Gold - worth a punt?

jon3001

kennyboy66 wrote: »

Possibly because when most comparions on investing are done, transaction costs are included if we are being consistent.

Of course with gold its conveniently ignored.

You don't think banks are loading their costs into the interest rate you receive?

But really I was talking about your point about gold not paying interest. Why should it? It's no one else's liability, unlike cash in a bank account which is a debt the bank owes you. We've seen how fragile that's been recently.

kennyboy66 wrote: »

Well done, gold has outperformed keeping pound notes under the mattress.

It outperformed inflation. That's its basic duty. People rebalancing as part of a wider portfolio would have done even better with their precious metal holdings.

kennyboy66 wrote: »

It hasn't even beaten cash in a bank or building society as a store of value.
Not to mention tax-free savings wrappers that have been available.

I'm sure you can pick various time frames to fit your argument. Allow me the same courtesy.

Has cash beaten gold over the past 10 years? With CPI inflation currently at 5.2%, most people will be receiving below inflation returns from their bank accounts. Given that many people's personal inflation rates are even higher can bank accounts be that good a store of value right now?

As far as tax goes, gold doesn't generate income as you say. So no tax to pay there. British bullion coins are also exempt from CGT.

jon3001

itsmickdundee wrote: »

If our economy is going down the duffer, there is very little you can do to protect your money. A better bet would be to own a house, rather than gold. [snip]

If it gets to the point where money is worthless and gold is one of the few things that still has residual value, do you honestly think this country - or even the world - would be in a state to even begin to make use of it? Riots, soup shops, no businesses, massive unemployment, countries going bust - but gold will be useful will it?

I somehow think not, especially considering how it's value has often plummeted during economic downturns. In which case, it is pointless owning it. If the Western economy fails, what would be more important in day-to-day living? Gold or food? Let's look at the above likely consequences to society should things get to such a stage...

Yes - if you thought things were going to get really bad then you'd stock up on dry/canned food, water and other essentials. Precious metals would be for rebuilding your wealth as things recover.

If things were so bad that you had to leave the country then gold is easily transportable. If you wanted to sell your house and emigrate during this hypothetical economic crisis, what would you accept as payment? Maybe you don't personally value gold but a lot of people out there do.

Traditionally silver has been the monetary metal rather than gold. And pre-1947 British coins had significant silver content. If the currency became suspect during a hyperinflationary period then shops and business would be looking for an alternative medium of exchange. Silver is a candidate. In Zimbabwe people were converting their dollars to cigarettes and alcohol.

itsmickdundee wrote: »

Think about it. All the media is assisting with is another classic pump n dump. As soon as the city boys reach their 1k-an-ounce target, in comes a big selling spree and all those private holders will be looking at losses, which they probably won't recover for decades... Remember gold has only recently rocketed in price. It had been in decline for 30 years, which I think says it all about whether it is a "good" or "bad" investment. The current increase in the value of gold is also why the city traders love private investors - they make them rich over and over again - and even when they fail - the private investor then coughs up his tax money too.

People piling into an asset at any particular price would be the most exposed to volatility and bubbles.

Anyone whose precious metal holdings are accumulated over the long-term as part of a wider, balanced portfolio would do better. As gold depreciates they'd buy more while it's cheap, possible using money from stocks that have appreciated in value. As gold appreciates they'd sell part of the holdings to buy undervalued assets - e.g. depressed stocks.

ianmr65

itsmickdundee wrote: »

If it gets to the point where money is worthless and gold is one of the few things that still has residual value, do you honestly think this country - or even the world - would be in a state to even begin to make use of it? Riots, soup shops, no businesses, massive unemployment, countries going bust - but gold will be useful will it?

Well i wouldn't have more than 5%-10% of my holdings in gold, but it's been the universal currency for ever, i agree you can't live in it... But if we do get to the martial law, riots, soup kitchen scenario, or if UK PLC goes bust, the banks shut up shop, and you have to leave the country in a hurry... (think Nazi germany 1938... not that long ago... or kosovo, lebanon ect ) Then having portable gold might make the difference between escaping and living, or ending up in a camp as an undesirable, or worse... as long as you're strong enough to hold on to it!!

Also it's pretty much doubled in value over the last year... so u win on both counts.

MiserlyMartin

itsmickdundee wrote: »

If our economy is going down the duffer, there is very little you can do to protect your money. A better bet would be to own a house, rather than gold. At least a house is a necessity that is almost guaranteed to always be in demand. And you'd need a lot of gold to make four walls and a roof out of it... Plus, historically and logically, the supply and demand of homes is a much more attractive proposition than the supply and demand of gold.

Last thing people want to do is buy a house! They are falling fast. If the economy really tanks they will be worthless. Houses are only of value if there is wealth near them and jobs. Without that they are peanuts. All the supply an demand arguements are bull. The foreigners are already going back home due to lack of work. There will be no demand instead, oversupply. There is a lack of affordable housing not a lack of housing - but that will change. Gold is the thing to buy in these times.

vigman

itsmickdundee wrote: »

Jesus christ. Some people really were born to be stupid.

It's a bit like the "pump n dump" bulls**t over the Iraqi Dinar. And yep, that too found it's way onto eBay after the war circa 2004 onwards with outrageous and completely unfounded claims, accompanied by a load of hard-sell spiel that a GCSE student could have knocked up, that its current face value had "plummeted" but when the oil starts flowing, the money will be worth a "fortune".

Sure it will. It's that black and white...

Well, I wish I had bought Kuwaiti Dinar after the Iraqi invasion! They too dumped to nothing and then went back to 3$!!!

I bought 1 million New Iraqi Dinar after the re-issue for 400GBP and they are now worth 500. If they go to 50 cents each in, say, 10 years time, I'll be happy enough;) . They have spent a fortune getting the UK printed paper money, so this actual currency will still be in use. There is a lot of oil there and the currency will have to go on the Forex one day IMHO.

Vigman