Gold Investing: Risks & Disadvantages to Consider

Investing in gold is generally revered as a good investment. However, there are a few disadvantages that you will need to be aware of before getting involved. Here are some of the disadvantages of investing in gold.

1. No Financing or Leverage

When you invest in gold, you will need to have all of the cash on hand to make a purchase. You cannot use leverage, or any type of financing, for this type of investment or purchase. This can severely limit the amount of people that can get involved in the market.

2. No Tax Advantage

Investing in gold is not going to provide you with any type of tax advantage. By contrast, if you invest in stocks for a long period of time, you are only going to have to pay a 15 percent long-term capital gains tax.

3. Subject to Confiscation

One of the big risks of investing in gold is that it is subject to confiscation. The government could come in and confiscate all of the gold in a warehouse if they deem it necessary. In that case, there is nothing that you can do about it and you will lose your investment.