Investing in property is meant to be the Australian layman’s way to turn a little bit of money into a lot of money. This month, a Sydney harbour-front mansion often vacationed in by Bono sold for $54 million to an anonymous Chinese businessman - a $26 million dollar improvement on what it was bought for back in 2002. But what if this property investor had instead chosen to play the commodity markets instead of eventually selling to a wealthy buyer? Mike Cohen from The Gold Company does the math so you don’t have to.
In 2002, the average gold price was $$554.55 in Australian dollars. Nowadays, the price is sitting around AU$1420.
If the owner of this mansion had decided to invest in gold instead of property back in 2002, he would have been able to purchase 50,4266.66 ounce of gold. Just for reference, that’s a lot of gold, and particularly compared with today’s commodity market, an absolute investment bargain.
So how much would that initial investment be today? If he chose to sell gold at today’s prices of $1420 an ounce, it'd be worth $71,704238.0523 whereas the house only sold for a comparatively measly $54 million. When looked at this way, gold has outlasted property - even through the recession - as a dizzyingly good investment.
“Gold is a controversial commodity as both a form of money and as an investment because it is not subject to the same forces that cause stocks to rise and fall. However, as you can see from this easy comparison, maybe it’s time Australians reconsidered the safest way to make money in this uncertain economy.” says Mike Cohen.
The property market has long been held up as the sure-fire way for average Australians to make huge returns. However, perhaps learning to buy and sell gold wisely could be the key today’s investors need to change their fortunes.
While gold has been through a sudden price drop recently and a few people are rushing to sell gold in case they lose out, historically, gold has been a safe investment and even a form of money that holds its purchasing power against inflation. As seen in this case of the Sydney mansion, a smarter financial choice back in 2002 would have been to take a chance on the commodity market instead of the property market and reaped the benefits only 11 years later to the tune of $17 million.
This holds true even today. If people want to take control of their finances and look for a safer way to invest their money, learning to sell gold is a sure bet.
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