Property and gold are often both considered “safe” investments, without the fluctuations of high-risk alternatives such as the stock market. So which one is best for safeguarding wealth in an uncertain world?
THE NUMBERS
This graph tracks how much an investment of £100,000 in gold and one on the FTSE 100 would be worth, tracked against inflation, if liquidated over the last 10 years.
As you can see, £100k invested in gold:
- would have been worth £286k in 2016, significantly more than the rise in inflation, a portfolio increase of 186%.
An average FTSE 1. 00 investment of £100k:
- is only worth a little over £140k. This means in absolute value it has hardly grown at all.
With the world and the economy in the state they’re in, investing in shares has become ever-riskier. With high levels of volatility and uncertainly, the balance between risk and reward in today’s economy isn’t what it has been before. Even a small return is by no means guaranteed.
Gold on the other hand has proved time and time again that it both protects against financial uncertainty and offers a real chance to grow your investment portfolio.
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 success stories out there, it isn’t unreasonable to suggest that these generally involve the very lucky, or the very skillful. Due to the complex and intangible nature of financial markets, success is hard to come by.
Banks are also increasingly vulnerable to cyber attacks, and are not strong enough 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 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 (as can be seen in the graph above).
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 almost all other forms of investment – get your calculations and estimations wrong, and you could wind up with nothing.
What’s more another crash similar to the one is 2008 is a very real prospect. MS, Citigroup and HSBC have joined other major voices predicting another impending equity crash which could cause huge economic damage and leave investors destitute.
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
- RBS is warning of an equity crash, leading to rise in gold prices
- Tax efficient
- 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
CONCLUSION: GOLD
It’s almost impossible to predict what will happen in the coming months and years. Brexit looks set to put a dent in industries across the UK and perhaps even Europe too, while the presence of Donald Trump in the White House has soured diplomatic relations between the world’s greatest superpower and nations around the globe. Trumpian diplomacy is set to raise tariffs and walls across the world, and slow the global economy.
With all of this mind, it only 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.
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
- Certain kinds of gold investment are tax efficient
- 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) of 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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