How does gold prevents financial 'leakage'?

Fiat money was introduced essentially as a medium of transaction. So, no matter how disciplined we are in saving them, our minds will find creative ways to trigger us to spend the money. And when it finally does that, do you think our mind calls it a day and stops? Most likely no! We just opened the floodgate for more similar situations to occur again and again.

When the savings are in the form of gold, the numbers are not there to be seen. And for some reason, if we decide to buy something, there is a buffer time where the gold has to be sold off or pledged for cash at Ar-Rahnu centre (pawnshop). During this buffer time, we would think rationally (not emotionally) and make a sound judgment. If the issue is not that important, going through the hassle of liquidation would make no sense.

When do we sell our gold then?

When are we supposed to sell our gold if that is the case? Because it appears like it is a one-way street, am I right?

No, friends. There are occasions on when we can consider selling our gold savings, which are listed as follows:

• When we run out of the emergency fund (cash is running low)
• Another opportunity that has more considerable potential to profit (rolling of business capital)
• The intended target is achieved, such as education funds for our children, starting a business, etc.

These are just some critical scenarios when selling our gold might seem the right thing to do.

Savers are losers

As discussed previously, we ought to allocate emergency funds, and this can be in hybrid mode where some of it is in the form of cash while others in the form of gold. Apart from this allocation, the additional money is better stored in assets that appreciate over time (including gold, too). It is not recommended to save a significant portion of extra savings in the form of cash. As Robert Kiyosaki says, “Savers are losers!”. The loss of value due to inflation is ridiculous when stored in cash. Hence, the term ‘loser’ was used in this regard.

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Your buddy on gold investing,

Naresh G