GOLD- the only true currency?

sabretoothtigger

It would require recognition of what situation fits what quote and when.
Theres a point where you look at everything and you weigh up the risk, where to put a stop loss and thats when you might appreciate a quote like that

ten.sbih

For what it's worth I hold Berkshire Hathaway stock and also have a short gold position. Clearly, I am a big fan of Buffet but my short gold is not because of his views but because I personally feel gold is currently expensive and once an appetite for risk returns a lot of money will leave gold and head to other assets.

I also have a long oil position. That is one commodity that looks cheap in comparison to gold.

Time will tell if my hunch (and it is no more than that) will play out.

mike22

Lol_UK wrote: »

Right now I'd rather hold 100k in gold than own a 100k house (I wish I had either!)..which do you think is more risky?

Neither, you already have the gold, so buying more won't get you anywhere. But, selling it and putting the money into a property, is the question you have to ask it to yourself.

If I were you, I'd give this a serious thought, as the houses prices are down, and the gold price is relatively high.

Blah99

cloud_dog wrote: »

I always like these quotes........... so is the finacial adviser is basically saying any investment where you do not receive income is gambling. Hmmmm, wonder how many stocks I / people hold that do not generate income for me?????

I think you misunderstood the quote. He is referring to how gold (and similar commodities) bring gains and losses based on market speculation. This is contrary to (for example) companies, who create a product and have an income stream. Income in the quote doesn't refer to the investment, it refers to the instrument.

cloud_dog

Blah99 wrote: »

I think you misunderstood the quote. He is referring to how gold (and similar commodities) bring gains and losses based on market speculation. This is contrary to (for example) companies, who create a product and have an income stream. Income in the quote doesn't refer to the investment, it refers to the instrument.

No, I did understand (thought I was stretching it a bit far) but............. all investments are speculation.

The price rises dependant on supply and demand. Ok, the driver that causes demand may be different, i.e. a stock/company producing goods/services is rolling in it then investors will want to own some of that because of the rewards.

In simplistic terms is that any different to gold, or any other commodity/investment???

sabretoothtigger

It is different where the shares pay a dividend because gold will never do this

However companies are in a mess, they are losing income, they cannot pay dividends as much if at all. In comparison gold is not half as bad when shares fundamentals fail


Here are blue chips, the groundrock of the economy:

http://www.digitallook.com/news/2630640/Dark_day_for_dividends.html


Maybe you should buy stocks only when gold falls 20% from its high and enters a 'bear market'

When it comes to fundamentals, the picture is not so encouraging for silver. Barclays is forecasting a drop of 4.7 per cent in industrial demand this year, a decline of 4.2 per cent in photographic demand and a small fall of 0.4 per cent in jewellery demand.

At the same time, the bank expects an increase of 3.5 per cent in silver mine supply to 22,997 tonnes in 2009 and the overall supply surplus to increase from 1,014 tonnes in 2008 to 2,513 tonnes this year.

“Despite the strength in physical investment, we still expect the market surplus to grow in 2009,” says Ms Cooper. “Should speculative enthusiasm ease, prices could encounter growing downside risk.”

Barclays is forecasting that silver prices will average $11.80 an ounce this year. It is not the only investment house to predict that prices will fall from current levels.

Natixis forecasts that silver prices will average $12.50 in 2009, down 17 per cent year-on-year.
Hussein Allidina, commodity strategist at Morgan Stanley, forecasts an average price of $11 an ounce.

http://www.ft.com/cms/s/0/d71f3a6a-029b-11de-b58b-000077b07658.html

cloud_dog

sabretoothtigger wrote: »

It is different where the shares pay a dividend because gold will never do this

My point being that people buy shares because some of them pay dividends or because they make profits but, the bottom line is that the underlying value is in demand for whatever reason and the same can be said of gold.

Gold has been rising for a number of years - why, because it is in demand. It does not matter what causes the demand, whether it produces anything, whether it provides an income, etc, etc.

Gold will fall in value at some point and that it liekly going to be because the demand for it lessens.

People talk about it being 'a bubble' but that's just them trying to feel superior. Any asset will rise and fall, call it a bubble if you wish. The bottom line is that as 'the money' moves between asset classes, and within classess, the recipient will rise the loser will fall.

Surely isn't it as simple as that.

sabretoothtigger

A bubble would be when people ignore fundamentals of an investment because it doesnt seem to matter at that point.
I think shares, bonds and commodities are fundamentally different to each other.

however unlike houses its not like you will have trouble getting cash for gold any time you feel like

cloud_dog

sabretoothtigger wrote: »

A bubble would be when people ignore fundamentals of an investment because it doesnt seem to matter at that point.
I think shares, bonds and commodities are fundamentally different to each other.

Yes, absolutely, as the great line says............ "They (sic) are all different" but a bubble will occur wherever the money goes, stocks, commodities, bonds, houses, elephants, etc, etc., i.e. demand?

As much as people want to build in complexity, isn't it that simple?

Blah99

cloud_dog wrote: »

Yes, absolutely, as the great line says............ "They (sic) are all different" but a bubble will occur wherever the money goes, stocks, commodities, bonds, houses, elephants, etc, etc., i.e. demand?

As much as people want to build in complexity, isn't it that simple?

It's not demand alone that produces a bubble, it's scarcity. That's an important distinction, and you need both. There would be no gold bubble if we could all dig some up in the back yard, because there would be enough resource to satisfy demand. It's the same with oil - the price rises on speculation of scarcity due to, for example, a refinery fire or middle east conflict.