Is gold the best option?

grey_gym_sock

steevo_h wrote: »

Yes you're right grey gym sock, my mistake. My second paragraph should have read:

"Nothing is ever risk free, but if you look at the history of gold, it has consistently outperformed having your money in the bank for the last 15 years. And given the rate at which every western economy is creating money to buy it's way out of debt, I can't see that changing anytime soon."

the markets know about the money printing. it's 1 of reasons that the gold price has done well over the last few years. that information is in the price. where the price will go in the future depends on new information and market sentiment, which is why it's not easily predicted.

That said I still think it is a better place to have your money at the moment than a bank. Only time will tell if that's a wise position or not.

all we really know is that gold can have very long good periods, and very long bad periods. either can easily last for a decade or 2.

padington

sabretoothtigger wrote: »

Self justified logic : The U.S. can never become insolvent

Yeah but only by printing in a way that will tank up the price of gold. However I totally appreciate there is risk everywhere. Just personally though, right now, insured gold in a vault with your name on it in zurich looks like the least risky way forward to me. It's a case where the wisdom of crowds doesn't apply.

grey_gym_sock

padington wrote: »

Just personally though, right now, insured gold in a vault with your name on it in zurich looks like the least risky way forward to me.

for 100% of your portfolio? are you kidding?

sabretoothtigger

My argument is 1% of free and clear long term genuine available savings. To refuse that as fair does seem obstinate to me. We all indirectly held gold like we do the RBS assets at one time and now we swapped good for bad

Banks on the other hand, would go bust if there was a run

As I understand things, banks are investors in their capital asset. BV is just trying to hold gold like a virtual safe, they charge fees but customers will take losses or make gains.
Personally I think I prefer GLD or Perth Mint, its same type of model ?

So banks hold gov bonds as an asset, what if this bond halves in value. The bank is 5% tier 1 instead of the 10% it wanted to be. The problem from CDO was they more then halved, it was a landslide.
Can that happen to gov debt, maybe. I hold Spanish bank shares :laugh:

George_Michael

steampowered wrote: »

If you buy a property you get rent. If you buy shares you receive a dividend, and if that dividend is reinvested your investment will grow. Even if you pick a dud and the price stays the same, the rent/dividends will help your investment grow.

You've only listed the possible upsides from your examples. What about the other possibilities?

steampowered wrote: »

If you buy a property you get rent. Provided that you can find someone willing to rent from you, and if this happens, you still have to cover insurance, upkeep of the property, possible management costs, mortage etc If you buy shares you may receive a dividend but this isn't guaranteed, and if that dividend is reinvested your investment may grow. Even if you pick a dud and the price stays the same, the rent/dividends will help your investment grow. "and the price stays the same". What about if you pick a dud and the price drops? I wonder how many Northern Rock shareholders thought that their investment would guarantee them an income, or the BP shareholders who purchased their shares at £6+ thought that their investment was a wise one

padington

grey_gym_sock wrote: »

for 100% of your portfolio? are you kidding?

If its a choice between holding cash or gold over the long term, as was the dilemma of the original poster, then gold 100%. Now is a good time to buy in, in my opinion, holding cash over the long term is insane.

If we're talking about someone who is prepared to invest in more and can manage a portfolio, then no. I would suggest 90% in a first home with a spare room or two to rent out in a safe mega city and 10% spread in cash, gold, art, equites and a few bit bit coins as an outside bet.

Thats if you don't manage to declare me mad and POA my finances.

grey_gym_sock

padington wrote: »

If its a choice between holding cash or gold over the long term, as this thread is about, then gold 100%.

as has been said, the correct answer to the original question is that none of the suggested options make any sense. and the person concerned needs to deal with the issues that prevent their considering more options.

however, hypothetically speaking, if you had to construct a long-term portfolio from only cash and gold, you'd be mad to go for 100% gold. the least risky option would involve a significant % in each, with rebalancing. though it would of course still be unnecessarily risky.

(compare the "harry browne" portfolio - 25% gold, 25% cash, 25% equities, 25% bonds - which is perhaps defensible, though it has both far more gold, and far more cash, than most ppl could live with for the long term.)

holding cash over the long term is insane.

yes, it's about as bad as gold in the long term. though a very small % in either may make sense for diversification.

If we're talking about someone who is prepared to invest in more and can manage a portfolio, then no. I would suggest 90% in a home in London and 10% spread in cash, gold, art and equites.

if it takes 90% of your money to buy a decent home in london, then it may be worth it. a much lower % would be preferable.

art is another very niche area - i.e. only for a very small % of a portfolio. and very hard to get right without expertise. (or perhaps even with it.)

HAMISH_MCTAVISH

Holding any large amount of cash or gold at home is asking for trouble.

padington

Cash in a jam jar is going to do as well as gold over the next 25 years? :rotfl:

Keep them coming.

grey_gym_sock

padington wrote: »

Cash in a jam jar is going to do as well as gold over the next 25 years? :rotfl:

Keep them coming.

it's happened before. you have a very blinkered view of history.

cash in a savings account vs gold over 25 years would be quite even odds in general. though i'd back cash at the moment, as gold looks toppy.

gold generally has an edge over cash in a jam jar, but it can lose.