Investing With Gold. It is not necessarily practical or useful to spend a significant sum at once in actual gold. Gold retirement accounts are an alternative to a one-time deposit. A specific amount is deposited into a retirement account on a monthly basis, such as 100 bucks. You eventually gain possession of the gold that is then held for you by the supplier. In this investment, since you buy real gold, all the risks (sharp price swings, exchange rate risks) that gold carries with it as an investment still remain.
A gold savings plan at first looks like a nice option because of the purchase in instalments, whether you can not or do not want a one-off number. Investors should pay careful attention here, however to expenses and fees. There are also very plentiful, but different deals are worth comparing. Costs can occur in the form of purchase processing fees and storage fees routinely imposed. Furthermore, there is always a spread between the purchasing and sale price: anyone who would immediately sell the gold they purchased would make a loss. You have to wait until the gold price has improved accordingly, if you wish to stop this.
It also clarifies what minimum requirements are given for by the savings plans! The mobility is then restricted accordingly. You will get the gold paid for for certain arrangements – so you pay the travel expenses. Also in this situation, though, you have to ensure that you can keep the gold in another safe spot. It costs more money if you want a safe deposit box or buy your own safe with it. With gold investment schemes, caution against suspicious suppliers and fraudsters is also recommended. You will not see the gold at all, since it is normally centrally stored.
Anyone who wants to invest in commodities such as gold does not necessarily have to buy physical gold (bars, investment coins, etc.). Instead of the gold, he can also buy shares or invest in a corresponding equity fund.
Anyone who does this does not, however, invest in the raw material itself – i.e. in gold – but, for example, in a company that operates gold mines. That is why not only the demand for gold and the gold price play a role in the performance of the shares, but also how profitably the company operates itself. General fluctuations on the stock exchange can also have a negative or positive effect on the value of such stocks.
In short: the price of such stocks or funds will not necessarily follow the course of the gold price. Even when gold prices rise, stock prices can fall.
When buying stocks, only order fees apply. In the case of equity funds, the buyer mainly pays an issue surcharge. In addition, there are various running costs: Investors need a securities account to hold stocks or funds. Some banks charge custody fees for this. In the case of equity funds, additional costs can arise, such as management fees. Transaction costs and custodian bank fees, possibly also a performance fee. The total costs can therefore vary greatly in amount.
Why consumers choose gold as an investment
In times of low interest rates, gold appears to be an attractive investment alternative for some consumers: around three in ten respondents can imagine investing in physical gold. This is shown by a survey commissioned by the market watchdog team at the Hessen consumer center. Younger respondents in particular are interested in gold as an investment.
Main arguments for gold as an investment
Gold is considered absolutely crisis-proof by followers of the yellow precious metal. Your arguments:
- Gold is crisis-proof
It has been valued by mankind for thousands of years. It survived wars, depressions and several currency reforms.
- Gold is tangible
Unlike our paper or book money, it may be something tangible with real value.
- Gold is expensive
In addition, unlike paper money, gold cannot be increased at will. This limitation and the enormous demand at the same time mean that gold is comparatively expensive.
Main arguments against gold as an investment
Gold is relatively expensive. The demand is enormous, not only from private investors, but also from countries like China. There is no certainty, though that rates will keep rising. On the contrary! Past price losses have shown that the price of gold can also fall quickly.
- Storing gold is expensive Storing
the expensive precious metal at home in the linen cupboard or even in a small safe is a high risk and should be carefully considered. Burglars and robbers are a serious threat. Instead, you can deposit the gold as an investor in a safe deposit box at the bank. But it is not available for free.
- Gold carries a currency risk
Gold is traded in US dollars. Put simply, this means that when you sell your gold, you first receive dollars and then exchange them for euros. Therefore, currency fluctuations affect the equivalent in euros. This means: If the dollar is devalued, there are disadvantages for the investor when reselling gold, because he gets fewer euros for the dollar.
- Gold pays neither interest nor dividends
Gold in itself is not productive: it does not generate profits like the companies in which shareholders invest. And it pays no interest like the banks and states that bond buyers or holders of fixed-term accounts and savings bonds lend their money to. You can only make a profit if the gold price rises and then you sell.
- The price of gold can fluctuate widely
As an investor, you have to hope that the demand for gold will increase in the future. If it falls, the course will fall too. In the past, strong price fluctuations were not the exception, but the rule: Between 1987 and 1999, the gold price halved.