Currently, gold is worth more than ever and there are a lot of people making a lot of money by investing in gold stocks. However, is buying gold stocks the best course of action? What are the disadvantages of buying gold stocks? Should gold stocks be a part of your investment portfolio? Well, it really depends on the investor themselves, but if you know what you want out of gold, it can be a good investment. If you are worried about investing in gold, then these disadvantages are not going to help ease your mind.

1.Currently, there is a massive amount of growth in the price of gold right now, but that growth has pretty much stopped now. In the past 10 years, gold has increased in price dramatically, and that dramatic rise seems to have stopped and is now only going on fumes. It is still rising, but very slowly and that does not help you if you are getting into the gold investing world now. People who are investing in gold now are people who are just trying to diversify their portfolio.

2.Another big problem with gold is that everyone knows the value of gold and gold has been heavily evaluated as a result. This means there is not much opportunity for you to invest in gold because everyone is already doing so. Other stocks can make a person a lot of money if they get in on the ground floor and invest when the stock is cheap. Think of how much you could make off Google stocks if you started investing in the company during its much-younger days.

3.Gold does not provide you with constant revenue from the dividends. Many investors will get big rewards from the dividends they can reap from their stocks and real estate, but this is not the case with gold. With gold, you buy coins, bars and bullion, and you own these items out-right. The value comes when you sell the gold to someone else so there are no dividends.

4.Gold needs to be stored somewhere as well. Gold is not like a stock and it does not exist simply in computers. The gold has to exist somewhere and that leaves you two choices. You can buy the gold and have it sitting in your house, or you can pay a bank to store gold. In the bank your gold is protected. This costs you more money and can eat into the profits you are enjoying from the rise of gold. If the price of gold falls, you still end up paying the same price to store your gold.

5.Gold preserves capital and does not grow with capital and that means if you want your money to make money, gold is not the right place to invest. Gold just sits in a vault and the value of gold will only rise and fall based on demand.

6.Transporting gold is also a very big problem because of how heavy gold is. If you are having gold transported to you, you need to think of the logistics of this. It is important to remember that one ounce of gold will be worth $1,000. If you have $100,000 worth of gold, you will have 100 ounces of gold to move.

7.Choosing the right amount of gold can also be very difficult. With stocks there is not this same problem because stocks come in the form of certificates that are electronic or in paper form. However, gold has many options that can make things very confusing for an investor.
8.If you want high-returns on your investments, then gold is not the best option for you.

Investing in gold is not always the best option, even with the high value of gold. There are several things to consider including the complexity of choosing the gold, the low-returns that come over the long-term for gold, as well as the need to store the gold somewhere and the high costs associated with storing gold. That being said, if you have some extra money, gold can be a good way to diversify a portfolio, but it is not a good option as the only investment you make.

Author Bio: Scott Bradley is a professional investor and has made a killing investing in the stock market. To learn more about Investing In The Stock Market

Category: Finances
Keywords: gold,stock market,investing,