Is gold a good investment

a) Why are you comparing gold to equities - they are not comparable investments.

b) I was making the point that gold investing carries a 2 independent risks, currency and asset.

c) When are you going to stop sounding like an estate agent re: 2006 with respect to gold?

You are deliberately and continually trying to make the possible downside to gold unclear to viewers of this form.

Try adding some balance to your posts.

People who are looking for somewhere safe to park money should be aware of both the potential upside and downside.

It is no safe haven, and you'd be mad to think otherwise.

Lol !

Talk about unbalanced Cancan - "it is no safe haven, and you'd be mad to think otherwise."

This is factually inaccurate as gold was safe haven in the 1930's and in the late 1970's and again since 2007, 2008 when it rose in all currencies including the dollar.

u said that gold has currency risk.

but all fiat currencies and all assets (denominated in fiat currencies) increasingly have currency risk as the printing presses are being used to bailout banks and buy dodgy assets and toxic debt. This has seen all currencies including sterling and the euro falling sharply versus the dollar and gold.

Gold is an investment as is equities and fair to compare any and all investments to each other. obviously stockbrokers and others who sell equity based products are not comfortable with this comparison.

errrr . . . don't remember any estate agents saying "DIVERSIFY" or do not put all your eggs in property.

let me clarify . . . do not put all your eggs in any basket including gold but do be diversified and have an allocation to gold to protect against unprecedented macroeconomic and systemic risk and Buffett's warning of the coming "onslaught of inflation."

fish and bicycles can peacefully coexist !
;-)

DIVERSIFY

I have been following this thread with great interest and was/am considering buying some gold. However as the thread expands I am getting more and more confused as to whether gold is a safe haven for my funds. Basically like the vast majority of people I am not confident that the Government could live up to its Deposit Guarantee Scheme if push comes to shove. What other hedges (medium risk) are available to ordinary joe soap to preserve his/her few bob savings in the event of "armageddon".

You are touting $2000 gold, and using "safe haven" to give the impression that this is risk free.

As can be seen by Happy Girls post, you are (possibly unintentionally) giving the impression throughout this thread that there are no downsides.

Either you don't understand the risks involved fully yet, or do, and are happy for others not to.

I have no problem with people of different opinions. But I think when the OP asks a serious question about whether something is a good investment, you should present both sides of the story as best you can.

People should be aware that the price can go either way. If it was a guaranteed win, the price would already be there. The market isn't stupid.

You appear to have issues dealing with the facts that I have pointed out to you as can be clearly seen above.

Secondly, u gave the impression in your previous post that Irish people who had invested in gold with euros had lost even more than those who had invested in dollars ("Double whammy of currency risk and asset risk for euro investors...").

This is factually incorrect as the euro, (like sterling but not by as much) has fallen sharply against the dollar and gold resulting in euro gold prices being up 15% since the start of 2008 (ISEQ is down 15%).

I sincerely believe that gold will at least reach it's inflation adjusted high of $2,400/oz as per the Economist chart seen on the previous page. That is not touting just my sincerely held belief. Assets become bubbles when they reach their inflation adjusted high and gold is less than half it's inflation adjusted high today - $915/oz.

I also sincerely believe that gold is a safe haven currency.

And 5000 years of history would corroborate this. Every single paper currency since the dawn of time has collapsed in a hyperinflationary collapse and unfortunately I fear that this may happen again in the coming years as warned of by David McWilliams recently.

Rereading this thread it is interesting that those who continually bash gold rarely offer alternatives and often are incorrect in their assertions and sometimes factually incorrect.

A little knowledge is a dangerous thing.

You keep selling gold Cancan and I will keep buying it and in 5 years time lets see who is correct.

Gold is a safe haven otherwise the People's Bank of China and other central banks internationally would not be selling their huge dollar reserves and buying gold:
Major economies eye boost to gold reserves
Reuters via The Guardian

Diversify and own some gold Cancan (if even only a small amount)- tell your friends and family to do the same.

I genuinely and sincerely believe that your closed mindedness and obvious bias may cause you much financial pain in the coming years .

Happy Girl - you should do the same. Own some gold in order to protect yourself but do not put all your eggs in gold (or in equities, property, bonds or cash).

Now more than ever a really diversified balanced asset allocation is essential.

DIVERSIFY

Whatever you say George. Reading comprehension seems to be lacking somewhere along the chain.

I am only trying to highlight that there are risks involved beyond what you are willing to admit before people get burnt/rich.

I don't have a side, but you should not present it like it's christmas and your birthday rolled into one.

People can do their own research after that and make their own minds up - Invest away, but be aware, there are risks, possibly bigger than this thread demonstrates.

There are other more in depth resources available for people to determine those risks themselves. Due diligence and all that.

2 years ago, people bought houses based off opinions on this site.

Last year people bought bank shares based off opinions on this site.

This year...............People should think for themselves more.

If one does not understand what they are investing in, they should not invest. Many have been given a free education in the past couple of years in that.

People like to think that it was genius when they are right, and someone else’s fault when they are wrong.

Personally, I am not against gold as an investment. I just want people to be aware that it's a bit more complex that a few positive links of the web, and that while there may be a plus side, there may also be a downside. Happy investing to all.

Couldn't agree more Cancan with all you said there.

Under no circumstances should anyone make an investment based on their readings of Ask About Money or any forum or any one thread.

My issue with you was with regard to factual inaccuracies and sweeping statements of fact and generalisations.

I agree that everybody should do their own due dilligence and read far and wide, in order to know and understand the gold market.

Great resources in this regard are [broken link removed] , www.goldassets.co.uk and www.goldseek.com which all have a lot of the breaking news and comentary regarding the precious metals market (positive and negative but more positive at moment because the supply demand driving the market are very sound).

People should listen to and read what the people who predicted this economic debacle are now saying (and ignore the vested interests and commission driven product sellers). These people are Eddie Hobbs, Jill Kerby, George Lee and David McWilliams in Ireland and Jim Rogers, Max Kieser, Nouriel Roubini, Marc Faber, Peter Schiff and Bill Bonner internationally. Buy their books and read them in Google News and on You Tube.

Most believe that gold will rise (some think gold might fall if deflation creates a greater Depression but if gold does it will fall a lot less then other assets).

Educate yourself.

Risk comes from not knowing what you doing but believing that you do.

We are living in absolutely unprecedented financial and economic times.

Good quote by Lord Rees Mogg, economist & former editor of The Times & assistant editor of The Sunday Times is very appropriate today

"Governments lie; bankers lie; even auditors sometimes lie: gold tells the truth."

Short article on gold prices (in dollars) on yahoo today.
[broken link removed]
It's a shame it only discusses the trends over the last 200 days only, and doesn't translate the trends into the euro.

The Telegraph has created a Gold section in the Personal Finance section of its website:

Gold

Gold is investors' traditional safe haven in times of financal turmoil. Read the latest news stories concerning the metal, as well as comment and analysis.
[broken link removed]

I really take exception to the post from george.shaw as it is an inaccurate summary of what I said on Newstalk on March 3. I was not negative on gold but tried to present the for and against arguments on gold. I mentioned that gold has risen for 11 months consecutively, that it is near $1,000 an ounce, but I also said it was seen as a store of value in times of uncertainity and people were buying it up. I mentioned that it was an important component of a balanced portfolio. Far from dishing gold, I was attempting to give both sides.

As for ignoring gold in the columns of the Irish Independent, that is an inaccurate and unfair comment on me also. I commissioned and published a 1,000-word article on gold which was published in the Your Money pages just two weeks ago.

And I do not own any gold.

Why is george.shaw so determinedly biased when it comes to gold?

Charlie Weston
The Irish Independent

Hi Charlie,

Re read my post and realise was a bit harsh Charlie.

Unfair to personally single you out for criticism in this way.

I am just frustrated as I genuinely believe gold will be one of the few investments to protect people in the coming years and feel that the Irish media rarely if ever covers gold and when they do it is often minsinformed and biased.

The Irish Times recently had an article where they repeated and highlighted 3 times (to paraphrase) that most analysts warn that gold may be overvalued and suffer a correction.

This is factually incorrect as most precious metal analysts are bullish on gold as per Reuters and Bloomberg polls.

"Analysts" who are bearish on gold are the vested interests such as banks (selling equity based and other products) who have no expertise re gold whatsoever and who got us into this mess selling "product".

Most analysts from major banks are bullish as per this article in the FT:

"The head of sales at one bullion bank told the Financial Times that he had never been so busy dealing in gold for large investors.
Goldman Sachs, Morgan Stanley and UBS forecast that the gold price would rise above $1,000 this year.
Peter Munk, chairman of Barrick Gold, the largest bullion miner, told investors last week that all countries had embarked on policies that would favour gold.
"The only option to governments is to print and print more money," he said. "That will end in tears."
[broken link removed]

Apologies again Charlie.

Warren Buffett on cnbc yesterday: A question on gold.


I want to get to a question that came from an investment club of seventh and eighth graders who invest $1 million in fake money every year. This is the Grizzell Middle School Investment Club in Dublin, Ohio, and the question is, where do you think gold will be in five years and should that be a part of value investing?

BUFFETT: I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money and there will be a lot--and it's a lot--it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that. The idea of digging something up out of the ground, you know, in South Africa or someplace and then transporting it to the United States and putting into the ground, you know, in the Federal Reserve of New York, does not strike me as a terrific asset.

Buffett is very smart but he is not all knowing or infallible and he is not God.

He bought into Goldman when it was over $100 and gold was under $750/oz.
Today Goldman Sachs has broken down to below $75 and gold is at $914/oz.

Not too mention his ill timed foray into Irish bank shares.

He appears to have a serious blind spot here or he is talking his equities book.

Frightening that even now he does not get the concept of proper diversification.

The beauty of gold is that it has ZERO COUNTER PARTY RISK.

That is precisely why the Federal Reserve keeps over 8,000 tonnes of gold bullion in Fort Knox and the Federal Reserve in New York and have not sold any in recent years.

Central banks own gold as gold cannot go insolvent - unlike companies and banks. Indeed the global financial system is ruptured and close to collapse.

Also, politicians cannot debase gold through massive government spending, stimulus packages, bailouts and massive government deficits.

Meanwhile all the gold in the world can fit into a 20 metre cube on a tennis court. It is extremely, extremely rare unlike paper or digital currency.

The notion that gold is particularly speculative is ludicrous - especially in the current climate.

Central banks are rightly increasingly concerned about the prospects of financial, economic and systemic contagion. The German Bundesbank recently clearly stated how they view gold as an essential reserve currency and monetary asset.

“National gold reserves have a confidence and stability-building function for the single currency in a monetary union,” the Bundesbank said.

Buffetts long term history speaks for itself. He is the most successful and richest person in the world.

You are nit picking short term blips that will have none or very little bearing on his long term investment success.

No one has a crystal ball Smiley.

But in the current climate if someone was to put a gun to my head and force me to chose Berkshire Hathaway shares or gold bullion I would choose gold bullion.

I do not blindly follow and believe the sentiments of anyone - even the Oracle himself.

Gold has an even longer term history than Warren B and it speaks for itself - has outperformed the S&P 500 and DJIA since 1971.

Actually think that Berkshire Hathaway shares and gold will both do very well in the coming years due to what Buffett has warned of in the "onslaught of inflation".

Diversification is key with a range of assets.

Fish and human beings can peacefully coexist.
;-)