Gold is considered one of the best and safest forms of investment, often seen as a safe haven during times of economic crisis and market volatility. However, buying gold is not as simple as some might think; there are several common mistakes that can lead to financial losses or unsuccessful purchases.
In this article from Qimmat Zawiya Al Shifa Gold and Jewelry Store, the best store in Saudi Arabia , we provide you with a comprehensive guide on the most prominent mistakes to avoid when buying gold, whether you are a beginner or have experience in this field.
Common mistakes when buying gold and tips to avoid them
When buying gold, especially for investment purposes, many people make common mistakes that can affect their financial decision. Here are some of the most common mistakes to avoid when buying gold to ensure a smart and safe purchase.
1. Ignore labor and additional costs
One of the things that new buyers often overlook is understanding the "workmanship", which is an essential part of the cost of any piece of gold.
What is meant by manufacturing?
It is the cost added to the price of raw gold for the design and manufacture of the piece, and it varies from store to store depending on the type and complexity of the items.
How do you calculate the final price?
Price per piece = Weight of gold × Price per gram + Manufacturing cost
It is essential to know the cost of labor beforehand so that you are not surprised by a price different from expectations.
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2. Being swept away by low prices without verification
Cheap prices may seem tempting, but sometimes they are an indication that there is a problem.
What are the risks of buying cheap gold?
It may be impure, or contain impurities that reduce its actual value. In some cases, the gold is counterfeit or fake.
How can you avoid making this mistake?
- Compare prices from different stores.
- Always ask for a certificate that shows the gold's karat and purity.
- Only deal with stores known for their good reputation, such as " Qimmat Zawiya Al Shifa Gold and Jewelry Store ".
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3. Failure to verify the purity of the gold and relying solely on its appearance.
The external shine is not enough to determine the quality of gold, as some pieces may only be plated or mixed with other metals.
How do you verify the purity of gold?
- Make sure the piece has a caliber stamp (e.g., 18K, 21K, 24K).
- Request a certificate of purity from the store.
- Simple home tests can be performed, such as the magnet test (gold is not attracted) or placing a drop of vinegar (gold does not change color).
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4. Lack of knowledge about the different gold purities.
The karat is the primary factor that determines the purity of gold, and directly affects the price.
Common types of calibers:
- 24-karat gold: 99.9% pure gold, ideal for investment and bullion.
- 21 karat: Contains 87.5% gold, suitable for fine jewelry.
- 18-karat gold: Contains 75% gold, is characterized by its hardness and is frequently used in everyday designs.
How do you choose the right caliber?
- For long-term investment: 24 karat gold is best.
- For personal use and jewelry: 18 or 21 karat is preferred, depending on preference.
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5. Buying from an unreliable store
Buying gold from an unreliable source may expose you to losses or the acquisition of counterfeit products.
Why is it important to buy from a trusted store?
- It guarantees you a certificate of authenticity for the gold.
- It provides after-sales services.
- It guarantees the quality and resale value of the item.
How do you verify the reliability of a store?
- Check customer reviews online.
- Ask about purchase reviews from previous customers.
- Choose well-known and famous stores such as Qimmat Zawiya Al Shifa Gold and Jewelry Store.
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6. Rushing into purchases without comparing prices
Buying gold requires time and study, and is not a decision to be made quickly.
How do you get the best price?
- Don't just visit one store, but compare several stores.
- Keep an eye out for seasons when stores offer special deals, such as holidays or seasonal sales.
- Take advantage of loyalty programs or discounts designed for repeat customers.
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7. Neglecting to read product details when purchasing online
Buying gold online has become popular, but it requires attention to detail.
What should be checked?
- Make sure you know the carat, weight, shape of the piece, and the type of stones added, if any.
- Do not rely solely on images; read all available information carefully.
- Ask customer service before completing the purchase.
8. Ignoring the return and exchange policy
When you buy a piece of gold, you may later discover that it does not suit you or contains a hidden defect.
Why is the return policy important?
- It allows you to replace the part or get a refund if there is a problem with the specifications.
- Some stores offer a free exchange period or a warranty against manufacturing defects.
Tips to avoid any problems later:
- Read the return and exchange policy on the website or ask about it in the store.
- Keep the invoice and warranty certificate after purchase.
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How can choosing an inappropriate time to buy gold lead to losses in savings?
The gold market, like any other investment market, is affected by supply and demand factors and global economic developments. Buying gold during periods of record highs or following sharp upward waves is one of the most prominent reasons that may lead to losses when saving, as psychological factors such as fear of continued rise or greed for quick gains drive many individuals, especially beginners, to make ill-considered purchasing decisions.
Strategies for choosing the optimal time to buy
Choosing the right time to buy gold is a crucial element in achieving effective savings and investment, as careful strategies contribute to reducing risks and taking advantage of market movements more efficiently:
1. Periodic Investment (Dollar-Cost Averaging)
This strategy represents one of the most effective ways to save in gold, and it relies on buying a fixed quantity or value of gold at regular intervals (monthly or quarterly), regardless of the price level each time.
This approach helps to reduce the impact of gold price fluctuations on the average long-term purchase cost, and spares the investor the burden of trying to determine the best time to buy, something that is difficult even for professionals in this field.
2. Buying during periods of decline
Continuously staying informed about gold market news and the factors affecting its prices—such as global interest rate changes, the strength of the dollar, and geopolitical events—helps identify periods of decline that present suitable entry opportunities.
Buying at significant dips gives the investor a better price point and improves long-term returns.
3. Using gold coins as a flexible savings tool
Gold coins such as the gold pound, half pound, and quarter pound are considered a highly liquid means of saving, as these denominations allow the investor to easily buy or sell small parts of his portfolio, without having to get rid of a large ingot all at once.
It is an ideal option for medium-sized savings and for covering emergency financial needs.
In summary: Simple steps to avoid significant losses
Buying gold can be a smart step towards securing your financial future, but it requires awareness and careful knowledge to avoid making mistakes that could cost you a lot. To ensure a reliable buying experience, rely on Qimmat Zawiya Al Shifa Gold and Jewelry Store , where you will find a wide selection of certified pieces, excellent customer service, and competitively priced items.
By following the tips above and avoiding common mistakes, you can buy gold with confidence and intelligence, whether your goal is investment or saving.
Frequently asked questions about common mistakes when buying gold:
What are the best ways to avoid losses when buying and selling gold?
To avoid losses when dealing with gold, it's crucial to be patient and make informed decisions. Avoid buying or selling at stores offering unreasonably low prices, as this may indicate poor quality or fraudulent activity. Always ensure you deal with reputable and trustworthy entities, and ideally, compare prices at multiple locations before making your final decision.
How can you protect yourself from fraud when buying gold?
The most important step to avoid fraud is to verify the identity of the merchant or store before purchasing. Do not deal with unknown entities or phone calls offering enticing gold investment deals, especially if they are unreliable or you haven't personally inquired about them. Ensure the store provides certificates of authenticity for each piece of gold and that it is officially accredited or well-known in the local market.
What type of gold retains its value when sold?
24-karat gold, especially bullion, is considered the best in terms of resale value due to its high purity and low manufacturing costs. Furthermore, pieces without embellishments or precious stones are more liquid and easier to sell at the market price.
Does the manufacturing cost affect the resale value?
Yes, the manufacturing fee is non-refundable upon sale, so the higher the fee, the lower the chance of recovering the exact amount paid. Therefore, it's advisable to minimize the manufacturing fee when buying gold for investment purposes.
Source
World Gold Council : Purity Standards and Buying Guides.