Gold prices in the past few months have been greatly affected by the instability caused by North Korea’s tyrannical ruler. Which begs the question is gold a profitable investment?
Short term
Short term investment in gold is often not very profitable as the price of gold doesn’t fluctuate enough for investors to post a big enough profit. Often short term gold investors loose more money on the transactional cost than they make from their trades. One way to combat this problem is to invest larger amounts of money into gold. However, investors should always apply their own money management strategy’s as each investor has a different financial situation.
If you are investing in gold in the short term you will be hoping for a loss in confidence in the banking or a loss of confidence in the political system. Both of these factors will cause the gold price to rise. So keep your finger on the pulse and if you sense falling confidence this often means that the gold price will go up.
Long term
Long term investment in gold is a good idea and is a great store of wealth. I have always been in favor of long term investment and here is why.
Inflation rates. Inflation rates are a very complex topic with lots of contributing factors but I will give you a quick rundown. The Inflation rate is the rate of change of price index over time. More simply it is how many goods your money can buy in that given year compared to the last year. Using the example of Australia which has an inflation rate of 1.3%, A positive inflation is a bad thing for the general public as it basically means your money is worth 1.3% less than the year before. By investing in gold you can protect your money from the inflation rate as the amount of gold your money can purchase increases with inflation rates. As the governments are continuously printing money to get themselves out of debt the inflation rate is almost certainly going to continue to rise.
The general trend of gold throughout history has been up. Now there is always a possibility that this will change but given that gold is a finite resource I highly doubt it. By purchasing gold now even if it goes down slightly in the short term in the long run you will eventually end up making money.
Mike Maloney does a very interesting documentary which you can find on YouTube called the secrets of money. He predicts that in the next decade we will see a minor recession followed by hyperinflation which will cripple our current economic system. There is a lot of supporting evidence that I find believable but at the same time this man is selling gold so he may be in it for his own profit.
At the end of the day Gold is just an older version of cryptocurrency as it can’t be printed like money. This makes it an excellent store of wealth for the long term.
Disclaimer: This is all speculation and the actual price of gold in the future cannot be predicted for certain. Ask a professional before investing.