Gold anyone?

enjoyyourshoes

Gold:you are betting on equities or currency falling.
Once it starts to rise, when do you sell?
The greed takes over and you hang onto it for too long, then its below where you purchased it.
Also watch the spread, where do you buy from what product, what price are you paying over spot, who buys it from you and what price will this be below the spot once you decide to sell.

puk999

James_B. wrote: »

I'm thinking of buying two 1kg bars, both because they make nice paperweights and conversation pieces...

I'd love a 1kg gold bar. Trouble is it's not easily divisible. Selling would be a pain because of the divisibility and because buyers would be scared it was gold wrapped tungsten. It'd need to be drilled just to be sold! Better to have 32 1oz gold coins. At least when you're boarding that ferry you can shove them in places people won't want to search

bowlhead99

hornmeister wrote: »

Gold is of no use? The Electronics & Technology industries beg to differ.

It is of course of some use. But if you take the supply/demand stats for 2013 for example:

Total demand 4080 tonnes
Industrial demand 408 tonnes (of which about a tenth is dentistry and the rest electronics and other industrial).

So, not very much of the gold is actually mined because we want to use it in an electronic component or a chemical or engineering process. Most of it is either because it looks pretty in a ring or on an ornament sitting there on a shelf, or has a reputation as a 'store of value' ie. speculative punt that generally goes up in nominal value over very long periods of inflation.

Then last year, central bank net purchases 409 tonnes, coincidentally similar to industrial use. Though that's a net number that could sometimes be positive or negative.

The other 80% of the demand is for jewellery or investment (latter being bars, coins (including imitation coins/medals as well as official coins) and ETFs or similar which might be positive or negative each year.

There is then some fudge factor / net stock movements and institutional or OTC purchases to get from demand of 4080 tonnes to the declared gold supply figure each year (4250 tonnes in 2013). Source: WGC.

Mind you I was told there's more gold per ton of old mobile phones than there is in a ton of mined material, so maybe the smart money is with recycling.

Of the annual supply, about 30% is recycled rather than mined. A couple of years earlier when gold was at a peak, the recycled percentage was higher, getting on for 40% - it was more worthwhile recycling it.

Gold is relatively easier to recycle than some other compounds (easier to get the gold out of an old phone or an old gold chain and melt it down, compared to getting the lithium out of an old phone battery for example). So they do recycle a lot. But each old phone might have 0.001 troy ounces in it, which is only a bit over a dollar's worth. So you do need a pretty big mountain of phones to get your value.

The anecdote about there being more in the tonne of phones than in a tonne of gold ore, obviously assumes it is a low grade bit of ore and is only a bit of fun anyway. Sometimes you might be running a mine at only 0.5g of recoverable gold per tonne of ore, but richer seams could be 15g+, and whether it's economic depends on how easy it is to get out of the ground compared to the gold price of the day.

ColdIron

puk999 wrote: »

At least when you're boarding that ferry you can shove them in places people won't want to search

Have you seen the width of a 1oz Austrian Philharmonic? They are nearly an inch and a half across. I think after secreting one of them you'd be reluctant to try a second

TheTracker

If the reason to invest in an asset (class) is a bet that it will go up or down because more or less people want it in future then I don't go near it. I'm interested in putting my gbp in companies that will use it to create more value. This is why.... "I'm out".

pop_gun

In an economy where the Bank of England can print £375bn, give it to the banks and they still remain insolvent. You know something is terribly wrong with the underlying economy.

Gold is trading below the cost of mining it. If that isn't a rigged market I don't know what is.

planteria

pop_gun wrote: »

Gold is trading below the cost of mining it. If that isn't a rigged market I don't know what is.

.......so will it, at some point in the coming couple of years, jump above that cost??:think:

DiggerUK

Kendall80 wrote: »

.......the more 'gold heavy' Investec fund has jumped 10%. The beginning of a revival maybe?

Your thread seems to be going way off topic.

This revival in the gold price is down to higher demand for gold. Raise demand and you always get a higher price. Seems there is a shortage of unallocated gold for the lease market, sellers who want to cash in will fill the shortage gap. Then we will see how far this 'revival' will go.
My opinion is that gold prices will stabilise, or fall back a bit, once the shortages of gold to lease are made up. That's why Investec is looking good for now.

Other thing to consider is if you are taking a long or short term position with your gold exposure. You would be best served by asking why equities are booming at the moment, and has the money expansion (QE etc) done nothing more than subsidise equities. Then ask yourself if current value of equities will continue.

On a risk level you have to accept that in a worse case scenario, equities can become worthless, gold does not have that disadvantage. As Digger Mansions is nearer the grave than the cradle we don't want to end up with nothing in our hands, which is why we are heavy in to gold.
..._

puk999

pop_gun wrote: »

Gold is trading below the cost of mining it. If that isn't a rigged market I don't know what is.

Is that true?

Here's the gold price from 2000 until present day. I know costs increase and it probably takes a lot of energy to extract gold, but I keep hearing this argument that gold is being mined at a loss then I look at this graph and it appears that gold is still trading at 4x what it was only a handful of years ago.



EDIT: Was just reminded of this post

bowlhead99

DiggerUK wrote: »

On a risk level you have to accept that in a worse case scenario, equities can become worthless, gold does not have that disadvantage. As Digger Mansions is nearer the grave than the cradle we don't want to end up with nothing in our hands, which is why we are heavy in to gold.
..._

Equities in an individual company can become worthless. If one of the 50-100 company portfolio goes bust, you have others, and some of them may become valuable due to the removal of a competitor from their market. It is highly unlikely that the whole UK or global stock market would become worthless, even in a "worst case" scenario.

If it did, you'd probably have bigger problems on your hands and might find that bullets became a more valuable commodity than blocks of soft yellow metal.