- Volatility: The price of gold can fluctuate quickly, even though it can be a reliable long-term investment. Significant price swings can be caused by a variety of factors, including changes in interest rates, currency fluctuations, and market sentiment.
- No Yield: Gold does not yield dividends or interest payments, in contrast to equities and bonds. As price appreciation is the only factor that determines its value, investors must rely on capital gains for returns.
- Costs associated with storage and insurance: Safe storage and insurance are necessary for physical gold, which raises the total cost of ownership. When contemplating gold as an investment choice, investors must take these costs into consideration.
- Market Risk: Both outside variables and market speculation have the potential to affect the price of gold. This may result in price distortions that do not accurately represent the metal’s intrinsic value.
- Regulatory Risks: Ownership, taxation, and trade of gold may be subject to changes in some jurisdictions. It is imperative for investors to remain up to date on legal and regulatory developments that may have an influence on their assets.