Is it worth investing in gold?

Glen_Clark

Malthusian wrote: »

There is a useful dataset showing typical savings accounts interest rates since 1960 at http://www.swanlowpark.co.uk/savingsinterestannual.jsp. It is flawed as the source data is inconsistent (see the bottom) but it is still a useful comparator.

If by "high interest deposit accounts" you mean maximising Santander's 3-2-1 account and the like, it would be near-impossible to obtain a meaningful and consistent figure for those returns over time, because a) of the restrictions on how much you can put in those accounts b) because chasing high-interest deals is a hobbyist activity, and the interest rate fails to take into account the time cost of researching accounts, filling in forms and chasing up transfers.

Thanks for the link. I haven't bothered with chasing interest rates on current accounts. I'm not suggesting cash is better than equities, (I hold 70% equities.) Its just that I have found when I see charts of how equities have performed over cash, the cash always seems to have been held in some low interest bank account for the whole term. Wheras the equities are often FTSE with income reinvested taking no account of charges and spreads.

Malthusian

Seems a fair enough comparison to me, you can access the FTSE through funds with very low charges and no bid-offer spread. A tracker fund is a better comparison with a bank account than a total return index, to account for charges, but some research will favour the index simply because it gives you a longer timeframe to look at. The index inevitably goes further back than even the oldest fund that invests in it.

I'm not sure what else you would use to represent cash. The Swanlow Park figures are on the optimistic side, given how many accounts since the mid 2000s dropped their rates to 0.5% for those who didn't bother to switch.

Glen_Clark

Malthusian wrote: »

I'm not sure what else you would use to represent cash. The Swanlow Park figures are on the optimistic side, given how many accounts since the mid 2000s dropped their rates to 0.5% for those who didn't bother to switch.

Thats the problem isn't it.
Those selling equity investments might prefer to compare with cash left in the same account for the whole term. Wheras moving to the best paying account every 6 months would have produced a much better return.
Cash is the only investment I can think of where the small investor can do better than the large professional investor - National Savings and Building Society (short term bonus) accounts with FSCS protection are not open to the professionals.

gadgetmind

Glen_Clark wrote: »

Wheras moving to the best paying account every 6 months would have produced a much better return.

For some cash, held unwrapped, yes maybe.

bigfreddiel

If you want to invest in something that doesn't pay a dividend, is kept in a safe, has no use other than a crown for a tooth or used in electronics, or worn then gold is your thing. And it costs to keep it safe, but not in Hatton Garden!

Cheers fj

ChesterDog

I will summarise the consensus for the OP...

"No".

Hope this helps.

paset2glen

Gold is ostensibly seen as a auxiliary currency that investors perceive as a safe haven for when the globbal market is in a downturn.

Therefore, your decision as to whether to invest in gold (or gold stocks) is largely dependent on whether you perceive that the global market will grow or contract in the future. If you think that the global economy will decline then invest in gold, if you don't, then don't invest. I personally am bullish on the global economy and would not invest.

TheTracker

paset2glen wrote: »

Gold is ostensibly seen as a auxiliary currency that investors perceive as a safe haven for when the globbal market is in a downturn.

Therefore, your decision as to whether to invest in gold (or gold stocks) is largely dependent on whether you perceive that the global market will grow or contract in the future. If you think that the global economy will decline then invest in gold, if you don't, then don't invest. I personally am bullish on the global economy and would not invest.

I would add to this to say you not only need to believe that the global economy will contract short term, but that either you can time markets or that you believe it will contract over the next 10+ years in real terms.

Kendall80

If there is a raft of -ve US economic data between now and the December US rate decision then the dollar may weaken. Gold will likely then pick up as it is inversely correlated with the dollar. If you can use this relationship to your advantage then investing in gold can be fruitful.