Does buying gold now make any sense?

[Dntsycnt]

I want to buy some gold just to hold and feel cool.

Something about that gold brick Samuel Jackson lugged around in Diehard (3?) altered me permanently.


As for buying gold you never see.  I've got some to sell...but I'll keep it.  You know.  For safe keeping.  *Shifts eyes*

I'd like to start making my money work for me instead of sitting around.  Would 1000 be a suitable starting sum for investment?

[LAK]

JohnBT

How about more foreign stocks? Do they count? Should I buy a wheelbarrow or three worth of Euros?

I have a fair-sized pile of silver coins acquired in my coin collecting days 40+ years ago, plus a smattering of gold pieces and little ingot thingies my father picked up along the way, and they don't take up much space. OTOH, the stupid Sterling flatware set does take up some room. I should melt it down and make bullets.

Land sounds good, but it's not very portable and I'm looking ahead a couple of years to retirement and traveling/moving.

The euro is probably a good bet. The onl reason I prefer gold and silver is that it is universally recognized. Many ignorant folk in this country have never even heard of the euro.

Although it takes more dollars to buy them, some of the smaller gold coins are good to have because cutting up 1 oz coins and weighing out smaller pieces dds unwanted complexity to a barter.

I buy maple leafs because I seem to be able to get them cheaper than other coins and they are .999 pure gold.
 

[luckyorwhat]

Euro isn't safe. There is internal strife and dissention, and they're writing off losses with sub primes just like everyone else. Stronger than US$, but not bullet-proof. Fiat currencies are what they are, paper given value by everyone playing along and pretending it's something other than paper. If people stop playing along the currency suffers.

[Manedwolf]

The babble about "fiat currencies" makes me laugh.

It's really obvious who isn't involved in any sort of international commerce. If they saw how many cross-currency transactions were taking place every second in a large corporation, they'd be overwhelmed. It'd be like exposing them to the infinity of the universe all at once.

[Brad Johnson]

But never confuse speculation with investment, or insurance.

I think you already have.  Insurance is a stated return in a given situation.  Gold has no such guarantee.

Gold = maybe.

Maybe = speculation.

so therefore...

Gold = speculation.

Brad

[Paddy]

Gold, and precious metals for that matter, are long term investments.  Something to buy and hold for their inherent value.  If you want quick turnarounds, look into short selling, hedging, straddling, etc. stocks.  It is not unusual for precious metals to fluctuate 1-5%, or even more, in a day.  Gold was $1, what, 2 days ago and today it's down nearly 10%.  It can increase again nearly as fast.

Look at some economic fundamentals.  The dollar is declining and it hasn't hit bottom yet.  Countries that will not accept dollars for international trade are increasing.  We've gone from the world's largest creditor nation 30 years ago to the world's largest debtor nation today.  No amount of fed manipulation will change those ugly facts. 

[Manedwolf]

Actually, the dollar is up against both the yen and euro today, and investors are dumping commodities.

Gold is still correcting. It'll probably hang around $900 for quite some time, if not correct down further to $800 or less. All the scrap gold that people just sold hasn't even reached the smelters yet. Once that's on the market as more bullion, there will be even more of a surplus.

[Paddy]

Exactly.  Both are short term events and have no relevance on long term investments.  They are market responses rather than fundamental economic conditions.

[JohnBT]

I hadn't noticed the big drop. I've been busy.

"At 1.02 pm, spot gold was trading at 920 usd an ounce against 945.50 usd in late New York trade yesterday, having at one point dipped as low as 904.05 usd before recovering on bargain hunting.

Gold hit an all-time high of 1,032.50 usd an ounce on Monday after the fire sale of Bear Stearns (nyse: BSC - news - people ), but has since been pressured sharply lower in the wake of the US Federal Reserve's smaller-than-expected rate cut on Tuesday." - some news site

[Manedwolf]

I hadn't noticed the big drop. I've been busy.

"At 1.02 pm, spot gold was trading at 920 usd an ounce against 945.50 usd in late New York trade yesterday, having at one point dipped as low as 904.05 usd before recovering on bargain hunting.

Gold hit an all-time high of 1,032.50 usd an ounce on Monday after the fire sale of Bear Stearns (nyse: BSC - news - people ), but has since been pressured sharply lower in the wake of the US Federal Reserve's smaller-than-expected rate cut on Tuesday." - some news site

It's at $912 at the moment. There's a number of realtime trackers out there.

[luckyorwhat]

Manedwolf it's not babble, I took economics and investing both. Currencies are not stable, imagine if time or distance measurements varied from one day to the next. What's one mile today will be 1.2 miles next year. People who 'feel' stability around them perhaps only feel that because the true uncertainty of life would overwhelm them, so it's like a defence mechanism, denial, to pretend there is no risk. But any cursory examination of either a country's history or economics quickly shows that it is highly highly unlikely that any person will go their lifetime without experiencing at least one period of severe economic fluctuations.

Actually, the dollar is up against both the yen and euro today, and investors are dumping commodities.

That's only relevant if you predicted it yesterday:)


Brad Johnson speculation and investment are differentiated by risk. Insurance: "a means of guaranteeing protection or safety <the contract is your insurance against price changes>" http://www.merriam-webster.com/dictionary/insurance

Besides, to be clear I'm not twisting anyone's arms, I'm explicitly not recommending any course of action to anyone. Gold might not be perfect, but it has an advantage over land in that you can transport it. Cars require maintenance and space to keep. Name your commodity and there's a downside to it, we acknowledge gold's detriments, but it's not a fair comparison unless you actually compare it to something. So I'd say that's what's missing - an actual comparison. So in the interests of discussion perhaps people could put out other ideas of stable inflation-riding mediums.

[Brad Johnson]

Manedwolf it's not babble, I took economics and investing both.

Now take history and stats.  Economics and investing, as courses, are nothing without a way to contextualize them.

Brad

[Bogie]

You can also buy sovereigns... They're smaller, but they're just as good...
 

[BrokenPaw]

Gold, and precious metals for that matter, are long term investments.  Something to buy and hold for their inherent value.

What is the value inherent in gold?  (This is not me being flippant; I'm really curious).  Gold seems to be just another form of fiat currency, except that there's a finite supply of gold.  But regardless, gold only has value to people because gold has value to other people, and so Bob will accept gold from Jane because he knows that later on he can use it to trade to Sam for something else; if nobody cared about gold, then...no one would care about gold.  You can't eat it, you can't live in it...it has no actual utility, except in niche industries like electronics, where the volume of use is relatively small; if the electronics industry was the only group of people in the world interested in gold, the price would be a couple orders of magnitude lower.

I'm getting to where I think that real estate is about the only asset worth having in the long run; you can live on it, you can hunt on it, you can grow food on it...the value of pretty much any other medium of exchange is purely psychological.

-BP

[zahc]

yet land isn't really much of a 'medium of exchange'.

[BrokenPaw]

No, you're right, it isn't.

I guess what I was trying to express is that, unless something has intrinsic usability, it's fiat money, regardless of whether it's tangible or not.

-BP

[LAK]

BrokenPaw

What is the value inherent in gold?  (This is not me being flippant; I'm really curious).  Gold seems to be just another form of fiat currency, except that there's a finite supply of gold.

Gold has some unique properties, as do all precious metals, and is used in a number of industries including high tech electronics and medical. These uses are not going to go away in the foreseeable future, and as countries like China ramp up to compete in these industries the demand will only rise.