Is It Worth Investing In Gold?

People have been using gold as money for several thousand years. Chests filled with gold coins buried by pirates on a mysterious island have awakened and continue to awaken our imagination. The reason why people love gold is that it doesn't lose its value, it can't be destroyed, it's rare and you can always buy something for it. Try to buy something for Venezuelan Bolivar?

Who Invented The Gold?

Gold was created during the formation of the universe and it is simply there. The most important thing is that it is not enough and it is becoming more and more difficult to extract it. As a rare mineral it is very valuable. This has always been the case. Gold was not invented by bankers and therefore it cannot be spoiled. Unlike fiat money, the value of gold is not based on trust in the central bank, which prints money. No one produces gold. Its price changes over time, but will never fall to zero. This is unfortunately the case with classic money. The reason is the constant printing of money by bankers. For this reason, gold is not liked by central banks.

They Don’t Like Gold And Buy It

The apparent paradox is related to the fact that classical money (fiat) is not based on anything that has any value. There used to be a gold standard. Such a situation was unacceptable to governments and central banks because they could not get into debt. As a result, bankers broke with this prehistoric tradition and began to print the currency. Why? It is expensive to meet the voters’ desires. Unfortunately, this is the only way to stay in power. Nobody likes to lose money, power and influence. Those who govern us don’t like it the most.

Official media reports tell us that we do not need gold. Gold is a relict. Now we have money, credit cards and internet accounts. Why do we need such uncomfortable money as gold? Such news has been dominating the economic media for many years. If gold is so archaic, why do central banks have been buying very large amounts of gold for several years? In addition, information about gold purchases is kept secret. 

Gold Doesn`t Pay Interest

It is true that gold is not an interest rate and its amount does not increase. Theoretically, the money held on a bank deposit has such an advantage. What percentage does this deposit in your country pay you? 2.5% per year? From this you have to deduct the capital gains tax. There will probably remain 2 per cent per year. Gold still pays nothing. Is this the reason why it is a worse investment? Of course not. It is a better investment because it is resistant to inflation. Gold is always worth the same amount and sometimes its value rises against other assets. This is what happens in times of crisis.

When Is Gold Useful?

Unfortunately, everything points to the fact that such a crisis will happen soon. Even the promoters of the financial world warn against a major financial crisis. It must happen because the level of government debts is cosmic. There are two ways out of the crisis. The first is inflation, which gradually lowers the value of money. This process is already happening. The second is the large financial crisis during which debts are cancelled. After such a crisis, the financial system is being built anew. At the same time new currencies are being created. Unfortunately, old money is worth as much as toilet paper or is exchanged for new currencies after a very unfavourable conversion rate, e.g. 2 to 1. For 1000 units of the old currency you will get 500 units of the new currency. So you lose 50 percent of your savings. Gold is insurance against such looting.

Gold vs. Fiat Currencies

We have established that gold does not lose its value in the long term. What is the situation with your bank deposit? Tragically. The real inflation rate is higher than the interest rate on your deposits. As a result, you lose money by holding it in a bank. Read about inflation in other articles on our website.

Gold will certainly not make you rich people. On the other hand, it will always have some value. If you are saving for retirement, it is worth considering postponing part of your savings in the form of gold.

How Do I Buy Gold?

First of all, you must not buy paper gold. I am thinking of all kinds of certificates for gold, shares of investment funds investing in gold, gold on the forex market or other such suspicious products. Do not do it because you will lose your capital. Some gold is worth buying in physical form. This does not mean that you have to keep them under the floor or bury them in the garden in the evening. In 10 years you may not remember under which tree this jar with your pension is.

 There are companies that collect real gold and can store it for you. You can buy the gold yourself from a gold dealer and deposit it in a safe deposit box. I will offer you one of these companies. However, you have to make an interview yourself and assess the credibility of this company. In my opinion, it is one of the leaders in the precious metals trade. The company is called BullionStar and is located in Singapore.

Gold Bars And Bullion Coins      

If you have the capital to buy 1 kg bars, congratulations. This means that you can save money and are on the right path to a better pension. It is better to buy such a bar from a licensed gold dealer and keep it in a duty-free warehouse. This is also achievable with the aforementioned BullionStar company. I strongly advise not to keep such valuables underground or at home. There are private companies that hold it for you. I used to write about them, and now I will just mention that you can find them in Switzerland, Singapore or Austria.

Good Place

As we know, these are countries that are stable and value privacy and, above all, respect private property. It is no accident that I mention these countries in the case of gold storage. Gold should be kept in countries and places that are safe. Another country of this kind is Singapore. I also advise against keeping gold in bank safekeeping because there is a conflict of interest in this case. Banks don’t want people to own gold because it is in competition with inflationary and fiat-type currencies they print. It may happen that in the event of a crisis and bankruptcy of a bank you will not recover your deposits. Be vigilant.

1 Oz. Coins

The most popular way to invest in gold is to buy bullion coins. Such a coin has 31.1 grams of gold and represents 1 troy ounce (1 oz). It is small, can be an official means of payment (Krugerrand) and is easy to buy or sell. Besides, it is resistant. It can scratch or bend slightly, but can withstand up to 500 years on the seabed.

Building Pension Foundations

Bullion coins and bars are a very good way to build a hard base for your pension portfolio. It is an element of your portfolio that will not give you a big profit, but will ensure you a peaceful sleep. The reason is gold’s resistance to inflation and bad ideas of bankers and government institutions. Gold is independent of the financial systems and therefore valuable. This element of saving should be treated in the long term (10 -20 years).

ETFS – Something For The Brave

This is a more difficult way to invest, because it requires more knowledge and access to brokers. On the other hand, if you want to be rich pensioners you have to learn it. This is not a rocket science.

Investing in ETFs based on gold can be treated as a medium-term investment (1-3 years). Once you are able to identify the moment that is good for buying gold, such an investment tool is very convenient. Just five minutes in front of the computer screen and you are already in a good position. Unfortunately, this method is not for everyone. If you do not know how to stop your nerves and you sell these assets at a fall in their price, you may lose money. One day I will describe these assets in more detail.

Shares Of Gold Mining Companies

This is a very good way to invest in gold. It is definitely the most risky of the safest. While the price of gold and ETF silver based on these raw materials is rising, the price of gold and ETF silver is rising similarly or a little more. In the case of mining campaigns, the price increases several times as much. Unfortunately, in this case we are already rubbing against speculation. Therefore, avoid this method if you do not feel confident about investing in shares. Moreover, invest the smallest part of your capital allocated for investing in precious metals.

Summary

Investing in gold makes sense if you treat such an investment as a long-term holding of capital. It is an anti-inflationary asset and is therefore highly desirable nowadays. In a situation of financial crisis and rising inflation on this occasion, gold can be the only way to preserve your savings. When it starts  stocks, bonds and real estates will lose a lot on the price. This does not mean that you have to sell your property right away. Rather, you need to think about how you will pay real estate tax when nobody wants to rent your apartment and your money will be worth less and less overnight. Then gold will be more expensive. The higher the inflation and the less worth your money, the more valuable your gold will be.

Moreover, after the crisis there will be incredible opportunities on the stock market. You will be able to buy shares of decent companies for a penny. Where will you get your money from? Your USD, CHF, EUR, NOR will have little purchasing power. Their price and value will be proportional to the prices of shares and bonds. Gold, on the other hand, will have enormous purchasing power. Now you will buy one bullion coin (1 oz.) for 1300 USD, and after the crisis you will sell e.g. for 5000 USD. With this money you will buy a lot more shares of Apple for e.g. 25 USD (current price is 166 USD). Think about it.

Prepare Yourself and Be Careful

At the very end I must mention that these are my own thoughts. They are supported by many years of learning and active participation in financial markets. However, I am not a professional financial advisor, so my advice cannot be treated as financial advice. I am writing this in order to open your eyes and help you secure a dignified and rich retirement. You can use these and other investment tips at your own risk. I would like you to treat this and other articles as the beginning of your education. I would like you to become your own financial advisors.

TAGS:  Inflation, ETF, Gold

LINKS:

BullionStar – a place where you can buy and store your gold

Shadowstats  – Other Point of View on Inflation

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Marcin Jagodzinski

Marcin Jagodzinski

Author and originator of the Wealthy Pensioner website,medical practitioner, author of articles on economic issues, enthusiast of modern technologies, fan of Brazilian culture and a man fascinated by blockchain technology.




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