- Gold is suitable as an investment that retains value
- Gold can be used a bartering item in times of emergency. (Keyword: Ban on cash)
- Gold is exempt from value-added tax, unlike e.g. silver or platinum, therefore you can buy with more favourable conditions
- Gold is best traded in its well-known forms compared to other precious metals
- They are independent of banks and financial institutions (keyword: state account access, creditor liability)
- They have real physical value (without good faith, currency is just paper)
- Diversification of risk in times of crisis (an alternative to real-asset investments))
Gold as a long-term investment
Those investing money in gold are long-term thinkers - this means at least in decades. Gold always stands the test of time when the population and markets lose trust in other assets. As a consequence, the price of gold can also rise explosively. Currency loses its purchasing power in contrast to the yellow precious metal. In times of crisis, for example, people have to release reserves to counter negative financial aspects and thus a lot of real estate appears on the market, which means prices fall as a result of oversupply. Gold, on the other hand, is limited on the market. In contrast to other investments, there can hardly be a drop in prices as a result of oversupply.
We have already had an economic crisis, say some, whereas others are sure this is ongoing and has not yet reached its peak. If such a peak were to occur, it would make the crisis of 2008 look like a mere blip. The price of gold quadrupled between 2001 - 2011 and reached its peak in 2011. The years during the economic crisis were an especially turbulent time for the stock market and investors. Many feared the collapse of the Euro, whereby the demand for gold bars and gold coins (e.g. Vienna Philharmonic coins) greatly increased. Because once a financial crisis or the drop in the value of a currency occurs, it is likely that the value of gold will be retained or even increase. The following has always been observed in the past: The more uncertainty that is triggered in society, such as by a financial crisis, the more people place trust in gold.
You should, however, observe some aspects when investing in gold. Good products differ from better products and reputable dealers from disreputable dealers here.
What should you pay particular attention to when purchasing gold?
Not all golds are the same! A gold investment in jewellery, for example, is not a monetary investment, provided that the jewellery has no cultural-historical value. It is likewise better to buy bars from refiners that also produce the big bars for the banking trade (Good Delivery Refiners). Other gold bars may have the same proportion of gold, but bank institutions and many precious metal dealers do not buy them. Bars produced by Good Delivery Refiners are nevertheless accepted worldwide. This is also the case if these refiners have a continuously up-to-date license.
A reputable dealer will not only point out the advantages but also the disadvantages of their products and spend sufficient time with you. This is all part of a good service. The precious metal experts at Gold & Co. will provide you with reliable and competent advice on all questions about buying gold:
- Is it better to buy gold bars or coins?
- Which denomination or grading do you take within these product classes? Is the purchase of, for example, small gold ducats sensible or rather Vienna Philharmonic ounces?
- What amount of money should you sensibly invest, taking into account your personal circumstances?
- Are your gold bars certified?
- How and where do you store the gold?
- When is the right time to buy and at what price?
- Which products are especially suitable for sale and how high are the price differences?
- How do you get the best flexibility, taking into account the best value for money? Which products are valued by the gram and which should be avoided regardless?
- What is the difference between buying gold and silver?
The issue of division/denomination when buying gold is closely linked to your wishes and requirements. Any reputable precious metal dealer will ask you about your purchasing intentions to try and meet your requirements as much as possible. The amount you wish to invest, whether you have made an investment in gold previously and also in which form you have bought gold, all play an important role here. This information is therefore relevant so that the right mixture of gold bars and gold coins can be found for you. Once this evaluation has been made, the most suitable products for you are compiled in the next step. A reputable dealer will guide you through the consultation and answer all your questions competently.
Gold & Co. is a family business and can look back on 120 years of tradition in gold. Both the management and staff will be happy to professionally address any questions you have about investment gold, investing in precious metals (gold, silver, platinum), or purchasing gold. Take advantage of our service and benefit from a free and non-binding consultation about buying gold.
Are there any risks involved when buying gold?
As with any investment, the purchase or sale of gold involves both opportunities and risks. In addition to fluctuating gold prices, currency fluctuations are also a factor that can contribute to the increase or loss in value of your gold investment. For example, a falling gold price in dollars does not automatically mean that your gold is worth less. Should the dollar be stronger than the Euro, we can even lock in profits in Euro if the price of gold falls in dollars. This has especially been the case in recent years. However, the advantage that gold has over any other investment product is the experience that it retains its value over thousands of years and even retains its colour and beauty in the face of the most adverse environmental influences.
It is especially sensible to distribute your wealth intelligently, to reduce risks and to purchase real assets in times of crisis. If we look at centuries gone by, we can see from experience that gold is likely to retain its value, even if classic monetary investments lose theirs. Gold has also enjoyed continuing value for centuries and is therefore particularly suitable for long-term value retention.
Admittedly, gold does not yield interest - we therefore recommend our customers to only invest approx. 10-20% of their assets in gold. An even higher share, though, is possible in the face of the current low interest rates.
Gold throughout history
Gold was seen as "hard currency" as far back as Ancient Egypt. Gold was considered money back then. Gold bars and gold coins were primarily used in trade for the exchange of goods. The Egyptians knew of the precious metal and were very aware of its significant value – the natural limitation of the resource always guaranteed a certain value throughout the ages. In every war (in WW I, WW II, but also even today – Ukraine, Libya, Iraq, etc.), it was always the winners that secured the hoard of gold from the loser first. The greater amount of gold strengthened the currency of the winning country.
Even though the gold standard has been officially abandoned, it is still the case today that each currency is backed by gold to secure its value - at least to a certain percentage, anyway. The European Central Bank (ECB) held 15,794 tonnes of gold in 2015 to collateralize the Euro.
In addition to physical payment methods, e.g. gold and silver coins, electronic money and the resulting modern financial instruments, as we know them today, arose during the course of financial development. However, these payment methods are often subject to speculation, currency fluctuations and are often very vulnerable to crises. This has been reflected in recent years, particularly in the price of gold. It was observed that investors from around the world were moving away from money and increasingly investing in gold. The increased demand boosted the price of gold: From 2001 to 2011, the price of gold rocketed from 257 dollars per ounce (31.1 grams) to 1,837 dollars per ounce. This corresponds to an increase in value of approx. 715 per cent or 1,412 Euros per ounce. Expert forecasts vary widely, but the majority expect a medium-term increase. Nevertheless, forecasts must be treated with extreme caution.
Despite this enormous increase in value in the past, an investment in gold is not suitable for short-term profit speculation. We strongly advise against short-term speculation, particularly in physical form. Nevertheless, those wishing to sustainably invest over the medium and long term will find themselves on the safe side with an investment gold purchase.
You can contact us at any time if you have questions, or just pay us a visit. Friendly and competent staff are on hand at both of our branches to provide you with the best possible service. We look forward to your visit!