Are Direct Investments in Gold worth the Effort?

For a while now, gold has been considered a safe investment but it’s pertinent to ask the question as to whether it is still considered so in 2012.

For us to answer this question, it might be necessary to answer the question as to whether gold can be considered as an investment or a ‘store of value’.

Among the definitions that are available for the term ‘investment’, the most plausible one is where an amount of money is set aside so as to bring future benefits. However, when it comes to gold, it wouldn’t be a stretch to assume that it is more of a ‘store of value’ as the person who spends the money will most surely obtain the value he or she bought it for.

Of course, there are several reasons why someone might buy gold these days. One reason why this kind of an investment might be done is because the value of gold might be increasing and can be sold for future profits, as prices continue to rise.

However, this approach, according to experts, is more like gambling rather than sound investing as there’s no guarantee that someone will want to buy the gold at a higher price in the future. Even if this kind of speculation works, it must be noted that for small investors who want to buy gold, the costs involved in buying as a ‘store of value’ reduce the benefits involved in such a transaction.

Therefore, average investors must think about ‘cash flow’ and seek other alternatives in buying gold mining shares and exchange-trade funds. Investing directly in gold should only be strictly reserved for those who want a ‘store of value’.