Bullion: Investing Short Term Is a Bad Idea
Bullion: Investing Short Term Is a Bad Idea; Gold has been the backbone of many economies throughout human history. In the past, it was considered a universal currency. The most salient example was when it was used in the Byzantine Empire, over 1,500 years ago. Today, a number of countries across the world use it as a reserve asset. Gold’s popularity is what makes it attractive all over the world. As a matter of fact, many people always want to buy this precious metal, with some of them thinking of buying gold bullion and investing in it in the “short term”. On the other hand, there are those who do not toe this line of thought, on account of the fact that they do not find it convenient. Today, we will explain why you should not invest in gold in the short term.
Spending money you need on buying gold bullion is a big mistake
As we earlier on discussed, it is not wise to spend the money that you need on buying gold bullion in the short or medium term. This is a mistake that many gold investors often make when they actually need this money to pay for things in the short term. For example, you may need this cash to clear your grocery bills, buy food, pay for education, and purchase utilities. You may also need this money to pay annual insurance premiums, annual tuition, travel, and annual taxes. For the reasons mentioned, we advise that you spend money that you do not need immediately on buying gold bullion. In addition, you can also invest your savings in the purchase of gold. That is why we all should get into the habit of saving. As soon as we realize hefty amounts after making our savings, we can then invest that in buying gold bullion.
Bullion: Investing Short Term Is a Bad Idea; Short term investments in gold are discouraged because of liquidity concerns
We do not deny the fact that you can sell your gold anywhere in the world. However, the fact of the matter is that you cannot dispose of your gold immediately, especially when you consider its presentation – is it gold jewelry, gold coins, or gold ingots? – and the level of purity. There are some presentations that are not easy to sell in the short term. Considering all the aforementioned, we can confidently say that gold is more specialized. For this reason, obtaining liquidity from it may take longer than usual, especially if you compare it to other financial instruments like foreign currencies, and shares. Take note of these as you plan to start buying gold bullion in the future.
Gold does not usually increase in value quickly
Much has gold possesses the ability to achieve a quick rise in value, its growth is not usually exponential. Instead, it occurs slowly and gradually. As a matter of fact, you show know that buying gold bullion should only be done for security reasons – to protect wealth and savings from the effects of inflation and a bad financial economy. Although the value of gold can take both upward and downward trends, these changes are often slight and gradual. When its price comes down, still the value of gold does not alter so much. The reason for this is that a fixed amount of gold is a highly valuable commodity. In addition, it also has many practical uses such in the field of medicine (dentistry), jewelry, electronics, the aerospace industry, the glass industry; etc. On the other hand, fiat currencies tend to fluctuate in value because they do not possess an inherent value. Rather, these depend on the value that states or people assign them, together with the monetary policies that vary from one country to another. So, when buying gold bullion, know that it is a commodity whose values don’t plummet quickly. You will have to be a little more patient as you wait for gains.
Buy gold to hedge against inflation
When the values of fiat currencies drop, that of gold instead increases. Taking this into consideration, many people start buying gold bullion in order to protect their wealth from being devalued by such factors as conflicts and wars, inappropriate monetary policies, and local currency inflation. When instability hits an economy, gold becomes the most effective safe haven” asset to invest in.
Do not invest in gold in the short term because the metal doesn’t generate dividends
The other reason why we do not recommend buying gold bullion in the short term is that gold doesn’t generate passive income or dividends; especially when compared to other instruments such as bonds, shares, and fixed terms. When buying gold bullion, remember that the only returns that accrue are usually realized when the precious metal gains value and is sold immediately. What are your thoughts on this topic? Could there be other reasons that you think you can give against buying gold bullion and investing in it in the short term? If you would like to obtain more information about buying gold from East Africa (The Democratic Republic of Congo, Uganda, Tanzania, Kenya, and Rwanda), feel free to contact us for more details.
