Investing in Gold for the Long Run

Almost all people in the world know that gold is precious. In fact, even children at an early age are taught that gold is precious. One only needs to revisit their history lessons to remember that man has sought gold for ages.

Even with the proliferation of much more newer investment instruments like stocks, bonds, commodities, and even cryptocurrency & NFTs, many people still invest in gold.

But is investing in gold truly worth it? After all, none other than investment guru and the “Oracle of Omaha”, Warren Buffet, has publicly stated numerous times that he doesn’t think it’s worth investing in gold.

Can he be right? Is gold not worthy as an investment instrument? But apparently, gold as an investment instrument is more popular than ever. For example, in 2023, the number of Americans who think it’s worth investing in gold has doubled to 26%.

But who can fault them? Gold prices as of 2023 are near a 30 year high, especially as more and more people are convinced that gold is a hedge again inflation.

The Details:

1. Gold is at an All Time High

If you have invested in gold a long time ago, you probably are laughing in delight now. This is because the price of gold as of 2023 are near their all-time highs. Gold prices are three times their prices in 1994 where they first continued to rise significantly over the years.

Also, the pandemic is almost considered officially over. All the economies in the world have resumed 100% operation and the world economy is surging again, leading to more demand for precious metals like gold.

But it seems lady luck have been favoring gold owners these days. This is because during periods of high inflation, investors usually turn to gold, making the already owners of gold even more richer.

Also, as stated, gold is now widely perceived by many people and even many learned investors as a good hedge against bad economic times, and as fate would have it, many countries these days are in bad economic standing. This is why there are many people today buying gold.

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2. The Allure of Gold

But what is really the allure of gold as against other forms of investment instruments? Here are a few reasons why gold is more popular than ever despite the existence of other forms of investment instruments:

2.1 Gold is Tangible: Unlike other investment instruments that exist only in paper or online, people who buy gold can actually touch them just like real money. They can hoard, store, and take them anywhere, although gold bars can be heavy.

2.2 Gold is Expensive: For ages, many explorers, adventurers, pirates, armies and criminals have searched for gold. Gold’s rarity is one of the reasons it’s expensive. In fact, if you own gold jewelry, many people would think you’re rich, although you might not actually be.

2.3 It Has Important Uses: For example, gold is widely used in electronics. And as we know, electronics is a major part of everyday life. Many people cannot do their daily tasks without electronic devices, which is partly composed of gold. This makes gold very important.

2.4 Its Highly Ornamental: Gold is widely used in jewelries. In fact, gold jewelry is used by many people to indicate to other people that they have money. Gold is a status symbol for many people in many cultures.

2.5 It’s a Part of History: From the Mayans to the Aztecs, From the Egyptians to the Romans, gold has been a part of history. Gold used to adorn important people in history. Gold also used to adorn many of the world’s past monuments and statues.

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3. The Psychology Behind Gold Investing

But why do people really invest in gold? Why don’t people invest in other investment instruments such as stocks, bonds, forex, commodities, and so on? Here are a few reasons:

3.1 People Grow Up Knowing Gold is Valuable: Even at an early age, people grow up knowing gold is valuable. From history lessons, adventure movies and novels, and even hiphop artists, people are constantly bombarded with the message that gold is valuable.

3.2 Gold Does Not Rust or Decay: Gold always stays the same. Although it might lose it’s luster due to oxidation, a little bit of buffing is all that is needed to restore its luster. This means that you can indefinitely store gold while waiting for it to appreciate in value.

3.3 Gold is Almost Financially Liquid: Unlike other investment instruments, gold is accepted almost everywhere. If you happen to run out of physical money, there is a high chance that people would accept your gold instead.

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4. Rolex has Beaten Gold

So far it’s been discussed why investing in gold is a good strategy. But let’s compare it to other physical items that people invest in, say Rolex watches.

In a December 21, 2022 report by businessinsider.com: Rolex watches have outperformed gold, real estate, and even stocks over the past 10 years, and sellers believe their future value will continue to deliver.

The report also stated that prices for luxury watches like Rolex, Patek Philippe and Audemars Piguet have skyrocketed in 2022. This highlights how investing in luxury watches can be more profitable than investing in gold or any other investment instruments.

Of course, you need to be aware that luxury watches are way more expensive than gold, and it is only the truly rich who can afford to invest in Rolex and other luxury watches. Meanwhile, you can easily invest in small amounts of gold.

As you can see, even if you only have a little bit of money, you can already invest in gold. You don’t even need to invest in physical gold, with little money, you can already invest in gold based stocks and other investment instruments.

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5. Other Investments That Have Beaten Gold

But it is not only Rolex and other luxury watches that have delivered more financial returns than gold. Although US stock average returns are not as great as the returns from Rolex and other luxury watches, US stocks average returns still beat out gold returns.

For example, the DJIA (Dow Jones Industrial Average) has risen 62,793% as of July 2023 from August 1915, while gold has only risen by 10,104%.

We also must note that stocks in general have given higher returns than either commodities, bonds or real estate. In case you’re interested in investing in the DJIA:

Take note that you can’t directly invest in it, but you can do it through exchange-traded funds (ETFs) that track the index, mutual funds that invest in companies included in the index, or by purchasing shares in the individual companies that make up the index.

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6. Where to Buy Gold

There are many ways you can own gold. There are many companies that sell different forms of physical gold. You can also buy gold based financial instruments such as stocks.

6.1 Gold Jewelry and Figurines: Jewelry shops and e-commerce stores sell gold jewelry and figurines. However, be careful when buying at e-commerce stores, as the gold jewelry or figurines you might be buying might just be faux or imitation gold.

6.2 Gold Coins and Bars: Coin Shops, Private Mints, and Government Mints sell gold coins and gold bars. There are also online based sellers of physical gold coins and bars. They are convenient although you first need to check if they have a good business reputation.

6.3 Gold Stocks and Certificates: Gold is actively traded online together with other investment instruments such as stocks, forex, commodities, crypto, and so on. You can trade in gold in one or a few Online Trading Platforms.

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Final Words

Although there are other investment instruments that yield higher returns than gold, it has the advantage of being relatively stable and almost financially liquid just like physical money.

It is stable because it does not decay or rust unlike some other metals, and all you need to do is to store it while it appreciates in value over the years.

It is almost financially liquid just like physical money because there are a lot of people who would accept your gold should you run out of physical money.

But remember that gold has more uses than just an investment instrument. For one, it’s widely used in electronics and in jewelry. So, gold would always have value and would continue to be bought.

Also, many people have been convinced since their childhood that gold is precious and is a status symbol, making them want to own as much of it as possible.

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