Gold and silver are tangible assets, but are often traded in the form of futures or options, which are financial derivatives. Gold is a physical raw material as well as a commodity. It has an intrinsic value as a commodity (at least the cost of taking it out of the ground and refining it). Do these attributes alone make gold a commodity? After all, gold is traded today in markets as a commodity.
Commodity trading means buying and selling commodities instead of finished products (such as a house) or financial assets (such as stocks and bonds). Raw materials are active such as corn, coffee, wood and minerals. A common form of commodity trading is to invest in precious metals, namely gold and silver. As investment assets, gold and silver have very different properties and uses in your portfolio.
It's been nearly three decades since Wall Street and the media considered gold as an asset class. It would probably be generous to say that even 1% of U.S. investors adequately understand why at least a portion of 10% of their assets should be protected in gold and silver, mainly in ingots. An even smaller percentage understands that they must have a physical possession or a custodian who can prove that they have the gold purchased in a segregated account.
A good S%26P 500 index fund will do better than gold in the long term, but it can be a good countercyclical asset if you want to guarantee liquidity in the event of a recession. In his own words: “In the absence of the gold standard, there is no way to protect savings from the confiscation of wealth. Even under the weakening of the gold standard after 1933, when the dollar was backed by gold and could be exchanged for it (only the world's central banks and not American citizens), it was a reserve of purchasing power. However, while raw materials derive their value from their use, gold has no consumable properties.
The saddest thing is that investors in China, Japan, the Middle East and India are taking advantage of any pullback to continue increasing their gold and silver holdings. On the contrary, when times are good, investors tend to take their money out of gold and put it in assets with greater ties to the economy in general. Dollars, so when the dollar falls in value, gold and silver tend to rise because they become less expensive to buy with other currencies. For those who invest in gold, the aesthetic characteristics of gold are not as important as its monetary function.
In the late 1960s and early 1970s, the world stopped using gold as the international monetary system's option for balance-of-payments settlements. The decision to buy or sell precious metals with funds that are outside or within a gold IRA or a gold-backed IRA, and which precious metals to buy or sell, are the customer's sole decision, and purchases and sales must be made subject to the client's own investigation, prudence and judgment. So gold isn't a currency, it's not really a commodity and it's definitely not a cash-generating asset, could gold be a collector's item? And since gold never runs out like oil or copper, all the gold that has been mined is still with us. But apart from these rare collectibles, the value of gold is in gold and not in what is on the side of the coin.
The fund operator is responsible for managing costs, maintaining a physical supply of gold or silver, and for collecting an expense ratio. Having a pre-existing investment in gold can provide you with a valuable asset to sell during a recession, so you can buy other people's undervalued assets without selling your own. This means that the financial industry markets gold as a commodity, but does not act as such. .