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putting money into gold ?
deb788
Posts: 167 Forumite
Hi . my mother is selling her house and is looking for ways to invest the proceeds . I wondered if anyone knows anything about investing in gold or precious metals in general ie the process , risks etc..
many thanks
many thanks
0
Comments
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The process is simple:
- Buy physical and take delivery
- Buy physical and pay someone t ohold it securely for you
- Buy in to a fund which is (really) backed by physical
- Buy in to a fund which holds (in essence) IOUs for the amount
The risk of investing PMs or metals is HUGE :eek:Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Not only is the risk very high (as with all commodity trading) but you also have a large opportunity-cost.
That is, not only is it a non-income producing asset, but you generally have to pay someone to store it.
simplistic, but lets say you put £1000 in gold, and £1000 in a FTSE100 share yielding 4%
After 1yr both the share and the gold have lost 10% of value;
Your gold is worth £900, and lets say you've paid £50 for the storage, so your loss is 15%.
Your shares are worth £900, and you've received a dividend payment of £40, so your loss is 6%.
The only way you can make money from gold ownership, is by hoping you can sell it to someone who thinks it's worth more than you did when you bought it. Craziness.I am an IFA, but nothing I say on this forum constitutes financial advice. Always draw your own conclusions and always do your own research.0 -
Why would you want to buy an asset that has increased massively in value and could be judged to be overvalued?
I'm sure some people in 2006/7 looked at the property market, the huge returns that others had made and wanted a piece of the action. I would guess that in many areas they would now be regretting buying at a peak in the market.
Others may be wary about investing in shares at the moment when the market has been so low and so volatile. You could argue that investing when it is low is the best time to buy.Remember the saying: if it looks too good to be true it almost certainly is.0 -
I sold my gold at the peak, but still have some gold miners and funds. The buy/sell margin in physical gold is about 5%.0
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I hold gold, but would not buy now.
And your mother is i preume not in a [position to speculate? How old is she? Is she retired? In not, when will she? Does sh have a pension? When will she need the money (Ie for another property)? If she isnt' buying another hosue, where will she live? REnt will soon eat into her capital.0 -
Richcountry wrote: »In year 1980, Silver was £32 an ounce. So in today's money Silver can reach £1270 or more an ounce.
Buy Silver you will earn high profits.
What happens if you eliminate the last 7 years, what are the profits then?0 -
Richcountry wrote: »In year 1980, Silver was £32 an ounce. So in today's money Silver can reach £1270 or more an ounce.
Buy Silver you will earn high profits.
What are you on about?
Silver is trading at £20 an ounce. Which means you've made a 30% or so loss, before you consider that prices have doubled since then. So your loss is well over 50% in real terms!“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0 -
Given the ongoing Eurozone crisis with ineffectual leadership, and inflation caused by QE, I think there is a place for gold in a portfolio in the short term. However even Money Week magazine who have long been hard core gold fans only suggest it makes up a small part of your portfolio, perhaps 10%.
In the longer term when the crisis is finally behind us I think gold will look expensive and there will be a grand selling off.
That's just my view. Whatever yours is it would be crazy to put the entire value of a house into precious metals. That really is putting all your eggs in one basket.0 -
Buffett in 1998 at Harvard: "It gets dug out of the ground in Africa, or someplace. 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."
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When things are normal only keep 10% in gold and silver for safety.
Things are not normal now, anything but. For safety in this environment far more than 10% in gold and silver is best.
Why do you think they say be careful dont put any more than 10% in gold and silver? Because they are nobody elses assets but your own once you have taken delivery. Nobody can make money from you like derivatives and paper investments.
The above sums it up for me.And of course, the world's greatest investor, Warren Buffett, is not a fan of gold. "If you take all of the gold in the world and put it into a cube", said the billionaire earlier this year, "it would be about 67 feet on a side and you could get a ladder and get up on top of it. You can fondle it, you can polish it, you can stare at it. But it isn't going to do anything."
http://www.fool.co.uk/news/investing/2011/10/26/what-now-for-investors-who-hold-no-gold.aspx?source=uhpsitima0000001
realmoney - please stop digging up old gold threads, it really is a pain.I am an IFA, but nothing I say on this forum constitutes financial advice. Always draw your own conclusions and always do your own research.0
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