Why on earth would anyone buy gold. What can you do with it and just Why really?

kennyboy66_2

!!!!!!? wrote: »

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Or are you perhaps suggesting that people should be forced to either hold all their wealth with those ever-so-responsible banks or else buy property and MEW against it to stimulate the economy :rotfl:

Just putting the opposite view on something which has always been prone to feverish speculation, a bit like housing say (perhaps you are too young to remember the last "gold rush" in 1979-1980).

It pays no income & you often have to pay someone else to look after it!

If anyone can demonstrate that it has been a better long term hedge against inflation than equities or land they I could be persuaded to hold it.

WTF?_2

kennyboy66 wrote: »

Just putting the opposite view on something which has always been prone to feverish speculation, a bit like housing say (perhaps you are too young to remember the last "gold rush" in 1979-1980).

It pays no income & you often have to pay someone else to look after it!

If anyone can demonstrate that it has been a better long term hedge against inflation than equities or land they I could be persuaded to hold it.

As I said, the trick is NOT to buy at a peak of speculation. Just like houses. The price is bobbling around so much at the minute that you have to be careful what level you are buying in at. The idea is to hedge with it as an insurance policy.

Of course, if you out and out want to use it as an investment with the aim of generating cash revenue then welcome to the world of speculation where anything can happen.

rl290

lotto-dreamer wrote: »

I've always believed that gold was the asset to have in hard times but never really understood why.

Having done a little googling it seems that America adhered to the 'silver standard' while Britain had the 'gold standard'. I know Britain sold off most of its gold reserves at some point.

Read The Wonderful Wizard of Oz - it's all about the proposal to bring silver alongside gold to back the Dollar in the 1890's! For more information:
http://en.wikipedia.org/wiki/The_Wonderful_Wizard_of_Oz#The_Gold_Standard_representation_of_the_story

the "Yellow Brick Road" represents the gold standard, the silver slippers (in the film ruby) represent the sixteen to one silver ratio (dancing down the road). Many other characters, and story lines represent identifiable people or circumstances of the day. The wicked witches of the east and west represented the local banks and the railroad industry, both of which drove small farmers out of business.........

R

mr_magoo_5

I remember I enquired about Silver several years ago; it was about $4.50 an ounce.
I considered their low value coins would be more useful, if indeed it did become messy.
Unfortunately, because I would have had to pay 17.5% purchase tax, I pulled out.
Oh well, looks a good price now!

lotto-dreamer

rl290 wrote: »

Read The Wonderful Wizard of Oz - it's all about the proposal to bring silver alongside gold to back the Dollar in the 1890's! For more information:
http://en.wikipedia.org/wiki/The_Wonderful_Wizard_of_Oz#The_Gold_Standard_representation_of_the_story


R

That's fascinating - never heard of that before. I'll have to do a little more delving re the author (never quite got on with the book but looking at it in a new light could be interesting)

kennyboy66_2

I'd never heard that about the Wizard of Oz - it sounds a bit like academics with too much time on their hands.

I do remember when a crown (5 shillings) used to be known as a dollar, because (I presume) at some stage the exchange rate must have been fixed at $4 to £1

lotto-dreamer

Here's an interesting snippet!

"There are people who probably hold bank shares that would have been seen as conservative investments and you could question what they are going to be left with"

"If the couple need money they simply sell some of their gold - it can be sold by the gram, currently about £16 - and the funds are deposited in their bank account the following day"

http://news.bbc.co.uk/1/hi/magazine/7657178.stm

dopester

Realy wrote: »

The only thing I could think of against holding gold would be when it's held for financial Armageddon, the chances are the times would be lawless and desperate.
In which case you may be killed or beaten for it.
Also if you had not had a drink of water for three days when you come to buy a bottle of water they might want all of your gold. In that situation preservation would take over so although your gold is far from valueless, it is to you if you want to survive.

To me you don't use gold bullion during the bad times, to trade for anything... except you can for gold jewellery and odd bits of gold. For bullion you don't offer it to anyone in exchange for anything.

Come the recovery, when things are improving and it is safe to sell, gold bullion (real or electronic) may have helped preserve some of your wealth. Gold bullion may of course tank in price or shoot up in price, but deflation/inflation it still has benefits, and is part of a balanced portfolio imo.

Realy

dopester wrote: »

To me you don't use gold bullion during the bad times, to trade for anything... except you can for gold jewellery and odd bits of gold. For bullion you don't offer it to anyone in exchange for anything.

Come the recovery, when things are improving and it is safe to sell, gold bullion (real or electronic) may have helped preserve some of your wealth. Gold bullion may of course tank in price or shoot up in price, but deflation/inflation it still has benefits, and is part of a balanced portfolio imo.

One thing I did not realise it is subject to capital gains tax.
Ageed it is good for a balanced portfolio, but surely it is worth more in the bad time and less in the good times.
Does not that make it a hard thing to get rid of (not in a financial sense but mentaly, EG should I sell it, it was worth £XXX and knowing its value would return again.)

LisbonLaura

Realy wrote: »

The only thing I could think of against holding gold would be when it's held for financial Armageddon,.

Good call

or did you guess the moment was near?