold
This is the biggest one, and it’s more about psychology than anything else. Someone reads about inflation, gets spooked about the dollar, and decides to put their entire portfolio into gold.
That’s not investing. That’s panic with a purchase order.
Gold is insurance. It’s a hedge. It’s something you hold as part of a diversified strategy. The people who’ve done well with gold over the long term? They typically have it as 5% to 15% of their portfolio, not 100%.
When gold goes on a run, it feels brilliant. When it sits flat for a decade (which it has done, multiple times), you’re watching other investments grow while your gold just… sits there. Being gold.
The metal doesn’t care about your retirement timeline or your kids’ college fund. It doesn’t pay dividends, it doesn’t grow the way a business grows. It just is what it is.
The Bottom Line
Gold investing isn’t complicated, but it’s not foolproof either. The mistakes I’ve laid out here have cost people I know actual money, real opportunities, and in some cases, their confidence in investing altogether.
You don’t need to be an expert. You just need to avoid being the person who learns these lessons the expensive way.