Investments - Gold, Silver etc,

Masomnia

Sarah920 wrote: »

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.

Are you this optimistic in every aspect of your life?

mike88

Sarah wrote "But the price never did fall, even at its worst in the 80s, to a point where one's investment was worthless."


Are you expecting all shares and unit trusts to crash so far that they will be worthless? If your investment strategy is based on this unlikely possibility then I do not think anybody on here will be able to help.

Looking at the position in a more practical way I would suggest that if you buy gold at $1400 dollars an ounce and you need to sell for some reason if/when the price has fallen to say for example $700 an ounce (which is possible given historic volatility) how can this be the kind of risk free sleep at night investment you require. Many of us have been down the student route and over a very short space of time circumstances and priorities can change.

You may not think you might not want to gain access to the money now but when you enter the workplace (assuming you are a young student) you may need the money for accommodation or a car to enable you to get to work or indeed for any unforseen circumstance that life may throw at you. Tying up your money in such an unpredictable investment is ill conceived.

lvader

Sarah920 wrote: »

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.

Gold isn't appreciating in line with inflation, it spent 20 years not keeping up with inflation followed by 10 years of doing much better then inflation. Saying it will recover after 40 years is a bit silly, a lot of people that invested in gold in 1980 will be dead by 2020.

Loopgames

But tying up your 'money' in sterling currency could be perceived is even more precarious than gold hence why someone will purchase gold.

I purchase gold and silver because I was not comfortable have savings in currency. It is losing value all the time. There are certain indicators for me that make it better to trade it for gold/silver like QE, low interest rates, inflation (which is all intricately linked).

sabretoothtigger

Loopgames wrote: »

How do you get a mortgage as a student?

You'd have to get someone else as a guarantor of the debt if not able to show personal income I guess.
If a mortgage replaced paying out on rent, it'd be a good idea quite possibly

Sarah920

lvader wrote: »

Saying it will recover after 40 years is a bit silly, a lot of people that invested in gold in 1980 will be dead by 2020.

I'm reasonably sure I won't be (I am 21). I am also reasonably sure that I will not need ready access to £3000 worth of gold - I have, as I have already mentioned, a reasonable sum in a cash ISA, another £15K in savings I am looking to invest for the medium term, and I've consistently underspent what I've made every year of my life (thanks to the foresight of my grandfather, a very low cost lifestyle and a little business acumen). I have no intention of having a car, unsafe sex, or a a mega no-expense spared wedding/birthday party/trip round the world.

Yes, there is a risk that at this point in the market, the initial price of any gold I buy will fall in the short term. On the other hand, the financial irregularities which caused the credit crunch in 2008 were never dealt with, and it seems to me that with $900 billion just added onto the US debt last week, the risk of financial meltdown and hyperinflation is a very real one. It won't matter how much money I have in a savings account by that point if all it can buy me is a smidge of ketchup.

Diversifying one's portfolio needs to cover all possibilities - my current account serves me instantly when I need to pay bills, my savings account covers short-term savings that I might need in a year or two when I graduate, my cash ISA locks my cash away safely for the eventual time I must pay tax; if I open a shares ISA (still thinking about it though), locking away £5000 over 5 years at least (but which in theory I could pull out at any time) will deliver a good return on funds that I am not currently using or anticipate using. Putting a fraction of my overall assets into a commodity for the extreme long term, that will probably hold its value in a turmoil market over time, but eventually recover if it doesn't because it's based on a substance rather than a financial instrument, which will definitely prove itself in the unlikely but possible scenario of global financial crisis, seems to me to be a logical step of my grandfather's long-term planning.

I would very much like to look at buying property, but my mother is watching the property market like a hawk and states that now is not the time to buy, as prices are still falling. So I don't think it's an option right now.

jon3001

shaun_from_Africa wrote: »

When exactly was the last time this happened in the UK? and how would they know what was stored in a sealed box in a bank vault?
This sort of unsubstantiated scare tactic does nothing to help a reasoned debate.

As recently as 2008

http://www.telegraph.co.uk/news/uknews/2066470/Safety-deposit-box-raids-yield-1bn-of-drugs-cash-and-guns.html

Police have seized a potential £1 billion “treasure trove” of cash, drugs and guns in an unprecedented raid on concrete vaults holding 7,000 safety deposit boxes.
...
Metropolitan Police Assistant Commissioner John Yates said: “Each box will be treated as a crime scene in its own right.”
...
Members of the public who have innocently and legally stored their valuables were “inevitably” going to get swept up in the disruption, it was predicted. Police said they could use a freephone number - 0800 030 4613 - to claim back their goods.

http://www.dailymail.co.uk/home/moslive/article-1222777/The-raid-rocked-Met-Why-gun-drugs-op-6-717-safety-deposit-boxes-cost-taxpayer-fortune.html

The raids had been made possible under a controversial law, the Proceeds Of Crime Act (POCA), which came into being in 2002 and introduced an array of wide-ranging new powers to seek out and confiscate dirty money - the houses, cars and boats bought by criminals.
...
David Sonn, of Sonn Macmillan Walker, one of the largest criminal defence practices in London, says, 'POCA was never intended for this. No one objects when criminals are caught and their assets seized - but shaking down everyone to get to them is specifically not what lawmakers wanted.'

...
the vast majority of those caught up in the raids were innocent. They have had their lives turned upside down over the past 17 months. Many have struggled to recoup their money and possessions, been forced into legal trench warfare with police lawyers and told they must prove how they came by the contents of their boxes.

morganslv

Sarah920 wrote: »

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.

This is exactly right.

Someone recently asked me how many reasons I could think of that silver will keep going up at the same rate that it is. I said many reasons.

Then they asked me how many can you think of that it will go down?

I can only think of one, alchemy. If it is possible to artificially make gold and silver cheaper than it costs to mine it. This would solve the demand outstripping supply problems with silver at the moment.

Personally I do not think they will ever be able to achieve this.

Are there any other reasons silver could go down?

Sarah920 wrote: »

I would very much like to look at buying property, but my mother is watching the property market like a hawk and states that now is not the time to buy, as prices are still falling. So I don't think it's an option right now.

Your Mum is smart. Keep an eye on the chart how many ounces of silver to buy a house in the UK. It is on it way to 1000 or less ounces again. If you can build up 1000 ounces of silver which will cost about £20K at today`s prices, then you will be able to buy a house outright with it sometime in the near future.

shaun_from_Africa

As recently as 2008

I must be psychic as I just knew it wouldn't take long for this story to get dragged into the discussion.

As it's now been mentioned, how about a few facts to go with it.

1/. It was not a bank vault (which is what this thread has been discussing).
It was a privately owned deposit facility and the main reason that it was chosen for a raid was due to the fact that the operators were not complying with the legal requirements for identification for people storing goods there.
Try opening a UK bank account nowadays and you will see exactly what you need to give to prove your identity

2/ The police believed that there were illegally held good there, being held with the knowledge of the facility owners (who were also arrested).

3/ There were some stories of legal items being held by the police (but only mentioned by the Daily mail, so I would'd have too much confidence in that particular report.)
Also according to both stories, anyone who could prove ownership of the property did not lose their goods, and I think any sensible person who had purchased gold bullion would have a receipt for it.

4/ You also forgot to mention the guns, drugs, other weapons and millions of pounds that were discovered and since been proven to be the proceeds of crime.


So I will ask again, using the with the same wording used earlier.

When was the last time that the government seized bullion from a bank vault in the UK? (not a privately owned storage facility which was not operating in accordance with the laws on the box holders needing to prove their identity).

In the past governments have confiscated bullion from bank vaults.

mike88

"I would very much like to look at buying property."

So you might need access to the money in the short term after all which makes the decision to purchase gold even more bizarre for someone who wants a solid reliable investment.

Property and gold are not that dissimilar. But if you bought property now the price you will pay will be close or near to its low whereas if you buy gold you will be buying at or close to its peak. Now might not be the the absolute best time to buy property but at least you would have the option of making up for any shortfall by by renting it out. Property is likely to be far less volatile than gold.

An investment strategy should be based on the buy low sell high adage. You are about to do the opposite. Property would be a far better and less risk free proposition than gold.