investment in gold

Masomnia

Browntrout wrote: »

Looking good for the Short Bullion ETF (SBUL)

How did I not know that existed!? I'm always saynig gold is overpriced, set to fall, that I'm yet to convinced that we are heading for significant inflation...

Think I might put my money where my mouth is.

gozomark

DiggerUK wrote: »

I think that gold under 600 pound an ounce is never coming back .

one to pin on the wall for future reference - another sign we are in a bubble is when the word "never" is used.

stv1x

gozomark wrote: »

one to pin on the wall for future reference - another sign we are in a bubble is when the word "never" is used.

How about we pin this one to the wall for immediate reference when gold was at just under £600 oz back in February. Your response was to the question 'Is there anyone whom thinks it cannot do anything but go up over the next 12 months?'

gozomark wrote: »

yes, but not me

http://forums.moneysavingexpert.com/showthread.html?t=1478623

gozomark

And I stick to it - anyone who says anything can only go in one direction is deluded, as is anyone who thinks a volatile asset will never ever, for all eternity, drop 50% from where it is now. Who knows what the future will bring.

Now if the question last Feb had been is it likely to go up over the next 12 months, then I would have said yes, it probably (ie more than 50% chance of happening) will, whereas I'd now say it will probably decline over the next 12 months.

cloud_dog

Oh, how I enjoy a good read, and there's nothing that drives peoples emotions more than gold (in the financial world).

It never ceaes to amaze me how people cherry pick the bits they want to critique so they can talk in terms of absolutes. I think people have been deliberately mis-quoting Digger - shame on you.

People discuss and confuse the understanding that gold will always have a value (what that value is will be determined by the currency value), but that it 'tends' to maintain its relative value - not sure anyone can argue that. If you try please dont regurgitate the same old stuff about price action over the last 30 years.

People are happy to accept that a stock or index will never go up in a stright line and yet they appear to be sooooo certain that gold should.

I would simply ask the question why are growing economies buying gold? Why, if gold has no value, is an antique (in the financial world) has India just bought 200 tonnes, China are slowly accruing gold, same for Russia. And, following on from this why are the aware economies safegurding resources? (lots of Q's I know but there ya go).

Why, because I beleive we are in an environment where assets will increase going forward. The pull back in the gold price is one I am happy about, is healthy, and very much welcomed.

Don't be emotiomnal about your finances.

sabretoothtigger

When they were building the pyramids about 4000 years ago in ancient egypt, it took a similar amount of gold to buy a field of corn that it would do right now.
Thats some real consistency and the long term limited supply of gold is what makes it valued as a finance measure.
When the worlds main currency is so uneven it is a natural effect that we revert back to a longer term way of trading between countries which would be commoditys. Hence gold is more highly valued as it takes up a purpose

And I stick to it - anyone who says anything can only go in one direction is deluded,

Gozo you would be or are correct. I dont think gold value has really risen in 4000 years, its average gain or loss amounts to nothing apparently.

Except we have to consider why gold is rising at all and its not due to economics. In a fair balanced system we would have deflation as well as inflation but the last time this was true was back in Victorian ages probably.
The reason why the price is biased or skewed to the upside is politics and the benefit to politicians of inflation is it reduces government debts and moves wealth from private holders of currency to the printers of that currency.
The BOE is buying government gilts and funding gordon browns budget deficit, his administration is the main beneficiary of currency devaluation

That dynamic is going to continue and as long as it does and probably some time after because money supply effects are not immediate I dont think. So gold is a growing market and its demand is increasing. Any time I look at an investment I look for growth in its market demographic or country or prospects in some way so we've got 400m people in usa and 60m here who will want to avoid currency devaluation so that is growth

The inflation adjusted price in 1980 was 2800 dollars, so thats alot of leeway still.

Gold is a long term purchase though, the price could well go down for a year for all I know, I just think it'll make a new high not long after

henryg_2

Aegis wrote: »

I think this is the worst possible reason to invest in something. It's all well and good if the fundamentals support that growth and more, but more often than not when something shoots skywards it's being buoyed up purely on sentiment. Gold doesn't generate an income, industry demand is actually down from this time last year and more and more is dug up and released into the market each year. There's no real reason for the price rise other than the fact that it's seen as a hedge against all the current market turbulence. As soon as confidence returns to the market and large institutions start selling their gold to get into other assets, the bubble will burst, and huge losses will end up being imposed upon people who bought towards the end of the upwards swing.

I believe that today Goldman Sachs increased their prediction of where the spot price of gold will be in about a year, and it's still more than $200 lower than where it currently stands.

Be very careful, you stand to lose a lot and could end up with an asset worth much less than you bought it for that produces no income and which turns over no business to justify large increases in real value.

Precisely. Good to look beyond the hype to know what's really going on before throwing your money down.

DiggerUK

Aegis wrote: »

I believe that today Goldman Sachs increased their prediction of where the spot price of gold will be in about a year, and it's still more than $200 lower than where it currently stands.

I had not noticed that gold went to more than US$1600 at any time this year, I must have been out that day.
Are you making this up, or just poor at sums.
According to the Financial Times, this is what Goldman said.

"Goldman Sachs’ gold forecasts now stand at $1,200/toz, $1,260/toz, and $1,350/toz on a 3-, 6-, and 12- month horizon respectively, with an average price forecast of $1,450/toz in 2011."

http://blogs.ft.com/money-supply/2009/12/04/goldman-prices-in-a-gold-bubble/

Aegis

DiggerUK wrote: »

I had not noticed that gold went to more than US$1600 at any time this year, I must have been out that day.
Are you making this up, or just poor at sums.
According to the Financial Times, this is what Goldman said.

"Goldman Sachs’ gold forecasts now stand at $1,200/toz, $1,260/toz, and $1,350/toz on a 3-, 6-, and 12- month horizon respectively, with an average price forecast of $1,450/toz in 2011."

http://blogs.ft.com/money-supply/2009/12/04/goldman-prices-in-a-gold-bubble/

My mistake. They moved it from the lower estimate to more or less the price it's at now.

Still not a great forecast when other investments are actually predicted to grow in real value.

sabretoothtigger

other investments are actually predicted to grow in real value.

gold has outperformed shares for about 4 months now and longer term over 2 years also