Why is it gold money? Part 2.

Why is it gold money?  Part 2.

Continuation of the article for novice investors who are just beginning to think about how to start investing in gold. The article will help you better understand what gold is and how it should be perceived in the first place. You can read the beginning of the article HERE.

4) Always try to buy physical gold, not paper gold. Physical gold is a tangible asset, while paper gold is only a financial instrument. When you buy paper gold, you have no owner. It only depends on the price of gold and the value of your asset depends on someone’s financial ability and willingness to keep their promise. In other words, you have in this case the risk of the opposite side, which is eliminated by owning a tangible asset. For several years in a row, the world economy has been operating against the backdrop of a financial recession, which is characterized by broken promises. For example, the mortgage bank Lehman Brothers was unable to deliver on its promises, and more recently, the Greek government has been unable to pay its obligations to creditors. Therefore, you need to avoid risky financial instruments during an economic downturn. As long as current monetary and financial problems remain unresolved, it is better to own physical gold instead of its paper substitute.

5) There are two ways to buy physical gold: buy it and store it at home, or buy it and give it to a specialty store. Each method has its own advantages and disadvantages. Everyone should weigh the pros and cons for themselves and decide what suits them best, perhaps both options are appropriate, as diversification reduces risks. For example, when you store gold at home, it is always on hand, but there is danger of theft. Someday you will have to take out this gold, which will also take time, and perhaps an examination of the purity of the gold is needed, that is, the liquidity of your gold will fall. The advantage of storing gold in a specialized vault is that you can sell gold easily at any time and immediately get money for it, that is, the liquidity of gold in this case will be high.

6) Store your physical gold only in those vaults that independently audit the gold in your vault to avoid the risk of not receiving your gold. This is necessary to avoid violating the rules of storage of gold, prescribed in the contract. Only an independent third party can ensure that your gold is in stock and safe.

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