Investments - Gold, Silver etc,

Sarah920

While I like the concept of physically buying silver bullion and keeping it in my house, the chances of the government confiscating the contents of private safety deposit boxes in bank vaults (maybe less than a %), the chances of my student house being burgled (30%) tends to put my survivalist tendencies in perspective.

Regarding the gold holding of value - well, it does. Look at this graph showing gold prices from 1800 to 2000: http://www.wisegeek.com/what-is-the-historical-price-of-gold.htm I'm looking at a real long term steady investment there that is secure rather than lucrative.

I am a student and my income is volatile, but I have already taken that into account. The money that I am looking to put into more solid, medium term investments is money that I have already taken out of my more liquid assets.

jimjames

Sarah920 wrote: »

Regarding the gold holding of value - well, it does. Look at this graph showing gold prices from 1800 to 2000: http://www.wisegeek.com/what-is-the-historical-price-of-gold.htm I'm looking at a real long term steady investment there that is secure rather than lucrative.

I'm not sure how you are reading that link? It states "In January of 1980 the price of gold reached its peak [$887], and by the year 2000 the price dropped to $272."

That hardly shows that gold holds it value? According to that if you bought in 1980 you would have lost nearly 70% of its value by 2000. I know it has risen recently but when inflation is taken into account the current price is still less than in 1980. 30+ years to not even keep still in terms of value certainly isn't my idea of a long term steady investment. Imagine we are at the same point in the cycle as 1980 - would you be prepared to wait another 30 years to get your money back?

Masomnia

jimjames wrote: »

That hardly shows that gold holds it value? According to that if you bought in 1980 you would have lost nearly 70% of its value by 2000. I know it has risen recently but when inflation is taken into account the current price is still less than in 1980. 30+ years to not even keep still in terms of value certainly isn't my idea of a long term steady investment. Imagine we are at the same point in the cycle as 1980 - would you be prepared to wait another 30 years to get your money back?

Indeed, and the cost of living roughly doubled in that time.

So your investment is down 70% and your cost of living up 100%... Not good really.

I wouldn't say it's a medium term investment at all.

Applying that to your comment about waiting until today to get your money back, you'd still be way down on your investment after inflation and would've been better off keeping it in the bank. That is cherry picking the times you use for comparison, but it does highlight the fact that in no way is the return guaranteed; especially if you need the money at some point.

mike88

Sarah920 wrote: »

While I like the concept of physically buying silver bullion and keeping it in my house, the chances of the government confiscating the contents of private safety deposit boxes in bank vaults (maybe less than a %), the chances of my student house being burgled (30%) tends to put my survivalist tendencies in perspective.

Regarding the gold holding of value - well, it does. Look at this graph showing gold prices from 1800 to 2000: http://www.wisegeek.com/what-is-the-historical-price-of-gold.htm I'm looking at a real long term steady investment there that is secure rather than lucrative.

I am a student and my income is volatile, but I have already taken that into account. The money that I am looking to put into more solid, medium term investments is money that I have already taken out of my more liquid assets.

Sarah I think you are wrong. Using a 200 year graph to justify your savings intentions is clearly not that sound. A similar graph could be produced for holding shares.

If I understood your original post correctly what you wanted was a solid inflation busting investment that enabled you to sleep at night as shares made you anxious. You wanted something that would perform better than holding money in a Bank account.

Gold is volatile. In 2006 gold was priced at 500 dollars an ounce; in 2008 1000 dollars an ounce and in 2009 700 dollars an ounce. Now its around 1400 dollars an ounce.

Gold is not the inflation busting investment that you believe it to be. If you buy high as it is now and sell low when you might need the money a huge slice of your investment will be swept away. It is a volatile investment but best bought when prices are in a trough not at its peak. Buying gold is as much of a gamble possibly greater than buying a solid unit trust.

That of course is my own opinion. If I were to buy gold I would buy a unit trust that invests heavily in gold shares and there are plenty on here that do that.

Sarah920

Imagine we are at the same point in the cycle as 1980 - would you be prepared to wait another 30 years to get your money back?

Yes that's exactly what I'm saying. I don't anticipate on selling that gold for any reason other than sudden, unexpected poverty. I'm not wanting to buy it to make me money.

Gold is a commodity that people aren't going to suddenly lose interest in - same with silver. The only way you will never make back your investment, regard of fluctuations in the market, is if technology suddenly turns up a way of creating unlimited amounts of gold and silver for cheap.

I've spent a lot of time looking at the Hargreaves Landown ISA now, and I think it might be an option - however, I maxed out my cash ISA earlier this year, so I'll only be able to put £5100 in (I'm thinking a mixture of equities and absolute return funds, favouring absolute returns). Further ideas welcome!

lvader

Sarah920 wrote: »

Gold is a commodity that people aren't going to suddenly lose interest in - same with silver.

That is exactly what happened between 1980-2000. People have said exactly the same about property. Anything that appreciates too fast ends up crashing and every time people say this time it's different.

cloud_dog

Sarah920 wrote: »

Y.... however, I maxed out my cash ISA earlier this year, so I'll only be able to put £5100 in (I'm thinking a mixture of equities and absolute return funds, favouring absolute returns). Further ideas welcome!

Are you aware you can tranasfer an exisitng cash ISA in to a S&S ISA, if you wish to increase your S&S (ISA) exposure? Unfortunately it isn't allowed the other way round.

sabretoothtigger

Unless you take your advice from Gordon Brown you dont sell your gold all at once or buy it all at once hence why I point out that Elm seemed to offer 1/2 ounces fairly reasonably

Taking the extreme high price and extreme low price is trash tactics for an argument.

there's not a lot of places that you can buy a house for £10,000

It could serve as a deposit is more what I meant. Even with a mortgage a house is an investment and I then recommend a fixed rate of interest on the debt and this again is a kind of investment.
Consider it like the reverse of a bond, instead of lending out at a fixed rate you would be benefitting from any upward variation in rates. Rates are now 0.5% its obvious which direction is most likely

Loopgames

sabretoothtigger wrote: »

Unless you take your advice from Gordon Brown you dont sell your gold all at once or buy it all at once hence why I point out that Elm seemed to offer 1/2 ounces fairly reasonably

Taking the extreme high price and extreme low price is trash tactics for an argument.




It could serve as a deposit is more what I meant. Even with a mortgage a house is an investment and I then recommend a fixed rate of interest on the debt and this again is a kind of investment.
Consider it like the reverse of a bond, instead of lending out at a fixed rate you would be benefitting from any upward variation in rates. Rates are now 0.5% its obvious which direction is most likely

How do you get a mortgage as a student?

Sarah920

lvader wrote: »

That is exactly what happened between 1980-2000. People have said exactly the same about property. Anything that appreciates too fast ends up crashing and every time people say this time it's different.

But the price never did fall, even at its worst in the 80s, to a point where one's investment was worthless. Even someone buying gold at its absolute peak still won't have lost anything at all by 2020. The price of gold is steadily appreciating in line with inflation.

I probably can't get a mortgage as a student, no. This does make it a bit harder from my perspective, otherwise I obviously would've just bought a house some time ago.