Buy gold: yes or no

[Aisling]

I've managed to save a nice amount of money and have been wondering if I should buy gold to protect myself "against the continuing devaluation of the dollar". Lately, TV has been bombarding us with commercials about buying gold, but no one I know (or who's willing to admit it) has put a fairly large amount of money into it.

I've been researching the idea, and from the many financial message boards I've read, I see the opinion is basically split 50/50.

Without divulging if you have purchased gold (unless you want to) because of the downward move of the US dollar, I'm looking for opinions/insights/wisdom about buying gold certificates/bars/bullion coins etc.

Would anyone care to advise?

 

[wdwfan16]

I've managed to save a nice amount of money and have been wondering if I should buy gold to protect myself "against the continuing devaluation of the dollar". Lately, TV has been bombarding us with commercials about buying gold, but no one I know (or who's willing to admit it) has put a fairly large amount of money into it.

I've been researching the idea, and from the many financial message boards I've read, I see the opinion is basically split 50/50.

Without divulging if you have purchased gold (unless you want to) because of the downward move of the US dollar, I'm looking for opinions/insights/wisdom about buying gold certificates/bars/bullion coins etc.

Would anyone care to advise?

I have not bought gold.

If they are advertising all over the TV I figure they are doing that for their benefit not mine.

IMHO the time to buy gold has passed.

 

[jlewisinsyr]

1. Rule of investing, buy low, sell high, gold is at a high, bad time to invest.
2. If you think the stock market is volatile, go look up the price of gold over the past 20 years.
3. Gold is traded like a stock, it can lose interest, sure it is a physical asset over a monetary one, but physical assets carry just as much risk as monetary ones.

 

[legalsea]

1. Rule of investing, buy low, sell high, gold is at a high, bad time to invest.
2. If you think the stock market is volatile, go look up the price of gold over the past 20 years.
3. Gold is traded like a stock, it can lose interest, sure it is a physical asset over a monetary one, but physical assets carry just as much risk as monetary ones.

I agree. I purchased some gold when it was selling for $300.00 or so an ounce (about 10 years ago). I think I will hang on to it a bit longer, since there is a possibility that it will go up to $2,500 or so: but, who knows? It may go down in the next year to $40.00.

One reason gold has been rising is due to India and China buying a lot of it. The articles I've read state that if these two countries continue buying, then gold may still double.

We also bought silver at the same time as the gold (then around $5.00 per ounce). It is now selling for $18.50 per ounce.

Anyway, if I were not in gold now, I would not buy any.

 

[Hoodie]

FWIW one of the major speculators has started divesting his gold thinking gold and oil will go down next year (I forget his name, but he predicted the credit bubble/etc.) It's already had a couple of down days.

That said, we've pretty much mortgaged the dollar to the hilt so who knows?

 

[LuvOrlando]

Personally, I don't think Gold or any else subject to the whims of the market, is a safe place to hold your life savings money. No matter what anyone else says I will never be convinced returns are more important than safety for a 90% of the population, myself included. Sometimes the dollar will rise and other times it will fall, but an FDIC protected bank will always be safer than any alternatives.

I'll tell you what my Finance Professor told me when I was about 20. He was a Commodities trader and his words always stuck with me, after all his advice was completely in opposition to how he made his living:

Investments should ONLY be made with DISPOSABLE INCOME, if you can't afford to throw it away in AC (Atlantic city/gambling) then you shouldn't be playing with it in the markets.

 

[Aisling]

FWIW one of the major speculators has started divesting his gold thinking gold and oil will go down next year (I forget his name, but he predicted the credit bubble/etc.)

Is it possibly Gerald Celente? I just saw an interviwe with him on FoxNews (googled) and his forecasts have been amazingly correct! I have to check him out more. He forecasts some pretty bad hard times ahead for the US economy, worse than the Depression.

Thanks for the responses. I keep thinking of the Twilight Zone episode where gold became as worthless as dirt. But then when I see those TV commercials, they make me feel like if I don't buy gold right now, I'm missing out on the "only secure currency there is".

 

[Aisling]

Investments should ONLY be made with DISPOSABLE INCOME, if you can't afford to throw it away in AC (Atlantic city/gambling) then you shouldn't be playing with it in the markets.

I so agree with this, but this is my problem: I'm not thinking of buying gold as an investment with a return, but as insurance against the dollar failing miserably.

If 5 years from now the dollar is worth 50 cents of today's value, and gold goes up a large percent, it'll compensate for the 50 cents I've lost per dollar if I put the cash in a savings account. Thoughts about that?

 

[JCJRSmith]

I look at the price of gold this way:

In 1910 the price of gold was about $21 per ounce. For the same money at the time, you could get a REALLY nice tailored suit.

Today, gold is about $1130 per ounce. For the same money you could get a REALLY nice tailored suit.

 

[DrCavin]

If the Gov't is saying its a good idea, I run the other way.

 

[luvmy3]

If the Gov't is saying its a good idea, I run the other way.

Thats because they have the right to confiscate it if need be

 

[bettymae1121]

For what it's worth, my mutual fund did 23% last year. Not bad! If time is on your side, stocks are still a good way to go. But putting gold or other metals in your portfolio could be a good way to diversify, and if my 401k had a gold fund, I'd look into, myself.

Just don't buy from the scam artists on TV. Frow what I've heard, they sell you gold for 30% over the market price, so it has to go up 30% before you break even, let alone see a profit. Reserch it well before putting any money into gold (or anything else, for that matter).

 

[LuvOrlando]

I so agree with this, but this is my problem: I'm not thinking of buying gold as an investment with a return, but as insurance against the dollar failing miserably.

If 5 years from now the dollar is worth 50 cents of today's value, and gold goes up a large percent, it'll compensate for the 50 cents I've lost per dollar if I put the cash in a savings account. Thoughts about that?

No matter what you do there is a potential for loss and gains. Beyond that, to my mind, there is only the goal of limiting those losses, which means to limit the gains as well. There is a relationship between gains and risk of loss. The higher the potential gains the higher the risk of loss, if there was no carrot at the end of the stick no-one would ever go for the lead KWIM.

I really do not think losing 50 cents to every dollar is reasonable. Just our Social Services Spending alone could prevent that... well if they stop spending like its Monopoly Money that is (fingers crossed). Anyhow, the way I see it, people got very burned with investments recently. So now folks are thinking twice before they hand over all their money to a bunch of sharks (and rightly so, Finance people are a bunch of gamblers in Armani suits). In my opinion, all those investment shows ect are nothing more than the Financial Industry trying to scare people out of the safety of their present state and into a net. Try to think of them as Sham WOW Infomercials so you can get a bit more perspective on their angle. They are selling something they have a whole lot of, and hoping you buy it to keep the market elevated.

I can just tell you what I see, I don't have a magic ball but I do have a bit of an education and a personality exactly opposite of most finance people. I don't invest much because I don't trust it, so I have nothing riding on the outcome which would influence my opinions. Most people on TV do not fall into the same category, they have a whole lot on the line to lose which distorts their objectives KWIM. I wish you tons of luck with whatever you decide to do.

 

[Golf4food]

I look at the price of gold this way:

In 1910 the price of gold was about $21 per ounce. For the same money at the time, you could get a REALLY nice tailored suit.

Today, gold is about $1130 per ounce. For the same money you could get a REALLY nice tailored suit.

If the Gov't is saying its a good idea, I run the other way.

These are the two best pieces of advice in the whole thread.

Buy low, sell high. Gold is high. Enough said. It is no security against the dollar if gold drops and you then lose all of your former dollars.

Me? I'm going to invest in hearing aids for when all these young punks with their crazy loud sound systems at traffic lights go deaf in five years.

 

[golfgal]

I have heard predictions that gold is going to triple in price in the next 10 years and I have heard it is at it's high. If my crystal ball were working I would know what to do . We put some gold in our investment account asset allocations but have not bought any gold outright.

 

[Imzadi]

I attended a stock trading strategies seminar a few months ago. I've known the founder of the company for years.

Steve told us that if we ever get to a monetary level of buying gold coins, buillion, or bars, make sure we from a company that actually sends the actual gold pieces. He said it's very important to actually, physically have the coins, not some certificate saying we own XX amount of gold. If the company goes belly up, and there isn't enough gold to back up those certificates, those certificates aren't worth the paper it's printed on. (That is exactly what is happening to the American dollar. The U.S. is printing bills all the time, but we no longer have the gold in Fort Knox [or wherever ] to back all the money being printed.) But, actual gold in hand will always be a valuable trading comodity somewhere, (Dubai?) even in an apocalypse. Gold has been tradable since ancient times.

This is the company Steve uses to buy his gold: www.ajpm.com. It's local to him as he lives in the Portland area, so he knows this place is legit. In fact, he was in the middle of some investment deal, during the same time as the seminar and his accountant had to bring in the actual gold coins and paperwork for Steve to sign so he could sell & convert them to cash for the deal. We saw the gold coins. They weren't chocolate gold coins! This isn't a guy who just blows hot air and you wonder if it's just all talk.

 

[Aisling]

Very interesting post, Imzadi.

Ok, here's a dopey question: say I buy $25,000 worth of gold bars, and 10 years from now the economy is a terrible mess and I need to "cash out" my gold for dollars for living expenses, where do I do that? Obviously I wouldn't be able to go into the grocery store and pay for food with the gold bars, so what would I do? Does anyone here know?

 

[jlewisinsyr]

The U.S. is printing bills all the time, but we no longer have the gold in Fort Knox [or wherever ] to back all the money being printed.) But, actual gold in hand will always be a valuable trading comodity somewhere, (Dubai?) even in an apocalypse. Gold has been tradable since ancient times.

The US Dollar left its gold peg in the 1970s, it has not been matched to any physical asset, this is the common place of every major currency in the world, we are not unique. Each currency is traded against other currencies based on the currencies demand and risk. There is a lot of faith in the in US, the same goes for the Euro and a few other major currencies.

The fact we do not mark our currency to gold is not a bad thing, its just a fact. Gold is volatile, it has been worth less then a $100 and shot up well beyond.

Someone asked if we were going to have an option to invest in commodities in one of our all company meetings one day...and our CEO (who is extremely respected in the financial community, so much so that he navigated this financial crisis and the company without much downturn in our company and without the need to raise capital) laughed and then said there are two types of people who invest in commodities, commercial investors and those who have more money then they could ever spend because no sane individual investor would ever invest their funds in an investment that is lower then investment grade material (meaning it is far too volatile for a normal investor).

 

[Imzadi]

Very interesting post, Imzadi.

Ok, here's a dopey question: say I buy $25,000 worth of gold bars, and 10 years from now the economy is a terrible mess and I need to "cash out" my gold for dollars for living expenses, where do I do that? Obviously I wouldn't be able to go into the grocery store and pay for food with the gold bars, so what would I do? Does anyone here know?

Not a dopey question because I wondered the same thing when we we're shown the gold coins. (I actually heard the "ka-ching!" as the coins clinked together. That's how I know they weren't chocolate coins. )

I turned to a guy sitting next to me and said, "Wait a minute, there's an apocalyse going on, people are scrounging for food, and someone will be buying gold coins?"

The guy said, "There will always be someone willing to buy gold, simply because they can." It's a wacky, screwed up world we live in,

but in all cultures, on all continents, gold has precious value. The ego of some people who have enough money to show that they have it, will want to. Think of how the Pharaohs had gold while thousands of slaves were starving around them.

Anyway, there should be some reputable place to buy & sell gold in 10 years. Hopefully the same place you bought it from.

I'm more concerned about, if I buy gold from this place in Portland, OR, how is it supposed to get to me? I barely trust FedEx with a $25 package. I'm supposed to trust they can ship a gold bar to me and it won't get "lost" along the way?

 

[Rora]

I don't think it could hurt to buy gold..