In April 2020, GoldNews.com.au came under new management, articles published before this time, such as the below, may not reflect the views or opinions of the current GoldNews.com.au team.

Typically regarded as a “safe haven” in times of economic instability and as a hedge against devaluation, gold is the kind of precious metal that only some can resist. Usually purchased in its physical form through jewelers, goldsmiths, or banks, it represents wealth and a store of value as well as a means of passing wealth onto the next generation.

In the recent times, you can purchase not just gold bars and coins, but even gold certificates and gold-related funds. Investment vehicles such as the gold buy-back schemes have also emerged. These schemes purportedly pay out regular returns to customers and/or offer to buy back gold at a premium to the original price.

However, you must first realise what you are investing your money into. Via the internet, you can find organizations offering gold buy-back schemes indicating that gold is a rare resource that will always rise in price while global demand increases. As against what many people believe, gold might not continue to rise in price and also function as an effective hedge against inflation. History has revealed that gold prices exhibit relatively high fluctuation.

What you must notice about firms offering gold buy-back schemes is the fact that they do not usually explain to you how they make their profits. This should raise warning flags. As long as you don’t understand how the profits are gained, how will you consider what the chances are, how sustainable the income are and also what can go wrong? Do not forget that there are no free lunches when it comes down to investment strategies. Some of the companies facilitating gold buy-back schemes have already been liquidated since they cannot sustain their unrealistic business structure. The consequence is losses for the clients.

So, be thoughtful. Don’t be anxious to rush into such type of schemes without first thinking it through and performing your research and examining the viability of the schemes. You can find alternatives to gold buy-back schemes if you are eager to invest in gold. You can get funds making an investment in gold-related securities and futures. It is wise to research your options before purchasing these products.

Most importantly, study the product information to discover the product’s features and potential risks. In particular, when you are considering a fund, request for the prospectus as well as the Product Highlights Sheet. The PHS should present the right snapshot of the product.

You may also ask the particular person offering the product to identify or even explain the benefits and risks. Understand what the product invests in, what factors that can make you incur a loss or even, what can happen to you in the worst-case scenario. When you have doubts, it is advisable to ask for the clarifications in writing. In this manner, it is possible to analyse the information and determine whether the method of selling gold bullion is suitable for you.

Gold News Australia