# Investing in Gold



## jebediah33 (10 Nov 2009)

was thinking of investing in the Eagle Star Gold Fund through Zurich life. Hoping to invest about 5,000 Euro (which i believe is the minimum amount possible). This fund tracks the price of Gold. However as it deals in US dollars i am a bit worried about currency fluctuations euro v us $. 

Was also looking at purchasing physical gold. However, the charges involved in purchase price versus selling price seems prohibitive. Also storage costs add to overall costs.

Would appreciate any advice here in relation to gaining low cost exposure to Gold for about Euro 5,000 or so.


----------



## Chris (10 Nov 2009)

Rabo Direct offer the BGF World Gold fund, which includes gold mining stocks.

There are ETFs that track the price of gold, one that come to mind is SPDR Gold Trust ETF

You will pay a large percentage at the moment for gold coins, small gold bars are a bit cheaper.

Another way to own gold is through www.goldmoney.com.

None of the above are recommendations, and I am not affiliated to any of the companies. My only recommendation is for you to do your homework and make your own decision on whether and how to invest in gold.


----------



## blass (11 Nov 2009)

For what it's worth I invested a small amount in the Rabo  BGF World Gold fund and it seems to track the price of gold quite closley (i.e. gold increases in price so does the value of your units in the BGF World Gold Fund and the opposite is also true of course).


----------



## Chris (11 Nov 2009)

You should actually find that gold mining stocks increase/decrease more than gold. The reason for this is that the cost of producing gold is pretty much fixed regardless of the price of gold. Example: price to mine and melt 1 ounce of gold is $400 and spot price of gold is $1000; if the spot price of gold goes to $1100 then gold has gone up 10% but the gross profit to the mining company has gone from $600 to $700 which is 16.5% increase in profits.
You will often find that mining stocks and funds that track them have higher profit and loss potential. It is something to be aware of.


----------



## Marc (11 Nov 2009)

Chris makes an excellent point. Many people seem to believe that an investment into the Black Rock Gold & General Fund or a Gold Mining Fund is the same as an investment in physical bullion. This is simply not the case as [broken link removed] of the Market Vectors Gold Mining ETF since 1998 clearly illustrates.


----------



## jebediah33 (11 Nov 2009)

thanks for the info re gold investing. One little question in relation to rabo direct fund fees as brought up in this discussion. On the rabodirect.ie website fees are quoted at 0% entry, 0.75% exit and annual ranging from 1.2 % to 2 % depending on the fund. However the prospectus' for each fund mention a distribution fee of 5%. What is this 5% fee and does the investor have to pay this. Frankly a 5% fee would certinly be a deterrant to investing in these funds. Not very clear from the website. any info?


----------



## Rory Gillen (14 Nov 2009)

Forget the Rabo fund and go for any of the gold ETFs. Open a stockbroking account and buy one of them. Ask the broker for a selection. If it is an on-line broker then you need to know yourself what product you want to buy. Put Gold ETF into google and several Gold ETFs will come up. 

Rory Gillen


----------



## george.shaw (24 Nov 2009)

Very interesting article on Market Oracle yesterday about how the natural gas ETF has massively underperformed actual Natural gas prices and - this is something that those wanting to own gold need to be aware of as a potential risk in ETFs - http://www.marketoracle.co.uk/Article15238.html . 

Not too mention their 0.5% charge per annum, bid/offer spread, stock brokers fees and very significant counter party risk from owning this derivative of gold bullion.


----------



## thebos09 (26 Nov 2009)

Hi all. Some interseting threads here on the gold situation and ways of investing. Can't let on to know much about it but was thinking of buying. Seems actual gold is preferable to the ETFs linked to it?
Was listening to E. Hobbs the other day and he was all in favour of purchasing even at the current price. Any thoughts? Think he was talking about these certs from Perth mines? He reckons with the imminent "inflationary tsunami" its a very wise investment saying somewhere between 10-20% of our wealth should be in it?


----------



## spursman (26 Nov 2009)

eddie hobbs is always late to the party. gold is gone parabolic at the moment, it could still rocket higher in the short term but there will be a big correction shortly. i would wait to get in then. it is going higher over the long term as the dollar is in demise but listening to eddie hobbs about stuff is always a bad idea


----------



## Derek123 (27 Nov 2009)

FYI Hobbs has been recommending gold for the past five years since it was under $400 per ounce and in his magazine it features regularly along with many other energy-related plays. His latest book is worth checking out and is all about scarcity pricing, inflation and oil. He's been right on his calls so far including suggesting that March was the low in the stock market and is suggesting that we are entering a long period of very high inflation. On the property side his punt on Germany seems right despite the bust here since Germany wasn't in a bubble, is already out of recession and has rents linked to CPI. Knock him if you wish but don't ignore what he's been consistently saying.


----------



## spursman (27 Nov 2009)

everyone has that theory now - high inflation down the road , yada yada yada.


----------



## Pennyscraper (28 Nov 2009)

jebediah33 said:


> was thinking of investing in the Eagle Star Gold Fund through Zurich life. Hoping to invest about 5,000 Euro (which i believe is the minimum amount possible). This fund tracks the price of Gold. However as it deals in US dollars i am a bit worried about currency fluctuations euro v us $.
> 
> Was also looking at purchasing physical gold. However, the charges involved in purchase price versus selling price seems prohibitive. Also storage costs add to overall costs.
> 
> Would appreciate any advice here in relation to gaining low cost exposure to Gold for about Euro 5,000 or so.



When you buy physical gold, and take possession of it, you can also knock a small amount off your investment pot as you've effectively contaminated it. In order for that gold to be bought back into the market, they have to be sure that you haven't tampered with it in any way e.g. a bar of gold could be drilled out and re-sold. By taking possession of it, you depreciate it. See here for an example of tampering


----------



## Rory Gillen (29 Nov 2009)

Free Article on the Gold Theme for anyone interested on my web site. Here is the link

http://www.investrcentre.com/index....ontent/id/07EC9264-38F7-45FE-87B7941B675E60FA


----------



## spursman (30 Nov 2009)

gold is way too popular now. its going to pull back. plus this whole dubai thing will probably spill over to the rest of the world and cause major issues with commercial real estate


----------



## Derek123 (1 Dec 2009)

Sorry Spursman, what you're stating is a *feeling. *It's a common mistake to assume just because an asset has collapsed it can't fall further and this is the bottom eg Irish bank shares heavily bought once they fell 10% to 20% early 2008. Similarly just because Gold has hit new highs doesn't mean it can't go further. The fundamental direction is up if you accept the loss of confidence in the US economies ability to service its debt at present dollar value. It's a pretty convincing case when you examine the debt relative to GDP and its trajectory. If you further accept the evidence of oil flattening, then loading up on certain commodities like Gold and especially Silver makes a heap of common sense.

As for Hobbs, his 2005 book LOOT predicted a credit bubble burst and gave strategies on what do do including eliminating debt, switching to dollar mortgages and buying gold. So call him lucky if you wish or a royal pain in the neck but he's been right.


----------



## dockingtrade (1 Dec 2009)

spursman said:


> gold is way too popular now. its going to pull back. plus this whole dubai thing will probably spill over to the rest of the world and cause major issues with commercial real estate


 
I dont understand the Dubai crisis forcing gold down. Isnt gold a hedge against all this. Isnt that why it gone up over the last 2 years.


----------



## spursman (1 Dec 2009)

if the market will crash then everything will sell off. gold included


----------



## Chris (1 Dec 2009)

spursman said:


> if the market will crash then everything will sell off. gold included



No, not true. When the stock and currency markets crash, then gold rises, as it is the only form of money that has underlying value (in that it is finite and much sought after).
In 2007/2008 stock markets crashed and so did the dollar, gold on the other hand went up. After a couple of futile intervention attempts in the US to prop up the dollar, it did temporarily go up in value, only to be crushed again, forcing gold to it's current price. If you believe that the dollar and fiat currencies have a long term, stable and viable future then don't invest in gold. If you think they will all cumble one by one, then gold is what you want.


----------



## piccu (2 Dec 2009)

The mistake people make is in comparing gold to other commodities, like copper or lead. Gold is not like other commodities. It is money and a safe alternative to fiat currencies. Thanks to 'quantitive easing' fiat currencies, in particular the american dollar, are being devalued. The dollar recently reached parity with the Swiss franc and a new low against the euro. This was a serious boost to precious metals, that surged on the news.

Gold is in a bull market that stretches back to 1999. Just look at the end of year quotes for the yellow metal (spot gold):

*2000 -- $273.60*
*2001 -- $279.00*
*2002 -- $348.20*
*2003 -- $416.10*
*2004 -- $438.40*
*2005 -- $518.90*
*2006 -- $638.00*
*2007 -- $838.00*
*2008 -- $889.00*

Even after its sharp pullback in 2008 -- mainly due to sales by funds needing to meet redemptions -- it still ended higher on the previous year. And is due to finish higher this year too. You cannot dispute what is a stone cold fact. And gold is far from popular at the moment. People are actually flogging the stuff to those 'Cash for Gold' people that have set up shop in every shopping centre in the country! It's getting very little media coverage and the man on the street just isn't talking about it. There will come a stage when we'll enter the third 'euphoric' stage of this particular bull market when gold will really go parabolic.

Also, it's claimed that gold is now expensive. It is not. Gold is up roughly 33% this year. Copper is up 125%, lumber is up 45%, heating oil is up 73%, palladium is up 92%, silver is up 64%. Relative to other commodites gold has a lot of catching up to do on the upside.

Now, nothing is for sure in life, certainly when it comes to the commodities markets. All of the above is what is LIKELY to happen, not what will definitely happen. The signs so far say to us that there is a lot of room for price increases, not just in gold. No evidence has appeared yet to suggest otherwise.


----------



## piccu (2 Dec 2009)

And as for a suitable investment vehicle, spread betting is a very cost effective way of trading gold futures. Yes, there is an element of risk in that you can lose a lot if prices move against you but with some decent risk management you can make some very good profits on the current uptrend in precious metals.

And of course you can bet on downward trends too.

An excellent book on spread betting is The Financial Spread Betting Handbook by Malcolm Pryor. And to be clear I have no connection whatsoever with the author. I simply read the book and found it an excellent guide to spread betting.


----------



## thebos09 (5 Jan 2010)

just wondering if anyone has any thoughts on the gold situation recently. prices seem to have pulled back slightly. would now be a good time to invest?


----------



## Catan (5 Jan 2010)

How would one take physical possession of Gold or Silver? Are there any sellers in Ireland? Coins or bullion? Are there any travel restrictions, say if I wished to purchase abroad? (sorry for all the questions!)


----------



## nbaki82 (6 Jan 2010)

Gold is going to be the next bubble. Everybody is running away towards gold, but once interest rates start going up Gold will fall big time, so be careful. Instead I would suggest Oil.


----------



## Chris (7 Jan 2010)

Catan said:


> How would one take physical possession of Gold or Silver? Are there any sellers in Ireland? Coins or bullion? Are there any travel restrictions, say if I wished to purchase abroad? (sorry for all the questions!)



Be prepared to pay a hefty price for physical gold coins. I think gold.ie (Dublin based) sell gold and silver bullion, haven't used them, so I can't say anything about their service or reputation. Most Swiss and German banks sell gold coins over the counter. There is no VAT on investment grade gold within the EU, but I'm not sure if you could get hit by some import taxes when bought outside the EU. The only travel restriction I can think of is the weight. Value of the gold may only be a problem when traveling outside the EU where you have to declare any goods or cash worth more than €10000.
You could also look into silver coins. I got quite a few on ebay at a reasonable price just before Christmas.


----------



## Catan (9 Jan 2010)

Chris said:


> Be prepared to pay a hefty price for physical gold coins. I think gold.ie (Dublin based) sell gold and silver bullion, haven't used them, so I can't say anything about their service or reputation. Most Swiss and German banks sell gold coins over the counter. There is no VAT on investment grade gold within the EU, but I'm not sure if you could get hit by some import taxes when bought outside the EU. The only travel restriction I can think of is the weight. Value of the gold may only be a problem when traveling outside the EU where you have to declare any goods or cash worth more than €10000.
> You could also look into silver coins. I got quite a few on ebay at a reasonable price just before Christmas.


 
Thanks Chris, for the info


----------



## Chris (10 Jan 2010)

I just found another way that will save you a lot of money. www.goldmoney.com now offer delivery of 100, 400 and 1000 gold gram bars. The cost for converting 100 gold grams into a bar is 4%. They don't seem to deliver to Ireland, but you can go and collect it there.
A 100 gram bar would cost you as follows:
1) 104 gold grams to make 100 gold gram bar
2) 2.74% to buy the gold grams => 104 /0.9726 = 106.93 gold grams
3) 106.93 * €25.37 = €2712.81 for 3.22 troy ounces of gold
4) that works out at about €842.49 per ounce
Of course you have to go and collect it in London.

There are a couple of 1oz. Krugerand coins for sale on ebay at €920, so you can save a good bit this way.


----------



## Radiowriter (10 Jan 2010)

'You could also look into silver coins. I got quite a few on ebay at a reasonable price just before Christmas'.

Im also thinking of buying some silver from ebay. I'd be looking at holding on to it medium term but was wondering how easy or where to sell (not ebay) when the time comes. Any suggestions?

Thanks.


----------



## blass (11 Jan 2010)

I will be in New York next week and was wondering if it is possible to walk in off the street and buy Gold/Silver coins over the counter?


----------



## Chris (11 Jan 2010)

Radiowriter said:


> Im also thinking of buying some silver from ebay. I'd be looking at holding on to it medium term but was wondering how easy or where to sell (not ebay) when the time comes. Any suggestions?
> 
> Thanks.



Sounds like you are looking more at investing, in which case I wouldn't recommend physical bullion (at least not at the moment). I believe that most bullion dealers will buy your gold and silver, but only at the spot price. This means you need to make up the markup, charged for buying the gold in the first place, through an increase in the price of gold. At the moment the markup on gold coins is between 15 and 20%. A few years ago when I bought the gold I physically own the markup was hell of a lot less; I'd have to dig out receipts but I'm sure it was only about 5%.
Physical ownership of gold is more like an insurance against a worst case scenario of total banking or currency failure, maybe for very long-term investments. Don't take this is any sort of buying advice, but do your own calculations on what your returns would have to be.


----------



## Brendan Burgess (11 Jan 2010)

Good article on gold in yesterday's Sunday Business Post

[broken link removed]


> Because gold has so few practical uses, its appeal is almost entirely psychological. It is valuable solely because we believe it to be. This is wholly unlike equities, bonds, property or other more orthodox investments.
> 
> ...
> 
> ...


----------



## george.shaw (12 Jan 2010)

Headline: 'Ex Stockbroker says 'Gold is a terrible investment', Buy Equities Shock'

Chris is crystal ball gazing and is again failing to observe the most important rule of investing - DIVERSIFICATION.

Gas that he can predict a bubble in gold but could not in Irish property or equities - indeed he denied there was any bubble in 2006.

He like many in the Irish financial services industry fails to realise that gold is money and that is why all the central banks in the world became net buyers of gold in 2009 and are predicted to do so again in 2010.

Central banks are rightly concerned about financial, economic and systemic contagion. The German Bundesbank recently clearly stated how they view gold as a an essential monetary asset. “National gold reserves have a confidence and stability-building function for the single currency in a monetary union,” the Bundesbank said. 

I would tend to lean more towards the expertise of the central banks in the world and the Bundesbank rather than the head of investments at Bank of Ireland.

If gold rises to above its price adjusted for inflation in 1980 ($2,400/oz) which many analysts believe it will then Chris may have some egg on his face.

DIVERSIFY


----------



## george.shaw (12 Jan 2010)

ps 
Nouriel Roubini said the dollar would rise in 2009 and it fell.

My money is on people who invest their own money and invest for a living and not on an academic. Would trust Marc Faber, Jim Rogers and George Soros more than Roubini re investment advice.

pps
When Ask About Money has a large number of posts about investing in gold coins, ETFs, gold certificates, storing bullion in Ireland, storing bullion internationally etc and frequent postings on gold as it did for property then gold will be a bubble. 

That will be the time to take profits and sell gold but we are a long way from their yet with most retail investors not even knowing the price of gold in dollars let alone how to invest in it .

Another indication will be a number of bullion dealers setting up to sell gold bullion (think only one at the moment). Today there are a number of companies buying gold from the public and only one selling which is another contrarian indicator:
The woman (and man) in the street in selling their gold and not buying when this trend reverses - sell your gold.


----------



## ringledman (12 Jan 2010)

george.shaw said:


> ps
> Nouriel Roubini said the dollar would rise in 2009 and it fell.
> 
> My money is on people who invest their own money and invest for a living and not on an academic. Would trust Marc Faber, Jim Rogers and George Soros more than Roubini re investment advice.
> ...


 
I read somewhere that Roubini doesn't even like equities prefering to hold cash. He seems to be going all out on deflation.

Marc Faber is by far the greatest economist in the world today. I bet he hasn't sold any of his mining companies. 

I would add Peter Schiff to the list of 'real' economists to follow. 

No one in the real world, outside of the investing forums is talking about gold. The odd comment is made but who of the general population has even invested in gold or even knows how to?

The West is a decade away from sorting its problems out. The new head of RBS in the UK was on today saying 10 years to resolve. 

The US, UK and Europe (with the Euro) have major structural problems to resolve and the solution of throwing debt at a debt problem is crazy and leading to a depression. 

To not own a small element of gold in a well diversified portfolio is mad in my opinion. Gold performs in uncertain, badly governed times.

Gold is currently in a bull market and not in a bubble (not yet anyway but I hope it does one day!).


----------



## george.shaw (13 Jan 2010)

Good points Ringledman -  in time Schiff and Faber will be seen as having been far more prescient than Roubini and his simplistic deflationary analysis.

This article in the Telegraph today is very good and warns of hyperinflation:
A global fiasco is brewing in Japan 
[broken link removed]


----------



## pebbledash (14 Jan 2010)

An article with a different slant on gold from last weekend's Irish Times. Plenty of  reasons not to invest in gold:
[broken link removed]


----------



## george.shaw (20 Jan 2010)

Excellent and harrowing article but is a ridiculous and simplistic tabloid style headline not befitting of the Irish Times.

The poor people mining in the article are poor and desperate not because of the "price of gold" but rather because of complex socio economic reasons such as colonialism, lack of democracy, corruption etc.

Very little of the world's gold supply comes from Burkina Faso or sub Saharan Africa at all rather the largest producers are South Africa, China, Australia, Canada and the U.S. 

When investors buy gold bars and coins from these mints they are getting gold mined in a sustainable and ethical manner. However those buying gold jewelerry cannot be so sure if their gold is conflict free.

Gold, unlike paper money, is an excellent store of value that has preserved its value over the centuries. Saying that owning or investing gold in gold is responsible for the plight of the poor in Africa is simplistic guff.

It is akin to saying that owning paper money, stocks, property or land or any other form of money or tangible asset is unethical.

With the euro set to come undeer severe pressure in the coming months and years - [broken link removed] , Irish investors and savers who all have significant Euro risk (not to mention the mad David McWilliams devaluation proposal risk !) should have an allocation to gold as euro gold will rise much higher than euro dollar.


----------



## george.shaw (20 Jan 2010)

ps
having said that the article itself is harrowing and brilliant and the video, while depressing, is well worth a watch: 
[broken link removed]


----------



## cancan (21 Jan 2010)

george.shaw said:


> If gold rises to above its price adjusted for inflation in 1980 ($2,400/oz) which many analysts believe it will then Chris may have some egg on his face.
> 
> DIVERSIFY


 
I see you're still hawking this stuff.
Fair play.


----------



## george.shaw (26 Jan 2010)

Fair play Cancan - still attacking the ball and not the man. 

Lost the argument on why a small allocation to gold for financial insurance purposes makes sense - have we?

I seem to recall you crystal ball gazing and claiming that gold was a bubble a year or two ago - like most others.

Glad to see you are still open minded and have gradually come to understand the merits of DIVERSIFICATION. 

The claim that gold is a bubble is absurd as gold remains less than half of its inflation adjusted price in 1980 - $2,300/oz.

And silver is even more undervalued - trading at $16.50/oz today it is less than half of its nominal high of nearly $50/oz in 1980 and a fraction of its inflaiton adjusted high of $130/oz in 1980.

[broken link removed]

If worried about a bubble potentially forming in gold, than buy its still very undervalued precious sister silver.


----------



## cancan (2 Feb 2010)

george.shaw said:


> When gold likely rises 10 or 25 times from it's 2000 low in the coming years then it will be a bubble and it will be time to go underweight gold and overweight property and equities.


 
I'm still waiting.


----------



## george.shaw (2 Feb 2010)

Thats your problem 'Cancan' - u have a short attention span. 
But as you know investing is about the long term.

If I recall correctly you like many others  (Paul Somerville of Delta Index most prominently) said gold was a bubble at $800/oz (believe Paul said it at $600/oz in 2006 - hope Delta Index clients did not take his advice and short gold then (in a high risk leveraged fashion) as if they had they would have lost a lot of money.

Paul is contrarian on all assets except gold and gets very brave after gold sells off and advises his clients to go short (gold promply does the rallies on Paul's pronouncements).  Delta Index were very quite and did not offer crystal ball guidance on gold when it was over $1,200/oz and now that it has had a slight correction, Paul says it is a short again.

Trying to predict the future movement of any asset class remains a fool's errand. Avoiding speculation and leverage remains key to preserving wealth and diversification with a range of asset classes and a healthy allocation to cash, short dated government bonds and gold remains key in these very uncertain times.

Great article here:
The Collapse of Sovereign Government Bonds The Next Financial Crisis Contagion
http://www.marketoracle.co.uk/Article16927.html


----------



## cancan (3 Feb 2010)

> If I recall correctly you like many others (Paul Somerville of Delta Index most prominently) said gold was a bubble at $800/oz


 
You recall incorrect sir.
When you were shouting about $2000 oz gold here, gold was at $900.
I pulled you on persistant comments of $2000, ignoring any possible downside.
I mentioned that there could be a bubble, as many people here know on too well, bubbles are easily idenitified after the fact.

You were advising all and sundry to buy gold, which as it turns out, was one of the worst performing investments of the past year.

At it's current $1112 per ounce rate and falling, it does appear to be a long way from the $2000 you predicted.

Gold has not done what every gold bug predicted it would do in the wake of a huge economic crisis. 

I wonder if you really have only 10% of your portolio in gold, given your constant posting of articles that suit your cause, while trashing any article, or respected economist, that differs with your view.

At the end of the day, it's a metal with few uses, held by people nostalgic for a different economic times. It's hard to price an asset like that.

In the long run we're all dead, and stopped clocks can be right sometimes.

Buying gold has all the certainty of tossing a coin and hoping for gains. 

I'd recommend people put their money somewhere where the real economic value can be studied and identified at their leisure, determined and priced much more easily, rather than stashing gold coins under the floor with a tin foil hat on.


----------



## george.shaw (3 Feb 2010)

Lol. You really crack me up. 
Litany of fallacies and half truths there Cancan - as is your stock in trade.

Most glaring fallacy is you said that gold "was one of the worst performing investments of the past year." In fact, gold was one of the top performing assets last year in all currencies and in recent years.

The beginning of 2009 saw gold at €625/oz and gold closed at €780/oz at the end of 2009 and is trading at over €800/oz per day. Thus Irish investors holding gold saw their investment increase in value of some 25% in local currency (euro) terms. Gold rose similarly in all major currencies including dollars and sterling and has been doing so gradually in recent years:

Gold's Rate of Appreciation Against 23 World Currencies 



*[broken link removed]*

The best currency compared to gold is the Swiss franc, but even this paper currency lost 10.1% per annum on average against gold in the past ten years.

AAM users can check all my posts and they will clearly see that all I have ever said is that I believe that gold could reach $2,200/oz (its inflation adjusted high of 1980) again in the coming years - I have never given short term predictions. I have also said that investments can fall as well as rise and thus it is important to be DIVERSIFIED and hold a range of asset classes including equities, bonds, cash and a small allocation to gold.

Ironic as you actually gave 'advice' in January 2008 to "steer towards using a third of your money towards a house, and investing in a balanced fund portfolio of growth stocks, later in the year when the current market turbulence dies down." ( http://www.askaboutmoney.com/showthread.php?p=556492#post556492 ) 2008 was an extremely turbulent year and the ISEQ was near 7,000 at the time and Irish property is down by a lot since then with manyy who bought then, in negative equity now. Those who took your advice may not be so happy now.

Irish people have learnt and are learning the hard way that there are more assets than just property and equities. 

EDUCATE yourselves, ignore the vested interests in the banks and brokerages (who almost exclusively focus on investing in stocks and property), DIVERSIFY and be prudent and risk aware.


----------



## george.shaw (3 Feb 2010)

Ps

Not sure what your "stashing gold coins under the floor with a tin foil hat" reference is to as do not recall anyone on this thread advocating doing either.

Gold is as liquid as equities and far more liquid than property which is important. Gold can be bought in an ETF (more risky and costly) or government certificates or bought and stored in vaults internationally and government mints as central banks do.

As ever it should not be an "either or" and investors should look at their portfolios holistically.

In the words of the genius President George Bush Jnr: 
"Fish and human beings can peacefully coexist".


----------



## Chris (3 Feb 2010)

cancan said:


> You were advising all and sundry to buy gold, which as it turns out, was one of the worst performing investments of the past year.



You need to get your facts right. Here are some numbers for you, all from first trading of the year. Notice that Gold has outperformed all major indices in each of the last 4 years.
*dow Jones* 
2010	10396	(20.13%)
2009	8654	(-34.95%)
2008	13304	(6.09%)
2007	12540	(16.33%)
2006	10780	

*Euro stoxx 50* 
2010	2978	(21.55%)
2009	2450	(-43.60%)
2008	4344	(5.23%)
2007	4128	(15.37%)
2006	3578	

*Gold in $* 
2010	1102	(26.09%)
2009	874	(4.42%)
2008	837	(30.99%)
2007	639	(23.12%)
2006	519	

*DAX* 
2010	5998	(24.08%)
2009	4834	(-38.76%)
2008	7893	(18.14%)
2007	6681	(22.61%)
2006	5449


----------



## ringledman (3 Feb 2010)

Wonder how much gold has risen in Zimbabwe Dollar or Venezuelan Bolivar terms over the past decade ;-)

Gold rises under decades of poor governance. We sure have a lot of this in the West today. The Fed & Bernanke bankrupting the US, Brown destroying the UK, the Euro zone heading for collapse under the weight of ludicrous government expansion.

The future will be grim in the West for at least a decade. The upside for gold is immense. The downside risk over the next decade is low. 

Marc Faber recently said that he thinks the US is past the point of no return and cannot ever repay their debts. Inflating their way out is the only option. 

The Euro zone is a complete disaster too. Even if the Euro zone or just Ireland experience deflation instead of inflation over the next 10 years, gold will still perform in 'real terms' against other assets and goods. 

There is even evidence done by Robert Pretcher that gold performs better under deflation than inflation. Gold may not rise much or fall slightly within a deflationary environment, but it keeps its value far better than all other assets or goods that are falling in value.

So whatever the potential outcome for the West, gold in real terms will rise significantly. I will sell out once the dow is at 1-2 times the value of gold. Wherever that may be, 5000, 10000, 20000. It doesn't really matter. 

Jim Rogers recently said that he gave a speech to 300 mega large money managers and '74% had NEVER owned gold' let alone joe public. 

http://www.youtube.com/watch?v=lHyQIo6jiHs

Legend. 

Schiff, Faber, Rogers: The only 'real' economists in the world today.

Hardly a bubble yet. The 'intelligent' central bankers of the world (aka Asia) are actually increasing their holdings in the greatest transfer of wealth toward the New World that civilisation has ever seen.


----------



## ringledman (3 Feb 2010)

The 3 greatest global crises of the last century -

1929-1931

1973-1975 

2008-201?

I think we can all agree on this. 

So on this basis lets view the dow to gold ratio after each of these major downturns -



1929-1931 Recession - Dow is only worth 2 times the price of gold.

1973-1975 Recession - Dow is only worth 1 times the price of gold (Interesting how gold peaked 5 years later).

The dow/gold ratio even hit a low of 3.6 times after the relatively mild 89 recession!!!

Ahh but gold is now in a bubble somehow at $1,1000 an ounce and the dow at 10 times its price you say! Gold is the most expensive ever (nominally) I hear!

Don't just look at the 'nominal' price isolated from reality. Look at history. Look at the price compared to other assets. Look at the price of gold compared to any property index in the world!

On a historical basis gold is a heck of a lot cheaper than most assets in the world today. it is also a lot cheaper than it has been after major crises of the past. It is after such crises that gold performs.

So if you think the dow will retest its lows of 6,600 gold should hit at least $3,300 an ounce before the bubble is over. If you think the dow is fairly priced now at 10,200 then gold should peak at least at $5,100. If the dow is going to rocket to 20,000 due to inflation (a la zimbabwe) then gold could hit at least $10,000 an ounce.

Who know's where gold or the dow are going in the future. All I know is that gold is not mega expensive compared to historical ratios and also whatever happens in the next 5 years (minimum), gold will be one of the best performing assets. 

Don't isolate gold from the real world when arguing it is in a bubble. Don't isolate gold from history when arguing gold is in a bubble.

The gold bull market continues upwards. 

The bubble has yet to start...


----------



## cancan (4 Feb 2010)

Georgie - since you only joined in 2009, and every post you have ever made is related to gold, I do wonder if you are locked in a basement with a tin foil hat on 
The question asked was:



> The question for me is should I be using the whole lump sum towards the property.


 
So advising someone to stay away from the equity markets in early 2008, and also advising someone not to overstretch themselves in relation to buying a property in early 2008, was bad advise?

Ok goldbugs
Moving on. For every dubious link above, i could spend all night here throwing up opposing ones, but I must go feed the chickens.

What price do you expect gold to be at year end 2010.



I'm throwing in 1025, cos I'm feeling generous.

Post here, for all to see, just a number, no big long lecture.

I'll see you guys at the year end to see who is closest, rather than being the meat in a gold love sandwich.


----------



## george.shaw (4 Feb 2010)

Very valid points by Chris and Ringledman and as ever Cancan you chose to play the man and not the ball. 

And you do not have your facts straight and avoid addressing the facts put to you.

What price gold is at at the end of 2010 is absolutely irrelevant. That is the problem with much of the so called financial 'advisers' who try and predict the future. The future is unknowable. 

What we do know is that there remains significant macroeconomic and systemic risk in Ireland and in the world and there is the risk of an international monetary crisis and competitive currency devaluations. 

Thus, investors should be AVOIDING LEVERAGE and own a range of sound assets and hold then for the LONG TERM. 

Irish savers and those holding prize bonds should realise that they have considerable Euro currency risk and need to diversify with gold (maybe Swiss francs) and international equities and bonds.

All I have ever advocated is a small allocation to gold. Most central banks have massive allocations to gold and view gold as an essential monetary asset and currency reserve. The German Bundesbank recently clearly stated how they view gold: “National gold reserves have a confidence and stability-building function for the single currency in a monetary union.” 

Name calling (bugs and tin foil hats) is the preserve of the intellectually unsure and of someone who does not want to deal in evidence based facts. 

DIVERSIFY friends.


----------



## cancan (4 Feb 2010)

> What price gold is at at the end of 2010 is absolutely irrelevant.


 
And here was poor ikkle me thinking that returns were a major factor in any investment decesion.

Buy gold folks, who cares what it's price does. 

Meanwhile I'll be over in my "intellectually unsure" corner, "ignoring facts", and weighing up investment decesions based on a ratio of risk/return.

[broken link removed]

Later.


----------



## george.shaw (4 Feb 2010)

What the price of any given asset is in 11 months time is of no importance and is pure speculation. Speculation (particularly of the leveraged nature), predicting the future movement of asset classes and massive debt levels is what got us into this mess.

Gold as a monetary asset and finite currency is not simply about returns. More importantly, gold is a safe haven asset and is financial insurance and that is why central banks own significant quantities of gold in their currency reserves.

As Alan Greenspan said "fiat (paper) money in extremis is accepted by nobody, gold is always accepted." And "gold remains the ultimate form of payment in the world". Greenspan realised that gold cannot default, cannot be nationalised, cannot be devalued and cannot go bankrupt - unlike corporations, banks and nations.

Your refusal to deal in evidence based facts and anti gold bias is quite extreme and is narrow minded Cancan.  It will likely cost you and others dearly in the medium and long term.

ps 
Where can I get me some of those cool tin foil hats your family are wearing -  I need them to protect myself from the CIA moonlasers.


----------



## cancan (5 Feb 2010)

> Where can I get me some of those cool tin foil hats your family are wearing - I need them to protect myself from the CIA moonlasers.


 
A few more days like today, and you'll be able to fashion them out of all that gold you're holding, as foil may look expensive in comparison.


----------



## Chris (10 Feb 2010)

cancan said:


> Meanwhile I'll be over in my "intellectually unsure" corner, "ignoring facts", and weighing up investment decesions based on a ratio of risk/return.
> Later.




Well, you still haven't addressed the incorrectness in your post about gold being the worst investment last year, which I proved you wrong on, so I think it is very fair to say that you are indeed ignoring AND misrepresenting facts.

Personally I won't get caught up in calling the price of gold at the end of this year; as stated in another post that would be pure speculation. I am happy though to call $2500 gold within 4-5 years.


----------



## cancan (11 Feb 2010)

Chris said:


> Well, you still haven't addressed the incorrectness in your post about gold being the worst investment last year, which I proved you wrong on, so I think it is very fair to say that you are indeed ignoring AND misrepresenting facts.


 
If I may - if you're going to try sell this stuff here, at least let people know what they could have made on similar metal plays.

*2009 Precious Metals Performance*

Gold - 25.04%
Silver - 57.46%
Platinum - 62.69%
Palladium - 114.75%


If you are going to pick a metal, may as well pick a good one.


----------



## Chris (17 Feb 2010)

cancan said:


> If I may - if you're going to try sell this stuff here, at least let people know what they could have made on similar metal plays.
> 
> *2009 Precious Metals Performance*
> 
> ...



Silver, Platinum and Palladium, while they are classified as precious metals, have predominantly industrial use, and are not used for monetary backing or inflation hedging. They are also far more volatile, nevertheless good investments.

Basically you are proving my point, that gold, and other precious metals, were among the best investments of the last few years, and your statement that it was the among the worst investments is still incorrect.


----------



## trekkypj (19 Feb 2010)

The trouble is the phrase 'were'. Precious metals such as gold 'were' among the best investments of the last few years.

Past performance bears no reflection on future prospects, despite what some might say. Nostradamus may be able to predict the future prices of equities and commodities and other investments, but we mere humans cannot. 

Basically to invest in gold right now is to bet on it continuing to rise when it has already risen enormously. Like tech stocks a decade ago, Gold will peak and eventually crater. The only question is how brave people will get before calling it at the top of the market. It may get to $2,400 or it may slide from $1,500. 

The point is that we cannot with accuracy say. Gold is overpriced as-is in my view. I would buy it at around $350-500 perhaps, but certainly not at the marked-up price it is at now. 

Then again, I'm not one for  speculating on the price, and I tend towards long term, value based investing in my own thinking. So buying at these prices wouldn't make any sense to me, since I shop when stuff is 'on sale'.


----------



## ringledman (20 Feb 2010)

trekkypj said:


> The point is that we cannot with accuracy say. Gold is overpriced as-is in my view. I would buy it at around $350-500 perhaps, but certainly not at the marked-up price it is at now.
> 
> Then again, I'm not one for speculating on the price, and I tend towards long term, value based investing in my own thinking. So buying at these prices wouldn't make any sense to me, since I shop when stuff is 'on sale'.


 
Yes but you haven't provided any basis for saying gold is overvalued except for a hunch you have because it has already risen a lot.

What fundamentals support your view that gold is overvalued at $1,100 when any ratio of gold v property or stocks ratio shows it at fair value to undervalued?

Likewise gold is still way below its $2,500 inflation adjusted peak in the early 80s and arguably we are facing a much worse global crises this time around. 

Add in the supply / demand imbalance, of gold being extracted at 2% growth per annum and fiat currency being printed at 20%+ per annum.

Add in the need for asia to diversify out of their huge dollar reserves and into a real asset that holds its wealth over the long term. 

Granted gold is not the bargain it was in 2000 when commodities across the board were at their cheapest level (inflation adjusted) in 80 years.

The history of commodity cycles are approximately 20 year secular bears (as in 1980-2000) followed by 20 year secular bull markets as in 2000 to 202?. 

The reasons for the secular cycle is that it takes 10-15 years to get new mines and oil rigs to market; so the supply always lags hugely the demand. Therefore when the world wants commodities there is a shortage and once the world becomes awash with new suppply of rigs and mines, prices fall thus creating the next commodity bear market. As rigs and mines shut down due to the price falls the next bull market occurs. This is history, you can't change it. We are now smack bang in the middle of a bull market that has some time to run.

We have at least another 5 years minimum to run. No commodity bull market has ever lasted less than 15 years. Most likely this will be one of the longest especially with the population growth of asia and the mess the west is in. 

I would say at least 8 more years, possibly 15.

So please, in arguing against gold provide some 'fundamental' reasons for not owning gold, other than it has already risen a lot.


----------



## trekkypj (26 Feb 2010)

Ringledman,

Sorry, but I just don't buy into speculative crazes. That's my own personal position as someone who believes that investing is about creating wealth from tangible business activity. That's my own personal choice. And I believe it to be sensible.

You say you want fundamental reasons for not buying gold... very well.

1. Purchasing commodities and trading them is gambling on the future of the commodities markets. I have no objection to this. But talking about bull and bear trends are just another way of saying - "everybody is buying gold, you should do the same". It's a herd instinct. That's why the analogies are animal based.

2. I reiterate my point. It is not possible to predict with accuracy when prices of any tradeable investment will go up or go down. We can't predict the future with accuracy. Gold may well rise some more, as you say. But how much? For how long? Will it be a smooth perpetual curve upwards? How long to hold it for? These are questions I ask myself and I cannot in all honesty say. Can anyone?

Prices rise and prices fall. That is the nature of a market. I don't believe that gold will rise perpetually for the next fifteen years. Rather, I think there will be a number of peaks and troughs. The reason I say this is that the primary consumers of gold are based in Asia. The Chinese economy, for one, is overheating on borrowed money. I believe that the economy will slow and demand for gold will fall to coincide within 3-5 years. It will recover, but prices will be unstable, in my humble opinion.

I'm not an economist, day trader or professional speculator. I am a humble small investor who takes a certain interest in the subject. And for someone like me, I'd rather find something which I can quantify in terms of return. I'm not looking to bet on it - there's a helluva lot of smarter people than me who call it both ways and I'd rather leave it to them than try and out-think the market.

Suppose you're right. Suppose gold does go bullish for another 7/8 years. What then? It can only come down when it peaks . The temptation when stuff is going up in price is to hold and hold and hold. And were the price to crash as loads of people get out of gold all at once? Unless you're very, very astute and skilled, and I don't claim to be, there is a BIG risk that your gains get eaten away, or that you could even be nursing a loss.

I'm not saying don't buy gold, I'm saying it doesn't suit me as an investment or as a speculative bet. And anyone who does buy gold better be damn clear in their mind that there are no sure things in life. Gold can drop in value as well as rise. If China or one of the other emerging markets such as India were to have an economic meltdown, I don't think demand for gold would be so high.

Then again, maybe I'm just too boring and cowardly to understand the appeal of taking the risk. Buying for long term holding, that I do understand, but again I'd not buy for this purpose now. I'd wait ten years if necessary and buy when the bottom falls out of gold again, and buy a LOT of it. Not because I expect it to rise in value quickly, but it's more likely to hold its value at a lower price level even if it stays low.


----------



## smiley (28 Feb 2010)

"Gold gets dug out of the ground. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

-- Warren Buffett


----------



## ringledman (1 Mar 2010)

smiley said:


> "Gold gets dug out of the ground. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
> 
> -- Warren Buffett


 
Utmost respect for Buffett, a true value investor of my heart. A guy who rode the American dream economy of the 50s to 00s.

Did you read the article by his long time partner Charlie Munger last week on the death of America?

[broken link removed]
_Charlie Munger (pictured with Buffet), Warren Buffett's longtime business partner in Berkshire Hathaway, warns in a new column that the U.S. economic empire is crumbling before our eyes, thanks to federal debt and poor planning._

We certainly are living in interesting times. 

And Buffett is correct as a guy who thinks in decades or multiple decades, gold's long term investment potential is zero. In fact it produces a negative return over many decades or centuries due to its storage costs.

Nonetheless, in times of; 

Government corruption, 
Mismanagement, 
Bloated states, 
Money printing of the highest order, 
Asset price collapses, 
Socialist run enterprises, 
Propped up too big to fail institutions, 
Huge welfare states, 
High unemployment,
Currency debasement, 
Public rioting,
Union intervention, 

Gold tends to perform rather well.

Gold is not an asset to pass onto the next generation. 

At some point it will collapse in price as it always does after the world sorts out its problems and we face another sustained boom.

Unforunately this is some years away. In the mean time enjoy the protection that gold has to offer and the following quotes;


*'You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold'*
George Bernard Shaw


*'With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people'*
Fredrich August Von Hayek 


_*'All of the government's monetary, economic and political power, as well as its extensive propaganda machinery, will be enlisted in a constant battle to drive down the price of gold - but in the absence of any fundamental change in the nation's monetary, fiscal, and economic direction, simply regard any major retreat in the price of gold as an unexpected buying opportunity'*_
Irwin A. Schiff


*'If ever there was an area in which to do the exact opposite of that which government and the media urge you to do, that area is the purchasing of gold'*
Robert Ringer


----------



## ringledman (2 Mar 2010)

*If and when governments finally decide that protecting the value of paper money is more important than keeping the illusion of short-term economic growth on the road, gold’s bull market will be over. Sadly, I suspect that’s a while away yet. Dr Marc Faber of the Gloom, Boom and Doom report reckons that ‘real’ interest rates (i.e. adjusted for inflation) in the US won’t move into positive territory “at any time in the next 10 years.” If your paper money is losing value, why wouldn’t you hold gold? *


http://www.moneyweek.com/investments/forex-safest-way-to-play-the-currency-markets-00905.aspx


----------



## george.shaw (29 May 2010)

FT has two good articles on gold today:
Scramble for gold coins to beat tax increase
http://www.ft.com/cms/s/0/74825c32-6a93-11df-b282-00144feab49a.html?ftcamp=rss

Bullion has not yet lost its shine
http://www.ft.com/cms/s/0/91141ab2-6a83-11df-b282-00144feab49a.html

The gold bubble of the 1970s came to an end when western electorates, fed up with inflation, elected governments willing to impose recession instead. Faith in sound money was restored. Back then it took nine years from President Richard Nixon’s abandoning of the gold standard for gold to peak. 
If the 2007 popping of the credit bubble is the modern equivalent of Nixon’s move, we have another six years of gold price rises to come. Unless governments have learnt the lessons of the past.


----------



## george.shaw (29 May 2010)

Great chart in the Wall Street Journal showing how gold looks to be only in the middle stages of its bull market:






There is no fever like gold fever and we are a long way from gold fever yet. More people in Ireland and the western world are selling gold in recent months (selling gold jewellery for paper euros) rather than buying. Most of the buying has been by the smartest hedge fund managers in the world (Soros, Sprott, Einhorn etc), pension funds and central banks and very few members of the retail public have any allocation to gold whatsoever. Ask your friends in the pub or at a dinner party have they invested in gold and they will likely either laugh at you or ask you what is bullion?; how do you invest? and even why would you buy gold?

DIVERSIFY people


----------



## ringledman (29 May 2010)

george.shaw said:


> Great chart in the Wall Street Journal showing how gold looks to be only in the middle stages of its bull market:
> 
> 
> 
> ...


 

You'll like this george.shaw-

*Gold's no bubble - here are some real bubbles*

May 27, 2010, 12:00
[broken link removed][broken link removed] Posted byMerryn Somerset Webb

Comments (1)
Earlier, I explained why we don't think the gold price has yet moved into bubble territory. You can read all about it here: Why gold is not in a bubble. But anyone who still isn't convinced might like to look at the graphic below. It puts the gold price into context next to real bubbles. The implication? There is a long way to go before gold hits the kind of levels that should make you want to sell. 
_[broken link removed][broken link removed]_
_Chart courtesy of __Business Insider_ 


Regards.


----------



## george.shaw (9 Jun 2010)

The notion that gold is a bubble is plain silly. 

Gold hit new record highs in all major currencies yesterday and the Irish Times, the Irish Independent, RTE, Newstalk etc completely ignored it and did not even report it - not even  one line. 

Instead they devoted time as usual to the movements of that bastion of global capitalism - the ISEQ and the performance of individual Irish shares and the Bank of Ireland rights issue - http://www.rte.ie/business/2010/0609/mibusiness.html

When RTE and Newstalk and the Irish press feature gold on a regular basis and report the news that it has reached new record highs it might be time to sell your gold.

But the media covers gold once in a blue moon. It is discussed on AAM once in a blue moon and most retail investors do not even know what the price of gold is in dollars - let alone what it is in euros.

Suits me fine as can buy more gold (and silver!) at these prices before the real gold rush begins. Will start selling my gold when gold is featured as often as 'buy to let' and foreign property was on AAM and when the majoirty believe gold is a "cannot lose" investment.


----------

