Buying gold

kinger101

Gazzi said:

What is your advice regarding buying gold now

YOU CRAZY FOOL!

puk999

Gazzi said:

What is your advice regarding buying gold now

Don't bother. I'm still holding gold (and silver) which is worth less than what I paid for it years ago after listening to the fiat doomsday stories.

As for disposing of the stuff, that's going to cost me a lot in eBay fees and shipping time. Worried that I'll be scammed by an unscrupulous buyer who could claim the package was empty and force a chargeback or something. Tip: don't enter into an investment without thinking properly about how you can liquidate downstream.

On the upside, it does look nice and shiny though.

markj113

puk999 said:

Gazzi said:

What is your advice regarding buying gold now

Don't bother. I'm still holding gold (and silver) which is worth less than what I paid for it years ago after listening to the fiat doomsday stories.

As for disposing of the stuff, that's going to cost me a lot in eBay fees and shipping time. Worried that I'll be scammed by an unscrupulous buyer who could claim the package was empty and force a chargeback or something. Tip: don't enter into an investment without thinking properly about how you can liquidate downstream.

On the upside, it does look nice and shiny though.

It seems you must have paid a huge premium over spot price as gold is around all time highs.

[img]https://i.imgur.com/PSu1JOt.png[/img]

Disposing of it - try chards as they are paying spot or atkinsons/hatton garden metals for slightly less.

DiggerUK

The last time an abundance of gold talk descended on the threads was after GFC1, it peaked with the gold high in September 2011. Now it seems fashionable to raise the subject again.

As I am MSE's self appointed, unelected gold expert, it is beholden on me to make some observations. Firstly, gold is not priced in $USD....it is priced in local currencies. The London  Fix is done in $USD, then by the magic of forex rates it gets instantly localised, I have only ever traded gold in £Sterling.

Fiat currency is handy stuff, I like it, it's here to stay. Common currency is ubiquitous, get used to it. It may get inflated, deflated, hyper-inflated, debased and what have you....but it will always be around. My Zimbabwean financial adviser has promised me that it will ever be so.

So why buy gold you ask. Simple, security is my base answer. 

It is unlikely you will become rich trading gold in a day trader or speculative manner, so don't try unless gambling is your fancy. We bought gold for long term security of our retirement savings, and it has done just that.

The current price of gold is over double our costs, calculating how much we are up on the deal can be done. It is my calculation that if held  ten years you would always be up.
What I classify as being up is matching inflation plus a margin on top. The only way I have been able to track that is by taking the cost of purchases made in one year, and running it through the BOE Inflation calculator. Most five year periods we have been ok, some were longer (8 years being the longest, as I recall, from when last I did the exercise) that is why I now recommend only tying up money in gold for the long term of ten year plus.

In the early years of your life gold isn't much help for getting property, or navigating life. So small amounts only should be considered, but only when the gold price tanks and with money you won't need for a long time..._

kinger101

DiggerUK said:

The current price of gold is over double our costs, calculating how much we are up on the deal can be done. It is my calculation that if held  ten years you would always be up.

The problem here is, this has not always been true in the past, and won't always be true in the future.  Particularly against Sterling, the gold price has been rising fairly steadily since about 2005, with only one significant dip along the way.  But that's after decades of gold being a bad choice.  I can see it having a small part in some porftolios, but you'd be blind not see the risks in being heavily invested in gold.  

bowlhead99

DiggerUK said:

The current price of gold is over double our costs, calculating how much we are up on the deal can be done. It is my calculation that if held  ten years you would always be up.
What I classify as being up is matching inflation plus a margin on top. 

It would have been annoying to have invested £3000 in ten ounces of gold coins in late September of 1986 (plus dealer margin, maybe 5%, so £3150). Then looking to spend the money ten years later in September 1996, you see that it's only £240 an ounce and you're down by a quarter after dealer commissions if you sell now. So you hold on another three years to September 1999, but now it's only £160 an ounce, or maybe £155 because the dealer won't pay full spot price because he has to make profit. So your 13-year gold-holding journey turned £3150 into £1550, a loss of 51%. But the UK retail prices index increased by two thirds over those thirteen years so the £1550 only has the buying power of £928 back in 1986.  £928 is only 29% of the starting value of £3150.

Of course, I have deliberately cherry-picked the dates there to prove that after 10 years (or 13 years) you would not 'always be up' - instead, you might be down 71% in real terms. The average person buying a bit of gold every so often would have bought at a range of dates and so get a range of returns, some of them very positive. But it does demonstrate that when buying commodities you can't always guarantee to preserve your value over holding periods of a decade, let alone match inflation with a buying/selling margin on top.

If you have time on your side and literally don't need the money, this will not be a problem, because someone with 10 ounces to sell in 1999 disliking the price at that time could just have waited another six and a half years and sold at a price that would get their £3150 back (ignoring inflation), or they could have waited another decade and done a lot better. So, you have your security in the end, even if it takes two decades to show its face. Meanwhile, you might have some concerns, unless you have Faith.

It's perhaps difficult to disagree that "small amounts only should be considered'" and "only when the gold price tanks and with money you won't need for a long time..." - you just need to be able to know when the gold price has 'tanked' rather than 'fallen a bit on the way to falling further' (which is what it did from 1986 to 1996).  It's easy to see the patterns with the luxury of hindsight, and know that you shouldn't have bought at what is in hindsight a peak (rather than a pitstop on the way to the top), or that you should have bought at a dip which was the bottom (rather than a shelf on the way to the floor).

MK62

As ever, it's all going to come down to timing.........when you bought and when you sold/will sell.
For some, gold will have been a very good investment.......for others, pretty dire.......hence the range of opinion. 

Hindsight can only tell us whether gold has been a good or bad investment vs it's price today, and relative to other potential investments......what we cannot know, however, is whether gold will be a good investment if bought today. To be fair though, that's the same quandry investors have with shares, bonds, property, oil....blipblaps....whatever.

kinger101

MK62 said:

As ever, it's all going to come down to timing.........when you bought and when you sold/will sell.
For some, gold will have been a very good investment.......for others, pretty dire.......hence the range of opinion. 

Hindsight can only tell us whether gold has been a good or bad investment vs it's price today, and relative to other potential investments......what we cannot know, however, is whether gold will be a good investment if bought today. To be fair though, that's the same quandry investors have with shares, bonds, property, oil....blipblaps....whatever.

I've been shorting blipblaps recently, but leveraging my position in blapblips.

Bravepants

So if now, according to some, is the time to buy gold, when exactly is it the time to SELL gold?

I note that some have been holding gold for years.

This is more a rhetorical question rather than one for which I'm looking for an actual answer.

EdGasketTheSecond

You sell it when it is expensive relative to other asset classes. Then you buy one of those other asset classes e.g. stocks when they are cheap as valued by PE or some other measure of value, or real estate when it is back to a realistic multiple of average earnings.