What I Learned from Gold Investment


“Don’t put all your eggs in one basket” is the advice I have been following since I started investing years ago. To diversify my investment portfolio, I chose gold as one of my instruments, because it is commonly known that you can never lose if you invest in gold.

After years of investing in gold, here are some things I learned:

Gold price fluctuates, just like other investment instruments

Contrary to the common belief that gold is the most stable investment and its price is always increasing, gold price fluctuates just like stocks or other investment instruments.

Here is a comparison between gold instrument and stock prices between 2000 and 2015:

Gold price chart

Indonesia Stock Chart

Pungky, an employee who invests in gold, experienced this kind of volatility, “I bought my first gold six years ago and I resold it recently. I only gained less than 10%, at first I thought I was going to have an investment instrument which price will never go down, but actually gold price also fluctuates.”

Price difference to buy and to sell

An important thing that I realized when I bought gold is the difference between selling and buying price. When buying and selling gold bars from a jewelry store the spread between the buying and selling price is about 1%-3% per gram. For example, if you buy 1 gram of gold at Rp 500,000, you will only get around Rp 495,000 once you resell it.

Thus, you need to make sure that the price of gold the day you sell it is significantly higher than when you bought it at. To get the gold price for today, check out the daily information on LiveOlive forum.

[Watch video: Ep 60: Easy Steps to Buy Gold]

Storing cost and risk

Gold is a tangible instrument, therefore we need to consider where and how to store it. Keeping it at home could be risky as it could be lost, stolen, or could catch fire.

As an alternative, we can store it in a safe deposit box that can be rented at banks and branches of state pawnshop company, PT Pegadaian. Since these alternatives cost money, you should consider this in calculating your potential when deciding to invest in gold.

For example, the smallest safe deposit box (12.5x12.5x60 cm) at Bank Mandiri would cost Rp 200,000 per year, plus an additional of Rp 750,000 for guarantee money. Another alternative is saving your gold bars at Pegadaian, which would cost between Rp 20,000 and Rp 200,000 – depending on the weight.

Volume purchase vs. small grammage

From a buyer’s perspective, the higher the gold grammage, the better the price for it per gram. However, it is not cheap and one might need several months to save the money before finally able to buy in big volume.

“My neighbor likes to buy 100 gram gold for investment so that he can save some money, but I prefer buying 10 grams to the first option because I will need a long time to save the money. I worry that I might use the money for other things,” Pungky says.

Keep in mind that selling gold in big grammage is not as easy as selling the one in small grammage, because the demand for gold bars is not as much as gold in small grammage.

Read also: How to Get the Most Out of Pegadaian

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