Well, first thing first, what is your purpose on gold investment? If one who wants to speculate in gold price movement, I am sorry, I can't help much as I don't speculate on anything. Further, speculation is talking about market timing but investment is talking about medium to long term return while I see myself as an investor, not a speculator.
If one who wants to invest in gold based on its fundamental, I also can't help much neither. This is because commodities like gold is very much affected by general market demand and supply and there is no way to evaluate the future trend of demand and supply of any commodity.
You may start to wonder what I am talking about here. Well, gold is a metal that carries actual value which is decided by the market force from time to time. Those notes and coins in our wallet, purse, bank accounts are just fiat currency. Its value is backed by current banking system of the country. As for gold, it is internationally recognized globally by itself. Can you see the different?
Therefore, whenever I buy gold, I am actually exchanging my fiat money with precious metal with real value. Of course, the real value will be affected by demand and supply from time to time. But, in a longer term, rare metal will definately preserve more value that any fiat currency around the world. To me, I am willing to gradually exchange part of the fiat money I am having now to precious metal.
It is not wise to just to exchange all your fiat money to gold just like that. Gold is not a good medium of exchange. Just imagine, how does a hawker give you your change if you use an oz of gold to buy a bowl of noodle for lunch? How do you and the hawker decide the value of an oz of gold during the exchange? Also, it is very unwise to put all your investment in one basket. Therefore, all you need to do is to allocate your investment fund accordingly and allocate some portion of your fund to make gold as part of your portfolio. Make it a standard to be part of your fund allocation and reallocation exercise. In my book, FREEDOM, I share more about I thought about gold investment.
So, when is the right time to invest in gold? Well, as my mindset on gold investment is to exchange fiat money to precious metal, anytime is good time for this exchange. My suggestion is to go for dollar cost averaging method. For those who have limited investment, you might opt for gold investment passbook account. Unlike normal savings passbook, gold investment passbook is recording the weight of gold you have purchased and sold but not value. The actual value will be the buying/selling price during the transaction. Generally speaking, it is backed by actual gold and some banks allow you to redeem it in gold with condition if you wish to. Please understand the detail how gold investment account is operated before putting in your hard-earned money.
Happy investing.
Well, ups and down are very common in prices of shares and other things but when it comes to Gold, it often rises and rises but now when it is going down then its a good chance to invest in Gold.
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