Thoughts on buying gold?

SoulTrader

Hi,

Would be interested in hearing a few non-partisan opinions from people on this board about whether they think now is a good time to buy gold.

For the past 18 months I've been reading all the reports that gold is set to rise (and I know it has been rising), and have heard people saying that we should all be investing in gold.

I'm not the most savvy investor (more of a gambler, in fact:)) but I can't help but feel skeptical about this latest gold-rush. I spoke to a friend recently who told me she'd invested in gold. I asked her what was her exit strategy and she said she was just going to hold it, and that she did it because she heard everyone should buy gold. I thought this was crazy. First of all, unless you actually intend to use it, or sell it at some point in the future, what real value does it have? It doesn't even pay a dividend (although in that respect, at least it can be said that it's quite similar to most financials at the moment...).

Also, I'm well aware of the upside fundamentals - the pre-Christmas Indian buying season, the lack of discovery of new gold mines and it's widespread everyday use guaranteeing a demand for it. I just can't help but feel that the ordinary people, i.e. the type of people who invested their redeemed SSIAs into BoI and AIB at 15euro per share are now, once again, coming in at the top-end of the market and setting themselves up for a fall.

Also, I know that gold has still some way to go before reaching an inflation-adjusted high, but we can never take past performance as an indicator of future performance.

The words of Warren Buffet are ringing in my ears - Be fearful when others are greedy, and be greedy when others are fearful.

Thoughts anyone?

silverharp

I dont think the real money will be made in physical gold , if you can grab some if gold goes back to 800 I'd do it but otherwise I'd be looking at gold mining shares. If gold can stay in the 900 to 2000 over the next decade there will be great returns especially in junior companies. There is a new junior gold stock ETF out which might be useful as a % of a larger gold investment.

SoulTrader

Yeah thanks for your reply Silverharp. I suppose a major reason to choose mining shares is that you might at least get some dividends along the way.

Not really thinking about buying physical gold, but it might be worth having some mining shares as part of a portfolio.

onetrueone

I share the scepticism of the idea that gold is a can't lose investment a one way bet - because I believe that one way bets have nasty habit of going the wrong way.
I think pretty much all natural resources will continue to rise in 2010 - at least the ones in which the supply can't be inceased so easily as fiat currency money.
I wouldn't own more than 10% of a portfolio in gold and I'd probably have half of that in silver which is undervalued and has a much higher price to reach IMO.
I'd wait until early January for the inevitable pull back ( sell off due to beginning of the tax year) in gold/silver Miners and oil companies.

Au 1969

MOD EDIT: 'Au' is not a very imaginative name for a gold spammer

Au 1969

Replying to the first post, there are many ways to invest in ore, I'll stick with gold for this conversation. I personally would only purchase gold itself, in kilogram bars because they are the easiest form to convert into cash on the open market. The smaller the weight, the less profit you will yield due to the small amount.

Gold right now is not going to sink for many reasons. For one, there are many countries that are shoring up their currency with gold. They are doing this because the American dollar weakness, OPEC wanting to go to another currency and China also wanting a global monetary platform, going away from the dollar. This movement away from the dollar may have a ripple effect with many countries that rely on the U.S. dollar.

With this rush to purchase gold as a hedge against inflation, the purchase of physical gold is safe, you simply hold onto it, it is yours. If you purchase certificates or shares, you won't be able to cash in your shares for physical gold because their will not be enough gold on hand in the fund to distribute. In other words, you aren't buying gold, you are buying a speculation of the gold market.

All this being said, gold is an ore that cannot be replaced. There are pockets of gold that are now being found in areas that can now be accessed for many reasons, technology, peace time, medicine, etc are some of the reasons. For example, in many mining countries, Malaria, Typhoid, Yellow Fever are just some of the illnesses you will encounter.

The purchase of physical gold cannot go wrong. It is a commodity that is used for jewelry, currency, technology and medicine. It is one of the few commodities that is used in most all sectors in the global market.

onetrueone

Au 1969 wrote: »

If you purchase certificates or shares, you won't be able to cash in your shares for physical gold because their will not be enough gold on hand in the fund to distribute. In other words, you aren't buying gold, you are buying a speculation of the gold market.

WRONG, you can buy into ETF's such as the Physical Swiss Gold Shares ETF (ticker SGOL) which is backed by one tenth of an ounce of Swiss stored physical bullion per share.

Or the ZKB Gold ETF on the Zurich stock exchange. Apparently you can take your ZKB shares to the Zurich Kantonal bank and take possession of the actual bullion and store that Gold in Zurich.

More info in the link below on other similar ETF's backed (and not backed) by Physical Gold Bullion.

http://en.wikipedia.org/wiki/Gold_exchange-traded_fund

me_right_one

Whats an EFT and a SGOL and ZKB's?

If you were absolutely brand new to all this, and had 20K to play with, what is the first thing to do? What do you need to know, and what return can you expect? Where do you start?

lucky-colm

me_right_one wrote: »

Whats an EFT and a SGOL and ZKB's?

If you were absolutely brand new to all this, and had 20K to play with, what is the first thing to do? ?

go down to the pub the boys down the pub will know what to do with it:D

lucky-colm

a few months ago gold was set to hit $1400 an ounce then a little while back there was talk of $1500 now down at the bottom of this page there is an add with gold to hit $2500 an ounce where do these people get their figures from or are they randomly pulling figures from the sky? its starting to sound a bit like the property boom again.
gold reached a high of about $1280 in mid december and it is now trading at $1101 it is like any other investment it goes up and down if you can buy it on the way up "great" and if you buy it on the way down......well what can i say
if you are buying as a long term investment it may not be bad as most economists and a good few governments for that matter seem to think that it will go up in price, but go up by how much......again start pulling random figures from the sky, or do what people did in the property boom and buy it for one price then multiply it by 2 and say this is what i want for this now and eventually some fool feulled by greed will come along when demand outstrips supply and pay you then what you are looking for:D

edit:
well that add was there when i was writing this

me_right_one

lucky-colm wrote: »

go down to the pub the boys down the pub will know what to do with it:D

So do you know about buying gold or dont you?:mad:

ixus

lucky-colm wrote: »

a
if you are buying as a long term investment it may not be bad as most economists and a good few governments for that matter seem to think that it will go up in price, but go up by how much......again start pulling random figures from the sky, or do what people did in the property boom and buy it for one price then multiply it by 2 and say this is what i want for this now and eventually some fool feulled by greed will come along when demand outstrips supply and pay you then what you are looking for:D

We could say this about any asset in history.

Gold is on a pause, no dounbt, it's intrinsically (speeling +drink) linked to dollar perception at this present moment in time. Presently, the euro is looked at as being weak. It will be interesting to see where we go from here.

hedgeh0g

Has the gold boat sailed?

silverharp

hedgeh0g wrote: »

Has the gold boat sailed?

dont worry it will be making port calls from time to time.:D

JoeB-

nothing wrong with owning gold.. it could easily go up a lot in the next few months or years, or go down maybe...

A good site with lots of info is..
http://www.bullionvault.com/

You can buy gold there, and you actually own the gold, and they mind it for you, in vaults.. with insurance. I'm a referrer by the way.. The gold funds are ok but are probably less secure, for several reasons,... mainly if they go bust you might not get your gold at all. With BV above it's very secure, and the prices are very low and transparent... and it's very professional.

See the help on BullionVault for more info...

I'm a happy customer of BullionVault by the way, so am a little biased.. still good though.

JoeB-

oh yeah.. another great thing about the site above is that if you register, for free, you get a free gram of gold!, and 1 Euro, 1 dollar and 1 pound!!!

That's great, worth about 30 Euro!!!

It allows you to trade the gold, and use the site, and all that, before you commit to anything!!!

If you want to keep the free stuff all you have to do is to validate your identity, (like opening a bank account, send a scan of your passport etc), or fund your account, by sending money from a bank account. That's it.. a great deal. :eek:

I'm not paranoid, and I don't have any tin foil hats or anything... but can you trust the government?.. the Euro could fail, and so could the US$... so having some gold is a good bet.

mr_happy

Is it possible to buy gold coins from a Jewelry shop?

Kalki

Hey JoeBallantine. What if you want to get your hands on the bullion itself, is that an option?

DERICKOO

please read topic

http://www.boards.ie/vbulletin/showthread.php?t=2055874917

digme

Id only buy physical gold now as things are going to turn ugly soon enough, a vault in Canada has no gold in it.... who's next?