How does owning Gold help you? (investments)?

Question

At some point in time you have to cash it in for paper dollars which are worth much less.....

It's not like you can take a gold krugerand to
Wal-mart and pay for something with it....

At some point in time you have to USE your investment to buy things otherwise your investment would have no purpose.

Answer 1

I think the underlying question is what gold, or any investment for that case, is for good for if you eventually HAVE TO sell it so you can use it. And, you know what? You're right.
Investing is just delaying the usage of your money. That its, delaying the use of the product oy your work.
As you delay your consumption, other people will consume on your money (if you buy equity, it will be a company financing it's growth; if i'ts a mortgage bond, it will be people buying houses; if it's gold, it will be gold producers (or workers) consuming).
In the same way that people who perform unproductive (unwanted) activities, such as digging holes just to cover them again, dont get anything for their work, in the same way gold miners wouldn't get nothng for the gold the find were not fot the people that DEMAND gold.
That is, gold DOES NOT have an intrinsic value. That's a myth. It just another currency and, as such, it's value depends on purely the demand for it AS COMPARED to other currencies.
Thus, what drives gold prices? The perception that, for example, US dollar will decline in value. Thus, in that visión the dollar is not as good a storage for your work's worth, as the gold might be.
That expectation will turn true if the dollar is not as worthy as its price says. That is, if your work is not as demanded, or if the government is not as creditworthy.
Note that if the governmente issues dollars to pay for unwanted work (such as dropping bombs in Mid East), in practice it's devaluing your work (besides killing people, of course).

Answer 2

The reason you would want to buy gold and hold it "indefinitely" is to increase the purchasing power of the dollars you do have. You would not have to sell it to realize the benefits of that purchasing power unless you spent all of your income dollars and savings.

For example, you and your neighbor have $10000 in savings (interest rate being negligible). You put $2000 in gold while your neighbor does not. In 10 years time, the purchasing power is 50% of what it was. So in today's dollars he would have $5000 cash and you would have $4000. However, if gold did not lose any puchasing power, it would be worth $4000 in today's dollars, giving you $8000 in purchasing power. That's fighting inflation!

So granted, you may be put in a position where you might have to liquidate some of your gold holdings to buy stuff at Walmart, but more likely your income and income bearing investments are going to be doing that for you.

Hope this helps!

Answer 3

There are really 2 primary (legitimate) reasons for owning gold:

1. To diversify your portfolio. Gold has been on a 2 year run, where stocks in general have lagged.
2. Hedge against inflation. Gold is a tangible asset.

It makes since for most investors to have some exposure to gold and other commodities, but I wouldn't overweight in gold or any other asset class.

Answer 4

If it increases in value then you will get more $$s & be ahead. Gold certainly has recently though had been bad for 25+ years. This question maakes no sense. You buy investments to make more $$ then do what you want with the $$ once you sell them. Too much thinking. Buy IAU (gold-etf) & trade it like anyother stock.

Answer 5

kcincon is correct. The primary reason is to preserve your purchasing power - a store of wealth. For example, in 1970, the median home price in the U.S. was $65,300 and 1 oz. of gold sold for an average price of $35.94. So to buy a house in 1970, it would take 65,300 dollars to buy that house or 1,817 oz. of gold to buy that same house. Forward to 2000 and the median home price in the U.S. was at $119,600 and the average price of gold in 2000 was $279.11 per oz. So, 30 years later, inflation was such (loss of purchasing power in the dollar) that you need 119,600 dollars to purchase that same home, but you needed 429 oz. of gold to buy that home. It took less gold 30 years later to buy the same house, but more Federal Reserve Notes.

Gold is also a barometer of misery. If gold prices are rising, it's because gold is telegraphing news that something "not so good" is coming down the pike. But primarily, it's used to protect your buying power as inflation increases.

Answer 6

I advise you not to speculation in areas where you are a complete amateur.

Gold pays no dividends and you will have to rely on capital gains. But current price is historically high and may well fall. If you still want to try, buy a mutual fund investing in cold, and good luck.

Answer 7

Owning gold only helps you if you own lots of other assets. Adding gold (and other commodities) to a diversified portfolio of stocks and bonds decreases portfolio's volatility and improves returns in the long run.

Answer 8

You make money through the discrepancy in price of gold between nations.

Answer 9

Husband is upset with my drinking?
I am 6 mon preg and drink vodka a few times a week. Hubby tells me to switch to beer because it is better for me and the baby. How do I tell him to mind his own business? He smokes weed and I don't complain. He is such a hipicrat.

Answer 10

It is an asset with an inherent value - unlike paper money which could be deemed of no value at any time.