Investing in gold?

redbuzzard

Jdevaney89 wrote: »

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..

If you buy gold at £943 when Snickers cost 70p, then sell it at £4,000 when Snickers are £3.00 each, you haven't actually got anywhere have you?

The fact that gold has gone up x 3 in 10 years is as much a reason to suggest it won't be worth any more in another 10 years, as it is reason to say it must go up...

The problem I have with gold is that there is no way to value it other than observing what people are paying today.

If I changed my mind, I'd use a physical ETF rather than hold the metal myself.

Jdevaney89_2

Yep, youre right, i need to think about another form of investment if im honest, im looking at S&S but i dont know what kind of gains they give or how risky they are or if theyre worth it, thats where im looking now anyway

atush

I haven't read this whole thread, but I gotta ask.

Why do you want to 'invest' as a 'newbie' in a non intrest baring asset that has lost money for the last two years?

merlingrey

atush wrote: »

I haven't read this whole thread, but I gotta ask.

Why do you want to 'invest' as a 'newbie' in a non intrest baring asset that has lost money for the last two years?

Perhaps he wants to avoid counterparty risk.

That's the whole point you only earn interest/yield or dividends by embracing counterparty risk.

And gold cannot fall or rise it stays the same (again the whole point of having it) but the price can change relative to the US dollar or other currency increasing or decreasing in value.

If 1 oz of gold falls 50% it does not mean i have lost half the gold does it? i'd still have 1 oz.

In fact it can fall 100% and you'd still have 1 oz.

Point being the price moves relative to something else.

grey_gym_sock

merlingrey wrote: »

Perhaps he wants to avoid counterparty risk.

i'd be surprised ... that would be a very technical aim to have.

i'm not sure i understand the same thing by "counterparty risk" as you do ... interest involves counterparty risk: somebody is promising to pay the interest, and repay the principal ... with shares, i don't anybody making a promise: you get to own a certain % of a company, but nobody promises the company will be worth any specific value, or pay any dividend.

merlingrey

grey_gym_sock wrote: »

i'd be surprised ... that would be a very technical aim to have.

i'm not sure i understand the same thing by "counterparty risk" as you do ... interest involves counterparty risk: somebody is promising to pay the interest, and repay the principal ... with shares, i don't anybody making a promise: you get to own a certain % of a company, but nobody promises the company will be worth any specific value, or pay any dividend.

By counterparty i mean government, banks and insurance since any money you have on paper depends on those things remaining solvent and intact.

With individual shares that is different because you are taking a direct % of ownership in a business which carries it's own risks.

But then if you own a business the counterparty is the lenders and suppliers etc...solvency risk/credit risk.

redbuzzard

grey_gym_sock wrote: »

i'd be surprised ... that would be a very technical aim to have..

It's a technical way of putting it, that's all

A lot of the "what's the best way to buy gold" questions seem to come from people who just don't trust banks, the government, anybody. That would also explain the frequent preference for directly buying the metal, rather than say a physical etf, which is a much easier way to do it.

Not that the distrust of banks and governments isn't understandable.

atush

If 1 oz of gold falls 50% it does not mean i have lost half the gold does it? i'd still have 1 oz.

In fact it can fall 100% and you'd still have 1 oz.

That is kinda nonsense.

As if you bought 100 shares or 100 units in a fund, and the price fell 50%, you'd still have the same number fo shares/units.

Not that I have owned many shares that ever fell that much (apart from maybe lloyds lol)

merlingrey

atush wrote: »

That is kinda nonsense.

As if you bought 100 shares or 100 units in a fund, and the price fell 50%, you'd still have the same number fo shares/units.

Not that I have owned many shares that ever fell that much (apart from maybe lloyds lol)

Not always shares can be diluted, as in the case of RBS if the number of shares in issue doubles then your % of ownership in that company falls in half.

If a company loses half its assets (building factories etc) then your physical asset has fallen in half, the share price can do whatever it wants but it might reflect problems in the business which results in real tangible loss of assets.

And of course if a fund or company shares go to 0 through default or otherwise you just have a bit of paper.

BTW i'm not anti-stocks and shares, i'm 75% in stocks but this economy is debt based, money/currency=debt.

So i hedge 25% against the debt, and gold or oil, real estate land..or even rare works of art is a BET against the debt.

money as debt: http://www.youtube.com/watch?v=jqvKjsIxT_8

lvader

I don't mind physical gold, I hold some myself but I wouldn't buy very small amounts because the premiums are too high. Save enough cash until you can buy a more significant amount, I'd also go for coins instead of bullion.