Recently, numerous articles have appeared in the media discussing the supposedly great advantages of investing in gold. However, the drawbacks are almost never mentioned. To make the right investment decision, it is good to be familiar with all its aspects. Therefore, we decided to explore this topic, and here are the results. Here are seven reasons why you should not even think about this type of investment.
1. You Never Know When the Price of Gold Might Surprise You
The price of gold generally rises slowly and boringly. And that poses a problem for investors seeking excitement and action. A large number of investors love quick and sudden changes, such as changes in the stock prices of the Swiss bank Credit Suisse or the American bank Lehman Brothers. (Interestingly, of the five largest bankruptcies in the history of the United States, four relate to banks. But let’s get back to the topic.) Indeed, gold has experienced sudden price jumps here and there throughout history. This usually occurred during major wars or economic crises when investors fear for their assets. At such times, investors are surprised by everything happening around them, including the price of gold. If you want to avoid surprises, do not invest in gold.
2. By Buying Gold, You Are Taking from the Mouths of State Budget Users
It is known that the most valuable human activities are financed from the state budget: schools, kindergartens, healthcare, culture, political parties… However, investing in investment gold does not contribute to these activities, as no tax is paid on the purchase of gold. Until Croatia joined the European Union, this was not the case. In Croatia, the highest tax on gold purchases in the world was once paid, at as much as 60 percent. This way, teachers, doctors, and parliamentary representatives always received their deserved share of the pie. Unfortunately, the decadent European Union forced Croatia to lower this tax to zero percent, claiming it is some kind of European legal acquisition. This percentage is lower than the tax on medicines, baby diapers, and baby food. Therefore, socially aware and socially sensitive individuals should avoid investing in gold.
3. Investing in Gold is Too Discreet
By purchasing real estate, you can publicly display your power, prestige, and financial strength. Real estate is visible to anyone passing by. The same applies to investing in stocks. If you are, for example, a shareholder in the company Rimac Automobili, everyone will talk about you, and some may even admire you. With gold, the situation is different. Gold is bought discreetly, and little is known about this asset. It is easy to hide, even from a justifiably resentful spouse who wants to secure their share of the property in a divorce for all the suffering you have caused them in life. Or from state authorities that rightly and legally accuse you of embezzling from your own company. There is no form of personal asset protection that is more discreet than investing in physical gold bars or coins. For this reason, it should be avoided.
4. How Will I Know I Am Buying Gold and Not a Pig in a Poke?
In the Croatian market, only investment products made of gold are offered from mints such as the Swiss Valcambi with a tradition of half a century. Or the Austrian mint Münze Österreich with a multi-century tradition. Or the German mint Argor-Heraeus, which has been continuously operating for almost two hundred years. These are companies that supply their customers with investment gold bars and coins whose quality is under constant question. And for this reason, numerous independent state and private institutions in Switzerland, Austria, and Germany constantly monitor their operations. So far, no one has been caught with their hand in the cookie jar, but one should always be cautious. And the most cautious investor is the one who does not buy gold because they want to be sure they are not buying a pig in a poke.
