Investing in gold?

grey_gym_sock

well, look at the graph of the inflation-adjusted price of gold in this article - http://www.rickferri.com/blog/investments/gold-bugs-swatted-again/ ... in the long run, the ups seem to be cancelled out by the downs - and it's currently way above average.

you can buy into property-related shares in the same way you can buy other shares, i.e. without needing large amount of money to start. that's not quite the same as buying property directly, but somewhere near.

jimjames

Jdevaney89 wrote: »

Im not a massive fan of stocks and shares, in the last 10 years gold has risen from £341 per oz to £1400, or above stated today its at £943 per oz, surely in 10 years itll be worth something more then what it is now?

Several of my share based funds have risen from £100 to over £1000 in the last 10 years?

There is absolutely no reason why gold would be worth more in 10 years than it is worth now. The price was static or dropping for nearly 30 years, there is no reason why that couldn't happen again.

jimjames

MoneySaverLog wrote: »

Some stocks have out performed gold. But I get where you're coming from. Besides I think the stock market is reaching a point of correction. Then where will the money end up going?

At the point of correction, or just after, the sensible money will be piling into stock markets. Buy on the dips rather than selling out once it has dropped.

Jdevaney89_2

I wouldnt know what shares to invest in, man i dont know what to do.

merlingrey

Gold is not and i repeat NOT an alternative to stocks, it is an alternative to holding cash.

Gold has no counterparty risk which is why it has no yield.

Yield/interest/dividends is what you get when you hand money to someone/institution and they pay you a risk premium for holding and utilising that money.

What i have just said is what nobody understands yet it is very basic.

Golds value is always in respect to something else so if gold goes down 10% it is because something else (the US dollar) increased in value by 10%.

However the government and banks have the power to manipulate gold prices to not reflect this and this is the key problem with gold:

Gold on the paper markets (which in turn determines the price you buy and sell the real asset for) is manipulated and is FIAT like the currency you have.

Despite this i still like to have gold as a hedge against the global debt markets and prefer it over holding cash for that reason.

MoneySaverLog

jimjames wrote: »

At the point of correction, or just after, the sensible money will be piling into stock markets. Buy on the dips rather than selling out once it has dropped.

Only about 1-2% of people will probably be brave enough to buy that falling knife, the vast majority will panic sell and then stuff their cash into things like gold maybe forcing the price of gold upward.

Jdevaney89_2

Is it an idea in that case to buy and monitor the price? If/when it becomes high again stop buying and wait until it drops again before recommencing with my purchases?

That way i always buy on the decline and then eventually on a very distant date sell. For instance when a snickers becomes £3 to buy instead of 70p..

grey_gym_sock

that can work. though shares can keep going up (or down) for a long time; so you may think they're high (or low) and then they keep on rising (or falling). not that you need to get it exactly right - very roughly right would do fine.

there is a danger of thinking share are high, so stopping buying, and when they keep on rising, realizing you were mistaken, but not knowing when to start buying again.

the simpler approach is just to keep putting the same amount of money into shares every month.

redbuzzard

MoneySaverLog wrote: »

Some stocks have out performed gold. But I get where you're coming from. Besides I think the stock market is reaching a point of correction. Then where will the money end up going?

I might be missing the point here, but if the stock market has a large "correction", then shares will be where my money is going!

Jdevaney89_2

Im looking at shares but i dont have a clue what im doing! Im completely lost now, my idea for buying gold feels like a rubbish idea and now im struggling to get my head around these shares.