GOLD VS EQUITIES


Gold and shares can both be attractive options for investment. However, while the rewards from shares can be big, they come with big risks. Gold is about long-term security and protection against uncertainty.

 

THE NUMBERS

This graph tracks how much an investment of £10,000 in gold and one on the FTSE 100 would be worth, tracked against inflation from 2000.

As you can see, £10k invested in gold:

  • would have been worth £77k in 2021, significantly more than the rise in inflation, a portfolio increase of 670%.

An average FTSE 100 investment of £10k:

  • is only worth a little over £24,500.

Investing in shares is never without risk, but the global pandemic was another stark reminder that market shocks can occur very unexpectedly. While the UK stock market has largely recovered the losses from 2020’s plunge, there is still some way to go, and the natural volatility will never disappear.

Gold on the other hand has proved time and time again that it can protect against financial uncertainty and offer a chance to grow your investment portfolio. The upsurge during the pandemic was a reminder to gold investors that it can be very effective protection in these volatile times.

Investment graph

COMPARING SHARES WITH GOLD


A RELIABLE PHYSICAL ASSET

Because it is a physical asset, gold is seen as safe and reliable, and something that will never go out of fashion. This has always meant that when the markets seem uncertain, gold tends to do well.

Investing in shares is a different prospect. While there are compelling stories out there, due to the complex and intangible nature of financial markets, outperformance is hard to come by and trading always comes with risk.

Banks are also increasingly vulnerable to cyber attacks, and some have prievously been unable to withstand serious international crises. Gold’s scarcity means that its capacity to retain value always remain.


PROVIDING AN INCOME

Another aspect of investing in shares is that they provide dividends, money paid to investors from company profits. This means that investing in shares can provide a regular income.

However, this amount will be small compared to the amount you invest. Unless you invest a very large sum it is unlikely to be an amount large enough to make a significant difference to your day-to-day financial life.

While gold does not directly provide an income, because it is in such high demand liquidation is very fast and easy to do. Invest in gold coins rather gold bars and you can liquidate in smaller or more specific amounts. Gold is a far more flexible investment than most people realise.


RISK AND REWARD

Investing in shares can be rewarding, as you can invest in businesses that you are interested in, or passionate about. Hopefully, the business will create products and services which will continue to be valuable far into the future.

But the decisions you make at this stage are likely to be based on speculation. The financial markets have shown throughout history that they are not the place for safeguarding wealth, and even the best companies in the world can struggle.

On the other hand, the risks associated with gold are much smaller. And again, as the numbers show, the potential rewards can in fact be greater.


WHAT THE EXPERTS SAY

Investors should be mindful that shares come with a higher risk than many other forms of investment – get your calculations and estimations wrong, and you could wind up with nothing.

The markets in the US bounced back quickly and strongly after the pandemic dip, while the UK has seen more measured return to growth. But a Reuters poll suggests a correction may be on the cards in the near future, with three-quarters of respondents saying a correction in their local equity markets was likely.

Ultimately success or failure in the stock market relies on unstable forces, and many people have lost everything due to factors outside of their control. Gold sits outside these systems, a physical object that has always retained its value.


WHY GOLD?

  • A proven asset in times of uncertainty
  • Tax efficient depending on individual circumstances
  • Physical, tangible asset


WHY SHARES?

  • Invest in businesses that appeal to you
  • Get to know both sides of risk and reward
  • Can be an exciting and interesting world to get into
  • Can provide annual income as well as long-term growth

One Ounce Fine Gold Bar

CONCLUSION: GOLD

The pandemic set in motion a tsunami of unprecedented events that changed the social, political and economic landscape of the world. The recovery is ongoing even while the threat is still imminent and the long-term effects of lockdowns, fiscal stimulus, furlough and a raft of economic safety measures is still unknown. Inflation is rampant and there may yet be more financial shocks in the market.

With all of this mind, it makes sense to invest in a commodity that has demonstrated consistency over recent years and is projected to do so in the coming ones. Both gold and shares have their respective advantages and drawbacks, but in times like these when the future and the economy are uncertain, gold is the clear winner when it comes to long term investment.

Stability and security are the name of the game when it comes to gold investment, and in times of such political and economic uncertainty, gold is the sensible option for investors looking to safeguard their assets.

 

investment gold bars

INVEST IN GOLD WITH THE PURE GOLD COMPANY

The Pure Gold Company recommends gold for a variety of reasons:

  • Consistent value thanks to its rarity
  • A proven asset in times of uncertainty and crisis
  • A physical, tangible asset not directly controlled by banks or governments

For more information on investing in physical gold to preserve your wealth, contact The Pure Gold Company today and speak to one of our advisers. We will be on hand to guide you to the best method of gold investment, given your individual needs.

 


HOW TO BUY GOLD & SILVER 

Our Simple 4-step process makes physical gold and silver buying easy.


Q & A
One of our dedicated specialists will work with you to answer any questions you have. We will provide you with factual information (benefits / drawbacks) about all available products. The length of this conversation is down to you and is an opportunity to ask us as many questions as possible. Please note we are not permitted to provide any financial advice. If you require advice, we suggest you speak to a financial advisor.


PURCHASE ORDER
When you feel confident that you’ve had all your questions answered, you will be asked to complete a purchase order, which is your instruction to purchase metals.


PAYMENT
In order to lock in the price and complete your order, you must then make a payment, via bank transfer or personal cheque. We no longer accept any payments over the phone / card payments.


STORAGE AND DELIVERY
We can either deliver your gold directly to you, via our insured delivery service, or you can choose to have your gold safely stored, in a London Bullion Market Association (LBMA) vault, where your physical metals are allocated in your name and with full insurance provided.

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