Gold anyone?

ReportInvestor

I make no apologies, not least to ZZR600.

Gold fell August 1995 - August 2003.

What did inflation do in that period :rotfl: ?

F_T_Buyer

I strongly suggest people research, and learn about monetarism, markets and cycles before putting money into Gold. The price can go up and down.

I put a *huge* amount of money in Gold last summer (some in Silver at the start of the year), and it has done well, very well. But don't expect it to be a one way bet, I wouldn't want anyone investing because of a thread like this (although I do expect it to perform well in the medium term).

As for inflation, the real rate is around 7%. This is based on the money supply being approx 13% (hence there is now 13% more money in circulation compared to this time last year), economic growth is 2.5% (ish) and the GDP deflator is around 3% (which is reported inflation), which equals around 7.5%.

This government, along with the Bank of England decided to pump the economy full of credit last year, which is the main reason why property prices to not collapse. The consequence of this is everything finite (e.g. house prices, oil/gas, gold) goes up in price.

I expect a point in the future (and it is near) where the public catch on to this inflation fiddle, and when that happens the BoE will be forced to raise interest rates. At this time, UK house prices will fall. If this is followed by the rest of the world (I doubt the USA will tighten much further) Gold will fall.

For most people here, try to avoid the biggest rises, and reduce your debt!

ReportInvestor

F_T_Buyer wrote:

I strongly suggest people research, and learn about monetarism, markets and cycles before putting money into Gold. The price can go up and down.

And it produces no income - unlike property, shares, bonds or cash.

So that naturally makes it more speculative / volatile.

F_T_Buyer

If anyone's interested, look what the world's largest economy (USA) is doing. This is the only article I can think of with a video link:

http://www.lewrockwell.com/paul/paul303.html

Click top right for video link, as most probably won't read all that.

Andybez38

Id rather invest in copper at the min. The copper price has gone through the roof lately.

richgirl

ZZR600 wrote:

Has anyone looked at investing in Gold?

It't up to $630/oz from $475/oz last October. That's up 32%. There's an account here that allows you to store bullion: http://goldmoney.com. Alternatively, you can buy coins from here:http://www.goldline.co.uk/goldlinedev/GC/Global/GLHomeFrame.ghtml

Any ideas?

Peaked at over $700

Looking at the chart , to me looks like its going to break lower to below $500.

I recall many years ago, stories about the japanese buying gold due to losing faith in the currency ! In the long-run gold looks a winner as signs are currencies are going to devalue themselves to keep pace with the devaluing dollar !

Though one problem with gold in the long long-run is that .... it does not pay dividends or interest over 20 years at 5% thats equivalent to an rise of 165% !!! Just to match income !

F_T_Buyer

ReportInvestor wrote:

And it produces no income - unlike property, shares, bonds or cash.

So that naturally makes it more speculative / volatile.

Yes you're quite right, gold produces no income, no interest is received. Infact, the yield on Gold is negative if you use the likes of Goldmoney because you have to pay to store it (although it is only about £9 per year).

Infact, it is wrong to say gold is even an investment as it produces no return whatsoever.

The reason gold has been always been valuable, is because Gold is a storage of wealth. No one can come along and magically produce gold out of thing air, hence devaluing your gold. Gold cannot be counterfeited, infact the only things denser than gold are things that are far more valuable and rare! Infact, if you put all of the gold on this planet in one cube, it would fit under the Eiffel Tower.

Ok, Gold is dug out of the ground, but this hardly keeps up with global population increased. Also, most of the future gold is already accounted for.

So why would anyone ever buy Gold?

You will always need a medium of exchange i.e. a currency. It would be impossible to go to a system of barter, as things never equal. What would you do if you wanted to swap a cow for 2.5 pigs (I don't want them killed)?

The currency here is Sterling, the great british Pound. But what is it? It's contolled by the Government (via the BoE) and they can create money by a few press of a button. So why hold it when it's value is constantly being diluted?

Even if you get a return on your savings account, the interest rate, does it account for the real inflation rate? If inflation is 4.75% and interest rates are 4.75%, you can buy the same thing in a years time as you can now. What do you do if inflation is 10%? Your money would buy less in a years time, this is when you want to store your wealth somewhere else!

The only thing holding up Sterling is faith, i.e your faith in our government. Sterling is a fiat (click) currency, If it gets devalued, you demand more through your wages, and the spiral goes up. The only way to protect the system is to give you more interest on your storage of wealth, i.e. your savings. This is when interest rates go up to attract me back to Sterling.

~

Like I say, there's lots of information on this subject, and you should do your research before putting your money where your mouth is.

Andybez38 wrote:

Id rather invest in copper at the min. The copper price has gone through the roof lately.

Copper has gone up for similar reasons, but it's hardly a storage of wealth. Where would I put £100k of the stuff? I'd need a few low loaders and a crane to move the stuff around. £100k of Gold weighs less than 10kg.

GW65

To all those who think that Gold is a sure-fire way of beating inflation...

In January 1980, Gold was at $680/oz. Today it's at $640/oz. So unless we've been through nearly 3 decades of gentle deflation, Gold doesn't look like such a good bet!

OK, so I've been very selective with the data, but it demonstrates that there are no guaranteed ways of beating inflation. None. Why? Because you can only ever know what happened in the past and can never know what will happen in the future.

As Niels Bohr once said: "Prediction is very difficult, especially about the future."

Spread your investments and spend at least some of your cash on things you can enjoy (and if they go up in value then what a bonus!).

richgirl

There is one guaranteed way of beating inflation

Government Index Linked Bonds.

gold has had a good run, 4 years ? , and now the gold bugs are talking about $1000, which suggests golds more likely to take a breather for a while at least if not longer

ReportInvestor

Andybez38 wrote:

Id rather invest in copper at the min. The copper price has gone through the roof lately.

IMF thinks metal prices could fall 60% by 2011 - Yesterday's Independent

They reckon prices are unsustainable and new production will come onstream.