In a previous post, we talked about why gold is so popular, and in the long run it tends to be bullish. This time, let’s look at the weaknesses of gold again.
(1) A Volatile Market.
Gold can be a high-risk, short-term market in the short term. Because gold is an asset of interest not only in one country but around the world, the trading of big investors can fluctuate a lot. In addition, countries’ banks often do not know in advance when and how much gold they will sell, and if one of these banks sells tons of gold, the price of gold could plummet. In addition, gold is a panic purchase based on people’s psychology. Panic selling is also common. When the price of gold goes up, people are buying to see if it will go up any more. So when it comes to buying more and more, some of them are more likely to catch up with higher prices.
In addition, gold tends to be more volatile than other foreign exchange markets. Gold used to be a currency, but today it is no longer the only currency. In each case, they have seized it, despite obstacles we can scarcely imagine. ” Gold, on the other hand, lacks direct control, so the movement is intense.
(2) In the long run, it goes up.
The main motto of gold collectors is that gold is volatile in the long run. This is true. But sometimes it is difficult to predict how long and how long it will take. For example, in the case of the Burmese gold market, in 1942 it was 150 kyats per kyat. There, for various reasons, it went up continuously, and in 1943 it reached 550 kyats per gold kyat. It jumped more than three times in one year. However, after the upswing stopped, it jumped back to 290 in 1944 and dropped to only 142 kyats in 1947. The price of 550 kyats in 1943 did not return until 1974. That was 30 years ago, when in 1943 the gold miners were in for a rude awakening. The same is true internationally.
The main reason for the rise in gold prices is the inflation rate of the currency. For example, in the first year, if you pay 100 kyats, you can buy a gold kyat or a car. If the inflation rate is 10%, you can only buy a gold kyat or a car for 110 kyats next year. But because cars are man-made, they can be invented in a variety of ways to make them more affordable, so prices can be maintained and demand can be maintained. For example, a kyat of gold can be bought for 110 kyats, but a car can still be bought for 100 kyats if it can be produced in large quantities and at low cost. The same goes for other products. For this reason, gold rises directly in line with inflation, while other commodities tend to rise gradually. So when you look at it this way, gold tends to go up faster.
In addition, inflation reduces the purchasing power of a currency. As a result, the value of the currency has fallen, and in addition to the value of gold, demand, Combined with some market conditions, the rise in gold prices seems to be quite rapid.
Another notable study by the New York Times reported gold. The study looked at the percentage of return on investment from 1836 to 2011, minus the inflation rate, if you subtract the inflation rate. It is only 1.1%. According to the study, treasury bills, such as gold investments, had a 1% return, while stock shares had a 7.4% return.
(3) Dividend or no regular income.
Every time you make an investment, you get one or both of the two main types of returns. These are Income and Capital Gain. Income is the amount of money you earn while owning that investment or asset. Stock-share, for example, is like an annual dividend. Or an apartment; If you are investing in a home, you may be able to earn rental income by renting it out before reselling it.
Capital Gain is the profit made when the original value goes up and resold. For example, you buy or sell a car. Buying for 100 lakhs and reselling for 110 lakhs is a type of capital gain.
There are a lot of investments that can bring both of these benefits. For example, if you are buying an apartment, you can still rent it out and still make a profit if the price goes up when you resell it.
So what about gold? Of course, gold cannot be earned as income. If so, what is Capital Gain for resale?
(4) I guess I will go up and down.
Recently, gold has become so popular that it has run out of gold in gold shops. The price of gold has risen steadily to over 17 lakhs depending on demand. As a result, I saw a lot of people buying the high price, thinking that the gold price would reach 20 lakhs.
The main reason for the fluctuation of the gold price is the world gold price. You also need to learn about WG. Supply Market conditions are often studied. In addition, since the WG is mainly linked to the US dollar, the fluctuation of the WG depends on the strength of the dollar. The strength of the dollar depends on the policies of the US economy and the Federal Reserve. This is WG only. As a result, domestic gold fluctuations in addition to WG will increase domestic demand and demand. Domestic gold flow; Border gold entry and exit; Excavation capacity; Market movements of gold diggers; It also depends on the local dollar price. For this reason, it can be a little difficult to predict the price of gold if you are not an expert in the gold world.
(5) How to save?
Buying a small amount of gold is not a big deal, but if you buy a piece of gold (ten pieces of gold), you have to think a little bit about where to store it. Advantages of gold, such as light weight and portability, also make it an advantage for theft.
Internationally. You can buy and collect high quality refined gold bars called Bullion. A kilogram of Gold Bar currently costs around US $ 60,000. If you invest four or five gold bars like this, the value can be lost if you keep them at home. There is a storage cost for this.
So why buy gold…?
Most people buy for trading. It is important to note that trading is not the same as investing. Trading means buying from a cheaper place and reselling at a higher price. Gold, on the other hand, is trading at a profit, regardless of location. Because of this price increase, you will get a profit whether the gold price goes up or down. Or they may be able to predict the market and make a profit by using the trading method of buying and selling at the lowest price.
Gold is also a good buy for those who want to save money again. If you are not saving just for cash, then buying something that cannot be bought directly can save you money. The advantage of gold is that it can be bought and collected from tens of thousands today.
A percentage of assets is often converted to gold to withstand inflation and to make it easier to raise money. For example, you buy 5-10% of your 100% gold. This is called a diversification strategy.
Global investors are flocking to gold in times of economic turmoil and crisis. When the economy slows and inflation rises, assets are often bought and sold to buy other assets, such as stocks, to keep assets from declining. But when the economy stabilized and the economy recovered, gold was resold and stocks were used to raise money for other jobs.
Summary:
Gold is a type of asset that you buy in exchange for the purpose of not losing your assets in the event of the risk of your assets being depleted. For example, political and economic instability; Economic downturn; And high inflation. But gold is not the best investment for the purpose of growing your assets rapidly.
Even in the current volatile situation, gold may not be the best investment. For example, if you buy gold for 20 million kyats and buy an apartment worth 20 million kyats, which is more profitable? As soon as inflation inflates, the original price of both gold and apartments will go up. Gold goes up immediately and the apartment can go slowly. However, the apartment can still be rented monthly.
If the monthly rent is higher than the monthly price of gold, the apartment will be more suitable. This is the liquidity of gold. Risk that you can take. And so on. In addition, gold is traded and made into jewelry. The long-term investment of all your assets in gold, not the other way around, is that the goal is not to lose assets, but to increase them is not the best investment.
So I want others to see that gold is more valuable than gold, not just gold. As I always say, talking about data, not pain, will only increase your assets. Adequate knowledge can easily overcome serious difficulties. More Get Quotes Here…
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