I've heard people investing in gold lately. Particularly because gold price has risen sharply. This year alone it has risen 20% or more. I read an article and couldn't help to agree with the analysis about the weakness of gold investment. Here are the lists:
1. It produces no income.
This should be a bad news for gold investor. Don't expect to receive dividend from buying/ investing gold. If you are lucky, you will get appreciation of the gold value.
2. It has witnessed a long periods of underperformance.
History speaks it all. As quoted: after gold price reaching a record high of $850 per ounce in January 1980, gold prices fell over 40% in two months. It took gold 28 years to reclaim the $850 level. Will we see a repeat incident of gold's historical head fake?
3. It has high ownership cost.
Unless you invest gold in paper form, you will certainly have to pay higher ownership cost for acquiring gold (physical gold -be it gold bar or jewelery etc). Transaction cost, commission, tax, insuring and storing - all of these are additional costs.
Well, this doesn't mean I'm against gold investment. Just a perspective and reminder so we won't be too obsessed and greedy with it.
1. It produces no income.
This should be a bad news for gold investor. Don't expect to receive dividend from buying/ investing gold. If you are lucky, you will get appreciation of the gold value.
2. It has witnessed a long periods of underperformance.
History speaks it all. As quoted: after gold price reaching a record high of $850 per ounce in January 1980, gold prices fell over 40% in two months. It took gold 28 years to reclaim the $850 level. Will we see a repeat incident of gold's historical head fake?
3. It has high ownership cost.
Unless you invest gold in paper form, you will certainly have to pay higher ownership cost for acquiring gold (physical gold -be it gold bar or jewelery etc). Transaction cost, commission, tax, insuring and storing - all of these are additional costs.
Well, this doesn't mean I'm against gold investment. Just a perspective and reminder so we won't be too obsessed and greedy with it.
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