Does buying gold now make any sense?

[zahc]

I'm a saver, in no debt, old payed-for cars that barely run, college degree, apt dweller, married, wife works, I'm a starving scientist, 22yo. Together we pull in $40ksome a year, which doesn't get you far in Dallas. We have a precious few thousand in the bank.

I was going to buy gold several months ago. Honestly,  the only thing that kept me from it was, i didn't know how to go about it. I wanted physical coins and most people recommended I try eBay, which freaked me out.

It as $800 then, now it's over 1000 I think. I'm distressed that my cash savings are losing value so fast. I don't own much in the way of real assets. It doesn't really seem like there's much to lose from buying gold; assuming one is hedging against inflation. On one hand, we don't have much liquididy as it is, on the other hand, that makes it all the worse with inflation. I'm still wondering if I shouldn't buy a couple gold eagles, and as i wonder, the price of gold continues to go up....

[grampster]

You are way too young to be worried about economic downturns.  What goes up will go down and vice versa.  That will happen a few times in your life.  Gold is like any commodity; severe rapid changes.

Imho, if you haven't bought gold by now, you oughta not.  If you have a 401k, it's buying you into stocks at lower prices.  You're getting more shares for your dollars. They will go up over time which will be good for you.

I'm no expert, but I wouldn't buy gold right now.  Let's say the economy continues to fluctuate, but then after the election, things begin to right themselves because the media circus will quit trying to wreck the economy in order to get democrats elected.  Gold could then rapidly decline.

[Manedwolf]

No, not now. It's likely to experience a correction soon. All the sites saying "Why you should buy gold!" are selling it.

[Headless Thompson Gunner]

NO!  The idea is to buy it when it's cheap and sell it when it's expensive, not vice versa.  If you buy now, you'll be doing it backwards.

...It doesn't really seem like there's much to lose from buying gold...

Are you kidding?  Right now there's $1,000 an ounce to lose from buying gold, the most there's ever been.  Gold probably won't fall to zero, but it could very easily fall a few hundred dollars an ounce.

Chill out.  Don't buy into the Chicken Little scenarios going around.  The economic system isn't going to collapse.  Inflation isn't going to eat away your savings to any appreciable degree.  Don't panic.  People who make investment decisions based on panic (including most people buying gold right now) lose lots of money.

If you're really worried about it, buy some savings bonds or CDs from your bank.  If you think inflation is going to go way up, take out a mortgage and buy a house or some land.

[Tallpine]

Buy a little piece of land somewhere that you can grow a garden, and build a simple off-grid dwelling on it - maybe even dig a cave

[HankB]

A lot of people who bought gold in, IIRC, 1979 for $800 are only now seeing a potential paper profit . . . but factor in the inflated dollars of today, and, well, they didn't do so well.

[Perd Hapley]

Invest in political signage.   

[wooderson]

I hear tulips are the future. Invest now, before it's too late.

[Azrael256]

A lot of people who bought gold in, IIRC, 1979 for $800 are only now seeing a potential paper profit . . . but factor in the inflated dollars of today, and, well, they didn't do so well.

They're at >50% value.  Inflation-adjusted, the 1980 peak is better than $2000 in today's dollars.

When it's down to $350 again, we'll talk.

[Bogie]

I'd stick with heavy industrials and stuff like commodity producers... My dad's into mining stocks as of late...
 

[thebaldguy]

Gold as an investment is really not much different than a stock or mutual fund. You have to buy low and sell higher. Although I think it will still go up a bit, it may be too late to get on the bandwagon.

[lupinus]

No, you are better off right now buying stocks.  Just like oil, it's to high.

Gold is only worth as much as someone thinks shiney stuff is worth something.  If the economy goes so far into the crapper that other investments aren't worth much, you got bigger problems.

[280plus]

Should I sell? At least some? And buy stocks with it while they're down? Inquiring minds want to know. 

[Headless Thompson Gunner]

Not sure what you should do, but for misself, I put a bunch of spare cash into the stock market last week. 

I was a little worried this weekend with the Bear Sterns thing potentially causing the market to lose 1000+ points this week.  But after watching the market today, and deliberately getting my emotions back under control, I'm confident it was a good decision to buy when I did.  The market will surely fluctuate a bunch in the coming weeks, but I don't base my investment decisions on what the market does over such a short time.  I'm certain that in 5 or 10 years I won't regret the decision to buy now.

I'm also getting serious about buying myself a house.  Rates are very good, prices are down or at least flat, there are plenty of houses on the market to choose from, and buyers have all of the negotiating power right now.  Seems like a no-brainer.

[Zardozimo Oprah Bannedalas]

Hell no. It's broken past records. Prices have historically fluctuated - a high around $800 in the 80s (IIRC), around $350 in the late 90s. My gold piece came in the era of $350. Bought a Bushmaster for 850 (yeah, payed too much) with it last December. I sold it 'cause I wanted to cash in while the money was good. I probably could've gotten another 100 or so if I'd waited, but I'm happy with the profit margin.

Don't buy during a historic high - prices will drop eventually on all such items. Stocks can go up for decades... metals tend to go up and down over time. Gold'll get cheaper eventually... ditto for ammo. It's possible for the US treasury folks to do something completely insane (replace all currency with autographed pictures of Fistful's legs, appoint Lee Mercer to run the place)... but not too likely.

BTW - I still hold that the 'experts' are telling you to buy gold so they can cash in their own gold stashes.

[Antibubba]

There is one truism: When "everybody" tells you to buy it NOW, it is already too late.  Gold, real estate, energy stocks, whatever.  I'm guessing a gold correction around $1,500, or whenever that ounce costs 1000 Euros, whichever comes first.

[Manedwolf]

I'm also getting serious about buying myself a house.  Rates are very good, prices are down or at least flat, there are plenty of houses on the market to choose from, and buyers have all of the negotiating power right now.  Seems like a no-brainer.

If you listen to realtors talking through a fake smile, sure. You just quoted their snowjob script. "There's never been a better time to buy!"...as they're panicking behind that blank smile.

I'm waiting for the coming price correction as more and more empty houses fill the market. If you buy now, you'll be paying a mortgage and property taxes on something that will decline in value, but you'll still be paying the mortgage on the original price and property taxes on the initial assessed value.

Go ahead. Myself, I regard realtors the same way I regard used-car fast-talkers. I wouldn't buy now if I had cash.

[LAK]

Buy. A modest amount of gold and silver.

When people speak gold going up or down they are in error; gold does not go up and down in price against the dollar. It is the dollar that gains or loses it's value. Hence at any one given time, it will take more or less dollars to buy an ounce of gold.

Suggestions that this is a mere "reccession" are very naive. Evidently they are not paying attention to what a loaf of bread costs right now - or a gallon of milk - and the disparity of wage increases in the middle and lower end. Many people have had less than a dollar an hour increase in hourly wages in many years, while the price of staples - and gasoline - have tripled.

In the event of a "correction", it will be bandages on severed legs. Anyone that has not paid too much attention up til now need only look at the impact worldwide of the Bear Stearns crash. Right now, there are a good many people fleeing the dollar, in a climate when a great deal of investors have been looking elsewhere in the world for a good many years. 

So it is not about making a profit, it is about protecting yourself against an inflated and dying currency. And the dollar is dying.

Don't put all your eggs in one basket. Break off somewhere between 15% and 20% for this and put the rest into other things. Like beans and bullets for example.

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[roo_ster]

Dallas Gold & Silver Exchange in Dallas, Texas.  Used to be visible from I635 & the DNT.  Now a little south of there.

They will sell you gold coins & other stuff.

Personally, I would not invest in gold, a the moment for all the reasons stated.

[Manedwolf]

Dallas Gold & Silver Exchange in Dallas, Texas.  Used to be visible from I635 & the DNT.  Now a little south of there.

They will sell you gold coins & other stuff.

Personally, I would not invest in gold, a the moment for all the reasons stated.

I've never seen a small store that didn't mark up the stuff way beyond what you can get it from via an online place like APMEX, even with shipping.

[WeedWhacker]

Buy. A modest amount of gold and silver.

[...]

Don't put all your eggs in one basket. Break off somewhere between 15% and 20% for this and put the rest into other things. Like beans and bullets for example.

With gold and silver at/near $1000 and $22 per ounce, it gets harder to justify buying something that is, by itself, mostly useless. "Why would one want to buy precious metals" is the question to ask, and it sounds as though you are interested in hedging against the US dollar's wild ride. I would venture to state that, while it's possible that the US government and/or the dollar could collapse due to economic stupidity, there are other things to address first before buying precious metals.

What should take first priority is short-term emergency supplies, such as a week's worth of water and storable food. After that, other things which would be difficult to live without should be addressed, such as a spare pair of eyeglasses, extra medical supplies, and certainly a goodly supply of lead, brass, and copper: ammunition, which is also "rising" in price as the dollar plummets.

Gold and silver is most useful to normal Joes, such as myself, after a total economic collapse, and after the economy is rebuilt and begins working again. It can be used to preserve some wealth through rare, disastrous times.The problem is getting to that side of the disaster alive and in one piece.

It might be worthwhile to read through the list of "100 items to disappear first in a panic" and see what you deem to be useful in the near future as you perceive it.

-edit
If you do decide to buy precious metals anyway, I second the recommendation for APMEX. I'd placed several orders for silver at $11/oz and had absolutely no problems with them, aside from wishing I'd started buying at $4/oz.

[Headless Thompson Gunner]

I'm also getting serious about buying myself a house.  Rates are very good, prices are down or at least flat, there are plenty of houses on the market to choose from, and buyers have all of the negotiating power right now.  Seems like a no-brainer.

If you listen to realtors talking through a fake smile, sure. You just quoted their snowjob script. "There's never been a better time to buy!"...as they're panicking behind that blank smile.

I'm waiting for the coming price correction as more and more empty houses fill the market. If you buy now, you'll be paying a mortgage and property taxes on something that will decline in value, but you'll still be paying the mortgage on the original price and property taxes on the initial assessed value.

Go ahead. Myself, I regard realtors the same way I regard used-car fast-talkers. I wouldn't buy now if I had cash.

I spent 8 years working for a commercial real estate appraiser.  I know a thing or two about property values.  My assessment is based on my own observations, not what the realtors are saying right now.  Realtors will tell you whatever they think will get them their commission, but in this case they're correct that now is a darned good time to buy.

House prices haven't fallen too far where I live, mainly because of the university nearby.  I'm betting that they'll work through most of their unsold inventory and have the market mostly back to "normal" within a year or so.  These conditions won't last forever.  The recovery will probably take longer in other parts of the country, but that's y'all's problem, not mine. 

Interest rates are also going to go up pretty soon.  The Fed has been lowering their rates to ease the credit crunch and to try to jump start the economy.  But if you listen to their statements, read their meeting minutes and so forth, it's pretty clear that they're gonna crank rates way up as soon as the see a positive response in the economy.  Rates will go up as fast as they've come down, perhaps rising 2 or 3 points in just a few months and perhaps 4 or 5 points over the course of a year.  The increases will likely begin pretty soon, certainly within half a year and maybe sooner.  It behooves me not to wait too long.

Anyway, time will tell, but I really don't think there's much of a downside to buying real estate right now.

[Brad Johnson]

If you listen to realtors talking through a fake smile, sure.

Go ahead. Myself, I regard realtors the same way I regard used-car fast-talkers. I wouldn't buy now if I had cash.

*Brad puts on fake smile*

What people are talking about when they say it's a good time to buy is loan rates.  If zahc is getting in for the long run, a few price corrections here and there will be the norm over the life of any home (and that usually amounts to a few years of stagnation rather than any real regression).  Waiting to buy a home in anticipation of "the bottom falling out" is terribly short-sighted, not to mention a poor long-term financial choice.

If the market "corrects" as severely as you say then probability is inflation will also be rampant and interest rates will skyrocket.  The house might drop a little in price but you are suddenly paying double the interest.  You still pay the same amount per month, except now you're doing it on less house.  In other words, the same home becomes more expensive or the same money buys less house.  Plus, every dollar you pay in rent while you wait is gone.  Forever.  At least a dollar made to a loan payment gets you some equity in return.  Beginning at zahc's age gets him in a position to have paid-for home by the time he reaches his early 50s.  Maybe sooner with a little financial prudence.

Back to buying gold ... No. Don't.  Gold is at historic highs and, historically speaking, that is the worst time to buy.  It's called "chasing a return", meaning you are buying in response to a peak, not a valley, and is almost universally viewed as the Net Loss Express Lane.  At your age and income you can't afford to go around chasing returns.  Start by maxing out your ROTH (tax free returns) and used anything else for diversified mutual funds and maybe a REIT.  It may not be as sexy as precious metals or other high-profile commodities, but it's far less volatile and a great deal more likely to make you a retiring millionaire instead of a have-to-work-forever pauper.

Brad

[par0thead151]

sell gold, buy stocks.
thats what smart investors are doing.
what happens to those who buy when it is on a mad streak to the sky?
they get burned. look at the tech bubble, real estate bubble, etc.
you buy before it takes off or during its initial rise to glory.
personally im chomping at the bit to buy stocks at bargain prices as i am only 25 and can wait many years or decades for the companies to return to where they should be.
and when that happens i will make out like jessie james

[Manedwolf]

Look at it right now. If you've bought some, you'd be $20 in the hole already. Everyone is selling, and that's going to cause a surplus, which means the price drops in a correction.

Once the scrap gold currently being pawned for cash (you should see an article in your local paper about people selling their old jewelry to cash in) arrives at the smelters, is recast, assayed and put on the market, it might correct even more.