Investment In A Crisis Environment: Forget The Gold. In times of crisis, it isn’t easy to invest money safely. Many people’s reflex is that they are buying gold. But right now there is rubbish and gamble on the gold market.
If you buy gold up to 2000 dollar, you don’t even have to identify yourself. Cash payers remain anonymous. But advice does not take place. At the moment it is anything but easy to buy gold on fair terms: some bars and coins are not easy to get. And the price differences are huge – depending on the denomination of the gold bought. Anyone who buys from a resident dealer always pays extra.
Not everything is cheap in online trading. The prices are very different from each other. Prepayment is also due there. Besides, the differences between buying and selling prices are exceptionally high at the moment. Price differences are not the only cost driver: If I want to sell my small one-gram bars.
How significant the losses are due to the denomination and the difference between the buying and selling price can be illustrated well if we consider how high the gold price would have to rise so that we can only cover these costs. Moreover, not to forget the price has fluctuated incredibly wildly!
How do these wild fluctuations come about? Actually, like any financial investment, investing in gold should be a long-term business.
Two phenomena that are currently particularly pronounced on the gold market are partly responsible:
- The dependence on the offer. Gold mining also suffers from Corona. In March and April, large parts of gold mining and processing were shut down due to the pandemic.
- Concerned investors are buying more gold during the economic crisis. Some as a classic system, others as jewellery. Some gold dealers’ websites collapsed under the onslaught. Speculators drove the price further. The price volatility of gold futures has not been the highest in years.
It is not difficult to see that futures and derivatives are not primarily about concerned small investors, but rather speculators who want to take advantage of the combination of supply bottlenecks and the economic crisis. Gold has historically been particularly vulnerable to such speculation. All sources show that the fluctuations – in technical jargon: volatility – in the gold price are practically always remarkably high. Besides, the analysis also shows that an investment in stocks would have fluctuated less over the same period and brought in more returns.
If the fluctuations in the gold price are particularly extreme, government agencies also intervene. This was the case both in 1980 during the oil crisis and hostage crisis in Iran and 2011 after the world financial crisis, when gold prices in dollars each reached speculative highs.
After all, we try to give, and you know that the short-term investments in gold are speculative and that value retention is by no means guaranteed. And that maintaining value is incredibly difficult at the moment, depending on how you buy. After all, we still repeating; do not trust gold!
But if you would like, then please note the following golden rules! :
- Do not buy mainly small coins or denominations, but instead bars or common coins weighing one ounce or more.
- If you have a delivery, take a close look at the delivery conditions and safety standards for the deliveries.
- If you want to buy more gold and store it at home, find safe storage there and notify your home insurance company, but not the neighbourhood.
- If you should store the gold in a safe deposit box, rent one from your bank first and then order the gold. Safe deposit boxes can also turn out to be a bottleneck.