Welcome to another #silvergoldstackers post. This time I am featuring the promise ring that I've bought last 2022 for my girlfriend back then (wife now). It is the very first ring that I've bought her as a symbol of commitment. It is an 18K gold ring, featuring 2 hearts with a gap in between allowing it to be worn with relative ease. In this article, I would also be sharing some reasons why gold may not be an investment for everyone.
I've written an article as well on some gold buying tips which you can read here. Also if you are into gold and silver stacking (or even other precious metals) please let me know in the comments below, would love to follow you and check on some of your posts and collections.
While gold has historically been considered a store of value and a hedge against inflation, there are several reasons why it may not be a good investment for everyone. Let's have a look at 4 of these.
1. No Income Generation I've already mentioned this on my previous posts. Gold does not generate income. Unlike stocks, bonds, cyrpto, or real estate investments that can generate dividends, interest, or rental income, gold just sits there. This means that holding gold does not provide any cash flow, and you rely solely on price appreciation for returns. In essence, it's a non-productive asset.
2. No Intrinsic Value: Ok hear me out on this one, Gold's value is largely driven by supply and demand and market sentiment. It doesn't have any intrinsic value like a company's earnings or a property's rental income. It is not a prime commodity like food and oil. And while it is used in many industries, like jewelry, technology and even medicine and culinary; Its price can fluctuate due to world events and/or reduced demand, making it unpredictable. While it is a rare occasion, Gold had seen its value plummet especially in times when there's an abundance of supply.
3. Limited Growth Potential: Gold typically doesn't generate the same long-term returns as other investments like stocks. Historically, the average annual return on gold has been lower compared to that of equities. Major cryptocurrencies has also outperformed Gold. And while it can serve as a hedge during times of economic uncertainty, it may not provide the growth potential many investors seek over the long term.
4. Storage and Transaction Costs: Holding physical gold comes with costs, such as storage fees and insurance. If you own physical gold, like myself who purchases jewelry you need a secure place to store it, which can be expensive if you purchase a vault or go to a third-party safety deposit box and storage facility. Additionally, buying physical gold in many cases may involve transaction costs and or premiums, which can diminish your returns. Right after buying gold jewelry, and if you go to a pawnshop, you could expect that they would only purchase it for like 75% of your acquisition cost. That means that golds prices has to increase by 26% just for you to make a profit.
