Before I share a small story on Gold to help simplify the logic behind our view on investing in gold ever since it was Rs. 12,000 I want to inform all Happionaires that the wonderful people at Quantum Dynamics (www.qudyn.com) have finally launched their site and are ready for registrations. All those who would want to interact more and share ideas, network, learn about investing and creating wealth can contact Ms. Neha on +91 9971346274. For all those of you who are in New Delhi do ensure you share it with friends, family and loved ones. Other cities will be visited soon!
Even today I get several e-mails from fellow Happionaires asking me if it is still the right time to buy Gold (and Silver). And why I still feel it is good to buy Gold. I used to get it even at Rs. 16,000, even at Rs. 18,000 and even now.
Let us say you are a country. Let us make it even more interesting, you have been the msot powerful country on the planet for the past 30 years. Everybody trusts you and keeps keeping their entire wealth in your country. People have kept their gold in your lockers, because they trust you. People use the money you print for everything they do. Other countries respect you and listen to whatever you say.
Now you start enjoying yourself and spending left and right. You after all are a country who everybody trusts and gives money to. But the beauty is that, they trust you so much that all the money they have is kept in the notes you print. So you borrow money from the Chinese - but even the money you borrow is the same money printed by you, because the Chinese have kept almost all their savings in your money. You have printed so much money and almost the entire world has been using this money.
Your money became so powerful, that people for sometime even forgot about "God's money" which had been used since ages and millenniums. So for a few decades, people started using your money as the 'gold standard' anywhere in the world it was acceptable and of value. But now overtime you kept printing more and more notes, to solve your own hunger and greed.
Every time you ran out of money or couldn't pay back someone, all you did was print more notes. Imagine if you could just print a note on your home printer and give it someone. After a time, there were so many notes all over the world that people started realizing that these notes are not really worth that much. With so much supply coming in, demand started looking small.
Imagine what would happen to gold prices if everybody had 100 kgs - of gold in their home - would gold prices go up or down? Obviously they would go down - this of course is not likely anytime soon. But this will soon happen to these notes which your print.
A few people including Mr. Warren Buffett have a negative view on gold. Yes they do, but then even I would, if I was one of the most powerful people in this powerful country. If I could print my own notes on my printer, why would I want gold to become the standard? Wouldn't it be more fun for me to just print my money and buy whatever I want in the world? It is okay if others have to pay the price of high inflation and devalued paper in the future.
The problem is that the new 'sophisticated' generation doesn't like to think in simple terms. They are constantly looking for 'electronic' 'sophisticated' products. I am sure all those who have been followers of the Happionaire Way will today look back and see how simple it was to buy a few gold 'biscuits' and 'coins' and simply keep them in the locker and watch prices to appreciate. No need to speculate, trade or worry about anything.
While I started investing in the stock market, I would always want to invest in something that will give me good returns - I don't believe we should emotionally get attached to any asset class.
Now what happens to this powerful country - when suddenly everybody realizes, that these paper notes printed are losing value? What happens when the world suddenly realizes - "Hey we need more of God's money - it is really scarce." People will rush to it and when prices really shoot up, I will be the first person to sell.
This is how simple the story of Gold is. Simple villagers in India are buying, while I find it unfortunate that the 'sophisticated' people invest worthless ULIPS marketed by people in fancy suits. As a Happionaires don't think about complicated things, to create wealth - simplicity is more than enough.
Hope none of you are Stingy Investors!