Secrets why long term gold investors stay happy
“Oh my God! I just bought gold yesterday, and today the price has fallen. What should I do now?”.
That’s the typical feedback we hear from new gold savers.
Based on my observations, coupled with experiences from my Mentors, we all agree that gold price never goes up in one straight line. Hence, those who have bought gold would experience a price drop after their purchase. In other words, price volatility is a normal thing to occur.
Should the price keeps rising
At a glance, if the price keeps rising without any sign of pullback, that is not a good sign. And the vice versa is also true. The gold price appreciation is a matter of time, especially if our time horizon is long term. There was a time when the gold price appreciated by 30% in a year, and there was a time when the appreciation was only 7% while the gold price fell by 25%. Hence, if our time horizon is long term, the price volatility is a friend, not a foe.
Whenever I have extra cash, I would convert it into gold for long-term savings. If the gold price appreciates, I would be happy because my savings increase in value. On the contrary, if the gold price falls, I would be pleased to buy expensive assets at lower prices. Hence, let’s become gold savers who smile at all times by adopting the following behaviours:
1. Allocate and separate emergency funds
Firstly, Before buying gold, consider allocating emergency funds worth three months of income, at least. As a consequence, if an emergency arises, we would not be alarmed and frantically sell off our gold. I usually buy gold with savings which I do not intend to use for at least three years and above.
2. Buying gold with extra cash, not with loans
Secondly, the plan to buy gold should be used with extra cash, not from the loan money. I typically used my savings to buy gold, which can come from business. Taking up a loan to buy gold is not ideal as I intend to have peace of mind without worrying about loans.
As mentioned previously, trading/investing is meant for those with extra capital after setting aside the needful budgets. Once we have extra money, consider converting it into gold to protect our savings against inflation. As a rule of thumb, buying gold with a loan is not recommended UNLESS that’s the only way they can discipline themselves to save gold.
Many people have challenges in saving money as the money is quickly being utilised for other purposes. Therefore, to discipline oneself to save, taking up loans and forcing them to pay every month might be helpful.
3. Buying gold is for wealth protection, not for speculation
Thirdly, we buy gold to protect wealth from being spent away (by us) and from being ‘eaten’ away by inflation (something that all of us are exposed to). Most importantly, we do this to protect wealth from sudden collapse in the financial system (if it takes place).
Gold is known to be a stable store of value across all time despite the uncertainties that took place. However, our paper money (fiat money) is precarious, and this was proven back in 1997. Due to fraud committed by George Soros, the value of Ringgit had dropped from RM2.50 (per USD1) to RM3.80. There was even a time when the value fell to RM4.70 (on 7th January 1998). The value of paper money has essentially dropped by 52% in such a short time.
If the Ringgit collapse?
Next, should we observe the Ringgit collapse, we could import items with RM25,000. In this situation, the same import is worth RM38,000. As a result, we had to pay more money (an additional RM13,000) to acquire the same goods.
Upon observing the regions that went through bad political situations such as economic turmoil, war, political imbalance, we would understand this situation much better. Do you recall what happened to the widely used currency during the Japanese Occupation? No one was accepting the ‘banana tree’ bills after the defeat of the Japanese. Perhaps our grandparents who went through that era could share their personal experiences with us.
With that said, who can guarantee the stability of our country at all times? Any instability that happens could potentially reset our wealth to zero. Are you OK with that?
4. Monitor the price only if needed
Fourthly, as gold savers, our target is to increase the grams of gold. Hence looking at the price chart daily serves no purpose. We might be happy when the price goes up but will be unhappy when the gold price drops. In other words, monitoring the gold price can be tiring to our emotions, and it does not do any good.
5. Invest while running a gold business
Last but not least, to those with a decent budget size, kindly consider buying gold to qualify for becoming agents. Gold companies typically have requirements that allow us to become agents upon buying a particular amount of gold.
The perks of being a gold agent
Being a gold agent has its perks, even if the primary intention is to buy for own savings. Traders or investors profit when the gold price appreciates while agents profit for every transaction.
As the gold price appreciates, we would be happy as our savings increase in value. However, as the gold price drops, more transactions will take place; hence we are pleased. Consequently, this generates commissions for agents. In other words, gold savers that run businesses would be happy regardless of any gold price movement.
If you find this article useful, consider sharing this with your friends and family. Let's create awareness about our money 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