What Type Of Gold Investment Is Best?

EdGasket

mike88 wrote: »

This is utterly ludicrous. Gold is not a hedge against inflation. It's not a particularly good investment either and is very volatile. Those who take physical gold are at greater risk of getting it stolen than investments becoming worthless. Buying gold is akin to those who think the World as we know is coming to an end and want to build a nuclear shelter at the bottom of their gardens.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8334952/Gold-the-ultimate-inflation-hedge.html

"More startling is that gold has retained this purchasing power over even longer periods. It is thought that an ounce of gold bought 350 loaves in the time of Nebuchadnezzar, the king of Babylon who died in 562BC. An ounce of gold still buys roughly 350 ordinary sliced loaves today, showing that over 2,500 years gold has proved a very effective hedge against inflation, at least when it comes to everyday essentials."

mike88

Gold has fallen by around 30% in less than 4 years. Why should I be bothered about how many loaves an ounce of gold bought 2500 years ago?How do you know that you will be able to to spend your gold if markets crash? And what steps do people take to store their physical gold? Are there costs involved? There is probably a greater chance of gold being stolen than markets crashing.

alexanderalexander

EdGasket wrote: »

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8334952/Gold-the-ultimate-inflation-hedge.html

"More startling is that gold has retained this purchasing power over even longer periods. It is thought that an ounce of gold bought 350 loaves in the time of Nebuchadnezzar, the king of Babylon who died in 562BC. An ounce of gold still buys roughly 350 ordinary sliced loaves today, showing that over 2,500 years gold has proved a very effective hedge against inflation, at least when it comes to everyday essentials."

Two points:
(i) in real terms (i.e. compared against average incomes) bread -- alongside almost any other food and consumer goods -- is much cheaper today than it was in Nebuchadnezzar's time, so I don't think that really makes as "pro-gold" a point as you'd think on first reading;
(ii) even if gold has kept track with inflation, the stock market had beaten inflation, so it doesn't really make the gold-better-than-stocks argument either.

DiggerUK

MrAndMrs wrote: »

".....Sovereign Investments are selling Edward and George Sovereigns at £207 each today!! Have a look if you don't believe me... http://www.sovereigninvestments.co.uk/buy-and-sell-gold-coins.html...........

Gold is gold, always go with cheapest. Never used sovinvest. They look ok though. Check availability, always found that to be the biggest problem with H/garden when buying in quantity......unavailable. Always allow for delivery costs.

The price crash in gold since 2011 I put down to the boom in equities. That boom I put down to easy money from QE/zirp.

This recent boost is not because of fear of high price inflation...there is none, and it is not because the boom has gone pop. It's a puzzle to me......only plausible suggestion I can come up with is that there is a major currency war in the offing.
A number of credible arguments to that effect have been published recently.
..._

Killerseven

Gold is not as rare as people think, there are millions of tons now.

puk999

Killerseven wrote: »

Gold is not as rare as people think, there are millions of tons now.

How many millions, and how do you know?

atush

redux wrote: »

Gold has dropped about a third in the last 3 years.

And you can find some people predicting it will go down for 5 to 7 years.

This is my view. I bought some gold thru my online broker when the price was very low, sold half on the way to near the peak, now still have half. I would not buy again until it was deeply unfashionable again. It was purely a hedge against inflation and other things at the time (inflation was higher then) and it was only a few % of my portfolio. Not 10%.

atush

As for BTL, retirement is when you should be selling OUT of BTL due to the hassles and costs. Not buying.

Why buy an asset that is illiquid, you pay tax on the income (which you dont in pension or Isas) and pay CGT when you sell? (ditto).

Have you thought of instead investing in pensioner bonds, current accts paying 4-5%, and some good income producing investment trusts in a tax wrapper? Much less hassle, and probably better returns after costs.

markj113

Killerseven wrote: »

Gold is not as rare as people think, there are millions of tons now.

EdGasket

atush wrote: »

As for BTL, retirement is when you should be selling OUT of BTL due to the hassles and costs. Not buying.

Why buy an asset that is illiquid, you pay tax on the income (which you dont in pension or Isas) and pay CGT when you sell? (ditto).

Have you thought of instead investing in pensioner bonds, current accts paying 4-5%, and some good income producing investment trusts in a tax wrapper? Much less hassle, and probably better returns after costs.

You do pay tax on income taken from a pension if your total income is above the tax-free allowance. You also pay tax on pensioner bonds.

I am not a fan of BTL as I don't like hassle and it only takes one set of bad tennants to severely dent your investment but if you don't mind the hassles, then ordinarily the return should easily beat pensioner bonds.

Gold will outlive fiat currencies; does protect against inflation though with extreme volatility. Plus it protects you from raids on your cash like that which happened to bank accounts in Cyprus.