Gold or properties? Which is the ideal means of storing wealth?

Part 1

(to read part 2, click here)

The discussion was long and quite interesting, as the flight from Bucharest to Thessaloniki lasted 1 hour and a half. The gentleman (a good friend of mine) sitting next to me was quite stubborn and if you add my personal… stubbornness to the picture, you can guess that it was not possible for us to end it quickly…

Gold or properties?

– “There is nothing better than gold, it is the best means of storing wealth by far. Even now, at 1.800 dollars per ounce, I find it quite cheap. Its price will exceed 2.500 – 3.000, this is why I will buy more”.

– “So you would buy more gold at this level? This is the highest price in history, don’t you think it’s risky?”

– “You said the same last year, when it was at 800 – 1.000 dollars per ounce and since then the figure has doubled”

– “So what? There are moments when you gamble and you win against all odds, but the risk is too high”

– “There is no risk at all, gold is safe, properties are the risky ones”.

Gold or properties? 5 positive and 5 negative aspects

I will not quote to you the entire discussion; you would need a good half hour to read it. But I can sum up the advantages and disadvantages of gold and properties, as we analyzed them through our discussion.

Gold: “More advantageous during turbulent times”

From my friend’s point of view, investing in gold during the crisis is the best way to protect your money and even earn profits:

1.      “Gold is not enough, so its shortage pushes the prices up. New quantities are always insufficient compared to the actual demand and the situation has been the same for thousands of years”.

2.      “When the economy is in crisis, gold is the safest shelter for all people. And as the world economy will continue to be in trouble, the price of gold will rise further more”.

3.      “Gold is pure, lasts forever, never get rusty, can easily be passed down to your children. You just go through some formalities and it is given to them. They will not need to worry about its quality, this is guaranteed”.

4.      “Gold is not taxed. You don’t pay taxes for your profits when the price rises, or annual taxes. It’s tax free”.

5.      “If you look at the national banks around the world, nowadays they all buy gold, even at today’s price. They know something we don’t”.

Properties: “Useless during the crisis”

At the same time he insisted that properties are not the best investment proposal, as they have many faults:

1.      “There are too many properties available and more are under construction. Thus there is no shortage and no reason for their prices to rise”.

2.      “Properties are heavily taxed, by all kinds of institutions and authorities. They are visible and any government taxes them without… mercy”.

3.      “Properties get old, need refurbishment and consolidation. These costs are very high, especially in countries like Romania”.

4.      “Investors used properties in order to speculate and create the bubble that burst in 2008 and brought us the never – ending crisis we are living through now”.

5.      “Properties involve too many people, from the notary and Real Estate agent, to the cleaning lady and plumber, from the state’s tax inspector to the evaluator. You don’t have the flexibility that gold provides you with.”

Tomorrow:

·         My approach

·         5 advantages that properties have

·         5 disadvantages that gold has

What is your opinion?