Editor’s note: This article was first published in October 2010, when gold vending machines were presented as a new trend. The price of around €31 per gram and the debate on whether gold was a bubble are from 2010.
As you will have seen and heard, gold vending machines are becoming fashionable, in an attempt to make money from the business of, and investment in, the yellow metal.
However, the company that sells these vending machines does so on the claim that everyone should invest 15% of their capital in gold. That claim may well be true, but what is even truer is that the return you get from this metal depends on the price at which you buy the gold.
From these gold vending machines you can buy 1 g, 5 g and 10 g bars and, to give you an idea, a gram costs around €31, so you’re paying quite a bit more than the market price, and that makes it a very unprofitable investment.
On the other hand, when people recommend investing in gold, they never advise you to do it in “physical gold”: even though it is an asset, when the time comes you’ll have to find a buyer willing to pay the price you want, and if things have turned bad, you’ll lose money.
When you invest in gold, do it through exchange-traded derivatives, never physical gold. Remember too that these days it’s not so clear that gold is a safe haven or a safe asset, as we discussed in our previous article: Is investing in gold profitable right now?
Some analysts still say that the price of gold is not a bubble, but others think it is about to burst as soon as the dollar and the stock markets recover. Bubble or not, what is clear is that you should never buy physical gold, much less from a vending machine, whose price includes the sales commission.
Further reading
- A short beginner’s course in investing
- Investing in ETFs: definitions
- Investing in warrants: definition
- 7 levels of investors and types of investment
Featured image: Guilhem Vellut from Annecy, France, CC BY 2.0, via Wikimedia Commons.
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