COMMENT. Gold broke the record at the beginning of April. It reached a price of 2276 dollars (54 thousand crowns) per ounce. It has increased by almost fifteen percent since mid-February. Compared to October 2022, it increased by 38%. Reason? Many investors believe that the US central bank will cut interest rates soon. US stocks and Bitcoin are also at the top. It doesn’t happen very often that stocks and gold are at the top at the same time.
The rise in gold prices was triggered in October by the deteriorating situation in Israel and the overall geopolitical tension in the world. Gold is gaining in attractiveness as central banks in many countries cut interest rates. JPMorgan Chase & Co. has identified gold as its best commodity and predicts an increase even to USD 2,500 (CZK 58,500) this year.
When you buy gold, choose carefully who your dealer is. You can buy cheaper in Germany or Austria, and there are also smaller differences between the sale and purchase price.
Watch out for redemption prices
Today, an investor can realistically buy gold for around 55,000 crowns per ounce. But if he wants to sell it back, the trader will buy it back at a price roughly 7% lower. Therefore, gold is not suitable for speculation.
Its appreciation takes time. This makes gold one of the less demanding components of the portfolio: I don’t have to worry regarding it. Honey, he doesn’t call me that his boiler went off like in a rented apartment.
When you buy gold, choose carefully who your dealer is. You can buy cheaper in Germany or Austria; they also have smaller differences between the sale and purchase price.
When it comes to investments, it generally pays to be cautious. In the case of gold, it also consists in realizing how the price has developed over time. The first major increase in the price of gold took place from August 1971 to January 1980. The dollar price then rose from $35 per ounce to $800 per ounce. That’s a 2200% gain in nine and a half years.
The second major increase in the price of gold took place from August 1999 to August 2011. The dollar price of gold rose from $250 per ounce to $1900 per ounce. That’s a 670% gain over 12 years.
The period following 1980 was a decline that lasted nineteen years and saw gold drop in price by 68%. From August 2011 to December 2016, the dollar price fell by 45%.
Don’t bet everything on one card
I personally started buying gold in 2012; continuously and thoughtfully. I always made sure it had some weight in the portfolio, I didn’t overestimate its role, but I didn’t underestimate it either. I also bought apartments in Prague.
In eight years (from 2011 to 2019), I bought, renovated, found a tenant, arranged a mortgage, and then successfully sold more than ten apartments with a mortgage and a tenant. Their price has almost doubled in that time.
That certainly cannot be said regarding gold, but I was happy with the low gold prices. It was possible to buy it cheaply.
Breakdown of investments according to Brúna
20% direct investment in companies
10% publicly traded shares
20% of the land
15% of the rental property
15% money (instant liquidity)
15% silver
5% gold
Gold price movement leaves me cold. I don’t care how much gold is worth, I’m more concerned with how much gold I have in my portfolio. I have now been buying regardless of price as some publicly traded stocks have appreciated, which I sold at a profit. I partially closed the position in shares and allocated part of the profits to gold.
I am not swayed by emotions or the mood of the markets. Games are won by players who focus on the pitch, not those whose eyes are glued to the scoreboard. But I update my portfolio quarterly to match my long-term investment strategy and goals.
Silver is undervalued
Opponents of gold claim that it does not bear interest and that one does not eat it. With gold, however, it is good to change one’s place of residence. I have long argued that silver, which is currently ninety times cheaper than gold, has great potential. The ratio of gold to silver in the earth’s crust is 1:16, historically gold is fifteen times more expensive than silver.
There is only regarding four times more silver in all forms than gold in the world today. If we were to limit ourselves to only the metal that is currently available on the market, there is less silver than gold. Therefore, I consider silver to be one of the most undervalued investments at the moment.
The author is an entrepreneur and investor
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