Remember in old movies when gold mines were a great deal that people used to fight for? That’s because of how important and significant gold was at that time. It was the ideal investment for anyone lucky enough to stumble over a gold mine or have a share of it. It used to be the actual universal currency until it was replaced with paper currency, first in the USA and other countries followed. So, why do people still dwell on investing in gold? Is it a good investment nowadays with millions of other investments rising everywhere?
Well, the answer to that question depends on your personal preferences, so we will introduce you to some advantages and disadvantages of investing in gold that will help you find your answer.
It preserves its value
No matter how many years pass, gold always keeps its value intact. Older generations used to pass it to their children due to its stable value that, even if changed, remains high. Imagine a scenario 50-60 years ago where someone owned a piece of gold and was asked to trade it for 20 dollars. At the time, both had the same value and could buy the same things. However, if this person hasn’t traded the piece of gold until this day, its value has probably increased to around 200-400 dollars, which is considered a great investment.
Sometimes, currency fluctuation brings about crises where the dollar deteriorates and inflation takes hold. These times force gold to rise in value, which makes it a super investment for its holders. Financial experts suggest in the thorough article here that gold is an ancient source of wealth that protects a person’s finances in present days. It offers much reliable investment than cash during hard times; therefore, people tend to keep gold stored to secure themselves when inflation strikes. Also, since gold is universal, it could be converted into cash anywhere in the world. That’s why people who own gold seems to benefit a lot from it when cash loses its value.
Used in products
The never-ending demand for gold that many products depend on will always promote investing in it. As we all know, gold now isn’t just big chunks saved in mines. It’s now converted into jewelry, bags, watches, and even car parts. Therefore, demand always remains high for gold. So, if you’re thinking about investing your money in gold, nothing is safer and more guaranteed than investing in products that mainly depend on it. You can even keep yours in the form of jewelry that can be worn for some time and then sold.
No stable income
Gold is not a consistent income that you can depend on. The profit that you can get from gold depends on circumstances like inflation. Other than that, it’s not a source of stable income for you. Even the fact that you can store it and convert it to cash doesn’t offer a reliable investment since the value of gold doesn’t change drastically over mere days. If you depend on this concept to start your investment, you’re likely to benefit from it in 50 years from now, or your grandchildren will.
Physical storage and insurance
When you store gold, you shouldn’t keep it in your cabinet drawer. Storing gold requires you to place it somewhere secure; a bank safe is considered to be the best option for this. Not only will you need to store your gold, but you’ll also need to pay insurance for it just in case it gets stolen or damaged. Otherwise, you won’t be able to replace it.
If you invest in gold directly, you will be subject to the capital gains tax with a rate of 28%, which is higher than the normal rate of capital gains that stands at 15%. That’s why mining companies that don’t invest in gold directly only pay the ordinary capital gain taxes. So, if you want to avoid such high taxes, you can get a share in these companies instead of investing directly in gold.
There are many ways to invest in gold, either by buying gold coins, having shares in gold companies, or investing in gold products like jewelry and watches. The best time to invest in gold, though, would be the time of inflation in which the value of gold rises and your earnings can be guaranteed. So, to sum this up, gold investment can be risky and tricky unless you figure out how to ensure regular revenue that would bring you a stable income.