Is gold the best option?

padington

antrobus wrote: »

Bank accounts in both the UK and Switzerland have similarly been proven to be very safe. So far. Who is to say what will happen in future? The UK might even feel obliged to issue the equivalent of Executive Order 6102 and BullionVault might have no option but to comply irrespective of where the gold is stored.

1) Bullionvault is not a bank, lets not confuse things, no fractual reserve system at bullionvault.
2) This didn't happen in Cyprus
3) Yes the UK may make legislation that requires homeowners to give up their home for the national good. It's possible but all possibilities are not equal.

grey_gym_sock

something is not proven to be safe because it hasn't failed so far. so bullionvault has not been proven safe; and if it is, then by the same argument, so are deposits in major UK banks. and so were cyprus banks until a few weeks ago. and everybody who hasn't died yet is proven to be immortal.

padington

grey_gym_sock wrote: »

something is not proven to be safe because it hasn't failed so far. so bullionvault has not been proven safe; and if it is, then by the same argument, so are deposits in major UK banks. and so were cyprus banks until a few weeks ago. and everybody who hasn't died yet is proven to be immortal.

Think you need a holiday.

steevo_h

steampowered wrote: »

Gold is a pretty bad investment. Don't assume it will hold its value. If you bought gold in September you would have lost 15% of your investment already, and there is room for much larger falls.

It is also an unproductive investment. 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.

The only reason to buy gold is to hedge against inflation. Even then it doesn't make sense, since you can also hedge against inflation with productive assets like stocks and property. You can try to make money by gambling on short-term gold price rises, but unless you are an expert in the commodity markets you might as well go to a casino and put your money on red.

Not factually correct. If you'd bought at the beginning of September, then the price was within 1% of what it is now. If you'd bought on the 7th October (the highest peak of this year and hence the worst time to buy) the price then was £1108 per Oz which would be a loss of less than 5% if you sold today at £1056.

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 decades. 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.

grey_gym_sock

steevo_h wrote: »

if you look at the history of gold, it has consistently outperformed having your money in the bank for decades.

does history start in about 1999 for you? gold consistently lost value for the 2 decades before that.

sabretoothtigger

Even that is a lob sided view. Modern monetary history should start 1971 for obvious reason.
People take peak prices way too often, at least level out the yearly prices in comparison

1) Bullionvault is not a bank, lets not confuse things

FSCS dealt with me even when my cash was with what is basically a betting shop.

confusion is rife, that could be point to see. Was RBS a bank or a betting shop at its peak, we arent sure still but it would explain alot

The people who matter on this may consider BV very similar to a bank, I wont say so but certainly is possible

Don't assume it will hold its value.

It buys a field of corn similar to 2000 years ago; in 6 months did that change much, not really? It cant be bought for 6 months then sold, thats even more silly then a buying a house like that

It is also an unproductive investment.

It doesnt do anything much now, it wont in 6 months. Thats why the value doesnt really ever change, the price does but thats peoples interest in it
Generally central banks are buying it, but its a dam slow process. More people in the world, more interest for gold over decade timeframes not 6 months of course

you might as well go to a casino and put your money on red.

Didnt a TV show send a guy to sell everything and go do that ?
I think he won, if we go with my idea gold is just a rock it wont double then really we are talking about sterling halving in value.
Can this happen, if yes give the idea serious thought?
-30% in 14 months possible
-50% in 60 months possible

steevo_h

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."

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.

padington

sabretoothtigger wrote: »

Even that is a lob sided view. Modern monetary history should start 1971 for obvious reason.
People take peak prices way too often, at least level out the yearly prices in comparison


FSCS dealt with me even when my cash was with what is basically a betting shop.

confusion is rife, that could be point to see. Was RBS a bank or a betting shop at its peak, we arent sure still but it would explain alot

The people who matter on this may consider BV very similar to a bank, I wont say so but certainly is possible

No Bullionvault doesn't issue debt and are in no danger of a bank run. They could not be considered a bank like we know it. The term bank insinuates far too much danger for their saving model.

sabretoothtigger

In the strange world we live in, BV is seen as far more risky then an actual bank. After all a bank holds gov debt as its security which is the best security you can get and BV hold shiny metal and pretends its worth something.

Im not sure their thinking is quite like that but the one is USA nearly got shut down as a ponzi scheme funnily enough.
They did have 100% backing and just sold into the market on every regulator cash call I think is how it went.

The recent bank 'stress' tests included a stock market crash but excluded the scenario of interest rates rising :think:


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

steevo_h

The reason BV is safer than banks, is that they are 100% backed by gold. So every kg of gold bought through them, is held in their vaults and registered in the name of the buyer down to the gram. Their vaults are audited daily. If there was a run on them, they would simply have empty vaults.

Whether the gold goes up or down is another question entirely, but the BV business model does not care if gold goes up or down as they make their money charging a commission on every buy or sell, and charging for storage.

Banks on the other hand, would go bust if there was a run because they are so highly leveraged i.e. for every pound invested, they lend out many times that amount.