Precious metals, foreign currencies

Things you should know that precious metal and foreign currencies are not always the best investment. Timing always matters.

1. Precious metals

Gold and Silver per troy ounce Prices in USD – 100 Year Chart

1 troy Ounce = 31.1034768 grams

Chart Source: macrotrends.net

I heard a myth about gold is the best investment because their prices rise every year, especially from our elders including my grandparents. In fact, they fluctuate from time to time. If anyone wants to argue and said the price of gold really increased rapidly in past from year to year in Indonesia, I would agree but not in other countries such as the United States of America.

The chart above is the gold price in US Dollars. Yes, because the value of our currency (Indonesian Rupiah) keep weakened against US dollars. Please note that gold is one of the commodities in global markets.

2. Foreign currencies

Chart Source: fxtop.com

Chart Source: fxtop.com

As you can see in the charts above, Rupiah weakened against others of the foreign currencies above in the year of 1998 when Indonesia was suffering a monetary crisis.


Chart Source: fxtop.com

Again, the myth about best to save in USD might not be true. If it was me, from the chart above I prefer to pick on SGD over USD which is in an uptrend for years (bullish market).

Once you take a look of the chart above, everything becomes clear. SGD/USD is in an uptrend (Bullish Market) it means from time to time SGD strengthening against USD in 61 years time frame.

3. Why I prefer stock

Did you now find similarity in investment between Precious Metals, Foreign Currency, and Stocks? Then why I prefer investing in stock rather than in foreign currency and precious metals?

Inflation always decreases the value of money, don’t forget foreign currency also cash (Money). The Indonesian government also won’t allow any local bank to give high-interest rate in foreign currency and would never do so; they want to protect Rupiah value.

Precious metals such as gold is a commodity, if you buy 100 gram of gold keeping it for 10 years, the price might increase. But remember after 10 years it’s still 100 gram of gold.

Take an example, company A went public with a price of 10 per shares as they are doing retails business owning 10 stores in Indonesia. After ten years of good business and expansion now they own 100 stores in Indonesia. Over 10 years a good company may have grown larger, cash flow, assets all have increased tenfold. Then for that do you expected share prices drop? If the stock prices increase 1600% I won’t surprise because of the company worth more now.

Precious Metals and Cash including foreign currency won’t grow. 100-gram gold will be 100-gram gold ten years later. USD 100 would also be USD 100 ten years later. A company with 10 stores might grow to 100 stores. Of course, there are risks of bankruptcy. But if you want to win big, you have to take the risk.

IHSG is composite index; some growth stock will rise in price even higher than IHSG itself. Of course the more risk you take, the more profits you get if you win. Some blue-chip in Indonesia such as Kalbe Farma stock can even gain 1600% in only 10 years time frame.

Whatever you invest in, timing is the most important. There is no gain without risk. Even by doing nothing, keeping money is risking its value to decrease by inflation. Protect your cash/money now!

Featured Photo from pixabay

Read more:

Learn why investing is not gambling.

Don’t save your money.

Why you want to be rich


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