Why invest in gold? It’s a durable, tangible, hard asset that can be stored as a hedge and possibly offset losses due to inflation, currency debasement, or bearish times afflicting the stock market, for example.
Elections. Inflation. Wildfire. Earthquake. Pandemic. International tension. We are starting to get a lot of calls from clients asking for suggestions on what to do with their investment to make sure they weather these economic, political, and natural disasters.
Here we are. Election season. As if that is not enough, there’s this stimulus chaos, airline bailout struggle, and the ever present Covid19. Optimism over more federal fiscal aid has pushed the stock market and gold higher at the end the week.
The beauty industry has always been touted as the one industry that’s recession-proof. And you know what? That makes sense from the most basic of human psychology. When things are bad and you can’t do anything about it, you turn to the one thing you can control, yourself.
We have good news and bad news. Good news? The IMF predicted on Tuesday that the world economy will shrink by 4.4% in 2020. Bad News?..
SINCE THE DAYS OF THE ancients, gold has been a symbol of wealth. Kings, queens, emperors, rulers, and celebrities continue to use gold as a symbol of fortune and glamor. Perhaps it is this precise use that’s turning people away from gold investments. Even while billionaires, the latest of which is Buffett, show their faith in gold, many are still doubting it.
Gold is more appropriately compared to the US dollar. Like the US dollar, gold is a medium of exchange that is accepted around the world. Like gold, the US dollar pays no dividend.
Gold pays no dividends, unlike stocks. That’s a reason some investors reject gold as an investment. The comparison is faulty.
Gold is used as a hedge against inflation. Even Warren Buffett, one of the biggest gold haters, sold his interests in some banks and shifted to gold recently but many are still arguing that the uncertain times could push the policy makers to make critical changes in Government’s fiscal policies and gold is the most vulnerable.
Many gold detractors claim that gold is worth what someone else is willing to pay for it. While most investments generate an income stream that can be measured as a percentage of cost, gold produces no earnings or income.