investing in gold?

phatus

I'm very close to paying off my mortgage and have been looking at things i could invest my spare cash in. Does/has anyone invested in gold? There seems to be different types of gold and it's sold as coins and bars and it seems to be cheaper per gram the heavier the item. Can anyone give any helpful advice to a total beginner for buying gold?

jimjames

What other investments do you have? Do you have 6 months worth of savings to cover living expenses?

Having gold as your only investment doesn't seem to be the most logical solution. Are you aware how much it has dropped recently? Although all investments can fall as well as rise putting a punt on a single asset class is highly risky and gold doesn't pay any income either.

It might be suitable to have as a hedge against inflation for part of your portfolio but not 100%

pip895

I concur with the above - I have recently upped my gold investment but it is still only ~1% of my total portfolio. I hold it as a physical gold etf.

dunstonh

Gold lost a lot in 2013. To be expected though as gold typically loses value when risk sentiment returns.

Its not bad for a small part of your portfolio but you shouldnt be heavy in it.

atush

I invested in gold, sub $700 an ounce, with a small part of my portfolio.


In your case, I'd be looking at equity funds in a pension if you dont' have one or S&S isas if you do (and it is well funded already)

phatus

I don't have any other investments. Spare cash has always gone into the mortgage. Surely having gold would be the same as having savings? I would have thought it quite easy to sell to release the money if needed. I wasn't planning on having it as my only investment.

Although it has dropped recently i assume that doesn't mean it's more likely to carry on dropping than rise? I'm not bothered about getting an income from it. It would just be an investment like if i put money into stocks and shares. It's of course more risky than just sticking cash in a bank account but risk can be fun and gold is prettier than cash or numbers on a screen.

I was more interested in whether i should be buying it in certain weight amounts or a certain type of gold or if it doesn't really matter? I suppose it probably doesn't matter as nobody really knows how much the different types will gain/lose value in the future.

phatus

atush wrote: »

I invested in gold, sub $177 an ounce, with a small part of my portfolio.


In your case, I'd be looking at equity funds in a pension if you dont' have one or S&S isas if you do (and it is well funded already)

I have a pension already. I do plan to put some money into S&S isas as well.

pip895

Gold is speculative - it lost ~25% last year - could loose the same or more this year - or it could go up 25% - It is still at a historically high value. If you don't have other investments I wouldn't invest in gold.

puk999

Decide on whether to take delivery of the gold or purchase a fund based upon gold.

Think about silver alongside gold. Silver is much cheaper per ounce than gold so if you wanted to sell a bit (but not too much), silver will give you more granularity. They appear to be highly correlated. Check the historical and live graphs on Kitco and compare silver/gold. You might want to check the gold/silver ratios to see if you think one metal is cheaper than the other. Gold is VAT free but silver attracts VAT at 20%

I prefer to take delivery of the metals and found CoinInvestDirect and Atkinsons to be fairly good. I decided against a safety deposit at the bank to avoid charges, for fear of confiscation and worry that I might lose access to the metals in a SHTF scenario. The PMs are sequestered away somewhere private. This has its own risks and stresses. Who can you trust to know? Having possession of the metals for me is a joy in itself though.

I prefer coins than bars. My theory on this is when selling you might want to prove to your buyer that the metal is legitimate. Coins are a lot more intricate than bars. Fakers would have a much harder time faking coins. This is also another advantage of silver as the faker would have the same effort for silver and gold, so better to fake the gold as it's worth 61 times silver.

There's an argument that the world economy is going to collapse, assets will be frozen and gold/silver will step in temporarily to become currency or that we'll return to a gold standard. There's a lot of people very passionate about this. I used to buy the argument a bit, but I think a lot of it is BS, scaremongering. Take it with a big pinch of salt. Having said that, we never know, and having a little in your portfolio isn't a bad thing IMHO.

As others have said, gold/silver plummeted recently. Look at the graphs and do some research. I'm putting most of my money in ISAs and pension from now on but can't resist checking the precious metal graphs to see what's happening as I'd like to get a few more coins (probably gold as I've got more silver than gold).

As you suggested in your original message, the larger the quantity you purchase, typically the cheaper the price per ounce is. With gold, you need to temper that with the divisibility. For instance, a physical 1 ounce gold coin might cost £800, but it might be better to buy 4 * 1/4 ounce coins and pay a slightly higher premium. Check CoinInvestDirect for special offers. For instance, they currently have a special offer 1/4 ounce maple leaf gold coin for ever so slightly less than 1/4 of the price of a single one ounce coin.

Brittania gold and silver coins (minted by The Royal Mint) are free from capital gains tax. All other physical bullion isn't (AFAIK).

dunstonh

Surely having gold would be the same as having savings?

Savings don't lose 25% of their value in 12 months. Gold has.

Although it has dropped recently i assume that doesn't mean it's more likely to carry on dropping than rise?

No it doesnt. However, it doesnt mean it will rise and it doesnt mean the bottom has yet been found. Gold rose for a few issues. Concerns over the credit crunch. Gold is seen as a safe haven and typically rises in price when things are looking bad. It typically falls in price when there is a risk appetite. Things like the credit crunch tend to happen once in a generation. Gold barely moved for decades prior to the credit crunch.

The other concern with gold is that it became fashionable. Fashion investments tend to boom into a bubble and when that bubble bursts, it bursts big time. You can tell when an investment becomes fashionable when people who know nothing about investments start to tell people to invest in gold. Historically, when the shoe shine boy tells you to buy something then its actually a time to sell.

Nobody knows the future and whether it will go up or down but it is certainly not comparable with a savings account.

gozomark

phatus wrote: »

Surely having gold would be the same as having savings?

only in the same way chalk is the same as cheese :-)