My financial advisor has told me to buy gold

John464

I would be uneasy at the thought of keeping gold in a place where someone knows where it is.
But then I have heard of gold being found buried hundreds or thousands of years after the person has died because nobody knew where it was.

Frequentlyhere

HappyHarry said:

I would always suggest that an emergency fund is 100% cash deposit.

Any gold holding would be part of the client’s investment portfolio, and I would not count it as part of an emergency fund.

I haven’t heard of any adviser recommending part of an emergency fund being held in gold, until now.

Second to this. Holding physical gold gives you a volatile and relatively illiquid asset with also extra transaction costs. A gold ETF would be marginally better, but still as volatile. I'm really not sure why anyone would advise this.

Besides which, how big does an emergency fund need to be? 10% of an emergency fund might only be £1k-£5k. I don't  see the point of messing about with transaction costs and safes for this level of investment.

Type_45

John464 said:

I would be uneasy at the thought of keeping gold in a place where someone knows where it is.
But then I have heard of gold being found buried hundreds or thousands of years after the person has died because nobody knew where it was.

If people knew where it was it could be stolen. And after they die they no longer need it. But it was there for them if they needed it during life. 

wjr4

HappyHarry said:

robaber said:

Hi

I recently had a free consultation with a Financial Advisor. We discussed my emergency fund. 

To my surprise, he suggested 90% be in cash and 10%, be in gold. He suggested I buy a home safe and gold coins e.g. sovereigns. 

I was very surprised as I don't have any gold, thinking it a wasting asset. It will cost me to hold it and it doesn't provide an income. It is also less liquid than cash. 

What do others think?

I would always suggest that an emergency fund is 100% cash deposit.

Any gold holding would be part of the client’s investment portfolio, and I would not count it as part of an emergency fund.

I haven’t heard of any adviser recommending part of an emergency fund being held in gold, until now.

I agree with this 

eskbanker

robaber said:
My financial advisor has told me to buy gold

[...]

I recently had a free consultation with a Financial Advisor.

You don't have a financial advisor, you just had a brief introductory conversation with one, and not a very good one by the sound of it....

Type_45

Financial Advisors of today have only ever known rising equity markets.  They've only ever known the kindest conditions investors have operated in. And they look to each other to confirm their biases (which is human nature).

The investing environment hasn't always been like it has been for the past 40 years. And it won't be like it is now in the future either. But as we are at the tail end of the longest bull run in history people have forgotten what has come before and what will happen in the future.

masonic

Type_45 said:

Financial Advisors of today have only ever known rising equity markets.  They've only ever known the kindest conditions investors have operated in. And they look to each other to confirm their biases (which is human nature).

The investing environment hasn't always been like it has been for the past 40 years. And it won't be like it is now in the future either. But as we are at the tail end of the longest bull run in history people have forgotten what has come before and what will happen in the future.

If you believe investors over the past 40 years have only known rising equity markets, then you'll believe anything.

grumiofoundation

Type_45 said:

Financial Advisors of today have only ever known rising equity markets.  They've only ever known the kindest conditions investors have operated in. And they look to each other to confirm their biases (which is human nature).

The investing environment hasn't always been like it has been for the past 40 years. And it won't be like it is now in the future either. But as we are at the tail end of the longest bull run in history people have forgotten what has come before and what will happen in the future.

So for clarification you believe there are no financial advisors who have more than 14 years experience? 22 years?

Type_45 said:

Sg28 said:

I wouldn't keep any emergency fund in gold. Unless the emergency you're planning for is total economic and societal collapse. 

I have 25 gold sovereigns as a long term investment and also because I like coins and I think they're nice to have. 

Dont bother with a safe either. Not point showing the burglars exactly were all your valuables are kept. 

Gold will perform in a currency collapse. Gold had kept its purchasing power for thousands of years. An ounce of the yellow stuff could have bought you an expensive suit at any point in history. Still true at today's price of £1,500.

How are the GBP and Euro looking to you right now?

Is that an accepted measure of inflation? Or a Type_45 one?

How much 'suit' could an oz of gold buy you in 100 BC, 100 AD, 300 AD,...... 1900 AD etc

Also I am sure it is very easy to spend more than £1500 on an 'expensive' suit.

EthicsGradient

grumiofoundation said:

Type_45 said:

Financial Advisors of today have only ever known rising equity markets.  They've only ever known the kindest conditions investors have operated in. And they look to each other to confirm their biases (which is human nature).

The investing environment hasn't always been like it has been for the past 40 years. And it won't be like it is now in the future either. But as we are at the tail end of the longest bull run in history people have forgotten what has come before and what will happen in the future.

So for clarification you believe there are no financial advisors who have more than 14 years experience? 22 years?

Type_45 said:

Sg28 said:

I wouldn't keep any emergency fund in gold. Unless the emergency you're planning for is total economic and societal collapse. 

I have 25 gold sovereigns as a long term investment and also because I like coins and I think they're nice to have. 

Dont bother with a safe either. Not point showing the burglars exactly were all your valuables are kept. 

Gold will perform in a currency collapse. Gold had kept its purchasing power for thousands of years. An ounce of the yellow stuff could have bought you an expensive suit at any point in history. Still true at today's price of £1,500.

How are the GBP and Euro looking to you right now?

Is that an accepted measure of inflation? Or a Type_45 one?

How much 'suit' could an oz of gold buy you in 100 BC, 100 AD, 300 AD,...... 1900 AD etc

Also I am sure it is very easy to spend more than £1500 on an 'expensive' suit.

It's a bit of a cliché among gold investors. They compare the price of a Roman senatorial toga to a good suit now: https://glintpay.com/blog/golds-purchasing-power/

dunstonh

Type_45 said:

Financial Advisors of today have only ever known rising equity markets.  They've only ever known the kindest conditions investors have operated in. And they look to each other to confirm their biases (which is human nature).

The investing environment hasn't always been like it has been for the past 40 years. And it won't be like it is now in the future either. But as we are at the tail end of the longest bull run in history people have forgotten what has come before and what will happen in the future.

That is a pretty ridiculous thing to say.  The average age of an IFA (dont know about FAs) is 57.    Markets didn't grow between 2000 and 2009

Gold had kept its purchasing power for thousands of years.

Yet for most of the last 50 years it didn't.