feelgood

Ok, no one can't deny that the economy is heading for recession (other than Bush). So, is the idea of investing in gold a good idea? Reason I'm looking into this is that with stocks and mutual fund expecting to fall, gold has always traditionally done well during recssion and its even expected to make $1500 by next year. Am I just throwing rocks in the dark?

How do you make such investment?

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dlish

funny you say that.. i was thinking the exact same thing this morning and wondering how i could find out

surely the brains-trust we call tfp has an answer

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Crack

I know a place in Dayton Ohio called "Gold Fo Yo Mouf" I think they put gold in your mouth for safe keeping, I can check into it for you, if you would like...

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AngelaSI

You can buy actual gold bullion/coins from sites like https://online.kitco.com/

allaboutmusic

You can buy it physically (gold coins, jewellery, bullion), gold accounts (you own the gold, but a gold bank holds and guards it for you), or by investing in gold mining companies etc.

eribrav

Easiest way: Ticker symbol GLD.
Each share represents 1/10 of an ounce of gold.
You can buy it and sell it just like shares of any other stock.

As an aside (and don't take this personally): Your post is really valuable to me. I'm a contrarian investor/trader and have been long gold for years. When the "man on the street" starts getting interested it means we are very near a top. I will be looking for more public interest and if it's out there I will start getting short bullion.

yellowmac

What sort of investment timeframe are you looking at? Short-term, it's probably a good call given the state of everything that's going on right now. Long-term though, I don't think it does well historically compared with stocks and index funds, though I can't find some hard data to back up my hunch. For investing long-term, you can just buy stocks now while they're in a lull -- that way you're getting them at a discount.

I also wouldn't put all your money into gold -- you gotta diversify.

robot_parade

Gold is a fairly stable investment over the longish term. I wouldn't expect to make much money on it, but I wouldn't expect to lose your shirt, either. So gold is fine for a small part of your assets.

I've also heard, anecdotally, that Jewish families often have a small stash of gold somewhere fairly safe in their homes - this because, when the cleansing of the jews started in Nazi Germany, gold was an easy way to bribe their way out of the country. Not sure if this is true or not, but it sounds plausible.

MSD

Who says it's supposed to make $1500 by next year?

dlish

i looked up teh price of gold over the last few years, and found that the price has gone from about 300 dollars an ounce to about 900 dollars and ounce over the last 6 or so years.

thats a big jump..but it doesnt necesarily mean its gonna keep going up. it may be the wrong time to buy.. but who knows.. WWIII may break out tomorrow and you could make a squillion.

get some financial advice from an advisor?

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host

I would wait for a pullback in the price of gold, and I would consider silver, before gold. There is a battle going on between fundamentals influencing inflation as well as deflation.

Recession is deflationary, since it is caused by a reduction in economic activity, which influences a reduction in demand. There is a desperate effort by the federal reserve to inflate the currency to lessen the burden of the massive public and private debt. Servicing debt by paying the interest and some principle on it is much easier when it is paid with paper currency devalued because of inflation.

Gold has risen from $255 per troy oz in 2002, to more than $900 US, this past month, on speculative demand driven by belief that US paper currency, and to a lesser extent, other nations' paper currency will coninue to decline in value as central banks areound the world attempt to inflate by adding to the money supply. Crude oil has followed gold, but silver has lagged.

There is a credible school of thought that believes gold is overextended, and will fall with crude oil and other commodities as declining demand driven deflation takes hold im formerly robust economies.

If you read about the problems of counterfeiting in the 1979 to early 1980 move up in the price of gold and silver, and the confiscation of gold in private hands by the US federal government in the early 1930's, as well as factors that can negatively affect the price of shares of stock of gold producers, you might want to avoid gold paper shares, gold bars, and other non-immediately authenticated gold items.

If your gold investment needs to be assayed before it can be traded for paper currency or other valuables, it is not liquid. The difference between buying a stock or other security and buying the metal is personal control and declaration of profits for tax purposes, after you sell.

I think deflation is going to win out, because it is least expected, but very obvious, just look at residential real estate valuations for an example. Are the values of homes higher than a year ago, or are the paper currency that the properties are priced in higher?

The purpose of the Fed lowering short term interest rates is to reflate the economy, as in 2001 to 2004, but this time, the effort will fail, because the problem is not availability of monry to borrow, i.e. liquidity, but a problem of solvency of major banks, broherages, and the federal government itself.

There will be a huge "fire sale", a liquidation of paper and property assets that has already started, but has a ways to go before it peaks, If peopel are not yet impressed that "cash is king", they will be, and they will liquidate their gold, taking profits on it's nice run (it's nearly quadrupled in price in 5 years, while comments in this thread mention a further upside of just over 50 percent.

My opinion is to wait for a pullback in gold's price to buy in cheaper of to take more time to confirm that inflation is going to work as a tactic to combat recession. A sign of this would be if US housing prices stabalize, and even rise in price for a few months in a row.

Secondly, I believe silver is a much better investment than gold, if you believe gold is soon going to trade at $1500. Silver has lagged gold hugely...in January 1980, when gold peaked at $800, silver touched $50 per oz for a short time, and it is only $16.79 per oz. tonight. Silver has industrial demand, medical treatment and power transmission technology demand potential, and seems more squeezed in it's availability compared to need vs. availability of gold. Practical demand for gold is primarily for jewelers and recesision should lessen demand for gold from that sector.

Societal instability influences both the price of gold and silver. If US paper currency purchasing power collapses because the fed's inflation strategy is successful , do you think owning gold bars or coins worth a minimum of $1,000 each will be the practical way to exercise your well planned and superior purchasing power, or would these extreme conditions, or concern that they might be coming, be better potential for a dramatic up move in gold's price, or in easy to carry, easy to authenticate, and easily accepted in lieu of paper money, pre-1965 US silver coins, containing 90 percent pure silver?

You can see updated prices on this page, from this reputable dealer:
$16.78 oz spot silver price, less .14 = 16.64 X 715 oz = $11897.60 for US pre-1965 silver dimes and quarters, $1000 face value, or $6000 for $500 face value.

As I said, I think it will be easier to get trapped in an investment in gold at current prices, than it will be to get trapped in US "junk silver" coins. The US stock market is not stable, and when the market drops, the stock prices of precious metal mining companies will decline with the market, at least temporarily. Gold had never been above $900 before very recently, but silver has been at $50 in the last 30 years, and is under $17.00 now.

Why would you be inclined to think that the price of gold has the potential for a higher percentage rise, vs. current price, than silver does?

flstf

host, as I recall didn't silver hit $50 for only a short time when the Hunt brothers were trying to corner the market and then fell big time and they filed bankruptcy?

shakran

almost guaranteed that it won't. Look at it this way. There are tons of advertisements on TV right now trying to get you to "invest in" (aka, buy) gold.

Now, if the people who have the gold already are now trying to sell it, what does that tell us about how they think the gold market is gonna go? If it was such a great investment right now, one would think they'd hold on to it. I somehow have trouble believing that these guys are all so altruistic that they're willing to take a financial hit so that you, yes YOU sitting in your boxer shorts watching reruns of Survivor, can avail yourself of such a solid financial windfall.

Hain

It's funny you mention that though. My post is entirely speculation, I haven't any facts. But I have been seeing those advertisements where you mail in your old jewelry and they send you back a check of "fair" value. Now if gold was going to go downhill, these people that are collecting the gold from you wouldn't want it, would they?

This is probably worth less than two cents, but you've got it now anyways.

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shakran

Define fair value. I guarantee you the guys you're sending your jewelry to are gonna define it lower than you will.

Are the coins gold?

Hain

For sure it isn't fair price, hence it was in quotation marks. Still, they are buying your gold jewelry for less than it is worth, to sell it for [ideally] more than they paid for. If gold is going down the tubes then this is an incredible risk buying the old now only to hopefully sell it before gold drops.

Nope, it's a 2-cent Euro-coin, so worth a little more than 2 cents.

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dlish

just thought id bump this thread after looking at the gold prices today...

since the thread 6 or 7 months ago the price of gold has gone up another 60 dollars an ounce..sitting at around 960 at the moment...whats that about 5-6%.

do you guys still stand by your comments 6 months ago?

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blahblah454

I have always wondered where to invest my RSP funds, perhaps precious metals would be a good place for them.

shakran

Let's say you have a ring that has $100 worth of gold in it. It's gonna drop to $50 worth of gold 6 months from now. These jerks give you $25 because it's "old and scratched." They can melt the thing down and sell it as gold, and still make a profit even if the value of gold plummets . . .

Plus, I don't think the gold will necessarily go down the tubes - historically gold has been a pretty safe thing to have as far as retaining its value. However, I'm simply pointing out that the ads are kinda weird. . .

"The economy sucks. Gold is the only way to ensure that your net worth remains about what it is now. So come buy our gold so that we can no longer ensure that our net worth is stable."

Just doesn't pass the sniff test.