Gold is one of the oldest investments in the world. It is tried and true, and has brought many people limitless wealth. Bad gold investments have also destroyed businesses that thought they were ahead of the curve. Gold is the ultimate gamble when it comes to investments, so is it worth the associated risks?
Gold will always be worth its amount, which is separate from the dollar value. Other physical assets have huge liabilities attached to their worth. When your stock tanks, you can’t get the actual value of the stock back unless it decides to go back up. A million of a stock that is worth a million will not retain its value 100% of the time. Once again, gold is gold- this makes it unique from many other physical assets.
When there are market instabilities or recessions, gold has a strong record of keeping its value. When stocks were at all-time lows gold was a fantastic investment for those that already bought in. It is the nature of the game, and is one of the main reasons gold bars are sold on such a high level. If you want to look at the negative side of things, when countries are doing well gold tends to stay in its own little bracket. To put it bluntly, when the economy is suffering, gold will do great but when the economy is prosperous gold won’t have much of an impact. History can make an argument for both sides, so it all comes down to the individual that wants to take a spin of the wheel.
Gold is a high reward low risk investment. You need a considerable buy in just to get started, and it pays no interest or dividends. Now compare that to a decent stock that could net you a nice bit of pocket change throughout the year, and you’ll see the differences between the two. People that horde gold do it for long-term benefits rather than short-term payoffs. A single bar of gold goes for over half a million dollars. If you want to be lighter on the pocketbook, a gold coin is about $1200+ dollars depending on the type. You don’t need to be a high roller to get started with owning gold, but it is significantly tougher for someone that doesn’t have a lot of money to spare. Most people will be better off with a savings account that has a moderate interest rate.
Now this is the big one. Central banks control the majority of the world’s gold, making them very dangerous if they decide to sell. The price of gold can fall if they sell a small amount, or even if they make an announcement about selling. Think about that- the intent to sell gold can lower the price of any gold you have on hand. Even if the amount of your investment falls 5%, that is a huge drop in the money that you already paid to get high quality gold.
For the average Joe, owning gold is not a smart investment. There are multiple other ways to grow or save money with a smaller initial investment. In the end, gold is a solid, stable investment for individuals with the required funds. For everyone else, it is like sending your money to the corner for a time out. If you are 100% dedicated to investing in gold, consider gold coins since the buy in is much lower.