4 Actual Problems When Investing Gold

Feb 22, 2012 • By • 18 Views

With the global recession, this meant that the banking community effectively imploded meaning that inflation and interest rates charged on loans increased, whereas the property of items were reduced, as was the value of money. Property owners were one of the groups of society that was most badly affected by the meltdown of the worldwide economy as they saw the value of their investments plummet. To add insult to injury, the fact that the banks restricted their lending policies meant that the pool of available purchasers was also reduced.

Because of these concerns, more and more people are looking for a safer, more reliable investment opportunity for them to put their faith and money in and so gold trading is quickly becoming a firm favourite among the general public. However, it would seem that the opportunity to invest in gold is a concept that many consumers have become quite smitten with and as a consequence they are effectively racing head first into the purchase of gold without actually weighing up all the options.

The following is a breakdown of some of the potential and actual problems that an investor can face if they decide to invest in gold.

1. Gold is a static investment, meaning that whilst it can be used as a means of effectively depositing money; there is no potential whatsoever to actually earn money or interest on the value of the gold. In comparison, if the investor was to purchase shares in a business, they would receive a dividend.

2. Gold, just like any other commodity will enjoy periods of boom and decline and so the value of the metal will fluctuate with these conditions. However, if the value of the gold should happen to increase for whatever reason, then the increase in the value of the gold can and indeed, will incur a tax liability. This stands in stark contrast to the "most favoured" real estate provision.

3. Investment in gold will not actually boost the credit of the owner, nor will it provide them with any sort of financial leverage that they can then use to bargain with a commercial lender such as a bank in order to secure additional credit such as éducation financière mortgage or a loan.

4. The expenses incurred in the investment of gold, such as the fees charged for security, transport, insurance and melting down the gold can all prove to be rather costly.

About the Author

Jeralyn S. Camajalan Jeralyn S. Camajalan

Jeralyn Siase-Camajalan is a long-time virtual assistant that has been serving busy people from major countries such as UK, US and Canada...

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