People who argue against investing in gold often sum up their reasoning with this falsehood. They then sit back with a smug grin as if it made some sort of sense. By ‘eating’ I think they mean ‘put into productive use’. They want you to think that you should not invest in anything which cannot make money by itself. They are wrong and foolish to think that. Even if they meant you can’t put gold in a sandwich and eat it, they are wrong on that point too.
Physically eating gold.
Pure gold is the most chemically stable metal. If you swallow some gold it will do you no harm. Some people even think it is beneficial. In times of crisis people have often swallowed gold to carry it safely through enemy lines or to save it from being stolen when their city was being plundered by an invader. More recently, refugees do this to carry their wealth across borders, secure from greedy government officials.
Gold leaf has been used as a garnish on dishes since at least Roman times because of its decorative appearance and the symbolism it conveys. Today it is sometimes used to decorate desserts and cocktails.
If you want to try this at home, please don’t experiment with other metals or anything less than 24 carat gold. Some metals, such as copper are poisonous. Also, only use gold leaf. Don’t swallow lumps of gold or coins – as the gold passes through your system it will scrape against whatever else you have eaten and this will erode the surface of your kruggerand, reducing its value greatly.
Metaphorically eating gold.
There are many investments which do not produce an income while you are holding them. Yet people who buy well are able to make regular profits from them. If you understand enough about the investment category, it is worthwhile investing in them. I will look at art and collectables; land; and shares.
Art and collectables. If you have specialist knowledge you can make good money by dealing in this segment. However it is unusual for anyone to earn an income by holding these assets. Usually it is the opposite, there are insurance costs, storage costs, the cost of maintaining the items. However the intangible benefits include personal enjoyment and their decorative purpose.
Gold in the form of jewellery and coins can also fall into this category. A collector who buys well, creates an important and attractive collection and markets it well can be a very successful investor.
Land is the investment often proposed by the anti-gold lobby as the alternative to gold. Apparently land can be eaten. I assume this is because farm land produces crops and buildings can be rented. In fact, the returns from such an investment can be less than the costs of rates, taxes, maintenance etc. In that case, the land is eating you!
There are many investors who successfully trade unproductive land. They buy a few acres of uncleared land and wait many years for the nearby city to grow to the stage where the land can be rezoned for a higher value purpose. Some investors even buy houses and apartments and leave them empty. They prefer not to receive rental income so they can save on maintenance costs.
Shares. There are many companies trading on the stock market which are unprofitable. Investors buy their shares because they hope they will make a profit sometime in the future. I’m sure you can think of a few technology companies that you wish you could have bought shares in when they were making losses every year but are now trading at multiples of their former value.
Gold can be eaten when you have accumulated a small number of ounces. In an emergency such as the birth of a child or job loss, an ounce or two can be sold to keep you going. There is always someone who will buy gold. When things improve, you can rebuild your ‘gold pantry’.
I can think of a few people in history and literature who were killed by being forced to eat too much gold, or molten gold. Can you think of some? Tell me about them in the comments.