Latest News from Newealth

Things that sparkle

• Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner

Gold is an asset because it represents as store of wealth.

This undisputed fact has been the case for millennia and Gold is also purchased heavily in times of financial fear.

For example, the price of one ounce of Gold has risen to US$3,115 today which is a 39.1% increase in 12 months.

However, the problem with investing in this asset is that Gold does not multiply.

A bar of Gold does not produce baby Gold ingots which means an investor can make no money for extended periods such as between late 1970’s and the 2008 Global Financial Crisis (some 30 plus years) during which time an investor did not make a dollar.

Worst still is the inflation adjusted price of Gold which has seen no real growth for 45 years.

Click for charts.

Gold is a terrible asset for multiplying wealth.

The principles of Value Investing teach us to not invest in commodities, Gold might sparkle but it is just too risky.

WARNING, this does not constitute Personal Advice. To discuss if this is an appropriate strategy for your given circumstances, please do not hesitate to contact us directly.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.