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We are facing a recession, but gold bars will not save us, warns the investor

comment by Lubor Žalman - owner of the investment group Encor Wealth Management

Money is losing its value, stock prices are falling, bonds are not understood by many.

As a result, Czechs have decided to believe in gold and are buying it in unprecedented quantities. They see gold as a store of value in times of high inflation, and as an asset that is immune to a collapse of banking system or to a geopolitical crisis.

But - gold is too heavy and impractical, and there is a large markup associated with its purchase and sale. Moreover, gold brings no regular yield. Investing in shares brings dividends, investing in real estate comes with regular rental income, bonds have

a regularly paid coupon. The investor never gets anything from gold – its value is built on the belief that it will retain its value.

In a comparison of the returns of various types of investment assets gained between 1802 and 2006, published by the American economist Jeremy Siegel, gold ended up in second last place before cash. The average annual appreciation was only 0.33%.

According to Lubor Žalman, relying on physical gold is not a wise decision. Potential investment in gold should take the form of a certificate, possibly backed by physical gold, which is safely kept in a safe somewhere in Switzerland.

Even so, gold should make up no more than 10% of the total investment portfolio.


Seznam Zprávy (27.10.2022)


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