For the average investor Gold may not be your best foundation!
A 20 per cent drop is described as a bear market, and a 30 per cent fall is called a crash, what would you call golds almost 40% nose dive, recently breaking below $US1,200.
Gold peaked at $US1921.15 on September 6, 2011. Gold closed yesterday within 5 per cent of the lows, at $USUS1241.
Any asset class that loses almost 40% of its value in two years should be re-evaluated with an open mind.
Many of us have collected old gold and unused jewelry in the hopes of lining the nest so to speak. The term "Cash for Gold" refers to a service for people to earn cash by selling their old, broken, or mismatched gold jewelry to local and online gold buyers, dont just take whats offered by these companies. Many companies have been caught taking advantage of their customers, paying a fraction of what the gold or silver is really worth, leading to distrust in many companies.
Our daily mail delivery bombards us with the opportunity to get on the gold wagon at the best prices and time ever. Just read some of their Baker Serria (BS) in the flyers from companies like GoldmastersUSA, Monex, MeritGold, GoldFellow and Cash for Gold USA or the many others you may receive. With a minimum of investigation you will find a wide spread in the amounts offered.
Let the investor beware, dont throw away your money unless you can afford the wait.
http://www.smh.com.au/business/world-business/ten-reasons-why-gold-bugs-lost-their-shirts-20140109-30iud.html
http://thestockmarketwatch.com/metal/gold-price.aspx
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Gold hasn't lost any value at all. Neither has silver. I could buy a gallon of gas with two dimes from 1964 in South Carolina today with the melt value of the silver and copper. The two dimes are worth today $2.82 cents. Well I might have to put another 1965 dime with it.
Like any investment, fluctuations up and down are, unto themselves, irrelevant without consideration to the time liquidation will be unavoidable.
Well Mike you hold on to your dollars. As for me I'll hold on to my 1964 dimes.
We are realizing pretty good annual income returns on rental properties (real estate) with little risk an no costs other than taxes
And I do not have to watch the markets
I put a comment up that continued the one above yours. By the time I went to save it again it wouldn't save so you only got the first sentence. Let's see if I can somewhat remember what I typed because it wouldn't let me edit it either to copy/paste.
Everything has gone up including gold and silver and the cost of living.
If you had $1k dollars worth of silver in 1964 it would be worth I believe around $6k. That's not too good. If you had saved $1k at 5% you would have without tax on it almost twice as much money or about $12k, so the best thing to have done with that gold or silver or dollars would have been to invest in Microsoft. LOL
Then you might have a pretty good retirement program there. I made a 23% return in real estate last year. Well real estate was down since the bubble burst and either we were going to hell in a hand basket or it was going to go back up which is has been doing.
My retirement was cut in half in 2008 and 2009 but has returned to where it was when it started falling. Kind of like leaving your house, turning around and starting over. I'm just a little past where I was plus what I've put into it since it arrived back where it was before it started falling.
I understand what you are saying. We're on the same page. I gave the wrong impression that the dime was worth a whole lot more and it isn't really. It has gone down in value recently as you've said which makes our dollar worth more for the time being. But I guess the best way to say it is everything is relative to the time you are involved in. If you had to buy a thousand dollars worth of dimes today it would cost you $1k of today's dollars. Sorry I didn't say everything the way it really is in my original comment. That was back then. Still I wish I had a thousand dollars in 1964 dimes. It would still only be worth 5 or 6 times the face value, not much of an investment if I had held onto them for the last 50 years.
I'm an old fashion girl when it comes to investments. Since there is plenty of gold still out there in Africa, just like diamonds, I like to go with a commodity that there is a limited supply, real estate. Nothing beats investment property.
IIRC the nation of India has instituted laws to prevent the importation of gold . With their huge population that country used to account for a large amount of the gold demand ...
True enough especially here in Colorado, and you know what just like money it goes up in smoke just as fast.
Depends upon what you're measuring it against.
I own shares of IAU, which is a proxy for physical gold (its movement is corelated to the actual POG ("price of gold")-- its correlated to the price of gold bullion. (Other gold investments, from stocks of gold miners to gold coins to gold "objets d'art" and jewelry are also correlated to the POG but to a lesser degree as there are other factors at play). Unless you want to actually own gold bullion, something like the IAU has the closest correlation to the price of the metal.
I measure changes in its value by how much those shares are worth versus the U.S. Dollar. (Because I paid dollars for them, and will receive dollars for those shares if I sell it). Currently I have a fairly large "paper loss" loss in that investment.
Gold has lost value-- here's a 1 year chart of IAU:
P.S: When you compare the value of coins to the price of gas there are two additional factors at play:
1. Fluctuations of the price of gas. If you can buy more gas now with the metal, it could be due to a rise in the price of the metal-- but it also might be due to a decrease in the price of gas! (Even if the POG remained constant in $$$, you could still buy more gas with gold/silver if the price of gas went down).
2. Coins are correlated somewhat to the price of the metal-- but not totally. There are other factors determining the price of coins other than the cost of metal in them. For example, you could have one coin that's worth "face value" (a dollar coin that you could sell for a dollar)-- and another dollar coin from a different year with the same metallic composition that might sell for five times-- possibly even ten times, as much.
In other words-- physical gold (bullion) is correlated to the price of gold. Gold coins are correlated to some degree to the price of the metal, but they are not "pure" gold (bullion), they are a "collectible", so their are other factors that influence their price).
I would not advise investing in gold right now...IMO there are better places to put money.
Agreed.
I declined to buy Gold Coins bearing the Bas Relief od Bernie Madoff.
Enoch.
Here's what Warren Buffet has learned:
Warren Buffett: Why stocks beat gold and bonds
Sounds like a good idea.
I have to agree with Perrie-- real estate is probably the best investment-- it not only appreciates in value over time, but if you buy something you can rent, it provides a nice source of additional income.
I was unfamiliar with Peter Schiff, so I looked him up. A few significant excerpts from the article :
Hyperinflation?
A "viscious" gold rally coming?
Financial adviser to..Ron Paul???
Well, OK-- the guy's obviously a nut case. However, more importantly-- he's been so totally dead wrong!
Krish
I live in the country and own land that is leased to local farmerswhich provides income with no cost other than taxes and no headaches that come with rental residential properties
Diamonds are the absolute worst. Diamonds are controlled by one large holding source Russia which has Huge Vaults literally full of them. Gold is like riding the waves at sea get in low get out high or loose your can. Real estate is good but the risk is there as well Bare land or farm land is usually a very viable commodity but even that can be a risk when a road is put thru your property. The State will buy the land the road goes on and a small strip on each side. You can try to sue the State or County who ever is putting in the rod. Suing the Government at any level is high risk at all levels. Have a friend who had his land split. He had hopes of eventually developing it into a housing development. His return on the farmland is still there and the tax write off is there but the gigantic return he had hoped for is gone. I am a a Realtor and have been for over 16 years. Some of the huge real estate investors in the area lost ther assets or asses when the economy tanked and the income drooped dramatically as local jobs went away and renters could not make their payments and property could not drop the rent enough to make payments or pay for upkeep on existing rentals and empty houses some owned over 50 even a couple at over 100 homes. Banks were begging for buyers to buy large packages of homes for way under 50% often down to 30% of original value. A home is only worth what a buyer will pay for it or how much they are willing or in these cases able to pay in rent. Some streets had 5 6 or more empty homes.
That's also temporary. Being state controlled price is bound to eventually go down or hit a fixed value.
The FED could have very well have been buying up gold but over the years they have found out that GOLD'S value is like water in the hand it eventually goes away or drastically drops. It used to be used in all electronic circuits now the circuits are in a chip set containing a very small amount of gold if any at all. Holding Gold in a vault is a Scrooge McDuck fantasy to have something to play in ( for the love of gold ) the very unstable commodity. Having a gold standard means the dollar would have dropped 50 cents on the dollar. Wise up there is no mineral to really base your currency on. But by the same token we must produce jobs in this country or there will eventually no longer be a United States of America. G.W. Bush added over 145 free trade agreements its the Countries where our manufacturing jobs now reside. Congress is doing this shit and refuses to stop because it favors the rich.
Actually I haven't thought about it much. I am not interested in the politics or the philosophy of that-- I am more interested in investing in order to maximize my own personal financial situation. I don't give a hoot whether or not gold is an "enemy" of government-- or a "friend" of government! I am interested in learned even more about whether investing in gold at any point in time is a good idea or not-- and if so, how much to invest.
Most of my money is in stocks. IMO it would be foolish to buy treasuries-- or any sort of bonds. Not because of any conspiracy theories, but rather because the interest they pay is ridiculously low. I can get better dividends on pretty safe stocks (>4%)-- and higher dividends on slightly riskier ones.
I invest in these companies because they create value- - they actually produce something. (Gold does not). And, many companies return part of their profits to investors (which they gained by providing goods or services) -- like me
.
In other words, I am more of an investor (or, if you will, a "capitalist") than a conspiracy theorist!
BTW, the "conventional wisdom" was (and probably still is) to have 5 % to 10% in gold. I did when I started (it was actually about 12%-- I was buying gold during the tech bubble), but since the price of gold has gone down so much my gold holding are worth a lot less now..
Generally people invest for one of two reasons: price appreciation (the value of the stock, real estate, etc goes up and you sell it for a profit) or for income (you collect rental income on property, dividends on stocks). Income, or price appreciation-- or both .
You can (if you're smart + lucky) trade gold for price appreciation. However, if you are an investor (as opposed to a trader) the conventional wisdom is that you put 5%-10% into gold-- not for income, and not for price appreciation, but rather as a "safety net".
I used to think the price was primarily determined by inflation-- or sales of gold jewelry (particularly in India). Or even by world turmoil. All of these have some impact over the POG, but over the years I come to see its mainly influenced by the value of the dollar. When the dollar is weak, the price of gold rises (because it takes more dollars to buy an oz of gold-- so the cost of an oz of gold goes up in dollar value).
As the U.S. economy improves (which IMO is now happening) , the dollar gets stronger, therefore it takes less dollars to buy an oz of gold-- in other words, the POG decreases. If I were a trader I would not buy gold here...
I don't trade gold, but "buy and hold" a little as a "safety net"-- its a form of "insurance"-- I'm not looking to make a profit on it. (Its the only thing I own that I buy and hold).
However, one of the most important principles of investing is to diversify-- "Putting all your eggs in one basket" (be it all in gold or all in tech stocks, or all in banks stocks, or all bonds, etc) has been proven over time to be a very poor strategy.
If in fact we have the Gold and Germany owes the United States money could the Gold not be held awaiting restitution. Don't know if that is even pertinent. If we have the gold reserve held somewhere Fort Knox isn't it. My understanding or miss understanding as it might be was that when we went off the Gold Standard the gold was sold or paid out. Who received it I would guess the Billionaires like the Koch Brothers, Rockefeller's Dupont and their ilk or the Arabs and China.
I would believe leasing out Gold is a very dicey business as the value is very unstable and always has been.