Key Post Is gold a good investment?

Not being a seasoned investor I have some reservations about all the talk of buying Gold.
Would I be right in saying:-
As the dollar drops gold rises!
As it seems that you have to buy and sell gold in dollars, you then have the problem when selling, of converting your fallen dollars back into euros plus your expenses in euros. Is it worth the exercise??

Whether to buy gold or not?

Hi
May be in receipt of a windfall between 5-10k
Has been suggested that rather than putting this on deposit with banks or in high interest account or in a long term investment/tracker that we should use some/all of the money and buy gold with it

Has anyone ever done this or know whats involved or if there are companies in Ireland that do this for you

How safe/secure would this be for investing some/all of this money in this
Thaks

Gold is trading quite hugh right now, of course depending on how markets move there could be a lot left in gold.

There is a company, Goldcore, I think their website is www.goldcore.ie that could help you with the acquisition of gold certs from the Perth mint.

However Id suggest you speak to an investment advisor as you need specialist advice as to ho best to invest based on risk, term of investment etc etc

Gold today at $1,200/oz remains less than half the price it was in 1980 adjusted for inflation ($2,400/oz). And that is in dollars - gold could potentially and likely will go much higher in the increasingly risky euro (€960 per ounce today).

Silver remains even more undervalued than gold. It traded at $50/oz in 1980 (over $130/oz adjusted for inflation) and is trading at just over $18 per ounce today.

I challenge anyone to tell me of one other commodity, indices or asset class that is trading at 60% below the price that it was more than 30 years ago in 1980.

Everyone should own a small amount of gold and silver to protect from Ireland Inc becoming insolvent (in which case the 'government guarantee' will not be worth the paper it is written on) and from the risk of a break up of or sharp depreciation in the euro which is a real possibility.

DIVERSIFY PEOPLE - especially from deposits and cash equivalents as cash can become trash very quickly when you have incompetent bankers and politicians (especially paper euro cash in Irish banks) .

rise and fall

A bit like the property market. It's going to peak soon then crash - like all these sudden popular trends. You can't go anywhere now - but people are looking for gold!! Be cautious.

My opinion...put it in a low cost index tracker and leave it there.

DO NOT touch gold with a 50 ft barge pole!

smiley - put it in an index tracker??? where has the stock market gone in the last ten years??? nowhere... the dow jones was at 10000 approx in 2000 its still there today... gold is not like property.. its a measure and most of the mess we're all in today is because is we use paper as a measure of value.. because the dollar has lost more than 90% of its 1971 value the economic world is in a mess. gold has risen for the last ten years in a row - if you bet against it you're betting on obama the federal reserve to get their act together? is that wise? if you think gold is in a bubble then why do you think that?
look at george shaws comments above.. i agree with his comments.

george.shaw said:

Silver remains even more undervalued than gold. It traded at $50/oz in 1980 (over $130/oz adjusted for inflation) and is trading at just over $18 per ounce today.

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Nonsense.
I absolutely disagree with this logic.

What makes you think silver is undervalued today because of the 1980 price?

Did you ever consider that it was in fact overvalued back then and todays price is the right price?
Or even if it was the correct price for it back then, circumstances have since changed. That doesn't mean it is the right price for it now !

I am not saying gold / silver won't go higher. But certainly not for the logic you offer above.

If we were to follow that logic then we shoudl all be piling back into property given that it must obviously be undervalued now based on the price it was a couple of years ago !

If george.shaw thinks that the $50 / oz price of silver from the 80's was due to legimate trading, I strongly suggest he researchs 2 items -

1. The Hunt Brothers
2. Cornering a market

For his convenience, these two items will be found together.

Basing any investement advice on this $50 price is ludicrous and should be ignored without a second thought.

zxcvbnm said:

Nonsense.
I absolutely disagree with this logic.

What makes you think silver is undervalued today because of the 1980 price?

Did you ever consider that it was in fact overvalued back then and todays price is the right price?
Or even if it was the correct price for it back then, circumstances have since changed. That doesn't mean it is the right price for it now !

I am not saying gold / silver won't go higher. But certainly not for the logic you offer above.

If we were to follow that logic then we shoudl all be piling back into property given that it must obviously be undervalued now based on the price it was a couple of years ago !

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Silver's historic price ($50 in 1980 versus $18 today) is just one of the reasons that you should invest a small amount in it (nodody suggested piling in).

Many of the other of dozens of reasons that one should invest in silver can be read here:
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http://www.telegraph.co.uk/finance/...gold/7803924/Silver-will-outperform-gold.html

DIVERSIFY

ps
the statement "You can't go anywhere now - but people are looking for gold!!"
is factually inaccurate.

The media never covers investing in gold, there are no investment providers, financial advisers, life assurance companies, stock brokers or banks advocating investing in gold, there are no ads in papers, magazines, radio and tv advocating investing in gold (let alone silver !!).

Indeed quite the opposite is the case. People all over their world have been selling thier gold (not buying !) in their droves in the phenomenon that is "cash for gold".
They have done this on the mistaken premise that gold is at record high prices as they are failing to adjust for inflation which as investment professionals know is absolutely crucial to do when considering all investments.

DIVERSIFY

george.shaw said:

Silver's historic price ($50 in 1980 versus $18 today) is just one of the reasons that you should invest a small amount in it (nodody suggested piling in).

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Dude ,

I've stated this already in my previous post but you chose to ignore it - but i'll try it once more for the craic.

The price of silver in 1980 is of no relevance whatsoever as to whether someone should now buy silver.

By that logic anything that was more expensive in the past than it is today is a bargain.

I've got a gaff i wouldn't mind shifting.
It was worth twice what it is worth now just a couple of years ago so thereore it must be a bargain in your world.
Interested ??

Did you google markjbloggs recommendation?
It was a purely speculative price back then.

Reality check - the 1980 price was an incorrect price !!
i wouldn't be making any investments based on historically dodgy prices.

That's the last yard-stick you should be using in fact.

Deise Doll said:

Not being a seasoned investor I have some reservations about all the talk of buying Gold.
Would I be right in saying:-
As the dollar drops gold rises!
As it seems that you have to buy and sell gold in dollars, you then have the problem when selling, of converting your fallen dollars back into euros plus your expenses in euros. Is it worth the exercise??

Click to expand...

There're many factors that effect the price of gold:
1. Dollar value (you're quite right about it). As gold price is in dollars, the value of the greenback affects the price of gold.
2. Gold is considered to be a safe heaven, just like a savings account, thus gloomy economics news will most like push the price of gold higher.
3. Gold is just another commodity... the price depends on demand and supply.

Gold doesn't have to be sold for dollars. The BullionVault site allows you to sell your gold for either Euros, Dollars or GBPs... I'm not sure how other places work but gold can be priced in any currency really.


The bailment arrangement, where someone else is paid to mind your possessions.. i.e the BullionVault arrangement, seems to be legally simple and secure... the next best thing to physical possession.

praetserge said:

There're many factors that effect the price of gold:
1. Dollar value (you're quite right about it). As gold price is in dollars, the value of the greenback affects the price of gold.

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No, gold is commonly quoted in US$, but is traded in every currency.

praetserge said:

2. Gold is considered to be a safe heaven, just like a savings account, thus gloomy economics news will most like push the price of gold higher.

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Absolutely right, but what has been seen in the last 12 months is that it dramatically increased even with an apparent "recovery". Either there is no recovery, or the market believes that if there is a recovery, then prices are set to go up because of all the inflation created by central banks.

praetserge said:

3. Gold is just another commodity... the price depends on demand and supply.

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Gold is a bit more than just another commodity; it is money, which puts into a category of where it is unique in that it is not used up through consumption. You are absolutely right that it's price is dictated by supply and demand.
Interesting thing about the supply side is that gold supply has not increased much (or at all) in the last 10 years, despite the price increases. Now this either means that mining companies believe that the price will go back down again, rendering investment to increase production unattractive; or they are not able to increase production. I believe it's the latter, but do your own research and decide then.

Chris said:

True, but the same goes for cash in a bank account, or shares held at a broker, or anything else stored by someone else.

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Its not the same. Gold paper, or silver paper trades are heavily manipulated to control the price of both. There have been more gold and silver paper receipts sold, than there is physically in existence.

If delivery of all the trades in pm,s were called for, then there will be an awful lot of people ending up with no metals. There have been many instances of customers being charged for storage, where no metal is held by the company.

Having a receipt for any of the precious metals , means nothing. Posession is everything.Gold and silver have been oversold by 100 to 1. thats 100 ounces of paper , to 1 ounce of physical. Fact.

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With regards to money held in banks ect, you would do well to read exactly what the government guarantee for bank deposits is. It makes interesting reading .

sabre

sabre said:

Its not the same. Gold paper, or silver paper trades are heavily manipulated to control the price of both. There have been more gold and silver paper receipts sold, than there is physically in existence.

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While this may be true for some gold investment vehicles, it certainly isn't true for all. The Perth Mint and GoldMoney are two very well audited companies.

sabre said:

If delivery of all the trades in pm,s were called for, then there will be an awful lot of people ending up with no metals. There have been many instances of customers being charged for storage, where no metal is held by the company.

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Can you give some examples other than some media hearsay, i.e. some actual auditing results?

sabre said:

Having a receipt for any of the precious metals , means nothing. Posession is everything.Gold and silver have been oversold by 100 to 1. thats 100 ounces of paper , to 1 ounce of physical. Fact.

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No, that is utter fiction! I think you need to seriously reassess the credibility of that website. The contributors fail to understand the most basic thing about futures contracts and economics:

[a] sells the bar to who sells it to [c] ... etc, till you have sold the bar 100 times.
Nothing wrong with that.

Now have a delivery date in the future, but all those sales already agreed today.

Anyone looking at the 'market' today would see 100 sales, but only one underlying bar of gold.

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Anyone looking at the market would see 100 sales and 100 purchases, i.e. the same bar having changed hand 100 times. And if delivery were required, then only the 100th person would be entitled to a claim, not all 100. I'm not even going to bother quoting some of the other utter nonsense on this website, as the level of stupidity of some of the posters is incurable.

sabre said:

With regards to money held in banks ect, you would do well to read exactly what the government guarantee for bank deposits is. It makes interesting reading .

sabre

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And do you think that if all depositors and creditors went to the banks and demanded their money, that the state would actually be able to cover this? The only thing interesting about the guarantee is that it is a terrible piece of legislation.
Banks are in a permanent, government sanctioned state of insolvency, whoch means that any cash you have on deposit, is guaranteed NOT to be there. At best you can hope for 10% being held in reserve.

Chris said:

...............At best you can hope for 10% being held in reserve.

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The old fractional reserve banking trick.

Let me ask you 2 simple questions.

Do you believe that all of the electronic gold and silver trade receipts match all of the gold and silver physical.

If all of the receipt holders looked for delivery, would they receive their physical metals.

sabre

http://www.youtube.com/watch?v=e9bU0r6JP4s

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Buying paper EFTs or gold type share things isn't the only way to buy gold. People can buy gold coins or bars, or buy from an exchange like BullionVault.

There are pros and cons to every method. Sometimes you might pay VAT on physical coins or bars, .. if so then it's not a good method. There might be tax implications, good or bad, when buying bars or coins.


In Asia and Dubai etc people view gold jewerlly differently to us in Europe.. they buy heavy gold chains etc, as an investment, where they are paying primarily for the gold content, not fabrication charges. So in Dubai you can buy 1 ounce gold chains, which contain an ounce of gold, and you only pay a slight premium over the spot price of gold, for a machine made chain. This seems quite good.


BullionVault don't sell paper gold, they sell physical gold and mind it for you. No tricks or sleight of hand.. the gold is there, and it's yours... not theirs. If they go bust the gold doesn't appear on their balance sheet, and the liquidator will ensure that everyone gets their entitlement.. no creditors have any claim on the gold, as it's not on the company books, and is subject to an age old, legally simple and secure, bailment arrangement... (i.e you are paying BV to mind your gold, they have no claim on it.)

There are exceptions to their insurance, for example, a James Bond nuclear bomb in the vault type scenario could see you lose your gold... similar to a massive earthquake or volcano, which could wipe out your hidden stash in the back garden.

sabre said:

The old fractional reserve banking trick.

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It's not so much a trick but rather government enforced fraud.

sabre said:

Let me ask you 2 simple questions.

Do you believe that all of the electronic gold and silver trade receipts match all of the gold and silver physical.

If all of the receipt holders looked for delivery, would they receive their physical metals.

[broken link removed]

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As I already said, some precious metal investment vehicles are dubious (at best), like some mutual funds, EFTs, etc, but certainly not all! I am personally very confident in the audit reports of the Perth Mint, GoldMoney and BullionVault. Of course I will never know unless I were to personally inspect it, but that is beside the point.
There has been increasing criticism/conspiracy theory of the Perth Mint, but the fact remains that you can have your gold allocated, and you are able to inspect your allocation anytime you want. And the complaint that delivery times have been increased (not suspended) is perfectly acceptable when lots of people try to take delivery of small amounts. Their terms and conditions of unallocated storage delivery state that it may be necessary to melt down larger bars into smaller ones when demand rises (no conspiracy here).
Jason Hommel's commentary is completely unfounded nonsense based on no actual facts he can present. Many of his comments refer to some of his clients telling him by email they are having problems taking delivery from the Perth Mint or some insider information being emailed or otherwise referred to him. He runs his own minting service and cannot compete with the service and reputation of the Perth Mint. Resorting to unfounded attacks like this is pure desparation.
NB: I am not affiliated to the Perth Mint in any way, I am not even a customer, but my father has dealt with them for quite some time with no issues at all.

JoeBallantin said:

In Asia and Dubai etc people view gold jewerlly differently to us in Europe.. they buy heavy gold chains etc, as an investment, where they are paying primarily for the gold content, not fabrication charges. So in Dubai you can buy 1 ounce gold chains, which contain an ounce of gold, and you only pay a slight premium over the spot price of gold, for a machine made chain. This seems quite good.

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Intreresting article here on India's attitude to gold. It's often depicted as just an obsession with jewelry, but its roots are much deeper than that.
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JoeBallantin said:

BullionVault don't sell paper gold, they sell physical gold and mind it for you. No tricks or sleight of hand.. the gold is there, and it's yours... not theirs. If they go bust the gold doesn't appear on their balance sheet, and the liquidator will ensure that everyone gets their entitlement.. no creditors have any claim on the gold, as it's not on the company books, and is subject to an age old, legally simple and secure, bailment arrangement... (i.e you are paying BV to mind your gold, they have no claim on it.)

There are exceptions to their insurance, for example, a James Bond nuclear bomb in the vault type scenario could see you lose your gold... similar to a massive earthquake or volcano, which could wipe out your hidden stash in the back garden.

Click to expand...

Yup, I agree!

Buying paper EFT,s is fine if you want to own pieces of worthless paper, when people wake up to the manipulation of pm,s that has been going on for a long time now. If you want to buy gold or silver as a protection for the value of your wealth, then do exactly that. Get posession of your gold or silver, dont buy a promise.

You would be better paying a premium or vat on metals in your posession, rather than paying storage for the promise of delivery, should you decide to seek delivery.

When Bullion vault charge you for storage, you are paying for gold that you might never posess.There are no cast iron guarantees that you will get delivery. If you dont get delivery when you look for it, you may well get reimbursed in dollars or euros.
But then again you wanted gold. When the liquidator is ensuring that you get your entitlement, he,s not paying you in gold, that you originally contracted for.

Paper EFT are no guarantee of anything. You might think that they are like an investment in your future, like a pension plan. But look what happened to them.

If you want gold or silver. Get tactile with it.

sabre