Gold’s property of becoming a vanishing point during crises makes investing in gold a double net. Gold does not depreciate during crises. A flight from gold sets in – if at all – only during periods of dazzling prosperity, during times when capital is at stake for lucrative investments. On the other hand, capital and money flee into gold during crises and create demand pressure. This pressure leads to price increases – at least for marketable products and liquid, fair markets. Those who have gold in their portfolios at the beginning of a crisis, unlike those who do not yet invest in gold, do not face crisis losses, but realize book profits that they can run through the crisis and realize when needed. In this respect, the futures markets have their own dynamics that make them dubious for managing crises by investment. In the event of adverse price movements in the futures market, the broker will issue calls to post collateral, known as “margin calls.” In case of non-payment, he will close the position with real loss for you. The leverage, which maximizes your profit in case of a positive price trend, destroys your money even in case of a small adverse price trend.
Futures exchanges were created to hedge transactions that have to be made in the foreseeable future. It is about the time until the next harvest, until the arrival of a ship, until the next dividend payment on stock portfolios. Futures markets are not intended for long-term trading and holding positions.
Therefore, futures contracts are not suitable for a holding strategy. Because of the leverage and the obligation to provide sufficient collateral per contract, futures contracts cannot be used for defensive, wait-and-see strategies.
For a successful prophylactic strategy involving gold, it needs spot commodities. It needs physical gold. Gold bars, as offered by banks and stored safely, are the safest due to their standardization. Gold jewelry, on the other hand, is usually purchased only at its material value, at a price many times lower than its cost price. In short, you can't count on the goldsmith work that has been spent on expensive gold jewelry to show up in the sale proceeds. Buy gold bars to use gold as a crisis metal!
