Gold – what a facility! A safe haven for our hard earned money. The only viable currency in times of crisis. And crisis is always somehow. And it also looks beautiful when it shines so brightly in the sun.
This beloved metal does not look any better than that. Because “gold is only once meaningless” as Andreas Beck, founder of the Munich Institute for Asset Management (IVA), does so beautifully expressed.
„First it lies meaningless in the earth, then is taken out with much effort. After that, it lies just as pointless in a vault. ”
So, can you make no money with gold? Sure.
Does it help you build a fortune? NO!
Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything. (Warren Buffett)
I think civilized people don’t buy gold, they invest in productive businesses. (Charlie Munger)
Gold is unique because it has the age-old aspect of being viewed as a store of value. Nevertheless,it’s still a commodity and has no tangible value, and so I would say gold is a speculation. (Seth Klarman)
The answer is just simple:
Gold does not make money! It does not produce any added value! Neither do I get interest on this yellow metal , nor dividends. However, I pay for each year that the bank keeps my golden bars in the depot, as long as I do not want to keep the bars at home.
I can buy a nice and expensive necklace of this wonderful shiny metal, which has been used by the smith, but when I have to sell it, I get only the current value of the gold. Not more. If I’m unlucky, it is just not announced and the price for it is low. And somehow that is always so.
The Value of Gold
Gold – and that is the problem – gets its value exclusively from the people who believe in it and buy it. The demand for yellow metal is largely determined by the psychology of the market. If people are panicked and believe the world will go down tomorrow, they believe in the precious metal and run into it. If the world looks rosy again and the panic has settled, they escape just as quickly from the gold again.
Gold is heavily dependent on different global political conditions and people’s response to it. We can neither predict what will happen in the world tomorrow nor foresee how people will react to it. Divination does not work.
That is why we cannot say when it is right to spend money in gold and when an exit is announced.
What events will occur which will strongly influence the development of gold in the future?
However, since gold gets its return solely by the price the investor is willing to pay and not by any products it manufactures and sells, it is not a safe haven for all investors who want to build a fortune. It is not even a haven. It’s not even an option.