Is it worth to spend time in gold trading?

First of all, allow me to say this: gold trading is not suitable to roll our business-related monies.

Echoing the statement above, capital rolling is more suitable in businesses, not in trading or investments. While running our business, the capital would be mainly utilised for buying or selling products. Plus, this is the way how the money would grow with higher profit potential.

With this in mind, achieving 200% profit in business is not surprising but rather acceptable. However, a profit of 20% is considered an outstanding performance with trading or investments. In addition, 20% per year is the return of the super-investor, Warren Buffett. He achieved this amazing performance after decades of calculated decisions with his partner, Charlie Munger.

The limit when it comes rolling capital

Next, as we grow our business, there will be a time when the capital grows and becomes non-ideal for rolling uses. As a result, we could potentially use such money for trading. Therefore, the point here is to utilise the monies which are not part of emergency funds or original business capital. 

Begin with savings first

Despite the strategy ‘buy low, sell high’ may appear solid, practicing it with a small quantity of gold is not ideal. As a consequence, the time and effort taken to realise profit may not be justified. 

Hence, if the intention is to buy gold, pursuing it as savings may make more sense. In other words, approaching trading or other investments is not recommended just yet. Instead, potential traders could spend time focusing on building business. Additionally, businesses can be of various types. As long as the business we work on provides solutions to the public, it is definitely worth working on.

For instance, gold savers with a capital of RM1000 can choose to buy gold. But, do you think they can earn 100% profit within a year? The answer is highly unlikely. Therefore, should you encounter such programs that offer enticing returns, my humble advice is to stay away. To be honest, even a return of 30% per annum is doubtful to achieve regardless of the various strategies used.

Small but profitable business

Above all, utilising the RM1000 capital to run a business is a better option. So should you have the capital in the form of gold, consider pledging for a loan at Ar-Rahnu centres. As a result of this process, you could get the required cash to start a business.

It should be noted that there are numerous options to choose from when it comes to running a business. We can choose either to do full-time or part-time. In that sense, I would say the chance of earning a higher profit is more likely than from trading. Nevertheless, if there are challenges in profiting RM 1000 from the same capital, the reason could be either: (1) laziness or (2) lack of mentorship or relevant knowledge.

In conclusion, consider occupying yourself with building business, even on a part-time basis. Consequently, we can then convert our profits into gold when we have achieved higher profits.

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Hope you find it useful.

Your buddy on gold investing,

Naresh G