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FAQ: When will I profit from my gold and silver?

by Rachel MillsMarch 9, 2023
Gold coins and bars in the shape of a house

A: You may be thinking about precious metals the wrong way...

Every investor wants to make a profit. That is the whole point, right? Many investors who look into precious metals wonder when their gold and silver purchases will "turn a profit" or sell for a price higher than their purchase price and associated acquisition expenses.

It's a complicated question and there are no guarantees, on this or any other asset you acquire in life. You just have to weigh all the information available to you, use your discernment and seek out professional advice from people you trust. (Note: Lear Capital does not give financial advice.) And yes, luck and strategy play their parts too.

But this could be the wrong way to think about gold in the first place.

House of gold coins and bars
Gold is not for the day trader and it is not like a stock. Gold is more akin to real estate, in that there are costs associated with acquiring and securely storing precious metals.

For a real estate investment, you will pay certain taxes and legal fees, real estate commissions in most cases and there are expected costs to maintain, insure and protect your property. Most people understand that if you turned around and sold the same house a month or even a year later, you'd take a pretty big bath on it financially, even if the market went up, and even if you paid cash for it.

When you purchase gold there are also costs to consider. Safe, insured shipping, secure storage and brokerage fees are all part of the package. Unless you discover it buried in your backyard, you will pay someone else enough to cover THEIR costs and secure a profit. Someday hopefully you'll be able to sell your gold and your buyer will pay YOU a profit. Just like any asset.

The length of time you should hold a home to make a profit depends on several factors, such as the local real estate market, the condition of the property, and your financial goals.

In general, real estate experts recommend holding a property for at least five years to maximize your chances of making a profit. This is because it can take several years for the property to appreciate in value enough to cover the costs of buying and selling, like closing costs and real estate commissions.

Typically, if your home is well-maintained, all things being equal, the longer you hold, the bigger your profit. And some people buy a home with the expectation that they will never sell. They plan to pass the home on to their children as an inheritance.

Real estate is considered one of the most tangible and reliable ways American families build wealth today. Many investors view precious metals through a similar lens.

Their gold and silver is set aside in case of emergencies that hopefully never come. They never plan to sell and the hope is to build up and pass on generational wealth.

Gold profits, like real estate profits, tend to be better the longer you hold. The truth is your profits will depend on market conditions, like supply and demand at the time.

A big advantage gold has over real estate is liquidity and portability. You can't pick up your house and go sell it in a hotter market. But gold can be carried easily from place to place and is universally recognized and valued. You can sell it at any pawn shop. (Or call us!)

Even if you believe the economy is sound and headed in the right direction, even if you believe the dollar will last forever and hold its value, there are solid reasons to add precious metals to your portfolio and your long term wealth plan. It is also important to understand that in general, precious metals should be considered an asset to hold for the long term in order to gain the best advantages.

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