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Disadvantages, prejudices, objections and arguments against gold

Prejudices and objections against gold - disadvantages of gold often refutable with arguments

This millennium is definitely that of gold. Not only that the gold price has taken an extremely positive development in the course. Despite its growing popularity, however, there are still some prejudices and objections against gold - some disadvantages turn out to be misinformation. For example, potential investors are concerned about safe storage, the environmental impact of the precious metal or the allegedly not very good return on investment. In our article, we would therefore like to name the most common prejudices and objections against gold and try to refute them with the appropriate arguments.

Situation on the market 2020: Extremely low interest rates cause boom for gold 

Content

 

Let's first take a look at the situation on the market as it is currently presented. The capital market is still characterized by extremely low interest rates. This has led investors to increasingly look for alternative investments to secure their assets with a good long-term return.

Against this background, investing in gold bars and gold coins has been particularly popular. This is reflected, among other things, in the fact that, on the one hand, gold prices have risen significantly over the course of the year and, on the other hand, physical gold has been in short supply in the meantime. In the meantime, more than 30 percent of all investors already hold gold - as a direct or indirect investment - in their portfolio, so that the precious metal is now one of the most sought-after capital investments after life insurance and savings deposits. More details on the distribution can be found in the following table:

 

Investment type Investor in percent Type of return 
Savings deposits 65 Interest
Endowment insurance 39 Interest + profit participation
Gold 31 Price gains / interest
Shares and securities 25 Price gains / dividends
Gold bars / gold coins 24 Price gains
Real estate 20 Rental income / price increases

 

On the positive side, it is noticeable that the willingness to invest in gold is present in almost all age groups. However, special mention should be made of young adults between the ages of 18 and 24. These indicate to nearly 40 per cent to want to invest in the future definitely their capital in gold. Despite the positive development and the numerous advantages, by which gold can distinguish itself, in particular:

  • Protection against inflation
  • Stability of value
  • Transparency
  • average good yield
  • Asset protection
  • Real asset investment

 

investors nevertheless see a number of hurdles, disadvantages, prejudices, arguments that may prevent them from deciding to invest in gold.

Disadvantages of gold: what hurdles do investors see for buying gold?

Let us now turn to the frequently mentioned hurdles and disadvantages that investors cite as reasons why they have either not yet invested in gold or do not want to further expand their portfolio with precious metals. In this context, the following hurdles to buying gold are primarily mentioned:

  • No safe storage possible
  • Fear of counterfeit gold bars or gold coins
  • Gold is too expensive
  • Mining of gold harms the environment
  • Gold does not generate income
  • No sufficient knowledge about the purchase available
  • No guarantee of fineness in gold
  • Gold stocks are difficult to liquidate
  • No good return in the long term
  • No acquaintances have invested in gold

 

We would now like to deal with these avoidable hurdles that prevent numerous investors from buying gold in detail. You will see at the end of our article that most of the objections and prejudices against the gold purchase can be invalidated and eliminated by good arguments.

Prejudice 1: I cannot afford gold

One of the main reasons why investors do not decide to invest in gold falls under the heading of ignorance. Quite a few people are of the opinion that they cannot afford to invest in gold bars or gold coins. Behind this, of course, is the view that gold is a very valuable precious metal and therefore coins or bars are not available for less than 10,000 euros.

However, the claim can be refuted relatively easily. The 1-ounce gold coin currently has an equivalent value of around 1,500 euros. Thus, the investment sum is in the lower four-digit range. Investors can, however, invest in gold at a much lower price if they opt for the smallest gold bars. For some time now, gold bars with a weight of only one gram have been offered in addition to the 50-, 100- or 500-g bars. Based on a gold price of about 1,500 euros per troy ounce, such a small bar would therefore cost only about 50 euros.

 

In addition, some precious metal dealers now offer a savings plan. Thus, an investment in gold is practicable even for savers, because from 50 euros per month, money can usually already be invested regularly in small gold bars. For this reason, the claim that one could not afford an investment in gold anyway is simply wrong.

Prejudice 2: Precious metals like gold harm the environment

For more and more investors, environmental and climate protection is important when investing money. Therefore, one claim and a simultaneous reason for some investors not to choose an investment in the precious metal is that gold mining would harm the environment. The issue here, then, is that the relevant consumers believe that mining the precious metal is not compatible with today's environmental and climate protection.

However, there is movement among many mining companies in this regard toward making gold mining ecologically sound. In addition, a number of globally leading gold mining companies have now committed themselves to complying with the so-called ESG criteria. Also the World Gold Council contributes something to promote special internship, which in turn can improve the corresponding ESG status.

In addition, you as an investor can do something yourself to ensure that you do not invest in gold mined in a way that is harmful to the environment and the climate. For example, in our online store you can specifically buy only those gold bars and gold coins that come without exception from manufacturers who adhere to the strict ESG guidelines. This gives you the guarantee that the origin of the gold is unobjectionable in terms of ethical and ecological aspects. In detail this means:

  • Manufacturer is committed to not accepting so-called mine gold
  • Manufacturer of the gold is an LBMA member and in this context has committed to adhere to the LBMA Responsible Gold Guidance
  • All gold bars of the manufacturer as well as the corresponding gold coins are produced from scrap gold 

 

In addition, compliance with the relevant standards is monitored at regular intervals by independent, external auditing bodies. Through our store, you as an investor therefore have the opportunity to invest in gold bars and gold coins of the highest quality on the one hand, while on the other hand, the ecological and ethical criteria are not neglected. For example, at GoldSilberShop you will find gold bars from C. Hafner, which are produced C2O-neutral and contain no mine gold.

More information: Environmentally friendly gold

Prejudice 3: Gold is not rarely counterfeited

A third reason why some investors have been reluctant to invest in gold so far is the concern about counterfeiting. In fact, of course, there is no denying that both gold coins and gold bars are counterfeited around the world. However, the distrust of investors is much greater than the percentage of counterfeit gold in the market. So what can you do if you are also one of the investors who have a concern - justified or unjustified - about the authenticity of gold?

In that case, we recommend you to buy the gold from a reputable and certified precious metal dealer like us. With us, all gold coins and gold bars are checked for authenticity before they are shipped to our customers or stored for you. In addition, there is the so-called Trusted Shops Buyer Protection with which you can secure your order.

In summary, it can be said that it is true that gold bars and gold coins are counterfeited globally in a certain frequency. However, by choosing the right precious metal dealer, you can significantly reduce this risk and even bring it down to almost zero. By the way, this also applies to the purity of the gold. Here, too, we test extensively and supply you only with bars and coins of the highest quality and purity.

More about gold authenticity testing

Prejudice 4: I don't know anyone who has gold

When some investors ask among their friends, colleagues and acquaintances if anyone is already invested in gold, many people get the answer: no. As a result, people often think that virtually no one has already invested in gold. However, this appearance is deceptive. On the one hand, more than 30 percent of all investors in Germany now have at least a small proportion of gold in their portfolio.

On the other hand, the "dark figure" is probably even higher. Some investors do not want to admit that they own gold bars or gold coins, among other things for reasons of data protection and because of the desired anonymity. So if you don't have anyone in your circle of acquaintances who has (allegedly) already invested in gold, this by no means means means that the precious metal is an investment form that is not in demand.

Prejudice 5: It is hard to get gold

Another reason why a number of investors have not yet been able to decide to invest in gold falls under the heading of lack of knowledge. For example, many investors believe that it is relatively difficult to get gold in the first place. However, it is actually even comparatively easy to realize if you want to buy gold bars or gold coins. Basically, the following places are available for this purpose:

  • Banks
  • Precious metal dealers on site
  • Online dealers and precious metal stores on the Internet

 

However, banks have largely withdrawn from the business of gold bars and gold coins. There are also fewer and fewer local precious metal dealers, so that it is mainly online precious metal dealers such as GoldSilberShop, where you can quickly, safely and easily purchase gold bars or gold coins. The purchase process is very simple and is divided, for example, in our store in the following steps:

  1. Select gold coins or gold bars and put them in the shopping cart
  2. Register or log in
  3. For new customers: Enter personal data and legitimize
  4. Select payment method and pay in advance
  5. Gold bars or gold coins will be shipped or we will take over the storage on your request

 

It is therefore only a few steps until you (if desired) hold your gold coins or gold bars in your hands. The entire process of buying is transparent, secure and easy to follow.

If you prefer to buy gold locally, we offer you the option at one of our more than 120 regional partners nationwide:

Buying gold locally as part of a tabletop transaction

Prejudice 6: I cannot store gold safely

In connection with the purchase of physical precious metals, for example gold bars or gold coins, storage plays a central role. Here, numerous investors are of the opinion that they cannot store the coins or bars safely. However, this view is only partially true. Certainly, it is not without risk if you store gold bars or gold coins at home, even more so in a safe that is not sufficiently secure or even just in the closet.

However, you can ensure yourself that the storage is associated with a significantly higher security. For example, it makes sense to invest a few hundred euros more in a safe of a higher security class, so that potential burglars and thieves will find it as difficult as possible to steal the gold holdings. In this context, we always recommend a safe that is firmly anchored in the home and meets certain security standards.

It is even much safer if you do not take care of the storage of your stocks yourself, but entrust it to an experienced precious metal dealer like GoldSilberShop. We guarantee that your gold coins and gold bars are stored in high-security vaults and thus extremely safe. The security is even higher than if you opt for a bank safe deposit box. Consequently, you yourself have a considerable influence, not least through the choice of provider and storage location, on how securely your gold coins gold bars are ultimately stored.

Our offer for the storage of gold

Guide to the safe storage of gold

Prejudice 7: Return on gold is too low

It is also not uncommon for investors to think that an investment in gold is not worthwhile because the return is too low. However, this thesis can be refuted very easily with valid figures and statistics. All you have to do is take a look at how the price of gold has developed over the last 3, 5, 10 or 15 years, for example. Therefore, let's simply take a look at the gold prices for the following years as an example:

    • 2005: approx. 480 dollars
    • 2010: approx. 1,400 dollars
    • 2015: approx. 1,250 dollars
    • 2020: approx. 1,900 dollars

 

Within the last 15 years, the price of gold has thus risen by more than 1,400 dollars per troy ounce. Calculated over one year, this means an average annual return of around 25 percent. You have not come close to such returns with interest-bearing investments such as overnight money or time deposits, and also in comparison with various other forms of investment, such as pensions, endowment insurance, numerous funds and shares, the return on gold is a "winner".

Information about the current gold price

Prejudice 8: With gold I achieve no income

Likewise, some investors are deterred from investing in gold by the notion that it is not possible to earn an income with the precious metal. The idea behind this is that it is not possible to generate regular income from gold assets in the form of payouts. However, this thesis is also not true, because of course you have the possibility to sell parts of your holdings of gold bars and gold coins at any time.

So, for example, you can specify at retirement age that shares in your holdings will be sold each month for about 500 euros, so that this is equivalent to an additional pension payment. Of course, you can also use such a "payout plan" at a younger age to generate additional income.

Another option is to lend us your gold and receive interest on it: More information on gold lending.

Arguments against gold: hurdles and solutions at a glance

In the following table we would like to summarize once again what are the most common hurdles to buying gold from an investor's point of view. Furthermore, we provide you with a possible solution to each objection, so that in the end there should be hardly any reservations about investing in gold.

Hurdle Importance in percent Solution
I cannot store it safely 28 Storage in high security vault via dealer 
Gold mining harms environment 28 Buy bars according to ESG criteria
I cannot afford 27 1 gram gold bar only about 50 Euro
Concern about counterfeits 26 Choose reputable dealer with authenticity guarantee
No income with gold 25 Payout plan often possible
No knowledge to buy 21 Many sources of information on the Internet
Do not know anyone who has gold 21 Almost 1/3 of all investors have gold
No sufficient return 20 Long term return at over 15% a year
Hard to sell 17 Can be sold at any time without notice via dealers 

 

Conclusion on possible reasons against buying gold

In our article, we addressed the numerous objections and concerns that many investors still have regarding a potential gold purchase. We were able to refute almost all false assumptions or unnecessary concerns with good arguments. Since the corona crisis will not be over quickly even in 2021 and also otherwise the low interest rate environment and other factors are very much in favor of the precious metal, it would consequently make sense for many investors to equip at least part of your portfolio with physical gold. The value of gold coins gold silver is simple, safe and the investment profitable, so they benefit from numerous advantages of the precious metal.

Your next steps:

Online guide: which gold to buy?

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