Advantages of physical gold - Part 1

Opportunity to roll capital for business

The benefit is owning physical gold is that it is not ‘locked up’ in the funds or other tools. Since we own the gold in our hands, we can always pledge a quick loan from Ar-Rahnu centres whenever we need urgent cash.

To obtain a quick loan from the Ar-Rahnu centre, we do not need to submit our payslips. All they need is the gold, and we are good to proceed with the loan, up to 70% of the current gold price.

Interestingly, even when we pledge the gold, it is essentially ours. Meaning, we can enjoy the gain (if it happens) despite the gold being under the care of the Ar-Rahnu centre.

Useful for small business owners

Those who run businesses at a small scale could consider using gold to fund the projects by pledging at Ar-Rahnu centre. Once you complete the project and earn the profit, quickly claim the gold items because the safekeeping fee is charged based on the duration of the items in the centre (approximately 1.15% per month).

Opportunity to generate profit during the price crash

When we save using a Gold Investment Account, there is nothing much we can do when the gold price crashes because our options are limited. Our savings are just numbers on the screen, not physical gold. Hence we might face paper loss. However, this is not true with physical gold. When the gold price crashes, we can pledge the gold at Ar-Rahnu centre. And using this loan money, they can buy more gold at a lower price.

Typically, when the gold price crashes, the price would climb to its previous price level. The gold bought at an earlier time can be sold at a higher price when this happens. Using the profit obtained upon selling, they can reclaim the pledged gold. The remaining money would be the net profit earned through this strategy.

Ar-Rahnu manipulation technique

This technique is known as the ‘Ar-Rahnu manipulation technique’, but in my opinion, the execution of this strategy requires detailed calculation. This technique makes a profit when the gold price rises quickly within the time frame. If the price does not rise within the time frame, the cost incurred for this strategy would not be worth the effort anymore. Hence, this is not recommended unless you know the risks involved. 

Should you find this article useful, consider sharing this with your friends and family. Let's create awareness about gold savings because nobody will come forward to help us.

Easy way to start gold savings can be found here: Gold Accumulation Program

Join my Facebook page for free here: FB page

Hope you find it useful.

Your buddy on gold investing,

Naresh G