Advantages of physical gold - Part 2
The form of savings that will last long
Gold savers proceed with this saving plan mainly to prevent spending money elsewhere. They tend to spend the cash upon coming across exciting advertisements on social media even though they may not actually need the items. Due to impulse purchases, their savings get lesser over time.
However, it is the opposite with gold. Money tends to last longer when kept in the form of gold. Not due to the power of mathematics but due to the power of psychology. Are you curious to know more? Gold gives emotional impact to their savers, interestingly. Gold savers would naturally prefer to save more gold. They adore the beauty of gold, which further boosts the desire to save money in this format.
The emotional impact of gold
Even when there is a need for money, selling the gold would not be the priority. If we need to sell the gold, we would quickly find a way to repurchase them. This habit essentially makes the gold saver richer over time.
Such experiences cannot be felt by the Gold Investment Account (GIA) savers. They would just observe the numbers on the computer screen, just like how they save money in the bank. The lack of emotional connection might influence the GIA savers not to save money consistently.
Flexibility in timing and buying/selling transactions
If the GIA savings are performed with specific institutions, we must obey their time and transaction limitations. Certain institutions would allow transactions only during office hours, which is not user-friendly in general. This is true, especially for those working during office hours. It is not convenient to apply for time-off to make transactions. To be honest, I have personal experience in this aspect.
Virtual savings account - personal account
Before knowing Public Gold, I used to have a virtual savings account but in silver denomination, provided by a famous bank in Malaysia. There were days when I had to seek permission for time off to pay a visit to the bank. I usually make the trip if I notice the price is ideal for purchase, as reflected on the website.
However, after I reached the bank and finally got to the officer’s counter, the silver price changed. I ended up buying lesser than I had anticipated. If I intend to buy 20g, I would end up with 14g due to price revision. Overall, I find the experience depressing. I still have the account with the bank, but I do not save in the silver virtual account anymore.
Purchasing physical gold has the benefit of flexible timing. We can perform the transactions whenever we prefer. Some might do it after working hours, during weekends, or even while travelling abroad. The transactions have been made very flexible this way.
Why this flexibility is crucial?
Such flexibility is crucial for taking profits by leveraging on price movement. If the gold price appreciates by a considerable margin and we are unable to sell, it is indeed a significant loss for us. Similarly, if the price has gone down to our preferred target price and we cannot buy due to restrictions by institutions, it is also not a pretty sight (and annoying too!). We just missed the opportunity to purchase expensive assets at a cheaper rate.
Interestingly, these features are only applicable to physical gold, not virtual GIA. In Malaysia and surrounding regions, Public Gold is the company that allows us to lock the price according to the world’s gold price movement. This is available 24 hours a day and seven days a week. This way, we can buy and sell at the best price.
Free from having accounts being frozen by banks
According to Michael Maloney, an expert in the field of precious metals, gold is a metal that is not part of the financial system, despite being a financial tool. This means no one else has to know how much gold we own, unlike other assets that we hold. Neither banks nor the government could find this out.
Based on experiences, numerous people who have been declared bankrupt came forward buying gold as an alternative to savings. They are restricted from opening any accounts elsewhere, hence gold was their only form of savings.
Plus, with physical gold, there are no ownership certificates or other documentation involved to indicate ownership. However, with virtual GIA, the situation is similar to any bank account with a high possibility of being ‘frozen’.
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Your buddy on gold investing,
Naresh G