Editorial
Gold in the news at a record high; why the reader could not explain the reason to own it and passed
Contents
The situation
The news said “gold hits a record high”, and people around me said “you should buy before it is too late.” I had heard that gold is a “safe asset”, and I felt tempted.
What stands out
- Gold does not generate income just by holding it, unlike stock dividends or bank interest. The only gain is a profit when you sell at a higher price.
- The price of gold in Japan is set by the international price and the yen-dollar exchange rate. Even if the dollar price is flat, a stronger yen lowers the price in yen.
- The price you pay to buy and the price you get when you sell differ. If the gap were 5%, selling right after buying would cost you that much. The gap varies by shop and product.
- Physical gold needs storage, and protection against theft or loss.
Why one might pass
“It is a record high, so I will buy” gives no help when the price later falls and you must decide whether to hold or sell. I could not say in my own words why I wanted gold (to hold part of my assets separately, or just a vague worry), so I passed.
What could change the decision
If I could decide how much of my assets to hold, for how many years, and without selling when the price falls, that would be something to think about again. Whether to buy would be a separate decision, based on the situation at the time. I would also check fees and storage, not only the price. There is no need to judge this decision by how the price moves afterwards.
What this case shows
- Gold pays no interest. Write down the reasons to hold it and the reasons not to.
- The price in yen moves with both the gold price and the exchange rate.
- Check the gap between the buying and selling price (the cost) before buying.
Related: Why record the deals you passed on: a checklist for skipping decisions
We also welcome your own story of an investment you passed on. Send your story.
This article is a story rebuilt from examples shared by readers, with details changed so that no individual can be identified. Some numbers and conditions are illustrations. It is not a recommendation of any product or investment. The price of gold can rise or fall, and you can lose part of your principal.
Found this useful? Let us know (anonymous).
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