investing in gold?

planteria

Pitchshifter wrote: »

Well said, this is exactly what I've been thinking and have started buying physical silver coins...

i've been buying a few lately too.

planteria

PsychoBob wrote: »

I agree with almost everything. I love Gold. However, fiat money is backed by the power of Government. They have land, gold, tax raising powers & the military, which is quite powerful.

those same governments are able to devalue their fiat currencies if they want to, though. i can imagine a return to a gold standard at some stage. and, while we're at it, a World Currency linked to it.

canucrackit

Pm's are not the only thing I invest in. They are security and will always be worth something. Precious metals are money. They fit the rules of money. They aren't really an investment as such (you can only hope their fiat price to buy goes up). They are non productive assets. The best investments are productive assets (what warren Buffett and others hold are farm land, property, railways).

Gold is seen as a hedge against inflation so should make a portion of a wide portfolio. Its best to hold some wealth outside the financial system. As much as the government would have you believe, our banks are much more leveraged and at risk than any eurozone banks like Cyprus. Fcs protection posters are everywhere now to try and avoid any bank runs. Even the bank of England chief says the banks are still too big to fail and the government can't afford another bail out.

planteria

i agree with much of what you say canucrackit, but do you see a collapse of HSBC, Barclays or Lloyds...with depositors losing their money?

canucrackit

planteria wrote: »

i agree with much of what you say canucrackit, but do you see a collapse of HSBC, Barclays or Lloyds...with depositors losing their money?

They can all collapse. The power for bail ins is already in place. When you deposit money in a bank it is legally there's to do what they like, they use fractional reserve banking to add up to 50-60x what you deposited. If people on mass withdraw their money it is a disaster. That's why the fcs protection posters are everywhere you look now. They are a private organisation and they hold not even 1% in reserves, so they couldn't bail out even the smallest of banks. Its all about confidence. Our banks and our countries debt is worse than any eurozone country. If it can happen to their banks it can happen here.

Follow what the rich are doing, they are buying property, gold, art, land - anything to preserve wealth. The U.S started the problems with moneyprinting which caused inflation in the other countries, so now we and China print money (QE). You can't keep printing money to get us out of it, look at the Weimar republic.

grey_gym_sock

in the event of a run on a bank, without any serious deeper problem, the BoE would (rightly) lend it money temporarily to keep the bank going.

in the event of more serious problems, there are now plans to use "bail ins", but that means subordinated bondholders lose some (or all) of their investment, not that deposit account holders lose their deposits. e.g. this is what has happened recently with co-op bank.

if it gets even more serious, i.e. subordinated bonds holders have been wiped out, and the bank is still short of cash, then, if it's a small bank, i wouldn't want to have deposits over the £85k that the FSCS guarantees. however, the FSCS is perfectly capable of paying out up to that limit for a smaller bank. it holds very little cash, but the state can (and where necessary has) put up cash up front, and be paid back later by a levy on remaining banks.

if it's a very big bank, the reality is that the state will bail it out again, even if that is unaffordable. though there is a charade of "banker bashing", it's still the government that dances to the bankers' tune.

following what the rich is doing doesn't make sense unless you're rich! if you have far more than you will ever use to live off, you can afford to put some of it in non-productive assets. you can also divide your wealth among different countries, putting enough in each country that you could happily live off that if all the other countries turned communist and confiscated your wealth. but this is irrelevant to most of us ...

Wilkins

The only reason to hold gold is as a store of value. But in order to do that you must really buy it when it is good value. It does not, to me at least, seem good value at the moment. With inflation low, QE winding down and, for UK investors, the added complication of a strong £. I fully expect the three year bear market to continue for a while yet. Even events in Syria and Ukraine don't seem to be able to disturb things too much.

Like fiat currency, gold value relies on trust and guessing how others will respond. Its advantage is that it's got a much longer track record but its disadvantage is that the value cycles can be rather longer than many are prepared to tolerate.

sabretoothtigger

I agree its not an investment, its a form of raw cash at best.
The average return from gold ? zero
The average loss from gold ? zero

Thats your reason to buy or not

It does not, to me at least, seem good value at the moment. With inflation low, QE winding down

This is where we disagree. The influence of politics in the economy is massive and inflation is not apparent. Interference is destructive

QE winding down is not true. You must figure this out yourself because I dont care about politics but it does not add up whichever party you favour so its just a general failure on every side.

The taper is still an increase in QE every day.

Eco_Miser

canucrackit wrote: »

You can hold gold yourself, have it stored in secure vaults offshore (to avoid confiscation by governments such as the U.S in the past).

But how do you avoid confiscation by the government of wherever the gold is stored? Like Cyprus maybe?

sabretoothtigger

Dont store it in Cyprus or any failing impoverished state.
Store it in the Perth mint that actually mines gold and their vested interest is not to degrade this brand of capital by confiscating or devaluing it if at all possible plus Australia has no massive debt?

Trust is best founded on observation of what is best for both parties.

They can call out gold, capitalism or any other standard as exploitive and biased to the rich but open trade usually results both parties being better off then they would be otherwise.
Idealism is the tool of communism and similar failures. Do not presume the worst or the best, realism is most profitable ?