FX.co ★ Frequent mistakes to avoid while investing in gold and mining companies

Experts of the precious metals market provide several recommendations to those who have chosen the yellow metal and gold coins as an investment tool. As a rule, beginners seek not only to save but also to multiply the invested funds. So, the advice of experienced market participants will help beginners to avoid the pitfalls of the precious metals market.

Absence of investment plan

The most important task is to draw up a clear investment plan. To earn a steady income from investments in gold, you need first study the boom-and-bust cycles of the precious metal for recent years and even decades. At the same time, it is important to analyze volatility in the equity markets in order to understand its origin. Analysts recommend studying how much relevant assets have grown over the past couple of years. Then they advise investors to stop trading and wait for the precious metals market to reveal its trend.

Impulsive actions of market players

Most investors often let their emotions run away with them which results in a loss of control over the situation. Influenced by emotions or second opinions, beginners acquire assets at the highest price and sell them at the lowest one. Such investment cannot be profitable, experts note. Many market participants do not trust their own assumptions and forecasts but follow the wrong advice of others. However, if you have patience and you are able to handle the situation, you can become remarkably successful.

Ignoring market warning signs

Beginners often face many obstacles. Among them are confrontations with the opponents of investing in gold who undermine this asset, as well as a number of warning signs that indicate challenges in the precious metals market. They include:

• a) high trading volume with hard-to-explain price hikes amid the lack of dynamics;
• b) overly intensive discussion in forums;
• c) strong recommendations regarding a gold share from non-professional investors;

d) complex geopolitical situation in the country of the mined gold.

Misassessment of risks and potential income

Analysts consider this issue quite topical for beginners. In case of incorrect calculations during investing in gold and other precious metals, they are highly likely to lose all the invested funds. Experienced market players warn against the desire to "put all your eggs in one basket", that is, to bet on only one gold mining company. Experts recommend that investors allocate investments in a number of areas.