Gold has been on a fantastic bull run. It has gone up by more than 500% over the past decade. But according to experts, the rally is expected to end soon and gold prices may come down. Investing in gold has always seemed a good idea if you want to make a bit of money but with current gold rates at an all time high, is it the time to be fishing through your jewellery box looking for gold items to sell, or is it the time to think about buying some to add to your assets?
Warren Buffet has perhaps explained gold the best. He said that gold gets dug out of the ground in Africa, or someplace, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.
But even then people invest in it. This is because gold is not regarded as an investment, but very often as the ultimate resort in times of crisis. And we are living in one. Gold does not suffer from the defects of other investments, bonds, shares and real estate. Unlike bonds, it does not generate interest but it does not represent anyone’s debt, so it can effectively be considered as having an AAA rating. Unlike stocks or shares, it does not represent a company, does not have personnel to pay, does not have a board of directors, manufactures nothing and does not provide any service, so it can’t see its share prices plummet, or its dividends degrease. Contrary to real estate, it is not for rent, does not require any maintenance and is not subjected to property taxes. Gold can’t go bust like a bank and have to have the government bail it out. It also provides a hedge against inflation.
However, buying gold mostly depends on a person’s investment philosophy. There are various types of gold buyers. There are investors who want to profit from it and will buy gold on price correction. Others buy gold to create wealth but not through profit and will invest in gold even at high prices. Thus depending on one’s need a person should buy gold.