Is gold the best option?

redbuzzard

To hold physical gold in the home is really no better than holding cash in large amounts. Either is obviously a terrible idea unless you are holding it illegally and it's important to keep knowledge of its existence from the authorities.

I assume that's not the case here, so isn't it better to try and get to the bottom of why he (reference to any gender shall include all and any genders, mutatis mutandis) feels he has to keep his wealth in the house in physical form?

I appreciate that could be difficult, and you must have tried it.

But, if he is susceptible to reasoning, you could point out that paper money is only a promise from the government and has no intrinsic value anyway. Putting the money into NSI or premium bonds is just the same promise in another form. There is no difference, except that the loss of the paper won't mean the loss of his money (and he'll get some interest, or the possibility of a prize).

You might also point out that he is putting himself at extreme risk already. You obviously know what he is up to, and we can give you credit for being a good egg. So who else knows? And who might they tell, and who might they tell? As the old saying goes, "I can keep a secret. It's the people I tell who can't".

All it takes is a stupid young thug to get wind, and he could find himself beaten up, tortured or worse in his home by intruders looking for his hoard.

Have you considered your position if you got involved in, or even knew of, him keeping large amounts of either cash or gold at home and something very nasty happened?

Seriously, if he can't be dissuaded, it sounds to me as if he's close to being unable to take proper care of his affairs, and if he were a relative of mine I'd be reading up on Court of Protection procedures right now.

JohnRo

I think the certificates is a good idea in principle but it could backfire if a subsequent investment in one or two companies then hits the rocks. Is the person a bean counter?

Perhaps have a discussion about the difference between wealth and money and that there are different ways to store your wealth, of which small paper rectangles issued by banks with fancy patterns and pictures of dead people on them are just one of several options. You might learn a thing or two yourself along the way as we all do.

Try steering this person towards the right decision through education rather than instruction. Get them to realise that money is not in itself anything of value since it isn't backed by anything but an increasingly worthless promise, it is just a trusted and accepted medium of exchange for goods and services. Real assets are generally less liquid but, at the least, no less valuable.

It's a dilemma, beyond trying to educate them to make the right decision themselves I'd suggest the best advice you have had here is to steer well clear.

salamancajerri

Holding gold is just as risky as cash from a security point of view so this does seem like a poor idea. T
The fact that you don't know what will happen to the price of gold makes it even worse than money. You could get lucky,but it definitely not a secure investment.

As redbuzzrd points out, premium bonds would be a much safer idea. Less risky and most criminals wouldnt recognise them.

trailingspouse

It's an interesting idea - my great grandparents never had a bank account, and literally kept all their worldly wealth in a tea pot. Mind, they had very little worldly wealth.
Your person won't, obviously, get any interest on their money - but then again they won't have the government of Cyprus rocking up and demanding 6.7% of the lot. They could avoid the obvious theft issues by keeping it somewhere inaccessible (eg the loft), or keeping it in several places so that even if one was stolen they wouldn't lose everything. But there's always the risk of fire if it's kept as paper notes.

Investing in anything is a minefield - and someone who has issues of trust with a standard bank current account might struggle to cope with the idea of investments going down as well as up. Might be better to just stick to money.
Would a safe be viable? I mean, would they be able to cope with remembering the number and such like? All they'll lose is the amount it reduces over time due to inflation (instead of the potentially much bigger losses associated with investments), and it's there to be counted/spent as required.

sabretoothtigger

I read a story like that a few years back. Bit of a heart breaker, this was discussed alot when Lehmans broke and RBS went to 10p.

http://www.dailymail.co.uk/news/article-1332644/Pensioner-leaves-80-000-roof-car-Westcliff-Sea.html

Make your bed frame out of a very expensive metal then paint it black was the best suggestion I heard. Never really heard of burglars stealing something so awkward. Hidden in plain sight is safest

padington

grey_gym_sock wrote: »

do you have any evidence for that?

actually, never mind, because what would it prove if it were true? nothing.

Yes

the effects of QE have included inflating assets prices generally. including gold. i thought you said they were trying to reduce the price of gold. make your mind up.



this is all just speculation about motive. in the absence of any evidence of price manipulation, or even of credible explanation of how it would be done, it's just hot air.

haven't you read detective stories? if all you have is motive, your case is very weak.

http://youtu.be/UWK5UQDCDTc

I think there is a lot of evidence and motive to suggest the market is being manipulated. It clearly has before, so why not again ?

sabretoothtigger

If gold is as easily misdirected as cheques and bonds then why bother lugging round its great mass for no advantage.
If gold supply does outrank demand as it often must do at the moment, they are juggling that relationship about.
Ultimately it doesnt matter so long currency is weak it'll keep leading to greater gains for any alternative store of value

They do the same thing with oil, trying to flush out the market with reserves but unless they produce a similarly greater amount the effect is just short term. Just another wave in a tide change, holding gold is a bet on tides not that you wont ever get wet

Daniel_Elkington

Investing directly in anything has a high risk premium attached - whether that is gold, shares in BHP Billiton, property or even cash.

If you are looking at commodities, ground nuts have performed better than gold, why therefore has there been no 'rush to peanuts'?

I suspect that gold is preferred as it is simply sexier and it allows middle class individuals to strut around telling everyone 'I'm invested in gold!'

You want to look at all the rich dynasties over the centuries - they've been invested in agriculture and land and gold and stocks and bonds and gilts and ... - a well balanced and diversified portfolio of investments.

Chucking it all in gold is stupid - what if someone discovers a gold mine that would double the amount of gold in the world? What if mobile phone companies discover a better metal for their devices?

Nothing is safe, so buy a little bit of everything and look for a sensible normalised return.

grey_gym_sock

padington wrote: »

http://youtu.be/...

I think there is a lot of evidence and motive to suggest the market is being manipulated. It clearly has before, so why not again ?

a youtube video is no substitute for a reasoned argument. explain your evidence, if you have any.

sabretoothtigger

ground nuts have performed better than gold, why therefore has there been no 'rush to peanuts'?

There are dynamics completely lost to us retail peoples. Nuts or chocolate mix is one I heard might be a great gainer quarter on quarter for many years but the wider problem is it is a tiny market.

Gold itself is accused of being a mini market that cannot contain modern world trade. Ie. gold is deflationary because it is restrictive and so a negative 'relic' as Ben B might put it

So why doesnt Goldman Sachs go for ground nuts, probably because they make billions on their deals why are they going to specialise and risk a few million dollar deals.
Bonds, debt, CDO are all gigantic, all the way up to trillions. They only have to be right on 1% of that fat cake to make a ton of money to split between their partners.
They dont bother with peanuts and theres little money in gold to be bartered. They'd rather deal the debt of mining firms then the commodity

It doesnt mean gold or anything rising in usage isnt worth it now. I bet they didnt deal tech stocks in 1990 either but I could say that was world critical in its importance and computers were really slow, boring and abstract at that time.
So I reckon the same could easily be true of gold now, so long as its improving trade efficiency gold markets will be worth trillions one day

gold is preferred as it is simply sexier and it allows middle class individuals to strut around telling everyone 'I'm invested in gold!'

Very few hold gold. Its below 1% on average I think, in the main its worst considered best performed asset theres ever been probably. It gains from not losing and cash losing value is not acknowledged. I only really hold the miners who sell it

WB on golds practical uses admonishes it, however he lost money staying purely in cash and he acknowledges high inflation:

http://www.youtube.com/watch?v=4xinbuOPt7c&list=PLH7qwlg3K28S0DbR6Neu6R4xbIjYghZMr&feature=player_detailpage#t=2182s