Investing In Gold In 2019: To Buy Or Not To Buy?

If you are not sure whether you should be investing in gold in 2019 or not, or whether investing in gold is a worthwhile investment, you will find your answer in this post.

Disclaimer: I am an engineer. I have nothing to do with finances and I do not give any financial advice. Thank you.

I have always had this idea that gold was the ultimate investing option. For some reason, me and people around me have this idea that if you have money, it is wiser to not keep it as cash but convert it to gold instead.

And, at the moment, as I was looking for more money investing ways, I thought, “Gold!”

But, since I am approaching this in a serious manner and dedicating my time to finding the best investing methods, I decided not to just follow my inherited idea of how brilliant an investment this would make and actually do some research, listen to what some of the experts say, read statistics, and find actual evidence on whether or not it would be as good of an investment as I, and most people I know, think it is.

The short answer to this question is: Gold is not an investment, but yes, you should buy gold. The longer and elaborate answer would be this post.


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Why Is Gold Valuable?

Gold is currently the world’s most traded precious metal and its value goes way back to ancient history where it was used for trading in the form of gold coins.

And, nowadays, it goes into many industries; the largest would be jewelry, of course, which takes up about 50% of the gold demand. Then there’s 40% that goes into direct physical investment in gold, including gold used to create coins, medals, and gold bars. The remaining demand for gold comes from industry, for use in things such as dentistry, heat shields, and tech gadgets. 

And while gold is available in nature, it is quite difficult to extract, which is why it is considered a rare metal and a scarce asset in comparison to its demand.

Extracting gold is a very costly process, it takes many years and a lot of preparations and equipment. And because gold is usually not the only metal available in a gold mine, for example, it is mostly mixed with other metals, so unless the mining companies are certain that this mine will have enough gold supply to cover all the expenses, they wouldn’t go ahead and extract it.

Gold has other values such as the powerful nature of the metal itself that can’t be destroyed by time, water, or fire.

There is a really good article on the value of gold that lists the 5 most overlooked values, if you want to know more reasons as to why gold is such a valuable metal.

Why Should You Buy Gold?

Gold is a lot easier to liquidate than, say, a house or a piece of land. There is always a market for gold.

Something else is that gold has proven to have a strong value as an asset. For example, when the stock market fell all over the world around 2008, gold has skyrocketed in price. But while the stock market prices risen back, gold still kept its value and hasn’t fell all the way back contrary to what was predicted; it just keeps rising.

It appears that gold prices often rise in response to negative economic news or a serious drop in the stock market, unlike oil, for example. So it serves as a safe option to invest your money if you’re looking for a long-term and an almost risk-free way to save your money.

As for the case in Egypt, for instance, there was a huge rise in the price of gold around 2017 following the decision of floating the Egyptian pound as can be seen in the below graph. This has definitely created an insane profit for gold owners at that time.

And before that, between 2011 and 2013, the post-revolution time, which has seriously affected the country’s economy at the time, has also lead to a noticeable rise in gold prices.

 A graph of Gold price per gram in EGP over the years via goldprice.org
A graph showing the gold price per gram in EGP over the years (1996-2019)

Many economists and investors around the world have been predicting a possible fall that would hit the stock market soon which would be similar to the one that took place in 2008; this could mean an obvious rise in commodities such as gold. Whether they are correct in their predictions or not, I think it will certainly be wise to include gold to be a part of your investment portfolio either ways.

I’m obviously no expert, so I have no idea if gold prices are going to be moving up or down from there, but I say just go ahead and buy a little bit of it every now and then, as in gradually add it to your investments. Otherwise, you may need to consult an expert who can make such judgment calls on the best timing to make a purchase based on how they see the market now and in the near future.

You can check this website for Live Gold Price everywhere in the world. At the time of writing this post, one gram of gold costs 747.46 EGP (42.49 USD).

If you want to read a more extensive study on how gold has been performing over the years and why it is a good time to start investing in it, you may need to check out this report on the relevance of gold as a strategy asset in 2019.

How Do You Invest In Gold In 2019?

First of all, I need to make one tiny clarification: Despite using the word “investment” in this post, but as far as I can see it, storing your money in a gold bar is not an investment, it is only that, “storage.”

Gold is a way to save your money. But instead of saving it in a bank account, you decide to save it in gold, in hopes that in the case of currency inflation or some global economy crisis your money will not lose its value because it is now gold which has proven over the years that it is a valuable metal and will always be in demand by both individuals and industries.

And while you can certainly benefit from a price difference between the time you buy it and the time you decide to sell it, I’d still not call it a real investment, because first of all, a huge rise in price is not guaranteed and second, normally, if it did happen, this can take a really long time for the prices to differ to the point that you would actually make a decent profit out of it.

Now that we got this out of the way, let’s move on to the how part. There are multiple ways where you can put your money in gold.

1. Jewelry

The most common method and the easiest to find is gold jewelry. They differ in the price and value depending on their weight and purity.

However, these may not yield a decent profit because most of the time you will be paying for both the metal plus the work done on the jewelry. So, if you will buy jewelry as an investment option, you may want to check pieces of jewelry that don’t have much work done on them.

2. Bars

The second option is to buy it in the form of gold bars; these would differ in price depending on their weight. Bars of gold are recognized as at least 99.5% pure gold.

This is a better option than jewelry because there is almost no work done on the gold and therefore you are only paying for the pure metal. But it can also be a little bit harder to sell them.

3. Coins

Another way to own physical gold is to buy gold coins. These can also have other mixed metals to them but they usually have the percentage of gold they contain carved on them.

However, like jewelry, you may also be paying for the work done to create the coin shape.

4. ETFs

Investing in a gold exchange-traded fund is buying stock in a company that buys and sells gold. This way you are investing in gold without actually buying and owning it.

This one is a good method because it saves you the burden of taking care of physical gold possession, but the downside to it is that it has fees both to put an investment and periodic management fees for your account. So you will need to make sure that you are not paying too much in fees that you are not actually making enough profit.

5. Mining stocks

This is another way to put your money in gold without actually owning any physical gold. Instead of buying gold, you buy stocks in a gold mining company.

The prices of the gold mines follow the prices of the gold itself, but you also invest in the actual production of gold by a mining company.

The downside to this one is that the mining business is full of risks including possible natural disasters or a mine collapsing. So this option is probably not for everyone.

What Are the Cons to Buying Gold?

Most people who are against buying gold and even those who encourage you to buy it agree that there are some disadvantages to owning it.

1. Saving expenses

If you will be opting for options like gold bars, jewelry, or coins, no one thinks it such a good idea to keep gold simply in your closet or a drawer.

So you will probably either need to buy a safe or consider renting a safe in a bank which would offer more security, for example, but is something that will require monthly payments.

So, in the short term, it will be adding expenses instead of giving interest.

2. No interest

Gold is considered a non-yielding asset. As mentioned earlier, buying gold is merely just saving your money.

So unlike the ability to rent a house you own and making money off it, for example, you will not be getting any interests from the money you put in an asset like gold.

3. Low profits

Unless there is some global economic crisis or a huge financial turbulence like the currency inflation in Egypt that lead to huge rise in prices, gold prices are usually steady. As you can see from the earlier graph, it takes many years to start noticing a significant difference in prices.

So, gold in general is not going to make you big profits as an investment.

investing in gold in 2019 to buy or not to buy, on pinterest
Click to Pin It on Pinterest.

Conclusion

From what I have read and learned so far, gold should definitely be part of your investments for its undeniable value and as a form of security and to diversify your investment portfolio, but it shouldn’t be your main and only focus, or even a big part of it. Because that is just money put on hold. It is believed that you should invest in gold with only 5%-10% of your money and put the rest of it in other types of investments.

If you don’t own gold…there is no sensible reason other than you don’t know history or you don’t know the economics of it.

Ray Dalio

Till next week, happy days!

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Who Is Ray?

In case anyone is ever wondering.

I’m starting this blog as a way to track and document my very unsettling and skeptic journey of achieving financial freedom and starting my own business (and, you know, becoming my own boss!).

The reason I use words like “skeptic” and “unsettling,” and I would go as far as saying frightening and insane, is that I don’t personally know anyone who’s ever done this before. At least not someone who didn’t initially have a huge sum of money (because they come from a rich family or so) to start with. Everyone I know follows the typical “active income” lifestyle: A day job and a salary for the hours they worked at the end of the month and that is it. And most of them live a month-to-month kind of life.

So, I am certainly taking a huge leap of faith here!

But before I take you on my journey, here’s a brief background about me first.

I’m a telecommunications engineering graduate who never really worked as one. I graduated in May 2015 with the decision to pursue a career as a writer instead. I thought the hardest thing about that decision was to face my parents with the fact. Boy was I wrong! That was probably the second easiest thing I’ve ever had to do. 

The hard part though was to actually pursue the career. Have you ever felt like you just don’t fit in a certain crowd? If so, that makes two of us!

In the brief 4 months of me taking online (because I couldn’t find any off-line) writing courses to polish my skill, I started to feel a lot like an impostor on that field. For two main reasons really: 1st, everyone in those courses was an English speaker who lived in an English speaking country; 2nd, none of them was an engineer.

See, my plan was to write a novel and publish it and become a published author and while I do that, I would find myself a day job as a writer/copywriter. And God only knows why I ever thought that this was going to be that easy.

First reality check was when I realized that where I live people do not need my skill. As you can clearly see, I write in English, and that is not my country’s 1st language. So, an English writing job that is basically for fiction readers is not something you would run into that often (in my case, ever!).

And don’t get me wrong, I do love my 1st language, but for some reason I have always felt more comfortable expressing my ideas and thoughts in English. I enjoyed English literature in school and the more I read the more I was encouraged to write. Perhaps this ease that comes with writing is for the sole reason that it is not my mother tongue. If I were just as fluent in German, that would have been the language I write in. (And there was a brief moment in time when I actually did.)

Anyway, so when I realized that the fact that I love to write stories in the English language was the kind of thing you say in an interview to sound more educated, creative, and thoughtful, but not the kind of thing that would actually land you an interview, I started exploring my options.

Sadly, I couldn’t find any job in my field of study (telecom engineering) that didn’t require a prior experience of some sort. That was when the customer service genie opened its wide arms to my unemployed potato head and I got my first job as a customer care agent for a telecom company (the irony!). 

I spent 10 months in that customer care job, during which I joined the 2015’s NaNoWriMo for the first time and wrote the first draft of my very first novel, as I was still hanging on to that dream of becoming a writer one day. (And, in case you were wondering, the draft is still untouched to this day.)

I then left that job for an opportunity to work as a scientific copy editor at an English research publishing company/online magazine. I figured that was a step closer to my initial dream and as close as it gets to my dream job. And let’s just say that feeling was amazing while it lasted! But 6 months into that job, I realized it was too boring for my brain cells. 

Fast-forward to April 2018, I would land another customer service job at yet another telecom company (when fate is clearly sticking out its tongue at you).

September 2018 was when I decided that this was no longer what I want to do with my life. I no longer want to be a customer care agent, this was supposed to be a temporary thing until I actually find a job I want. But now it felt I was just wasting my days, approaching my 26th year alive with absolutely zero accomplishments, zero goals, zero boxes ticked off my bucket list (which I started in high school, but in my defense, there are some unachievable stuff in there, like owning a home on an island before 30. What was I thinking?)

So, it was kind of an existential crisis in a way. I left my 30-day notice that month and, despite what everyone said, I didn’t care if I didn’t have a clear plan yet. All I knew was that this was not what I wanted to do with my life, and that was enough reason for me to quit it.

The few days following my quitting the job, while still unclear about my next step, I received 3 other customer service job offers 2 of which were really easy to reject, the 3rd one was a tough no; but something else happened too, I ran into this video Getting A Job Is For Losers by Rich Dad Channel on YouTube, and that was when it hit me; I realized that what I really needed was to not need a job. I was more drawn to the idea that I do not necessarily need to work for someone else to make money, the idea of being financially independent, of having an income whether or not I worked for 45/50 hours every week.

That’s when I started to research on this more and figure out other ways to have a source of income. And throughout the posts of this blog I will be experimenting with all the ways I find and share all the tips and methods I run into that would help me (and hopefully whoever reads this) achieve that goal. *fingers crossed*