Transfer cash savings into Gold bullion?

farouqtaj

I'm thinking of transferring some of my cash savings into Gold bullion to protect against inflation erosion. I'm finding it difficult to get a view on whether during a period of crisis with rising inflation leading to recession this would be a good idea or not. What are you thoughts on Gold prices as we go through 2023 ?

masonic

Gold looks quite expensive at the moment, and historically hasn't given very reliable protection from inflation. If you hold it for a few centuries then it will tend to keep up with inflation, but over just years or decades, it might go up or might go down in real terms.

Assets that are thought to protect from inflation are priced according to future expectations, so the right time to buy them is before inflation hits.

Albermarle

Where would you be thinking of storing it ?  Normally there would be significant costs involved, with security, insurance etc .
You can buy Gold ETF's- investments that follow the price of gold, which are much cheaper.
Any gold investment is heavily affected by the strength of the dollar, so you would be indirectly betting on exchange rate movements, which is risky.

DoublePolaroid

Pensioncraft has done a good video on whether historically gold has been a good hedge against inflation. The short answer is that it hasn’t except in cases of hyperinflation the like of which tends not to occur in developed economies. Link to the video, or bedtime reading if that’s your preference, is here.

plumb1_2

I bought someone’s collection of 10 half sovereigns about 10 yrs ago at £60 each.
Think I’ve done ok hanging on to them. a£160 each now.
How much would £600 be worth today with inflation 

masonic

plumb1_2 said:

I bought someone’s collection of 10 half sovereigns about 10 yrs ago at £60 each.
Think I’ve done ok hanging on to them. a£160 each now.
How much would £600 be worth today with inflation 

Gold price is up 40% over 10 years. RPI is up 42%. You've done very well (166% return) getting them at £60 each, which was a little over half their market value at the time. If you can buy gold at a near 50% discount, then it is a no-brainer.

plumb1_2

masonic said:

plumb1_2 said:

I bought someone’s collection of 10 half sovereigns about 10 yrs ago at £60 each.
Think I’ve done ok hanging on to them. a£160 each now.
How much would £600 be worth today with inflation 

Gold price is up 40% over 10 years. RPI is up 42%. You've done very well getting them at £60 each, which was a little over half their market value at the time.

Maybe a good time to sell now?

masonic

plumb1_2 said:

masonic said:

plumb1_2 said:

I bought someone’s collection of 10 half sovereigns about 10 yrs ago at £60 each.
Think I’ve done ok hanging on to them. a£160 each now.
How much would £600 be worth today with inflation 

Gold price is up 40% over 10 years. RPI is up 42%. You've done very well getting them at £60 each, which was a little over half their market value at the time.

Maybe a good time to sell now?

I try not to do much crystal ball gazing with equities. Gold is even harder to predict. I added a 5% gold allocation to my portfolio about a year ago. At the time I didn't want to hold government bonds (turned out to be a good move), and I've been tempted to sell, but am holding off doing so until interest rates peak. I don't usually consider gold a worthwhile investment, but it served a purpose when interest rates were being hiked from historic lows.

ColdIron

Gold goes up, gold goes down. It's a speculative asset
Are we talking a couple of sovs or a significant part of your life savings?

Are you thinking of holding it for ten or more years or an SPQR (Small profit, quick return) by Christmas?

Type_45

farouqtaj said:

I'm thinking of transferring some of my cash savings into Gold bullion to protect against inflation erosion. I'm finding it difficult to get a view on whether during a period of crisis with rising inflation leading to recession this would be a good idea or not. What are you thoughts on Gold prices as we go through 2023 ?

A 10% allocation is what I've heard advised.

Apodemus

Type_45 said:

farouqtaj said:

I'm thinking of transferring some of my cash savings into Gold bullion to protect against inflation erosion. I'm finding it difficult to get a view on whether during a period of crisis with rising inflation leading to recession this would be a good idea or not. What are you thoughts on Gold prices as we go through 2023 ?

A 10% allocation is what I've heard advised.

... and I've heard 100%...and 0% ...and everything else in between!