When it comes to purchasing gold, it takes a lot of money out of circulation, especially when you are purchasing tangible gold and then store it in a safe vault. Both the government as well as the Wall Street hate money invested on gold bullion and has been forbidden for three reasons. Also, people go for cash for gold tends to take the money out of circulation for an immense amount of time. It means that when some gold has been bought, it becomes hard to sell it again for the next month or even week.
- Money invested on gold cannot be used on daily goods and services
Western economies tend to totally depend on the continuous consumption. As a matter of fact, in order to live a healthy lifestyle, our markets need to grow every year. The country’s wealth is dependent on millions of people opening their wallets on a daily basis. So, for instance, if you are spending $30,000 on investing in tangible gold, that amount would not be spent on grocery items, home renovations, gas or new electronic equipment. The money invested on gold is then taken out of the economy and not included in the daily expenditure.
- Money invested on gold cannot be invested on stocks
The money which is invested in stocks tend to fuel the growth of the companies regulated by public sector. The more of their shares you invest in, the more money is then further invested in making new factories and offices. This, consequently, results in rewarding you by enhancing the value of your company as the price of the investment tend to shoot up. Keep in mind that once you invest in gold, those gold bars and coins are kept secure in a safe vault and their value in cash cannot be invested in stocks or in a bunch of stocks in the form of mutual funds.
- Money invested on gold, cannot be invested in bonds
When you have an investment portfolio, it contains an amalgamation of stocks and bonds. The former is selected for growth so that the portfolio value can rise. The bonds are selected for safety purposes. When seen in a conventional sense, the safest bonds are then issued by multiple levels of government. Treasury bonds are deemed the safest of them all. But when bonds are no longer considered safe, seek solutions that are safer for your portfolio. The alternative here is investing in gold. But if everyone does that, no one will invest in government bonds. And this consequently will result in deficit in funds among other expenditure.