Key Post Is gold a good investment?

ETFs are looking dodgier and dogier by the day:

A CDO-esque Gold Investment
http://ftalphaville.ft.com/blog/2010/08/13/315436/a-cdo-esque-gold-investment/

Bullion Vault and GoldMoney are digital gold and wholly dependent on websites, servers, IT staff, the internet and are tiny companies with a handful of staff. Grand for a punt but not for diversification or wealth preservation purposes.

They are some of the better so called "gold investments" and safer than many mainstream investments being touted by brokers now (with their so called "capital guarantees"!!) but digital gold is not without risk.

With regard to gold coins and bars being at risk from volcanos and earthquakes - the last time I checked Ireland had little risk of either!!

We are however at risk of sovereign default and like the US are very close to insolvency. So having a few Credit Suisse gold bars stuck in the corner of an attic looks like prudent financial planning.

Always good to have a little insurance.
DIVERSIFY
 
The problem with physical possesion is that you'll have broken the chain of 'good delivery' bars, and so your gold will need to be re-assesed for purity and weight... this could be expensive. This doesn't really happen with coins as they can be tested handily enough, for weight, dimensions and density. Some coins are easier to sell than others, Kruggerands (South Africa), Eagles (American), Sovereigns (UK) etc, and Philharmonics (Austria maybe?).

I'd like to buy Irish minted gold coins but there doesn't seem to be much on offer. I have checked the website for coins in Ireland, we do produce a few but they seem to be light, and the gold content isn't listed, and they may be a bit pricey, so they don't seem to be aiming at the investment or wealth preservation market.. they seem to be aiming at gifts for newborns etc.


People do rely on technology, i.e massive and widespread computer failure would affect many people.. would your money be safe in a bank in those circumstances?


If a house burns down does the gold melt and disappear?, or can it be recovered from the ashes?
 
What would be the best thing to own in the event of WW-III?

I like Armegeddan type movies... Mad Max scenarios. I saw one recently, The Road... they didn't explain what caused the downfall. But they do show cash and jewels lying around, they're of no use. But I'd have thought that jewerly would have some value, cash would have none. Gold rings and chains would have value wouldn't they?


But what would be more valuable?.,.. would cigerette lighters be of value? tinned food, engineering books perhaps? How Things Work would be a handy book to own. What about gardening books? Spices maybe.. or salt?


So what's of most value in the event of WW-III.. gold bars?, or something else? Weapons perhaps? Medicines?


A great fiction book I read was Hammerfall... about a comet hitting Earth. It was very good, one of the heros was a scientist who was able to manufacture Mustard Gas which they used to kill the rampaging cannibals.. he was also able to make many things of value, technological things.. like electrical generators etc. Even a knowledge of construction and concrete was very valuable. Unfortunately the scientist was a diabetic, who needed insulin.. while he knew how to make it he didn't have the required sheep, or the advanced lab facilites....

Hammerfall (seems to also be called Lucifers Hammer)
http://en.wikipedia.org/wiki/Lucifer's_Hammer
 
As I said before - this kind of scenario is extremely, extremely unlikely.

Learning a special martial art such as Krav Maga would be benefical too - too protect against civil unrest, marauding and looting mobs and thieves.

But even if Sabre is hopefully proved wrong (and I appreciate your inputs Sabre as even if I disagree with you - you have definitely provoked thought ) learning those skills would be fun and life enhancing anyway.
 
But the government are saying we,ve turned the corner, and things are improving;-0 Fat chance.

We are about to see every devious attempt through taxes ect, that will part us from our money, as well as enslaving our children and grandchildren with a neverending debt that will never be paid.

We are indeed heading into rougher waters, and if anyone thinks any different, they are in for a rude awakening. Your paper currency will be worth less and less, and I,ve no doubt that precious metals will be a worthwhile method of protecting your wealth, if you are lucky enough to still have some.

sabre
 
To hold an exposure to physical gold I suggest people look a an ETF provider called Source which is jointly owned by a number of large investment banks.The Custodian for the gold is Deutsche Bank and the Trustee is JP Morgan.TER is 29bps
 
george.shaw said:
In that scenario - paper currency would be absolutely worthless. Tangibles like food, fuel, hard commodites and precious metals particularly bullion coins and bars (either government minted or refinery or government bars).
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I thin initially even precious metals will have not much tradable worth. But when you consider that civilisations that never came in contact with eachother, e.g. Europeans and Inca/Maya/Aztec, chose gold and silver as storage of wealth, utility to trade exchanges and jewelry, would suggest that the same would happen again.

george.shaw said:
'You cannot eat gold' but those who have owned gold during periods of very high inflation or hyperinflation can sell or swap their gold for land, livestock, food, fuel etc. etc.
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I love the ignorance of that "You cannot eat gold" comment that is branded by pro-fiat currency and sovereign bond media commentators that do not understand gold. Why no one has said to them "You cannot eat paper either" is beyond me.


I agree. Basic survival skills will be much more important and useful than gold initially. Heard of this website a while ago on the radio. Never got round to looking at it in more detail, so I can't vouch for any credibility: www.thesurvivalistblog.net
 
On www.investrcentre.com I argue that the pro-gold arguments can be more easily understood by comparing gold and paper currencies to two companies.
Company A has €1 billion of turnover, €200 million of profits and no debt and a market value of €2 billion. Company B has the same turnover and profits as Company A but €5 billion of debt and its market value is falling due to concerns for its solvency.
In this comparison, what price would an investor pay for Company A versus Company B ? - if Company B's financial difficulties become extreme it may need a rights issue (diluting existing shareholders) or could default on its debt and go bust. One could probably pay any price for Company A versus Company B to preserve capital.
The global paper currencies are backed by not much more than a mountain of debt and can print money to solve it thereby increasing the supply (like a rights issue). The global investment market has been alive to this risk for many years now - Gold is strong against that background.

If I were Chewchew above, I would not be asking for financial or investment advice off this site. If you are considering gold, you need to see a decent independent investment advisor and get yourself an overall plan.
 
Just after reading your patronising and uninformed post (if somewhat amusing)


As I said - silver's historic price is just ONE of the many, many reasons that one should have an allocation to silver and help get real diversification - which is crucial in these uncertain times.

Many other reasons can be read in the Telegraph and Money Week articles provided above (which you did not address).

With regard to silver's historic price. As I said before - the nominal price high is ONE important way to determine if an asset is undervalued, fairly valued or overvalued.

Silver is half the nominal price that it was in 1980. Silver is some 1/6th of the inflation adjusted high that it was in 1980. When an asset class is a fraction of the price that it was 30 years ago than that is an indication (one of many - read the articles!) that it remains undervalued.

Indeed it means that that asset is not a bubble. A bubble is when an asset class reaches record highs (often multiplies of the record high) and often reaches record highs for consecutive years and goes parabolic (as silver did in 1980). Bubbles are also characterised by specualtive manias and a failure to evaluate risk - more often that not involving the public (as seen in Irish equities and property recently and in Irish deposits today).

One set of billionaires the Hunt Brothers, managed to corner the silver market in the 1980's. And yet today there of hundreds of more billionaires in the world and there is a hell of a lot less silver in the world. Thus, the silver market will likely be cornered again.

Please read the articles, do some research and educate yourself prior to posting somewhat financially illiterate posts which could further financially damage investors and savers.

DIVERSIFY
 
5-10k? go on a really nice holiday and create some memories... It will sound better when you're old...
 
Agree hard to beat a good holiday but spending 10k of one's savings on a holiday might be a little foolhardy in these difficult times.

Should not be an either or.Why not have a nice holiday spending 1 or 2k and put a few bob into gold bullion. In time. it will likely help pay for other holidays and help create many happy memories.
 

Sorry George if this has been covered before, but what are the best (i.e. easiest/cheapest/most liquid ) ways to get an exposure to silver with €5K ? would you go ETF or some other form ?
 
Depends.

ETF is grand if taking a short term punt but annual costs of 0.5% per annum and the fact that it has many risks such as being unauditted make it for speculative punters rather than those wishing to make an investment or own a safe haven asset for financial insurance reasons.

With an ETF you own a share in a trust and are in a long line of creditors. You are also exposed to custodians and subcustodians who are Wall Street banks.

Far safer to own actual bullion or a personal allocated gold or silver bullion account with your own coins or bars - pref in Frankfurt or Zurich (rather than UK or US).

The legendary investor, David Einhorn sold the ETF due to risks and bought physical bullion.




Primary criticisms of gold ETFs are:
  • <LI style="MARGIN: 0in 0in 0pt; tab-stops: list .5in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; mso-list: l1 level1 lfo1" class=MsoNormal>The key custodian, HSBC, can use sub-custodians and even sub-subcustodians <LI style="MARGIN: 0in 0in 0pt; tab-stops: list .5in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; mso-list: l1 level1 lfo1" class=MsoNormal>HSBC is not liable for the acts or omissions of its sub-custodians <LI style="MARGIN: 0in 0in 0pt; tab-stops: list .5in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; mso-list: l1 level1 lfo1" class=MsoNormal>The locations of the vaults of the sub-custodians are not disclosed <LI style="MARGIN: 0in 0in 0pt; tab-stops: list .5in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; mso-list: l1 level1 lfo1" class=MsoNormal>Neither the Trustee or HSBC monitors the activities of any sub-custodians
  • Analysis of the allocated bar listing revealed duplicated bar numbers

    See http://news.goldseek.com/GoldSeek/1235052376.php
Caveat emptor with gold spread betting, CFDs, derivatives and ETFs - not for widows and orphans, despite what the marketeers might say.
 
Sorry bullet points not coming through!

Primary criticisms of the main gold ETF (GLD) are:

-The key custodian, HSBC, can use sub-custodians and even sub-subcustodians
-HSBC is not liable for the acts or omissions of its sub-custodians
-The locations of the vaults of the sub-custodians are not disclosed
-Neither the Trustee or HSBC monitors the activities of any sub-custodians
-Recent analysis of the allocated bar listing reveals duplicated bar numbers
 
Soros: Gold Not Safe Anymore
by Paula Schaap ,Senior Reporter , September 16, 2010


Hedge fund manager George Soros said, despite his play in gold, that the precious metal wasn’t a safe bet anymore.

Speaking at a conference sponsored by Reuters, Soros warned while the commodity could go higher, it’s the “ultimate bubble.”

Soros has been calling a gold bubble since the start of the year. Yet, at the same time, he has invested heavily in gold ETFs through the SPDR Gold Trust and in gold mining companies, according to regulatory filings.

Gold prices were up to a new high early Thursday morning, at $1,278 per ouce.

Butn Soros said, in times of economic uncertainty, what he really prefers are plain vanilla blue-chip stocks with steady dividends.
 
smiley said:
Soros: Gold Not Safe Anymore
by Paula Schaap ,Senior Reporter , September 16, 2010

Butn Soros said, in times of economic uncertainty, what he really prefers are plain vanilla blue-chip stocks with steady dividends.
Click to expand...

Can't beat blue chip, high yielding, cash rich, defensives currently.

Cheapest since 1950 according to some estimates.

That and 10% in precious metals.
 
i was thinking to invest about 2.5 k in a Gold ETF, and over the next few years want diversify into Home and emerging markets...

would anbody care to point to a broker? gold bullion securities?

thanks,...
 
Its interesting to read Jeremy Granthams (GMO) latest views on gold from his latest quarterly newsletter

Religious wars (or, Should we buy gold?)

Everyone asks about gold. This is the irony: just as Jim Grant tells us (correctly) that we all have faith-based paper currencies backed by nothing, it is equally fair to say that gold is a faith-based metal. It pays no dividend, cannot be eaten, and is mostly used for nothing more useful than jewelry. I would say that anything of which 75% sits idly
and expensively in bank vaults is, as a measure of value, only one step up from the Polynesian islands that attached value to certain well-known large rocks that were traded. But only one step up. I own some personally, but really more for amusement and speculation than for serious investing. It may well work and it may not. In the longer run,
I believe that resources in the ground, forestry, agriculture, common stocks, and even real estate are more certain to resist any infl ation or paper currency crisis than is gold.
 
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