It only took 4 days but I succeeded in one of my 2018 goals and objectives (or at least I started to succeed since it was a year long goal) – I bought a tiny bit of physical gold. Worry not, I am not turning into a gold-bug , I still believe over the long term that my stock investments will be a better return on investment. Seems appropriate to start with why I never thought I’d ever buy gold, and then the eventual semi-turn around.
Why I Never Thought I’d Buy Gold
Gold as a purchase for a retailer investor never made a lot of sense to me. Truth be told it to a large extent still doesn’t – as you’ll see below I am taking a tiny microcosm of my investable assets and buying gold. To a retail investor such as myself or probably you, gold doesn’t actually do anything. It isn’t building a business, it isn’t paying you dividends, in large part it isn’t really used for things beyond some jewelry and semiconductors like other commodities (you don’t go a single day without ‘using’ an expendable oil based product).
Then we have the opinion of someone who I respect, admire, and am a semi-fanboy of, Warren Buffet,
You could take all the gold that’s ever been mined, and it would fill a cube 68 feet in each direction. For what that’s worth at current gold prices, you could buy all—not some—of the farmland in the U.S. Plus, you could buy 16 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?
So if I don’t understand why to buy gold, and the legend I respect the most also does not get the purchase…why did I want to start investing in this asset class?
Why I decided to Buy Gold
I am having a real problem with the market and the world in general right this second. All major U.S. markets are still skyrocketing after an 8 year bull market. Just today, the Dow hit a milestone of 25,000:
Crypto Currencies are going completely nuts. I am watching houses in my neighborhood going up for sale and down within a week or so at ridiculous pricing. Just a few months ago, I started to move my new 401(k) contributions to cash instead of the market…and that has hurt my short term returns.
I don’t have the particular gall or brashness to sell it all. I said before I am not a gold bug. I don’t know when, how, or to what extent, a correction is going to occur, but is it the worst thing in the world to put a few dollars into something that has been used as some type of currency for the past few millennium?
So why am I purchasing it? Because as my plan shows below it is such a small amount to call it a hedge would be an insult to the word. Rather, I look at it as a why not? My plan is to purchase a tiny amount ($50 to $150/mo) every month or two. First few months of course it’ll seem silly, as did me saving a few hundred a month into my cash account to buy my house, or in my dividend account, but eventually it all adds up. In that same vein, what are the odds that I wake up in a few years and be upset that I have a ‘pile’ of physical, tangible gold? Knowing myself the chance is near zero.
My Plan to Purchase Gold
As alluded to before my goal in 2018 and probably beyond is to buy $50 to $150 worth of gold per month. I preferred to find a monthly option where I sent $50 with the option to increase as I went forward, but I wasn’t able to find any site beyond a minimum of $100. I wasn’t quite comfortable with that amount, although I may be in the very near future. Instead for my first purchase I went to one of the many gold peddling websites and about my first 2.5 grams of gold…with free shipping of course!
Have you ever bought gold before?