Is gold the best option?

Daniel_Elkington

well, peanut meal production is about 3-5 million MT a year at the moment at $2,000 per MT at the moment that's a $6-10BN market.

Nut's aint as sexy as gold though.

I do take your point, however we aren't talking about an institutional investor but an individual.

Indeed, said institutional investor would not put 100% of their assets in two basket, then proceed to store one basket in the other!

They have a well balanced portfolio of various assets.

You hold the miners? Well, they make money from things other than the speculative price of gold, which is more diversified than buying a lump and sticking it in a safe.

It doesn't gain from not losing, everything falls in value once in a while. Gold cannot shoot up like it has forever - markets have ceilings and they form bubbles. Some of my clients hold 1-2% in a physical gold ETF, but nothing they couldn't afford to lose and only because they really wanted to tell people they invest in gold.

Any direct asset held in an overconcentrated manner is high risk. These are the facts of life and not really up for debate.

atush

my parents invested ingold decades ago, and it crashed.

So yes, despite Cyprus and euro problems my feelings are the same. Cash, but not all of your wealth in same, in banks/ Property to live in, and S&S investments inside and out of pensions.

And My feelings are still the same as regards to the OP.

Helping a mentally ill and vulnerable person to save into gold which could be stolen from them is not helping them, but enabling them. Like handing out free booze at an AA meeting.

sabretoothtigger

We all used to invest in gold. British physical coins were made from it when were an empire, thats just about within living memory.
I hope Im not making an obscure flimsy point by saying that, but it used to be commonplace and now its a rarity
Upto 1971 we were indirectly invested in gold via our exchange with dollars.
So thats within most peoples lives that if they had cash, they had gold and now people hold almost none at all. Its so not 'trendy'

Im totally not a fan of gold but I hope not to swing too far the other way and avoid it altogether like our nation has done in general. Im personally adjusting for that deficit

So I definitely disagree with the bubble or gold mania type argument, the opposite is true. I probably would hold none if I believed otherwise

$6-10BN market.

Its comparable to the JP Morgan whale trade. They dominated that market and suffered for it and it wasnt that small either I guess.
Gold is too small to be hyped by the biggest players. Its not profitable, John Paulson is losing money on gold where he made it on CDO but he didnt get suddenly stupid

Gold cannot shoot up like it has forever - markets have ceilings and they form bubbles.

That is the appearance but if adjusted for losses in dollar value its not risen so much.
Oil has risen greatly since 2000 also and is a major cost to mining
Gold floating this high for so long is the surprising part but its being justified by something of equal weight.
If this was purely hot air we should be back to 1000 already. The housing boom on face alone made more sense, those houses were used every day and gold does nothing?
There is much more to this, if we adjust everything according to 1970's dollars or 1964 minted dimes, it'd explain alot maybe
In 2013 it does look like a boom when its mostly about how cash lost value

merlingrey

"Nature no more produces money than it does bankers or a rate of exchange. But since in bourgeois production, wealth as a fetish must be crystallised in a particular substance, gold and silver are its appropriate embodiment. Gold and silver are not by nature money, but money consists by its nature of gold and silver."

- Karl Marx (Critique of Political Economy 1859)

MalcolmSm1th

Would he consider buying arable land and letting it off to farmers?

Daniel_Elkington

I take your point, it is possibly something to add into portfolio's as a high risk diversifier but we are looking here at a family who want to buy a lump of it and put it in their safe - good idea? I think not.

sabretoothtigger

Only as an alternative to cash. Also it must be very long term cash reserve or might as well just chance the savings rates.

Most people dont have savings, they have debt and a bit of liquidity between pay cheques and the mortgage payment. Basically they are debtors not savers.
In UK that is most of us.

For genuine savers with net wealth over a decade or more, 1% in gold is totally reasonable.

When it gets fashionable to flaunt it. Sovereign rings ? I'll be selling then probably, dont think gold looks that nice even

Browntrout wrote: »

I am short Gold today.

Not confirmed yet but technicals are showing the rally's momentum is slowing, there are a lot of nervous holders who could sell...

.

What rally ? The way gold moves is in giant leaps, it has been playing dead for a while now.
Holding 1550 like that, same as yearly lows, similar to 2011 first half highs should make any short sells apprehensive.
Its probably safer to try a short in the 1400's though maybe less profitable

padington

A long term gold investment with bullionvault is a brilliant way for someone who refuses to save in a normal bank account. Obviously it would be wiser they had some diversity but it sounds like this person is a little ill and for a simple solution bullionvault is quite brilliant, you can direct debit £50 month and your gold will stack up without you thinking about it and gold is probably a very wise way to save for the long term, it won't go to nothing and will probably be worth a lot lot more in 25 years than if they stuck it in a 2% bank account or worse.

if you could encourage them to have some shares as well all the better. However if they are likely to get confused, lose share documents, etc, keeping it simple and saving what they can in a safe bullion vault vault, really is quite a good solution for someone who refuses to give their money to a bank.

Those in Cyprus that have done exactly this will be sitting pretty right now as their gold is safe in a Swiss vault owned by no one else but them.

atush

Obviously it would be wiser they had some diversity but it sounds like this person is a little ill and for a simple solution

So people who are ill and vulnerable should be told to put 100% of their money in something risky?

Please, hang your head in shame.

padington

atush wrote: »

So people who are ill and vulnerable should be told to put 100% of their money in something risky?

Please, hang your head in shame.

1) Everything in this climate is risky, holding cash uninsured over the long term is a guaranteed massive loss making mistake, not risky but guaranteed total disaster given inflation and risk of crime. I had a friend who was sitting on 100k, he got tied up to a chair for seven days and burnt with cigarets to reveal the location of it. It turned out he had actually put in bank by then but he still got seven days torture because they believed he was Lying because the word slipped out he kept it at home.
2) I didn't suggest they shouldn't diversify unless having multiple accounts could prove a greater risk, read it and weap.
3) They only seem to be prepared to invest in gold or cash, given the circumstances, could you tell me what you would suggest o wise one that's so much better ?