Sometime back, I saw a facebook post and joined in the discussion. It was about gold. A gentleman commented that buying physical gold at retail shop is at a ridiculous markup and selling may result in a loss. There are some other discussions elsewhere on whether gold is an asset or commodity.
In 9 August 2015, I bought a piece of 10g gold at S$550 thinking it is an investment. As I slowly learnt other forms of investment, I felt that “investing in gold” is a bad choice as it does not generate any cash. A piece 10g gold bought in 1900 is still a piece of 10g gold in 2000. It does not produce more gold.
REGRET? ALTERNATIVE?
As of now, I regretted buying that piece of gold but at least I learnt something from it. On 18 March 2019, I sold that piece of 10g gold at… S$550. At least monetarily, I did not lose. It also got me thinking what would happen if I invested the money elsewhere. I am talking about real investment, not any ponzi scheme or MLM.
SPDR GOLD SHARES ETF (Ticker: GLD)
On 9 August 2015, each share of GLD ETF costs US$105.72 and on 18 March 2019 US$123.04. This is a capital gain of 16.38%.
SPDR S&P 500 ETF (Ticker: SPY)
On 9 August 2015, each share of SPY ETF costs US$210.63 and on 18 March 2019 US$282.33. This is a capital gain of 34.04% (excluding dividends).
SPDR Straits Times Index ETF (Ticker: ES3)
On 9 August 2015, each share of ES3 ETF costs S$3.19 and on 18 March 2019 S$3.22. This is a capital gain of 0.94% (excluding dividends).
Putting aside expense ratio and transaction fees, looking at these results, it does seem like buying physical gold at retail shops/pawn shops does not generate much profits as mentioned by the discussion member.
FINAL THOUGHTS
I am not too sure what other forms of gold investments are out in the market. Comparing ETFs to gold may not be a proper comparison as I know some people use gold to “hedge” their overall portfolio. Personally, as of now, I would no longer consider “investing” in gold and will just stick to investing in index funds or stocks/businesses.
What are your thoughts about investing in gold? Let me know in the comments below. Thanks for reading.
Disclaimer: www.engboonhow.com is an opinion based website. I am not a financial advisor, and the opinions on this site should not be considered as financial advice.
Gold is a simple thing to understand, but it can be a complex investment when you drill down into the details. Here s everything you need to know.
Yes, gold is a simple metal. An easier way to invest in it can be to buy a gold etf.
Investing directly in commodities, such as gold or oil, tends to be more difficult for investors than investing in stocks and bonds. A major reason for this is that stocks and bonds are readily transferable and easily accessible to the average investor. Traditionally, commodities have been more difficult to invest in due to the complex way in which they trade through the futures and options markets. In other words, an investor can t just buy a barrel of oil.
That’s true. And I do not have enough space to store so many barrels of oil or metals.