I have always been reluctant to make a meaningful investment in gold for the following reasons:
1. I believe more gold has been sold than exists. Has anyone done a substantial audit of these privately owned gold vaults? If so, are auditors qualified to attest that the product audited is real gold?
2. Counterfeiting has reached such a high level of sophistication that it is almost impossible to determine fakes. Some years back there was an issue with fake gold bars being produced in China that fooled investors.
3. In times of need it is not readily divisible.
4. The market is controlled with market makers collecting fees for both the purchase and sale.
5. You must be able to safely store and protect your investment.
6. Gold, as all items, is subject to the law of supply, demand and need.
I do not feel gold is a good investment for anyone who needs an immediate return on their money (dividends) or will need to liquidate in a relatively short period of time. For most people I would suggest brass, lead, land and seeds.
Comments briefly:
1. I believe more gold has been sold than exists. Has anyone done a substantial audit of these privately owned gold vaults? If so, are auditors qualified to attest that the product audited is real gold?
You must own individual physical gold - or you only (may) have a claim in court.
2. Counterfeiting has reached such a high level of sophistication that it is almost impossible to determine fakes. Some years back there was an issue with fake gold bars being produced in China that fooled investors.
There are electronic ways to reveal what a coin or bar are made of. Also reputable dealer.
3. In times of need it is not readily divisible.
In one town in Venezuela we read last year their local economy was running on gold mined in the surrounding mountains. They literally eyeballed an estimate of cost, cut it off to pay…
4. The market is controlled with market makers collecting fees for both the purchase and sale.
True. Businesses have no incentive to provide services - including liquidity unless they can make a profit. The stock martlet works this way.
5. You must be able to safely store and protect your investment.
Yes!! Either privately and securely or home… or in more than one legal jurisdiction.
6. Gold, as all items, is subject to the law of supply, demand and need.
Yes, but is rare, expensive to recover, and valued worldwide.