Help to invest in gold?

John_G_Jones

raffs wrote: »

I am lost as how I have offended your sensibilities so much. I asked a simple question highlighted in bold to get some advice.

My sincere apologies that my financial acumen is not as exquisite as yours.

You haven’t, I just didn’t want to leave any doubt as to how far off from a good idea your plan was.

In case I wasn’t clear, it’s a really bad idea.

Putting all of your money into any one single asset tends to be a bad idea, it has no better expected return than a diversified portfolio but a much greater probability of losing most of your money.

John_G_Jones

raffs wrote: »

That is exactly why I decided to post here, I thought at the very least someone would point me in the direction of more respectable sites, not chastise me because they have issues in their lives!

No issue in my life, so maybe best to drop the analysis.

No-one’s chastising you, just using hyperbole to point out how far off your first thought were.

Alz1986

Best way is just to buy up chunks of Gold.

But the problem with those "investing" in gold is that they are usaully misinformed or believe we are about to go back to iron age - like in Games of Throne, where everyone buys and sell in gold, like our ancestors did. Its crazy. And its not going to happen.

Index funds track movement of companies in a specific criteria. Legal and General have decent global index trackers. Use them. Your returns will be better.

Brown_Bear

Alz1986 wrote: »

Best way is just to buy up chunks of Gold.

But the problem with those "investing" in gold is that they are usaully misinformed or believe we are about to go back to iron age - like in Games of Throne, where everyone buys and sell in gold, like our ancestors did. Its crazy. And its not going to happen.

Index funds track movement of companies in a specific criteria. Legal and General have decent global index trackers. Use them. Your returns will be better.

That's probably all true.
But physical gold does have the advantage of asset protection.
Most other assets can be confiscated, frozen etc.

In an ideal world, we wouldn't need to own gold.
But unfortunately govts cannot be trusted.
What if the govts continue with their 'cashless society' drive - towards negative interest rates?

short_butt_sweet

raffs wrote: »

It's money that I hope to protect from whatever happens around Brexit while also putting away for 5 - 10 years hoping that it can make some money as well.

in that case, IMHO investing this money (by buying a multi-asset fund, probably inside an ISA) might be suitable. or perhaps investing part of it, and putting the rest in fixed-rate savings accounts (fixed rates are mostly available for anything between 1 year and 5 years - see https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#fixedsavings ).

short_butt_sweet

Brown_Bear wrote: »

That's why I consider physical gold an insurance for emergencies - not an investment.

you can think of it as insurance. but it's a bit rubbish as insurance.

take a classic case of insuring against an unlikely event: buildings insurance for your house. your house is unlikely to (for instance) burn down. buildings insurance is cheap. the worst-case events are very unlikely, but could happen. and if they do, buildings insurance pays out a very large amount, putting you back in the position you were in before the bad event.

compare that to holding gold. if you hold a lot of gold, it isn't cheap, because you're giving up likely higher returns (from investing in shares, bonds, etc). however, if you restrict your gold to a small percentage of the available assets that you might invest (e.g. 1% of them), then the cost of holding gold is cheap.

now imagine that some bad event happens. does holding gold put you back in the position you'd been in before? almost certainly not. does gold go up in value after a bad event? perhaps, but it depends on the event. does holding gold actually help you at all with handling the event? perhaps, but it depends on the event.

that sounds like really rubbish insurance to me. a bit like if buildings insurance didn't cover you if your house burnt down on the wrong day of the week, or if they just didn't feel like paying out

short_butt_sweet

Brown_Bear wrote: »

Obviously, many would argue that the gold price is not volatile at all

these people exist (though i'm not sure how many of them there are). and they are delusional.

John_G_Jones

Brown_Bear wrote: »

That's probably all true.
But physical gold does have the advantage of asset protection.
Most other assets can be confiscated, frozen etc.

Because of course there is absolutely no way in the world your physical gold could ever be taken off you is there?..

The particularly narrow set of dystopian circumstances in which money would not have value but gold does are so unlikely as to not be worth changing your strategy over.

As to the idea that gold prices are not volatile, well that’s simply wrong. I don’t know who claimed that to you but you can easily show them their mistake.

Apodemus

short_butt_sweet wrote: »

you can think of it as insurance. but it's a bit rubbish as insurance.

I have my great grandfather’s writing case, and in amongst all his letters and papers is a wee bag with his gold sovereigns. They date to around 1907 and are well-worn, from the days before WW1 when they were simply in use as pound coins. They are not collector grade, just old coins. I don’t see me ever cashing them in (neither my father or grandfather did, so why should I?) they are just curios in a time-capsule!

Incidentally, accounting for inflation, the gold in these coins is worth about twice what it would have been worth in 1907, so I guess they have been a store of value, but probably a poor investment in comparison to the stock market. However, 1907 was the year of the first global stock market crash and I wonder if great grandfather put these away as a hedge against uncertainty in troubling times!

Malthusian

Brown_Bear wrote: »

I'm saying that no one can predict the future and that having all your assets registered with the govt may not be a good idea. Especially as no one can say who will take over as the govt in the future. For many reasons.

Not just tax / benefits. Also things like imprisonment and confiscation / freezing of assets.

Gold is more vulnerable to confiscation than stocks & shares.

Stocks & shares can be held with a multinational company that would have no reason to hand over your assets on the orders of a UK dictatorship. Providing you were sensible enough to flee the country you would still have your assets.

If you have physical gold under the floorboards by contrast the secret police can simply rip up the floorboards and take it away.

If you hold gold electronically via a multinational company rather than physical gold, the position re possibility of confiscation is identical, and it becomes purely a question of expected return, which we don't need to go over again.

If you don't flee the country then it is irrelevant whether you have electronic assets or physical gold. The Stasi will deduct fingernails until you hand it over either way.

But I would say, the poorer and more vulnerable you potentially are - the greater proportion you should hold in gold.

The poorer you are the less you can afford to lose money by holding non-yielding shiny metal.

Providing you can scrape together enough money to pay traffickers, poorer people are less vulnerable to tyrannical governments, not more. This is because they have less to lose. Middle-class people are more likely to stay put and hope the storm will pass because they don't want to lose their house, or any other assets they can't take with them. This correlation holds until you get to the rich, defined as anyone rich enough to shrug off the loss of their penthouse. They will be long gone on their yacht before any tyrannical government takes over.