Tradefair & Financials
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Woner if someone could give me some advice about the pros and cons.
If i did buy gold it would be with money i dont need for the medium to long term so thinking more 5 to 10 years plus down the line.
I know its cheaper to buy gold and it being kept for you but i would probably want to keep it myself. It would be nice to look at now and again.
I would probably go for gold coins so i can easily hide them round the house.
One thing that i dont like is the fact there is about a 9% margin in the difference between the buy and sell price which means your down 9 % as soon as you buy the gold.
What i really want to know is in say 10 or 20 years what would the maximum upside and downside be in terms of value if i got say £20,000 worth of gold sometime soon.
From what i can gather from looking at the main factors which affect gold prices the biggest upside in value would come if we lived in a mad max style world. However, that is not something i would hope for!
If i did buy gold it would be with money i dont need for the medium to long term so thinking more 5 to 10 years plus down the line.
I know its cheaper to buy gold and it being kept for you but i would probably want to keep it myself. It would be nice to look at now and again.
I would probably go for gold coins so i can easily hide them round the house.
One thing that i dont like is the fact there is about a 9% margin in the difference between the buy and sell price which means your down 9 % as soon as you buy the gold.
What i really want to know is in say 10 or 20 years what would the maximum upside and downside be in terms of value if i got say £20,000 worth of gold sometime soon.
From what i can gather from looking at the main factors which affect gold prices the biggest upside in value would come if we lived in a mad max style world. However, that is not something i would hope for!
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Think how many people now know there could soon be gold at your house.
If/When you buy some are you going to make it even easier and put a flag on your roof? [pre] PHYSICAL GOLD HERE I I I I \/ [/pre] |
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how many people can tell by reading the thread where his house is?!
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i can
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well its probably as good a store of wealth as any in these uncertain times but in all honesty at the end of the day u cant eat a piece of paper with the queens head on it and u cant eat a gold coin. at the end of the day its a bubble like every other investment
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at the end of the day
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Paddletoe
Although gold has increased in value , its performance in comparison to equity markets during the past 12 months has been poor! |
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The only asset to make new highs since the financial crisis.
Poor showing Gold. |
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at the end of the day u cant eat a piece of paper with the queens head on it and u cant eat a gold coin
yes but u can always trade that gold coin for bread..you have been able to for thousands of years and you will be able for a thousand to come - cant say the same about fiat money can you? Bottom line is mate if u study the history of money man has tried in vain countless times to operate a monetry system without gold and failed every time.. i cant see any reason why we're different this time As for a bubble? Think of 50 people you know... ask yourself how many of those people own gold? when your mates, family, people at work and the like start talking about owning gold.. then u might consider a bubble forming, but at that time gold will be well north of where it is now. |
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u dont need half the world to have invested for it to be a bubble. i speak as a gold investor but at the end of the day its gone up in value because its more in demand. whether that demand will be there in the future its very hard to know
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I've been long Gold for a while and have just taken physical delivery of some. Unless you have a lot of cash and want the physical for credit risk and financial collapse protection, then stick with futures rolled on a spreadbet (tax free) or an ETF. If you want physical for the previous reasons, you're right to buy some relatively smaller pieces (in terms of your total investment) as you might need to barter them in the unlikely even that all the economies collapse.
In terms of prices, I wouldn't think of holding it for 10-20 years. It's a good investment when it's good and it's bad when it's bad. It barely outperforms cash unless you include the spike years in the 70s and early 80s. We're having a spike now which I expect to go to at least $1400 this year and peak at either $2000 or $5000 if we have a double dip. Once it's gone down consistently for 9 months or so, I will probably exit it entirely assuming that is at least two years away. When it goes down, I think it will bounce off around $500, but that will not be before 2015 in my view simply because of the reflation policies going on and the upcoming Prime crisis (following the sub-prime...). |
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Yes Goring i saw you took delivery of a dozen gold bars on another thread. Out of interest may i ask why you bought bars rather than krugerands as the later would seem easier to sell in whatever quantity you wished.
If the worst came to the worst it would be a lot easier and economical to barter with krugerands than an expensive gold bar. |
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I'd already bought them a while ago but had them in the vault. I would have had to pay a spread to change over so I didn't bother. I'm also figuring I'd have time to leg out of a few if it went Mad Max, but in short it's probably a mistake.
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I'm still a dip buyer so I'll get 1oz or 100g tablets next time - the bulk buying prices are pretty good once you buy a 1kg total or so anyway. I'm also easy about being long the physical because if the bubble breaks, it's easy to lob out a futures hedge and it's likely to be a less scary environment in terms of inflation/mad max if that happens. If it goes bad on the way up, you have nothing to buy them with etc.
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gold is a bubble but its a bubble that is hard to see bursting in a spectacular way coz we all know the world economy is fecked due to high oil prices and that aint gonna change
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The high oil prices are caused by the same thing that is causing all the high prices - low interest rates. Too low, too long.
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I have also being thinking about buying some gold for the long term. A mix of sovereigns, kregerrands and some small ignots. As part of a varied portfolio i reckon its a good idea.
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3 main ways to own gold:
1. bullionvault where they store it for u safely 2.Physical gold ETF like PHAU 3. Physical gold in your house. You can buy bars easily from Bairds I am holding gold because I fear for the long term value of sterling and other fiat currencies. Gold will maintain its purchasing power as it has done throughout history. |
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Unless you bought it in 1980-82 when you got muellered...
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Palladium going for it this last 24 hours. :D
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upside = could be worth more than you paid.
downside= could be worth much less than you paid. |
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Alternatively, moneytree.
downside - only $1150 upside - unlimited, probably... |
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The high oil prices are caused by the same thing that is causing all the high prices - low interest rates. Too low, too long.
I really dont think so Goring! You still shorting the FTSE? I love it that investors in Gold are so focussed on one thing..Financial Meltdown! If you had come out of Gold last year and invested in Equities, particularly miners etc your returns would have been astronomical. You do know that you can take profit dont you ? Hence the mini dips on the FTSE, DOW..Onwards and upwards then! |
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Oh and in cas eyou want evidence, do you not think it ironic that as the oil price rose so did Interest rates. The price of oil actually fell when rates were cut.
It fell too far, and has regained some of its losses. Admittedly , I am concerned that th emedia.markets are talking the price back up! There is no shortage of the stuff after all! |
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chisel 22 Apr 14:48
You still shorting the FTSE? Yes, it's down 50 points today. I love it that investors in Gold are so focussed on one thing..Financial Meltdown! If you had come out of Gold last year and invested in Equities, particularly miners etc your returns would have been astronomical. You do know that you can take profit dont you ? Hence the mini dips on the FTSE, DOW..Onwards and upwards then! If you've only got a few bob I guess you have to put all your eggs in one basket. I have been long equities for a while (and gold) and am making a better correlation adjusted return as a result. Oh and in cas eyou want evidence, do you not think it ironic that as the oil price rose so did Interest rates. The price of oil actually fell when rates were cut. No because interest rates are responding after the fact as they're set by little old men instead of the market. It fell too far, and has regained some of its losses. Admittedly , I am concerned that th emedia.markets are talking the price back up! There is no shortage of the stuff after all! There's no shortage, but there's even a greater abundance of greenbacks, hence the 'rise' in both oil and gold. |
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Chisel - the HUI (Gold Miners Index) bottomed in October 2008 at 150, it is now at 425, an increase of 183%.
If you want to use your Tardis to make investments, then Gold Miners are right up there. We don't all have it buried at the bottom of our garden you know. |
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I BOUGHT A LOAD LAST YEAR, WILL BE WORTH LOADS IN 10 YEARS.
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MONEY TREE tips gold? Uh oh!
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everytime i trade gold i lose money so dont listen to me.However if you buy gold long term you gotta keep it and not trade it.Long term you need physical delivery now not derivitive or trading instruments.Why? Because gold has long flat periods punctuated with spikes.If you miss one of those upward spikes you will miss a large part of the return.
I dont like gold as an investment because it just sits there, no divis, no rent, no interest.!0 year hold is a long time.Consider the compounding effect of interest etc.Consider the risk it may fall.My view is that cash will beat it once compounded.Just as it is possible gold will rise so too is it possible interest rates will rise. The downside of interest is tax.I imagine it would be easy to cash gold in with no tax.Not same interest. The reality is that all long term investment classes are showing poor returns.Pundits are saying that stocks have had a huge run.Only if you bought somewhere near the bottom.Long term holders are still behind 2008 prices and will be for a while.Real estate long term holders are behind.Gold long termers are finally in the black for a while now after 20 years of blot. But if your buying now to become a longtermer- best of luck. |
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Mr B
What do you considr a long term holder??? I am a little confused as a LOMG TERM HOLDER of property would surely be well ahead! We are talking 7 - 10 years right? I agree with you on gold, I think there are better places to invest for a) a speculative punt and B) a long term return with relatively low risk.. But , I must admit that a lot of your posts appear to suggest a long term holder is someone that has invested in teh last two years.. Can you clarify please Goring I have little doubt that you are a sensible investor. You obviously have the cash to play with so good luck to you ! i am of teh opinion that governemnt support is here for a long while yet. GDP fell 6% , and we have got 0.1% of it back. Our economy is based on GDP increasing year on year, tis is the only way we can fund our deficit and our public services. The only way to get this back is long term low interst rates.. Inflation is an issue, but I am convinced that with unemployment, lower wages, smaller bonuses , paying down debt , people will continue to excercise care with their money. I know I am! |
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I agree almost entirely with that last paragraph. Low rates is another way of saying, "inflate" or print money. Whether or not it finds its way into the restricted CPI basket in the short or medium term is one question, but the thing about Oil and Gold is they ain't finding more of it at the same rate as they're printing money. One way or another, this is the main and common reason for the increase in those prices.
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hisel 23 Apr 18:36
Mr B What do you considr a long term holder??? I am a little confused as a LOMG TERM HOLDER of property would surely be well ahead! We are talking 7 - 10 years right? I agree with you on gold, I think there are better places to invest for a) a speculative punt and B) a long term return with relatively low risk.. But , I must admit that a lot of your posts appear to suggest a long term holder is someone that has invested in teh last two years.. Can you clarify please As you know chisel i'm a trader not a long termer.Yes I would agree 7-10 years is long term.My main issue with alledged long term returns are they are somewhat illusory.They also do not consider opportunity cost nor are they compared to compunding cash.Most long term returns come from spikes in value.If you are not a holder during that spike you miss a large amount of the returns.I often wonder if there is any analysis of if an investor sold after the spike and moved to the thing that has been flat for a period of time what the results would be. Examples- sydney real estate peaked in 2003 and was virtually totally flat untill mid 2009 to now.The total rise if you bought in 2003 to now is about 2% capital gain a year.If you took interest costs off you are wayyyyy behind even though prices have risen 20%.If you bout stocks in 2003 you would have about a 12% per annum gain here in aust up to date.However if you bought 2006/07 you are about breaking even.2007./08 you are about 20% down. Now you have you money invested you could have had it in cash.This point is often ignored when quoting gross returns. Here is my own real life example. Bought a house here in brisbane for 269,000 in 2003. Currently valued at 450,000. So i'm 181,000 in front- right? Actually if i sold today the result would be 181- buying costs 9k, minus sellingcosts 15k, minus interest paid approx 70k= 87,000 divided by 7 years= 12,500 a year. A gain of about 4.6%.Not much different from cash. My other house bought in 2006 is about 5.5% return. If you buy gold today at 1150 where will it be in 5 years? Its quite possible its still 1150.It may spike in 1 year or 8 years you don;t know Most hard assets will rise in the long term.They need to rise to justify the investment.My point is for all the extra risk are they really much better than cash?There are plenty of share investors who wish they were in cash.Plenty of usa property holders who wish they were in cash.Plenty of uk property holders who wish they were in cash. |
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Mr Bean your net capital gain on the value of your house over 7 years were you to to sell it now does not take into account 7 years rent whether its a tenant paying that rent or if your living in the house. If your living in the house surely you have saved 7 years rent which must be added into any capital gain on the house.
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P.S, sorry for spelling your name wrong. I was not trying to compare you to our own Mr Bean over here. It was a genuine typo.
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Plenty of uk property holders who wish they were in cash.
i doubt that |
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yes paddle in part your right.WE lived in that house for a few years first then rented out.Rental returns here are yielding about 4% and falling due to falling capacity to pay, rising living costs govt charges etc.Also if the house was sold it would be subject to 24% capital gains tax.Also you lose 40% tax on net rent.I did'nt calculate it but it may add a bit to say 6 or 6.5%. Hardly exciting.
Considering the extra risk involved such as long term maintenance- which I have'nt had to spend yet, the returns above cash are just not there. |
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Paddletoe
I agree with you Mr B . The example of a house is a ridiculous one I am afraid. I like your style, and good luck to you , but you are a short termist. The point is that people are not happy being "in cash" as interest rates are so low and inflation high in comparison. Your argument is simply**ers. It is lucky however, that you ARE making money with your investments! |
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Gold now up 2% since 22nd, equities flat (Dow).
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breaking new records
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I've got a bar out of storage to stroke today.
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