A critical concept that we need to bear in mind in investment is whether can we sleep at night after investing. If we are worried after making the so-called ‘investment’, either the investment tool is unsuitable for us, or we have yet to acquire sufficient knowledge. Or, it could be that we have placed too much money in that tool.
In addition, many people who are interested in gold savings are worried about safety issues in gold investment. Hence, they are considering Gold Investment Account (offered by third-party providers, mostly) where no physical gold is involved. Is this a good idea?
Most gold experts highly encourage acquiring physical gold (gold bar or dinar) over the gold savings account. The underlying principle is that we must eventually get the gold if we buy gold.
Here, we must understand the rationale of this thinking. The main factor they recommend gold is because the actual benefit is acquired not just from ‘buy low, sell high’ but is beyond that. True power of gold is in the physical gold, not in some form of electronic records on screen.
If the intention is to play with numbers, perhaps unit trusts or other financial tools (futures, options, foreign exchange, etc.) can be considered, provided that we understand the risk and benefit of the selected financial tools.
How to save gold from the risk of theft?
From the perspective of storage, there is a solution for us to consider. We can consider renting a safe deposit box (offered in a bank or private company) or at companies that provide this service such as Public Gold. Public Gold delivers a gold storage service for free and for a reasonable fee. As end-users, it is up to us to choose the options based on our preference.
The important thing is that the gold must be physically present to hold and keep for our safekeeping whenever we wish to.
The advantages of physical gold
When we own physical gold, there are seven benefits that we can leverage as compared to Gold Investment Account, namely:
- Opportunity to use them as business capital
- Opportunity to generate profit during the price crash
- The form of savings that will last long
- Flexibility in timing as well buying/selling transactions
- Free from accounts being frozen by banks
- Free from financial uncertainties
- Savings that are Syariah-compliant
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Your buddy on gold investing,
Naresh G