Gold Shines Amid Uncertainty, But Investors Should Be Aware of These 7 Key Risks

As global economic uncertainty persists, gold continues to emerge as a preferred safe haven asset. Thanks to digital platforms, investing in gold has become more accessible than ever. However, despite its popularity, gold is not without its pitfalls.

Before allocating significant funds to gold, investors are urged to diversify their portfolios and fully understand its limitations. Here are seven key considerations before investing in gold:

1. Gold Doesn’t Generate Passive Income

Unlike deposits, bonds, or dividend-paying stocks, gold offers no cash flow. The only potential return is capital gain, based on the rise in its price over time, which isn’t always guaranteed.

2. Not Suitable for Short-Term Gains

Gold is generally not ideal for short-term investments. Investors should not expect significant profits within two years, especially considering the gap between buy and sell prices, particularly for physical gold like Antam.

3. Price Slows in a Stable Economy

When global markets stabilize and risk sentiment improves, investors tend to favor stocks or other high-yield assets over gold. This shift in preference can reduce gold demand and pressure its price.

4. Physical Loss Risk

Those who invest in physical gold face a higher risk of theft or loss. While digital gold offers a safer alternative, some still prefer holding tangible assets, requiring secure and often costly storage like a safety deposit box.

5. Fraud Risk

As gold investment gains traction, so do scams. Investors must be wary of counterfeit gold and fraudulent schemes. Always buy from certified dealers or reputable platforms.

6. Currency Exchange Risk

Gold prices in local currency are heavily influenced by exchange rates. A weakening rupiah against the U.S. dollar raises gold prices, while a strengthening rupiah could cause them to fall.

7. Speculative Risk

Although considered a long-term asset, gold is not immune to market speculation. Speculative activities can drive prices up or down quickly, potentially harming investors unaware of such market volatility.