Gold has been used as a store of value for millennia. When you bought your gold, you probably thought you’d never have to sell it. And, ideally, you wouldn’t. However, in real life, there are situations that are less than ideal. So how to know when you should be selling gold bullion and when doing so would be a big mistake?
When you SHOULDN’T sell gold bullion There are various situations in which you might be tempted to sell your gold bullion. However, very few of them really warrant it, and you should resist the impulse whenever you can. Especially if it’s driven by… Consumerism: Have you ever gone to the store and got overwhelmed by the desire to buy some shiny new thing? Or have gotten a call from a friend inviting you to a restaurant you can’t really afford? Or dream about taking that trip that’s way beyond your means? We have all been there. But that is a really bad reason for selling gold bullion.
Chasing investment fads: Everyone thinks that chasing investment fads is silly… Until the right fad comes along! Just think about all the people that took out loans to buy Bitcoin back when it was at $20k per coin. Now they are all burnt because it dropped to $10k per coin. “Opportunities” like that are not worth cashing out the savings you have put in gold.
Changing investment vehicles: Maybe gold was your first investment and now that you have learned more about other investment vehicles you are tempted to pull your money out of gold and put it into something else. Don’t do it. Let it stay there.
Gold is a long term investment, and you are not supposed to touch it unless you really, really need to it. But how to know if it’s the right time to sell?
The only reason to sell gold bullion
Really, there’s only one reason to sell gold bullion, and that is that you have been hit by a true financial emergency. Here are some examples of true financial emergencies:
Job loss. You lost your job. Sure, you might survive on your savings for a while, but what if getting a new one takes a lot longer than you have initially expected? Your savings will run out eventually. Selling gold bullion could be the only way to buy yourself some time. Sickness. There’s a reason old people say that health is one’s most precious possession. Once you are sick, you can’t work anymore, plus someone has to take care of you. Again, it’s great if you have savings, but if sickness is prolonged the savings might run out. Selling gold bullion might be the right choice here. Unexpected bills. Things happen. Your car might break down at the worst time, or you might end up in a hospital, or your house might catch on fire. Ideally, you would have insurance for all these things, but insurance doesn’t always cover everything. When you are served with an unexpected bill, but you don’t have the cash at hand to pay it, you might consider selling gold bullion.
To summarize, fake financial emergencies involve wants and desires, and true financial emergencies involve needs and necessities. Do you really need extra money right now?
Then it might be the time to sell your gold bullion.
Conclusion You should treat your gold as an emergency fund. Would you use your emergency fund for something frivolous? Probably not. So don’t do anything foolish with your gold either. It’s there to store your money, not to provide extra few bucks when you feel like getting the latest gadget. Remember, true emergencies only!