The Zero Income Commodity
It is not uncommon that the absence of regular dividend payouts on gold related stocks are explained in an incomplete manner by most public related precious metals companies. People usually try to grow their saving through investments, and most people think that buying gold, they are actually doing this, the truth is they are not in the short term as gold is definitely a long term investment and could be considered as a good investment only after a decade. However, most investors cannot just bury their savings in the backyard for 10 years and hope that they will grow a money tree, so they invest based on what they know, what they think they know or even what they think a trusted source knows. The bad news is that the usual math game on gold the appreciation of gold does not tell the entire story – it never does.
When somebody says, “the markets look shaky, it is time to invest in gold, what they are actually saying is that, the market is going to make us lose money, and holding paper money is going to make us poorer, we need to buy gold and make sure we have what we had when all this crashing is done and over with”. Gold does not generate revenue in most case scenarios, what they do is, they preserve what you have and usually most who convert their wealth into gold do not come out richer, they actually end up with a bit less than what they had before, but not as “less” as those who did not convert their wealth into gold. Gold is not for everybody, if they intend to make quick profits and turn them around again and again in rapid succession, eventually they will get bitten, gold is for everybody who wants to save slowly and surely without worrying that their savings will go south.
In other words looking at gold as an investment is actually wrong, gold is more towards a ‘saving avenue’ than an investment avenue. Even if gold losses value over time, the truth would be that other commodities including paper money will be losing much more than gold, in other words, saving 500 dollars in gold today is better than saving 500 dollars in paper currency as currencies often depreciate much faster than anything else (if history has thought all of us anything at all). However, gold on the other hand, although I tends to lose value drastically in short periods of time (or increase in value), the reality is that gold on average has been on an upward trend ever since the markets were established, making it one of the safest commodities to invest in – in the long run.
Again, as mentioned earlier, it is better to look at gold as a saving vector than an investment and if at all you do manage to save a substantial amount of gold, and prices skyrocket, sell, and when prices stabilise again, buy your gold back and then some.