by Jonathan Buhalis
This is not an offer to sell nor a solicitation of offers to buy any security. The information contained in this website is only a summary and is not intended to be a complete description of strategic resources.
The facts and figures presented in this website regarding economics, industry, markets, and all other statistical measures are estimates only and should be treated as such.
We are not a licensed securities broker. For investment questions, please consult your broker.
RISKS IN PRECIOUS METALS INVESTMENT
The markets for precious metals experience significant volatility. Prices fluctuate because of economic conditions including inflation and expectation of inflation, political conditions worldwide including war and terrorism, and conditions in the mining and refining industry. Prices for metals cannot be predicted with any certainty.
Bullion coins and bars are not regulated to the same extent as securities. Purchasers of precious metals are not entitled to the same level of disclosure and protection as, for example, investors in stocks and bonds. On the other hand, there is no guarantee that government regulation will not be imposed on precious metals market in a way unfavorable to purchasers of precious metals. Transactions in certain bullion products currently enjoy certain tax advantages, but there is no guarantee that tax laws will not change in a way detrimental to purchasers of such products.
The difference or "spread" between the market buying and selling price of bullion coins and bars is significant. The spread is typically 5-10% and can be much higher for certain products. There is no guarantee that a purchaser of precious metals will see his holdings appreciate sufficiently to cover the spread.
Borrowing or shorting precious metals can carry unlimited risk. There is no limit to the possible increase in the market price of a metal after borrowing. The risk in shorting precious metals other than gold is higher because the markets for other metals have less liquidity.
Bullion coins and bars are subject to forgery and counterfeiting.