What are hidden costs when investing in precious metals?

Precious metals are a very popular investment, but it is important that you gain insight into the hidden costs involved if you want to start investing. Because these costs certainly exist. If these costs rise significantly, they can even affect the return on your investment in gold, silver, or platinum.

When investing in precious metals, you always deal with transaction costs and taxes, for example. When investing in physical precious metals, you also have to take storage costs into account.

Storage costs: what do you need to know?

Physical gold, silver, or platinum must be stored safely. Are you investing in physical precious metals? Then you must also consider storage fees. This can be done in a safe in your own home, but you must purchase this safe as well.

You will naturally want a highly secure safe, but the costs for that can also add up, depending on the total weight of your precious metals. Storage fees can also vary depending on the location. Be sure to also factor in insurance costs.

You can also use external storage services. This can be done through services offered by our sister company Edelmetaal Beheer Nederland. They have highly secured storage facilities in Rotterdam and in Zurich, Switzerland.

Transaction costs and spreads in precious metal trading

In precious metal trading, you always deal with what are known as spreads. This is the difference between the purchase price and the selling price when you later want to sell your precious metals. This difference can work against you, so it’s important to take it into account already at the time of purchase. These are, in fact, also hidden costs.

As mentioned, you also incur transaction costs. This is also the case when trading in shares or buying gold ETFs, where you invest in gold but do not own physical gold. Even then, you face transaction costs. You always pay these costs, even if you buy only a small amount of gold. As a result, buying smaller quantities of gold can still lead to higher overall costs.

Taxes and duties: how do they affect your returns?

Because silver and platinum are also used as raw materials in various industries, you always have to pay VAT on them. For gold, there are sometimes exceptions: gold intended for investment purposes, such as gold bars, is exempt from VAT. For gold coins, you may sometimes still need to pay VAT. You also need to take wealth tax into account when holding precious metals. Are you importing gold from abroad? Then be aware of import duties and customs fees.

Minimizing hidden costs in precious metal investments

To avoid or reduce hidden costs, it is important to choose a trustworthy precious metal dealer who works with transparent pricing, such as The Silver Mountain. Also compare various storage options offered by different providers.

Tax planning can help reduce the tax burden on precious metal investments by using tax exemptions, such as the VAT exemption on investment gold. Strategically spreading wealth, selling over multiple years, or storing in tax-friendly countries like Switzerland can save costs. Consult a tax advisor to make optimal use of tax benefits and regulations.

Contact us at The Silver Mountain for advice on the best and most cost-efficient ways to invest in precious metals.

Disclaimer: The Silver Mountain does not provide investment advice and this article should not be considered as such. Past performance is no guarantee of future results.