Over the last ten years, anyone who ever saw gold as the place to park their money has been really happy. It’s been such a phenomenon, investors in gold have seen their money and grow five times over – at the beginning of the millennium, it cost about $200 an ounce to buy and now, it costs about $1200 an ounce. Wall Street hasn’t done anything close to the same though in this period. So if you want a quick ride to easy street, trusting in gold financial investments would be the right idea still, right? Not so fast. Let’s look at some of the worst mistakes that investors make when they decide to invest in precious metals.
No one really knows why gold is as expensive as it is. It really isn’t something that has actual value. Whatever it is worth, it is worth it because society decides so. So it’s difficult to actually tell how much higher and gold can go. But to think that gold financial investments are a safe haven is really not the right way to think. If it were a safe haven, why did it fall greatly in value over the 20 years before the start of the millennium? Gold is an asset that you take a risk on just as anything else. It’s not your magic ticket to riches.
From time to time, people like to say that the gold financial bubble is about to burst any day, and every smart investor has gotten out. The Bank of America survey that comes out every month on what the world’s best fund managers invest in, finds that most of them hate to touch gold because they feel the bubble is about to burst. But they’ve been saying this for years now, and gold has gone from strength to strength in this period. The rich men of this world so, people like George Soros do continue to invest in gold, and they do make billions.
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Doomsday enthusiasts love gold for a strange reason. They feel that when the nuclear wars break out and people head back into the caves, gold will be the only real money left that’s worth anything. Anyone who has seen any movies about life in prison knows how valuable toilet paper and cigarettes can be in there – that they are almost like real money. The only money that’s worth something in a crisis is the article that’s really needed then – antibiotics, liquor, anything people need. So to invest in gold for its value when civilization goes down the tubes is really not a good idea. While selling gold jewelry can be lucrative, it just doesn’t make sense in a complete end of the world scenario.
And finally, some people would like to trust in gold financial investments more than gold itself. What that means is, they would like to buy gold stocks rather than the precious metal by itself. They feel that there is a layer of protection that they they have when they don’t actually buy the metal itself. Investments in gold stocks are really investments in mining. Gold stocks have really crashed over the past three years though, and they really haven’t gotten anyone anywhere.
In the end, gold continues to attract investors because it’s been a pretty sought-after for millennia. It’s really self-serving thinking talking there though. In a time like ours when we keep excessive records of the price of everything, it can be still hard to know what gold cost 40 years ago. Who knows what it cost thousands of years ago? The right way to think would be to see that gold as an investment like anything else. And gold financials can be strong sometimes, and sometimes, they can be weak.