facebookWould you consider gold an investment or an insurance? - Seedly

Anonymous

18 Apr 2019

Events

Would you consider gold an investment or an insurance?

Discussion (7)

What are your thoughts?

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Lim Chun Long Jimmy

06 Mar 2019

Co-founder at PolicyWoke (Traded Endowment Policies)

Short answer:

Gold is not an investment. In order for it to be an investment, it has to be exposed to risk to have a yield. Gold has no yield, because it has no risk. No maturity risk and no issuer risk. If you own it, you own it as it's not anyone else's liability. Gold is an element, atomic number 79, so it's always just Gold.

Gold protects what you earned and kept against devaluing of fiat money such as SGD, USD, etc. Instead of using fiat money as an anchor, use Gold as anchor because Gold is constant, it's the fiat money that is fluctuating. If this is the insurance you're referring to, then yes, Gold is a form of insurance.

The short answer is based mainly on Austrian Economics, which I strongly believe in. Here is the video on Austrian Economics with Kane:

https://www.youtube.com/watch?v=l8xphl-CyvU

Hello,

Gold has a long history being money itself. After 1971, the world went into a new monetary system (fiat currency) and gold has become freely trade commodity (a type of investment vehicle or asset class). Gold has its uses for jewelleries and devices it electronics, hence there are the gold mining business industry. During times of panic or stock market clashes or currencies crisis (hyperinflation), gold can behave like money again where hold it as a safe haven asset. Russia/China/India has been biggest buys of gold...

Just an observation, as the stock market corrects in oct 2018, gold price went the opposite direction (inverse relationship there).

Just my 2 cents, hope it helps

Hi anon, to me gold is an investment - though some may call it "insurance" in the broad sense of hedging against currency depreciation or inflation, I see it as an investment as how you would see bonds vs equities - generally an idea of negative correlation. One goes up, the other goes down (usually). Historically it has always been a great hedge against inflation given the fact that gold price usually increases when the cost of living increases, and not only that gold also maintains is relative value to currency in deflationary conditions as well.

Nowadays, with the rise of emerging markets in Asia such as India, one of the largest consumers of gold, their demand for gold from the cultural standpoint of dowry, jewelery etc. leads to increasing buying pressure on gold prices as India's economy grows as her people prosper and get wealthier.

Hence, this is an investment to me.

Hello!

Personally, I feel that gold would be considered an investment since it provides diversification in terms of investment. For example, should the stock market crash, gold may not be affected by this crash directly. Also, the rate of gold prices increasing has increased more than the rate of inflation. Singapore’s inflation over the past ten years account to about 30%. Price of gold however, increased by 170.30% in the same period of time.

These are just my personal views and can be debated against, hope it helps though!

More likely insurance because gold doesn't have a return...

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