When looking into different possibilities of investments, you ought to measure the pros and cons of your investment choices. Gold has always been a viable element of investment. Even in the past, gold was considered as an alternative currency to money.
Currently, gold retains its values and continues to be one of the easiest investments to liquidate. Nonetheless, when choosing to invest in gold, you need to learn the basic factors that make up both the advantages and disadvantages of investing in this asset.
Because we discuss how to make money with gold investment, it is important to understand what gold investment is about.
What is Gold Investment?
Gold is an extremely valuable metal. Compared to its counterparts, gold is far more valuable. Gold is worth a lot and it doesn’t lose its value over time which makes it very useful for investments. Lots of businessmen and wealthy individuals have earned a lot from investing in gold. It is still quite common in today’s investment and trading industry.
The thing is, you have to consider a number of pros and cons when it comes to investing in gold because it has its fair share of risks as well. So before you start converting all your savings into gold and investing it, take your time to know some critical information associated with gold investments.
What You Should Remember When it Comes to Investing in Gold
ONE: Going Gold Seems Simple, but It Isn’t
Gold compared to other metals, is superior when it comes to its significant value. It is a common tool used for big investments because unlike money itself, gold doesn’t depreciate in value. Money little by little depreciates in its value because of the continuous rise in inflation.
Inflation is measured by what the “US Bureau of Labor” calls the “Consumer Price Index” or “CPI”. CPI increases yearly by about 3.5%, which at first doesn’t really seem like much, but in a long-term perspective, it heavily affects the value of money over time.
This is why gold is extremely valuable in the investment industry. It keeps its value because it doesn’t depreciate. The thing is, because of its value, it is extremely common and because of this, the price of gold tends to fluctuate.
When it comes to short period trading, the price of gold tends to be a little volatile and trades, basically like any other stock item. Even in the past, gold has been extremely common in terms of trading and payment. The price of gold was measured back then by the ounce which after “WW2”, was priced at 35$. Until now, gold is still being traded continuously in the investment and trading industry.
Gold is also used as a hedge against inflation because again, its value doesn’t depreciate in value because of inflation.
TWO: Some Common Factors Influencing Factors in The Pricing of Gold
The price of gold is influenced by the supply and demand of the product just like any other stock item. Gold isn’t usually traded in ingots; the most common form of gold being traded today is in the form of jewelry. Jewelry is one of the most accessible forms of gold and it is very present in the trading and investment industry.
Again, gold is usually traded in jewelry. Jewelry accounts for about 2/3rd of the annual gold demand. Jewelry is usually traded for cash when it comes to old and mismatched gold that can be recycled.
Though, it is actually quite common for many jewelry recyclers to take advantage of their customers by paying for them for only a small amount of the total value of the gold jewelry. This is why caution is needed when trading in your gold jewelry because you might get scammed.
The “Central Banks” and “International Monetary Fund” play a big part in the price of gold. Central banks and the international monetary fund hold most of the gold above ground in the forms of reserves.
Going gold has its significant risk when it comes to investments. If for example, you invested all of your life savings into gold, you have to consider the safety risk of holding it. Some of the associated risks of holding gold include theft, loss or even burglary which can pose a significant risk to you or your family.
There are no benefits that come to you when holding your gold, you don’t earn interest payouts or any dividends. So the real money you get from gold is by trading and investing it, not by simply owning and holding it.
So overall, gold is extremely beneficial and can be a very great tool in your success in investments. There are significant risks and aspects you should consider before attempting it. But in hindsight, going gold is pretty much a very good option when it comes to investments. You have to be very cautious and smart when it comes to investing in gold, if you do it right, you can outrun inflation in this continuous race of the fluctuation of the value of money.
Are There Dangers in Gold Investment?
Going gold is extremely common these days and in the past as well. Gold is used to diversify the investment risk and it is very popular as a safe bet all across the world. One of the main reasons why it is so common is because, unlike regular money, gold doesn’t depreciate in value because of “Inflation”. This is also why gold is referred to as the “Hedge against Inflation”. But before you decide to go all-in gold investment, consider these risks and dangers associated with it first.
ONE: You Could Potentially Lose Your Investment
Gold investments are usually a very smart move, but in today’s world, it’s a little risky. Gold is one of the most precious metals in the world, they are extremely valuable and are worth a lot, that’s one of the risks. I’m sure you’ve watched a lot of heist movies that included extremely popular actors, in those movies, what do your favorite actors usually steal? That’s right, gold.
Gold is a risk to hold because it is a magnet for theft and burglaries. Most of the time when big robberies occur, gold is usually involved in the picture. Because it is extremely valuable to and if executed right, can be stolen very easily. This is one of the maybe’s you should consider before going all-in on a gold investment because if you’re not careful, you could lose a LOT of money.
Another risk is that future is very unpredictable. The worldwide economy changes every single day, and in the future, gold might not be as valuable as it is now. You never know when a new precious metal or stone is discovered that could potentially make gold obsolete. This is a pretty hard maybe but something that you should definitely keep in mind.
TWO: Possible Risks in Losing Your Money to Scams
You’ve probably heard programs made by companies or institutions that all have the same message: “Cash for Gold”. The basics of this cash for the gold scheme is that a company or business gives you cash for gold, simple right? Not really. You see, a lot of these schemes are scams, their trick is to get you to sell them your gold, but they’re actually secretly paying you a fraction of the actual value of the gold you’re selling to them.
A lot of people have been victims of this type of scam and many have lost family heirlooms like bracelets or necklaces that are made of gold or have gold in them. Most of the companies that do this type of scheme are actually most of the time fraudulent and are in fact not even real. They’re just posing as some company that wants your gold and is willing to pay cash for it.
There are many fraudulent schemes and scams similar to this cash-for-gold scheme that sadly, a lot of people still fall victim to.
THREE: You Don’t Earn from Holding Your Gold
Having gold doesn’t necessarily give you any profit. You don’t earn dividends or interest payouts. In order to profit from the gold, you have to trade it off or invest it in something else. so in general you don’t earn from holding your gold. This can pose as a risk again because of theft and burglary.
If you’re new to gold investments and you don’t have much experience in the field, you might think that you earn from simply holding and owning gold, but you don’t. So it is actually recommended to not risk too much of your money in gold because you could potentially lose a lot of money. Many investors recommend that you save an amount of your savings and invest a portion of it into gold that way in due time you could earn a sum of money and not lose too much money in the case of theft or burglary.
So to summarize, you only earn money from selling, trading, or investing your gold. Not just by holding or storing it.
So overall, gold investments can be very lucrative and beneficial in the long run, but they also have significant risks and dangers associated with them. Smart investing and decision-making are required in this specific field of investment along with the rest of the investment fields.
How Do You Earn from Gold Investments?
Investing your money into gold can actually be a very smart and effective move. Will it benefit you? Will you get your money’s worth? That depends. Before we answer those questions, let’s take a quick look on some of the basics when it comes to gold investments.
ONE: Basic Golden Knowledge
Before you decide to go all in on gold and investing your whole life savings into the metal, take a pause first to know some of the basics on investing in gold. Going gold is considered a very smart move especially now. A common fact that is associated with gold is that its value isn’t affected by “inflation”.
TWO: Gold Vs Inflation
Inflation is the big enemy of money. Inflation is basically what depreciates the value of our money. Inflation is measured by what the “US Bureau of Labor Statistics” call “Consumer Price Index” or “CPI” for short. According to the US Government institution, CPI increases inflation by about 3.5% annually. This basically means that every year, the products we normally see in the grocery store or super market, will get 3.5% more expensive.
Now at first glance, 3.5% doesn’t really seem like much, but in a long-term perspective, this can have a great effect on the price of our favorite day to day product.
Now unlike everything else, the value of gold doesn’t depreciate because of inflation. This is why gold is what people in the industry call: “The Hedge Against Inflation”. Which is somewhat true. The value of gold doesn’t decrease when inflation strikes, it retains its original value which over time can actually increase.
For example, let’s say you go all-in on gold now, then maybe 10 years in the future you decide: “Hey, let’s trade-off all those gold ingots I have in my treasure chest (or whatever you use to store your gold)!” The price of that gold could be much larger compared to its original price 10 years ago!
So in a way, gold can be your armor against inflation, but the thing is, before you convert all your life savings into gold, you have to know how to earn from it.
Remember, you don’t earn, from gold just by simply holding it. You don’t earn interest payouts or dividends. Holding the gold won’t earn you anything in the short term. In the long term, however, when you decide to trade off your gold, that’s when you start earning, and as mentioned earlier, you could double, maybe even triple the original amount you invested in that gold!
So basically, you earn from gold by trading it off or investing in the gold itself. For example, you invest a large sum of cash into gold and you use that gold to invest. When you do this, your investment could very well pay off and earn you a lot of money in the future.
The Downsides of Gold
There are a number of downsides to gold that you should know first before going all-in on it.
One of the downsides is the obviously present risk of theft. Theft is very common when it comes to gold. The thing is, the danger of gold theft or burglary doesn’t just pose a threat to your investment, but it also poses a great threat to your safety. Many people get killed in the middle of gold robberies sadly, so it’s best to keep this in mind.
You can take measures to avoid this threat such as hiring security or looking into companies that offer safe and secure storage for your stock of gold ingots.
Another downside is that again, you don’t earn anything from holding the gold, so a safe bet is to invest some of your money into gold and save some for the short term. You can save the gold that you invested in and eventually you can earn big from that and potentially increase your savings. “Better safe than sorry” right? This is especially true when it comes to investing in gold.
So all in all, gold investments can be very lucrative and can increase your savings by a lot. There are some risks associated with it along with some facts you should know on how exactly you can earn from your gold investment. If you’re planning on going gold, make sure you know the risks and basics associated with it before you do.
When deciding on whether to invest in gold or not, you need to make sure to understand all the pros and cons of this investment to make sure that you are not throwing your money out into the wind.
Accordingly, the more you understand the gold investment, the better you may be able to earn from this particular option. Getting good advice from those who are familiar with this investment can help you decide on this matter more effectively. Remember though that when looking for help, you need to be careful about scammers.