The misconception is gold isn’t a viable investment option because it has no yield, and yet that is exactly why gold is such a necessary component to an investment portfolio.
Yield is derived from risk, without risk there is no yield. Think about the money in your wallets, it does not yield without counter party risk. A great example is a bank. When you buy a GIC you get a rate of return based on the time you lend your money to the bank. What is the risk? The banks ability to return your investment plus the interest you’re earned by lending them your money over time. This seems like a fairly “secure” method form generating return on your investment but considering there were eight (8) failures in the U.S. in 2017 and 5 failures in 2016 and a further 8 in 2015 risk certainly exists. It’s also important to keep in mind these failures occurred with virtually no market stress.
Its important to remember when you deposit funds into a bank the depositor is no more than an unsecured lender to what he believes is a “solvent and safe” institution. Ironically, we still believe that when things get tough and markets plummet they’ll have our money secure. I can assure you they will not! Without warning these same institutions can legally, “lock the doors” and lock you out of your accounts withholding any investments within. This action is called “bail-in” and it has been enacted to protect the banks and prevent another liquidity crisis like the one in 2008. With physical gold no such risk or safety concerns exists.
How do you create yield in gold without adding significant risk? By efficiently trading the highs and lows in the gold market. This is important given most gold owners typically employ a buy and hold strategy which leads investors to question the annual cost of “holding” precious metals. International Gold Vault can place immediate buy and sell trades on any market worldwide providing the very best in liquidity and market access. Low supplier costs and zero commission on every trade. Furthermore, the average cost per trade on physical gold buy is $11.00 making it easy to buy and sell for profit, generating yield. The risk being the client’s ability to buy dips and sell highs.
Clients of International Gold Vault can place immediate buy and sell trades on any market worldwide providing the very best in liquidity and market access.
Written by Rob McInerney