Better Buy Gold

PenguinJim

pop_gun wrote: »

Gadgetmind was shoring up JimJames' argument about a return of 70%, if you had brought the entire FTSE index and reinvested the dividends from it's highs in 1999. Even if we don't take into account the various brokerage fees or the tax on dividends, this percentage still pales into comparison with the 400% rise in the price of gold for the same period. If you add storage fees and capital gains tax (some coins are exempt) you'd still beat those stock market returns.

I think you've missed the point - they were explaining a near-worst-case scenario where people bought into the stock market at a "terrible" time, but would still have made a return today. Most people can invest regularly into the stock market and get much better returns. While "timing" the market is rarely beneficial, it's possible to invest more... efficiently, if you research instead of "blindly" investing.

To try and make it simpler: they chose this example because it started on a high. While your scenario for gold always seems to start at a low and end on a high. Funny, that. Gadfium pointed this out to you (what about if you'd bought at £1,151/oz in Sept 2011? Then today you'd have a "loss" which hasn't been offset by dividend reinvestment and, as you say, has been exacerbated by inflation), so I apologise for repeating it.

And you also seem to miss the flexibility of shares (the discrete units are very large with gold coins, and they generally take more than 60 seconds to sell) and the fact that gold hasn't made you any money until you crystallise the gains by selling. Except maybe you do recognise that, because you say:

pop_gun wrote: »

If anyone had brought gold in any prior year to 2011 they would've made money had they sold at or near the peak.

So please tell me: if I buy my gold today (and I am genuinely interested in holding a couple of ounces - I just never seem to get around to it!) what will the next peak value be, roughly?

I think gold has a place in portfolios. I don't see a problem with people hitting certain intangible targets and picking up a 1oz gold coin or two to 1) add a touch more diversity to their portfolio and 2) finally, something from these ISAs and annuities and OAP bonds and online trading accounts and online bank accounts and Sri Lankan farmlands and Japanese whale research funds that I can finally ****ING TOUCH! I'll stroke each coin every night and it'll be a reminder of the financial checkpoints I've reached.

But I'd worry if my gold approached 3 or 4% of my portfolio. :eek: It's not magical and to say it's better than cash or shares or property really does require a crystal ball.

Or adequate skill at scaremongering on Internet forums to increase the demand for gold and therefore increase the price. But I don't think anyone can accuse you of having that.

Gadfium

pop_gun wrote: »

We were discussing differing perceptions of the stock market. Here is mine (U.S. tale that could so easily apply to this side of the pond).

http://americablog.com/2014/10/gtat-stock-crash.html

Did you even read the whole article? Or just quote-mined the bit that supported your view (remember what I said about confirmation bias?)?
If you had read the article then you would have seen that the author was using those examples of exactly how NOT to invest- ie, chucking a substantial portion of your wealth into a single stock. The author then goes on to talk about tracking the whole market to prevent such an occurrence.

pop_gun

PenguinJim wrote: »

I think you've missed the point - they were explaining a near-worst-case scenario where people bought into the stock market at a "terrible" time, but would still have made a return today. Most people can invest regularly into the stock market and get much better returns. While "timing" the market is rarely beneficial, it's possible to invest more... efficiently, if you research instead of "blindly" investing.


But I'd worry if my gold approached 3 or 4% of my portfolio. :eek: It's not magical and to say it's better than cash or shares or property really does require a crystal ball.

Or adequate skill at scaremongering on Internet forums to increase the demand for gold and therefore increase the price. But I don't think anyone can accuse you of having that.

70% is a worse case scenario. Give me the best case scenario from any point in the last 20 years. Please make it realistic. I'm sure if you could perfectly time the market to buy on dips and sell on peaks you'd make millions from a few thousand pound.

PJ, what makes you think I want the gold price to go up?

I want it to go down!

£300 an ounce gold is something I dream about. At those prices, I would go out and line my pockets.

dunstonh

70% is a worse case scenario

Global nuclear war would see gold hit zero as trading of usable commodities and would be the preferred currency. It would be back to bartering.

So, worst case scenario on equities and gold is 100% loss.

PJ, what makes you think I want the gold price to go up?

Fear.

pop_gun

Gadfium wrote: »

Did you even read the whole article? Or just quote-mined the bit that supported your view (remember what I said about confirmation bias?)?
If you had read the article then you would have seen that the author was using those examples of exactly how NOT to invest- ie, chucking a substantial portion of your wealth into a single stock. The author then goes on to talk about tracking the whole market to prevent such an occurrence.

It seems confirmation bias isn't something you're afraid of. You will note the author stated even a 1% brokerage fee will reduce the retirement balance by 28%. He alluded to the fact most investors were paying more than 1%.
Even if your argument is a diversified portfolio might have led to a return on investment. Would that return have covered the annual fees being charged?

I'll give you the author is none too bright (reminds me of you in some ways) with his claim to have saved $5,700 by changing broker. No doubt transaction fees will be still be there and anything else they can dream up.
A bit like being repeatedly burgled and being happy they didn't take the kitchen sink.

pop_gun

dunstonh wrote: »

Global nuclear war would see gold hit zero as trading of usable commodities and would be the preferred currency. It would be back to bartering.

So, worst case scenario on equities and gold is 100% loss.

Fear.

Even under the bartering system you need to differentiate value and use something all parties are willing to accept.

This is fear.

http://www.theguardian.com/business/2015/jan/22/ecb-quantitative-easing-1-trillion-euros

Brilliant comment under the article

By Simonatthegrauniad

They could of course give that €1Trn to people to pay off their debts and stimulate the economy. But then the banks would complain that the debts couldn't be paid off with the QE money because it wasn't real money, it had no real value having just been created out of thin air. and obviously if it wasn't real money then it couldn't pay of real debt. Yet they are going to use the same value-free-created-out-of-thin-air money to buy real assets from real people and lend it to real people at real interest rates making real money from non-existent money putting real people into real poverty with things that don't exist, and, and and, and …

Now that's magic!

jimjames

pop_gun wrote: »

70% is a worse case scenario. Give me the best case scenario from any point in the last 20 years. Please make it realistic. I'm sure if you could perfectly time the market to buy on dips and sell on peaks you'd make millions from a few thousand pound.
.

You could make millions if you timed perfectly to buy and sell. But trading doesn't work for most people as they don't possess crystal balls.

Obviously compounding is the one thing you don't understand as you are obsessed by an asset that produces no income but that produces much of the long term return.

A few examples from my portfolio, an Asian trust has gone from £1.50 to £10 in the last 15 years, much the same timescale as the FTSE100 peak you're quoting.

On the FTSE100, I was buying units for 45p or so in 1999, now they are 80p. That isn't a loss even if it isn't a great return over that specific time period. Try 2009 until now and you'd have got over 100% return.

FTSE250 has gone up 3 fold over that same 15 years.

Lots of options for a portfolio and no-one with any sense would base it on a single index or market.

gadgetmind

jimjames wrote: »

A few examples from my portfolio, an Asian trust has gone from £1.50 to £10 in the last 15 years, much the same timescale as the FTSE100 peak you're quoting.

Well, quite. If you hold equities from different territories, and also hold asset classes such as property, bonds, and even (gasp!) gold, then your portfolio performs better than the sum of its parts.

Nocto

pop_gun wrote: »

I want it to go down!

£300 an ounce gold is something I dream about. At those prices, I would go out and line my pockets.

If that were to happen, you’re making the assumption that it would go up again! It might, it might not, it could continue going down. Clearly you would be able to buy more gold for your money, but what if you needed to sell? You have no way of knowing if it will ever be worth more than you paid for it in your lifetime.

If you’re not comfortable with shares that’s fine. You have at least the good sense to save and invest, but I would suggest that you need buy more than just gold with your money. Personally I’m comfortable investing in the stock market, but I would be crazy if I only bought shares in one company.

There are lots of other physical things you can ‘invest’ in. Other precious metals, gems, art, antiques, etc., and of course property. All of which will still be around if the financial system were to collapse, though what they’d actually be worth is anyone’s guess…

You’ll save on brokers fees, but don’t forget that dealers buy and sell for a profit (or a big fat fee in the case of estate agents!), and I would suggest that insurance is essential.

Gadfium

pop_gun wrote: »

I'll give you the author is none too bright (reminds me of you in some ways) .

pop_gun wrote: »

I

You know you've lost an argument when you're attacking the poster and not the argument he makes.

Q.E.D.

pop_gun wrote: »

Even if your argument is a diversified portfolio might have led to a return on investment. Would that return have covered the annual fees being charged?
.

Again you have demonstrated the limit of your knowledge.
16% growth in 12 months, 0.24% annual charge
http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-80-equity-accumulation