Gold is a precious metal and used as an investment for thousands of years. Since the ancient ages, people hedge their finance through gold. They convert their cash into gold to prevent stealing and protect the money from bad investments. The reason behind investing in gold is – it protects your capital from – economic, political and social disturbance, declining markets, currency failure, inflation, war and national debt. Not only that, the most common reason of buying gold is – the high liquidity. People can sell the gold within no time!
It is a common argument among financial specialists – whether gold is an investment or a form of liquid money? Well, if we take a closer look at both the arguments – they are quite different and they have very clear distinguishing features to classify. If we consider gold as an investment, then surprisingly we found, in contrast of ROI (return on Investment) with gold is very low compared to options (over time!) But if we consider gold as a form of liquid cash, then it definitely adds some value to your life. As mentioned earlier, it protects your money and gives you the opportunity to generate cash from your fixed asset. Rather than an investment, gold can be compared with an “insurance” that can protect you from financial mishaps. Here is a brief differentiation between investment in gold and owning the gold. This can help you to better understandings of both aspects.
The Difference between Owning Gold and Investment in Gold
Before you buy/invest in gold, keep in mind that, there is a clear difference between owning gold and invest in gold. In plain English – “investment” means, you purchase the financial instruments or other assets for further profits in the form of interest, income or value of the investment. Whenever investors give their capital, the capital is put at risk (whether minimum or maximum) and the investors expect interest, dividends or compensation for the risk.
Gold bar, coins, and all such jewellery can be locked into the vault and this is the storage of physical metal – not an investment! You can sell them anytime but you can’t expect any dividends from it. However, gold derivatives like – forwards, future and options are the true form of the investment. If you’re a resident of the United States, you can get the further information from COMEX (New York Commodity Exchange).
From the above clarification, it is clear to us – gold is not an investment, rather it is a safe store of value that you can redeem anytime. You can buy physical gold or go for E-gold purchase at Pentagold to get good value for your money. Finally, many investors use gold as a form of diversified investment, but bear in mind that, buying little everything is not diversifying the investment, rather finding the most potential alternatives can give you the desired result in the long run.
To insure your future with more gold in your treasury, give call at 022-20402225 and speak to our expert team at Pentagold sitting in Zaveri Bazaar, Mumbai.