Making money opportunities online is basically the same as any brick and mortar business. In all the channels of making money online, there is a physical equivalent . Profit from Gold investment is no different from any of the other channels.
Therefore, profit from Gold investment have been included here as this can potentially make huge amount of money for the trained and disciplined investor and trader.
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Historical performance of Gold Investment
If you look at the historical price of gold, you can see that in times of crisis, trouble or high inflation, Gold will shoot up by between 300-500% depending on the severity. After reaching its peak, it will usually corrects back about 40%-60% of the total gain. Then, it will base for about 5-6 years within a narrow band before making its next move higher.
For example, if you look at the recent run, it started in 2001 when Gold broke out for its consolidation basing band between $250-$400. It then slowly and steadily move higher so that by 2007 when the subprime crisis hits, Gold was already at about US$600. When everything blew up in 2007, Gold just shot up 300+ % to a all time high of US$1921 per troy ounce in 2011. It then corrected by 50% to reach the low of US$1088 per troy ounce in 2012 ie (1921-1088)/(1921-400).
This was still twice the point it broke out of its basing pattern. It then base around US1100-US$1385 for the next 6 years before it broke out of the consolidation basing pattern at US$1385 in May 2019. It has since steadily risen to touch a recent high of US$1613 on 8 Jan 2020. I expect this trend to continue until the next crisis hits when it will zoom up another 300-500% before correcting.
You can work out yourself all the other times Gold did this at the peaks in 1937 and 1981.
Case for Gold Investment
After having worked hard for your money, surely you don’t want to see its value and purchasing power eroding. In times of trouble and high inflation, Gold preserves its value extremely well.
Although many argue that because Gold does not pay a dividend or interest, it is not a good investment. However, if you look at history, Gold increases at a 7% per annum compounded rate. You just have to compare with other forms of investments and evaluate it yourself. Of course there are other investments that may match or even exceed performance of Gold like
- Stocks Indices
However, I like investing in Gold for the following 3 reasons
The universal nature of Gold is the inherent trust and confidence that people have of Gold as a store of value. It does not depend on the fortunes of any country or economy or industry. It is well recognized by the whole world. Compare this to fiat currencies which value is dependent on the issuing country fundamentals. If its economy dives, or there is political upheaval, confidence erodes and its value will go into free fall.
Secondly, I like its passive nature is the fact that every time it corrects, you can add to your holdings and accumulate within the window when prices are holding steady. You can basically do this until the next crisis hits. When the crisis is over and it starts correcting, you can either take out some profit or you can just ride it out till it steadies before accumulating again. You can work out the other times this happens to Gold in the 1981, 1937 peaks.
Gold is a great hedge for our investment. When the economy is doing well, our business will do well and stocks will outperform Gold which will hold steady within a narrow band. However, when crisis and troubles hit, everything will fall apart. You may lose your job, your business may go bust and your stock investments will dive. Even the interest on your bank accounts will be slashed. In times like this, only Gold will outperform and preserve your wealth.
If you would like to trade Gold on a more regular basis and makes money regularly on shorter time frames, be sure to check out my other articles on online trading
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