Physical bullion carries real risks and costs: prices can fall as well as rise; buyers pay premiums going in and accept spreads coming out; the metal produces no income; storage and insurance cost money; some products are harder to sell than others; and counterfeits exist. None of these makes bullion 'bad' — but a purchase made without understanding them is a guess, not a decision.
Key takeaways
- Price volatility is real in both directions; historical performance does not guarantee future results.
- The premium/spread round-trip is a built-in cost: you buy above spot and typically sell below retail.
- Bullion generates no yield — holding it has an opportunity cost relative to income-producing assets.
- Storage, insurance, and shipping are ongoing, real costs of physical custody.
- Liquidity varies by product: recognizable, common-size items sell faster and closer to fair value.
- Counterfeit risk is managed — not eliminated — by buying recognizable products from reputable dealers.
Market risk: volatility is not a one-way street
Precious-metal prices can experience deep, multi-year declines as well as strong advances. Anyone who tells you a metal “always” does anything is selling, not educating. A useful distinction: price volatility (your holding fluctuates in market value) is not permanent loss (selling at a lower price than you paid, or losing the metal itself) — but volatility becomes loss if your time horizon or liquidity needs force a sale at a bad moment. Suitability depends on your circumstances.
Cost risk: the round-trip is wider than it looks
You buy at spot-plus-premium and typically sell at or below spot-referenced buyback prices. That spread is a real, unavoidable cost of physical ownership, and it is widest on fractional and low-recognizability products. Add storage and insurance over your holding period and the true breakeven sits meaningfully above the price on the chart. Premium math →
Liquidity risk: not all bullion sells equally
A widely recognized one-ounce sovereign coin can usually be sold quickly through many channels. A large bar from an obscure refiner may require assay verification, fewer willing buyers, and a worse price. Recognizability is liquidity insurance — that is the honest case for paying a coin’s higher premium.
Custody risk: theft, damage, and counterfeits
Physical custody means physical exposure: theft, loss, and damage are your problem in home storage, and someone else’s terms in vault storage. Counterfeits exist, particularly in secondary markets and person-to-person sales; buying current products from reputable dealers with authentication practices, and keeping packaging and receipts, materially reduces (but never zeroes) the risk. Dealer reputation and product authenticity are separate questions — a good dealer can still transact in categories where fakes circulate, which is why both are separate dimensions in our standard.
Structural limitations
Bullion pays no interest or dividends. It can be taxed on sale depending on your jurisdiction — rules vary and change, so consult a qualified tax professional rather than a website, including this one. And physical metal solves for tangibility, not convenience: ETFs and other paper exposure trade instantly but introduce counterparty and management risks that physical ownership avoids. Different tools, different tradeoffs.
Frequently asked questions
Is physical bullion risk-free?
No asset is risk-free, and bullion is no exception: price volatility, spreads, storage costs, liquidity differences, and custody risks are all real. Anyone marketing bullion as risk-free should be treated with caution.
Does gold protect against inflation?
Gold’s relationship with inflation is inconsistent over shorter periods — it has sometimes preserved purchasing power over long horizons and sometimes lagged for years. We do not make protection promises; historical performance does not guarantee future results.
How much of my savings should be in precious metals?
Vetted Bullion does not make allocation recommendations. Suitability depends on individual goals, financial circumstances, risk tolerance, time horizon, and liquidity needs — questions for you and, where appropriate, a qualified financial professional.
Sources & evidence notes
- Volatility and drawdown history: long-run public price series for gold and silver. Stable facts; reviewed annually.
- Spread and buyback mechanics: dealer-published buyback policies; policies vary and change. Dealer-specific; reviewed quarterly.
- Tax treatment varies by jurisdiction and changes over time — consult a qualified professional. Regulatory information; reviewed semi-annually.
Claims on this page are classified and reviewed under our evidence model. Found an error? See our corrections policy.