Costco’s recent foray into the gold market with the sale of 1-ounce bars has stirred significant interest among investors. Despite the apparent allure of owning a tangible piece of the precious metal, financial expert James Royal warns potential buyers of the downsides associated with this form of investment.
The one-ounce PAMP Suisse Lady Fortuna Veriscan gold bars, priced at nearly $2,000, might fit snugly into one’s hand, but Royal underscores the inherent costs that come with these purchases. “As soon as you purchase these gold ingots, you’re already down 5, 6, 7 percent, which is the cost you pay over the fair value, the spot price of gold,” he explained to WBZ-TV.
Moreover, the selling process can be equally disadvantageous. “If you have to go sell later on, then you’re going to lose a similar percentage. And so that’s a huge spread for anybody to get in-and-out of gold if you had to give up 15% of your investment at any one point, just to buy in-and-out. That’s a huge cost right off the top for anybody,” Royal cautioned.
Beyond the financial aspect, there are practical challenges associated with physically owning gold. Safeguarding the precious metal necessitates additional expenses for insurance, and the risk of theft remains a constant concern. “Anybody who comes into your home could physically take that from you. So that’s another huge issue with owning gold, you really have to protect it,” Royal highlighted.
To navigate these challenges, Royal proposes exploring alternative investment vehicles, such as funds that own physical gold. Additionally, he emphasized the potential long-term benefits of investing in stocks. “They need to really more carefully understand the long-term returns that you can get by investing in stocks. Stocks handily outperform basically all other asset classes over time and it’s a really attractive way for you to invest in the things that have made other wealthy people wealthy,” he advised.
As investors contemplate their options, it becomes clear that while the glimmer of gold may be tempting, the wisdom lies in exploring more secure and lucrative investment avenues.