Top 5 Myths about Gold Investment Explained

Last Updated on May 21, 2021 by MoneyVisual

Long before gold was used to be a payment option across the globe. After World War 2 the gold started losing the value and as far as it is concerned with trading currency. In 1971, The United States has put an end to gold standards and the gold changed for good. Now gold is a good investment option for each and every investor’s portfolio these days.

It is totally different to buy gold for personal use and buy gold for investment purposes. No matters, if you would like to purchase gold jewellery you must monitor the gold price. You can track the gold rate by searching in Google and know the current gold price and trends.

In modern days people are surrounded by myths about gold and they tend to believe. These myths should be busted so that people can make an informed decision about their investment. Below are the top 5 myths about gold.

1. Physical Gold is not Money

The big fight is that these days’ people tend to believe, gold is not money. The yellow metal can be a lesson for investors. So many ways gold is money. In the year 2016, 9 percent of the gold demand came from the many financial institutions and central bank. More often 24 percent of the gold demand in gold bars and gold coins. The maximum demand for gold is coming from the people who wanted to keep gold as an investment.

Moreover, forty-seven percent of demand for gold came for jewellery segment, which indicates that this is not related to money in any way. Jewellery might be purchased for sentimental reasons or fashion. The purpose of purchasing jewellery wouldn’t be to use it as money, so it would be used for wearing it as a fashion.

However, the fact is that you can sell that jewellery for money whenever you need. And at the end, the rest of gold demand came from an industry where they don’t buy gold for monetary value but for industrial use. Anyway, you can exchange gold for money anytime you need it.

2. You do not Need to Buy Physical Gold

Gold safety is important because it is not easy to store gold at home because there is the threat of theft. Most of the individuals store their gold in bank’s locker. As you know bank charge some money for locker charges. It can be said that keeping physical gold is not a bad idea.

For some reason, if there is war or any other crises due to which the currency like USD will lose than the physical gold will have the more value at that time. Event after, it is not recommended to invest your all money in gold, it is a good idea to keep some gold as an investment goal.

3. Gold is a Bad Investment

Gold is a type of investment which is exposed to market volatility and fluctuations in price. There is a huge demand for gold. As discussed before that yellow metal (Gold) can be traded for money. This means that gold is a physical source of wealth or money.

People choose gold as a safe investment option out of fear which makes a gold shining investment. In any bad situation gold hold its value. Gold performs well when other investment options like stock perform poorly.

The gold performance depends on the purpose of buying gold in the first place. Suppose if you want to make your investment diversify include gold in your investment portfolio.

4. Gold Miners Offer better Returns than Gold

If you desire to buy gold in order to make sure your financial safety and security in worst case scenarios, that keeping gold is a better option as compared to purchasing stocks in a gold miner. If you would like to have an investment like safe haven than keep gold in your investment portfolio. Buying gold ETFs would offer similar returns. The benefits of gold ETF is you don’t have storage issue and it is same as gold.

Purchasing gold miners is diverse than purchasing gold. It like you are buying a company who process and sell gold. When you purchase gold miners which means the performance of gold depends on the company’s performance. Based on the performance of gold these companies will pay your share.

It can cause an issue by which your earnings will decrease because of increasing cost of a miner. The decision of buying gold miners vs. gold depends on your investment goal.

5. Gold ETFs, Gold Miners and Physical Gold are the Only Investment Options You Have

There are so many gold investment options available other than Gold ETFs, Gold Miners and Physical Gold. There is one more gold investment option available which is streaming company which provide miners cash in advance in exchange for gold for the purpose of buying gold in future at the lowest price.

The business model adopted by these companies increase the profit even after the gold price is low. In so many ways these streaming companies offer better returns than gold miners.

You may like to Read: Important Points to Consider before Investing in Gold

The Conclusion!

Gold is still a safe haven for investment among investors. It totally depends on your personal and financial goals how you would like to invest in gold. After knowing the well these common myths of gold investment you will be able to make a better decision regarding gold investment.