The following article was contributed by our of our members. DragonCoin™ would NOT provide investment advise. Therefore, please treat this blog as entertainment reading materials.
Investments are a very tricky thing, and in a lot of ways investing is similar to gambling, you could say that the two things are basically the same, at least when it comes to investing in the stock markets. The same principles apply for both investing at the race track and investing on the stock markets, the two most important elements being research on the one hand and a bit of luck on the other. For these two reasons investing in the precious metals is a much better option to resort to, because it’s much safer, have you ever heard that a gold bar has gone bankrupt or that the gold stocks are falling?
Some of you might have answered positive on the last to question about gold losing value and gold stocks as well, and it’s true, you could have come across similar news in the newspapers or on TV, but those situations are not how they sound. First let’s have a look at what exactly is meant when it’s said that the a gold stock is losing value. Here it’s very important to point out that the gold stock in question here isn’t a gold stock in a literal sense, but it’s rather a stock of a gold mine, which since it a company can publish and sell stocks on the stocks markets, in order to gather funds for further research and development of for example new gold deposits.
In a sense you are basically investing in gold stocks, in the current and the potential gold deposits that the mining company in question owns, and that’s where a problem lies. These deposits and financial funds that are gathered from stock sales, could if the decisions of the mine management aren’t good end up with no new discoveries of gold deposits, or any other precious metal deposits for that matter, and then we can hear that the gold stock has failed, and people who invested in it lost money, because basically it’s true, but gold didn’t have anything to do with the drop and it’s wasn’t gold as a precious metal that has caused the stock to lose its value or for it to go bankrupt.
Investing in actual precious metals, like actual bullion bars and coins also brings some risks, you could for example come across a bullion bar which has been tampered with and it has been filled with tungsten, tungsten because it has a very similar density to gold which won’t be detected with the most popular way of testing for gold, the weight test. But luckily majority of precious metal dealers, the big ones especially have started introducing other, more precise methods of testing for gold authenticity and the amounts of precious metal fraud of this type have been brought to a minimum. If you’re buying bullion coins and bars from sellers which aren’t well reputed, then you might still be at risk, so be careful.
Now when it comes to the comparison from the beginning of this text, the one between investing in the stock markets being equal to betting at the race track, and how both of these methods are very risky when compared to precious metal investments, that still stands. For both betting and investing in stocks you are gonna in the first step make research, when it comes to betting, you could for example research what kind of qualities and what kind of past the participants of the event that you’re betting on have, and the same thing is done when you are investing in stocks on the stock markets with there being uncertainty about the investments, even with the best of stocks.
Research done on something that you bet on and research done on a stock, even the best researches performed, still have a very good chance for not being true, even the most accurate ones, because you never know what kind of deals are being done under the table, in case of the stocks, and if the participant of the event that you’re betting on has for example taken a bribe or lied about something very important for the race, which could seriously derail the results of the event, the desired event end.
Precious metals on the other hands, gold, silver, platinum and palladium are all very stable things to invest in, mainly because they cannot lose their value, like we mentioned in the previous few lines. True there are times when the prices are experiencing a downturn, and when you could potentially lose money, but in these types of situation you’re not really losing money, but rather only the time that it takes for the return on your investment to actually return is prolonged, you’re not losing any money, you’ll just need to wait a little bit longer for the profit to happen.
Eventually the prices of precious metals will go up, and the only thing that precious metal prices not increasing could cause you would be that the investor needs to wait a bit longer when the right time for selling comes up. This is a fair trade, because you don’t have to worry about loosing all of your money, like you normally would when investing in stock, so why are people then investing in stocks, and for that matter why are they betting, since precious metals are such a sure thing.
Answer to this question would be that it’s because the returns on both stocks, and even when you bet on the race track, they are much higher, and because of that investors are prone on choosing the stocks over precious metals. But there are situations when precious metals are very much so in demand with the investors, for example when there is a crisis, and when the stock markets are flopping, then precious metals are the safest thing to invest in and that’s when everyone is dealing with precious metals. So you see gold, platinum, silver, palladium and all the others really are something to look in to, at least with part of your investments., make sure that you do.