Gold

[Bro. Noble]

The Fed made a statement recently that indicates that interest rates are going to be low for several years. 

We've had posts on investing in realestate,  or at least timberland.

There's lots of ads on TV about investing in gold.  What's your opinion on this compared to stocks or mutual funds.

Of course it's a moot point for me cause I invest all my cash in groceries

[DanG]

A year ago, and for a while before that, all the tv ads about gold were trying to get you to sell your gold.  That told me the value of gold was going up.  Now, all the ads you see and hear are urging you to buy gold NOW!  That is telling me that the price has peaked and is headed back down.  Regardless of what they say in the ads, the people that are advertising have only their own pocketbook at interest, and will do everything they can to seperate you from your wealth, and that includes your favorite Talk Radio hero.

[Chris Burchfield]

In 1978, my first son was born on Dec. 12th.  The price of gold was $198. an ounce.  The following years most of my earning went into putting biscuits on the table and a roof over our heads.  About 1990 I began buying stocks with a few coins.  I'd add to the number of stocks I bought with raises.  Some time after the market started dropping.  I'd lost everything they had made and it started getting into my money.   I'd always heard "you stay in this game for the long haul."  I began making plans to retire effective end of April 2007.  My stocks had built back up and worth about twice what I had in it, with a loss of $600 first quarter of 2007.  On retirement, I cashed out.  Paid about 30 percent in taxes on that money.  Yea, I could have rolled it over into something more stable.  I paid my truck off and had a little coin left over.  Paying the truck off was like a $750. a month raise for us.  Being retired with a pension based on 30 years of service, 20% penalty for leaving 5 years early, we have more usable income now then when I was making about twice as much.  The government was getting most of it in taxes.

[Ron Wenrich]

I don't listen too much to those that are selling gold on talk shows.  But, I do listen to guys that invest for a living.  I have yet to hear any of them say that gold is overpriced or that gold is going into the tank.  All are saying that gold has yet to peak.  This move up in gold is going to take years.  

Interest rates are going to stay low, but the real story is going to be the value of the dollar.  As the dollar slips in value, gold will go up.  In normal situations, gold values go up when the dollar slides.  Some are expecting the dollar to go into crisis in the next few years.  That's when the debt catches up, as well as all that surplus money that's slopping around thanks to all the borrowing for the stimulus.  So, basically gold is a hedge against the dollar's value.

There are several ways to take advantage of the increase in value.  You can buy gold bars.  Some are also talking about silver, as well.  Values are down right now, but it is traditional that the jewelry makers in India will start buying gold and silver in the next few months.  That usually leads to a push in prices.  Having gold bars adds to the problem of where to store them, and how to cash them in some time down the line.

You can play the futures market.  You control 100 oz. at per contract and it costs about $5800 for the margin.  But, you better be on the right side of the market.  If you lose $1/oz, you lose $100.  $10 price swings are not uncommon.  And contracts are for only set amount of time.

You can play the options market.  Its based on a strike price and you can either buy a put or a call, depending on your market outlook.  The value of the option is based on what the underlying commodity is doing.  It helps protect against those violent market swings.  You sleep better at night.

You can buy an ETF (electronically traded fund).  It mimics the price of gold and they are supposed to have the physical gold to back it up.  Very liquid in an upward trending market.  I don't know how well they do when markets fall.  

You can invest in mutual funds that deal in mining stocks.  When gold goes up, so do those mining stocks.  You could get just the mining stocks on your own.  

How does it stack up against stocks?  In 2007, the S&P was trading around 1500 and gold was worth about $800.  Today, the S&P is trading around 1100 and gold is around $1200.  The S&P dropped 27% and gold went up 50%.  Back in 2007, it would have taken nearly 2 oz of gold to buy the S&P.  Today you can do it  for less than an oz.  

[gary]

I started buying gold in 2008. I have a few pounds of it now. Not going to sell yet. I am getting ready to get rid of my silver. I am going to sell it next week. The problem with own gold and silver is where do you keep it. I don't trust banks so no safety deposit boxes for me.

[red oaks lumber]

when the economy is weak gold is strong, now is not the time to buy gold. invest in any stock that has to do with "green, thats the trend for the next 5-10 yrs. also buy up bp stocks hold for awhile  it will come back..
 but, i work with wood all day so what do i know.

[Raider Bill]

I started buying gold in 2008. I have a few pounds of it now. Not going to sell yet. I am getting ready to get rid of my silver. I am going to sell it next week. The problem with own gold and silver is where do you keep it. I don't trust banks so no safety deposit boxes for me.

Bring it to the pig roast. I will hide it for you

[Kansas]

I can't see investing in anything that just sits there. If you are really worried about inflation, or the falling dollar, and are convinced that gold is safety, invest in a gold mine. A good mutual fund that invests in them, or better yet, a variety of metals. At least then you are investing in a company, not an inert object. If everything does go to hell in a handbasket, in all reality, how much will gold be worth. You can't eat it. And it is only valued what someone places on it.

[SPIKER]

some good thoughts I myself want to say GOLD is not very liquid, it is hard to buy & hard to sell (the physical metal) and you can easily be taken for a ride to the poor house by buying it.  like many other commodities it goes UP slow but can drop 10 points really quick.   there are other metals that are better to own as they are easier to sell.   Mining stocks are OK for a few select miners but for the most part it is hit or miss and is very market dependent.  (saying this I bought PAL this week) PAL is a mining stock they mine platinum & palladium (stuff needed for catalytic converters & EXPENSIVE jewelery.  there are only a couple players in the field.  most for them have smaller gold holdings as well.  In this market is it probably better to be playing STOCKS than GOLD.  I been doing well the last few weeks...
I might add Ron did a good job above.   
Mark

[gary]

If the economy crashes what are you going to do with your stocks? At least with gold in my hand even if it is worth less than I paid for I can still trade it for food. I guess you could heat your house with the stock certificates.

[LeeB]

If the economy truly crashes, I would prefer for my metals on hand to be iron and lead.

[WH_Conley]

I only metals I have invested in is ordinance steel.

[DanG]

A fork with something on it would be my choice.

[OneWithWood]

I'm with DanG!

[sandhills]

me too, oh and the iron and lead (helps keep sumthin on the fork)

[Brad_bb]

The best plan is to live within your means, and don't carry any debt that you can't deal with in a crisis.  Don't carry any credit card debt.  Have cash reserves to cover if you are out of work.  Don't buy things you don't already have the money for(House excluded, but you still need to have reserved to cover it's payment if you lose your income for a minimum of 6 months).  This economy shows you need to be prepared for even longer than that.  Be prepared to live frugally if you need to. 
   I've never bought Gold.  I've practiced what I've preached, and now the worst case has happened(though I do not own a home).  I've been able to get though because I have prepared, and can live frugally as needed.  And I don't have debt.  I'm a long term investor.  If I do want to take more risk, I will do it with money I can afford to lose, and I will risk it on myself, making a personal business move.

[fuzzybear]

   never invested in paper.  always been the real thing for me. of course when you live in gold country it's a little easier. I own the rights to 10 claims here. we still mine by hand and can pull about 100 oz in a season.
   China is pouring tons of money into buying and running mine here in the north. Selling gold here is easy with over 10 buyers giving the current prices.

[mad murdock]

Gold is artificially low, as big money players (i.e. the Fed, and US treasury, as well as others) are gaming the market.  With the invention of the latest treasury bills the so-called "inflation-proof" T-bills, they are attracting money that way rather than to the gold market.  My opinion on precious metals is that if one is truly concerned about protecting some "excess" money that they have laying around in a bank, buy silver coins.  THere are the 90% silver content (pre-'64) coins, or bullion coins that one can buy.  Silver is easier to break down into a usable quantity for day to day items.  You will have ahard time trading a 1 oz gold coin for a truckload of bread or eggs, but you sure can trade a 1 oz worth around 20 bucks, or even a 1/2 oz coin, for some bread and eggs, or some meat or ammo or what have you, without having to figure out large value amounts like with gold.  As said by others, if one is really worried about the future, invest in a patented claim somwhere in gold country.  Investing cash now in good tools, or supplies that can be utilized to maintain ones equipment and be more self sufficient, will pay back big dividends over time, and will always have value, whereas a bunch of paper, either in cash money, or stock and bond certificates can become worthless, and will only serve as fire starter if things get real tough.

[red oaks lumber]

listen to what you guys are saying! acting like its the end of the world. the economy is stalled for awhile.
 i for one feel that things are improving slowly, if every one looked at things more posativly things would grow faster.

[Cedarman]

In my book, the wise person plans for both contingencies.

[Raider Bill]

Beans, Bullets and bandages..........

[sandhills]

I never once meant the end of the world was coming, yes the economy is in the dumps but I will say that in my opinion history definetly repeats itself .  The nice thing is we're living in the best country on earth, all you have to do is look at those who are fighting for it!  I'AM PROUD

[Raider Bill]

But then look at the fools that are running it....into the ground.

[sandhills]

No arguement here

[Carpenter]

The value of gold and silver both is very stable.  An ounce of gold is always worth an ounce of gold and an ounce of silver is worth a dollar.  I couldn't find the dictionary this morning, but the way it was explained to me is that when we were on the silver standard, pre 1963 or 64 that the dollars were silver and the paper money said silver exchange note on it.  So all of the money either was gold and silver (or copper or nickel, which has value as well) was backed by gold and silver in fort knox.  All of the gold and silver was supposed to add up to all of the goods and services available, and thus it should have been a relatively stable economy.  I can't speak from experience of course, but I know several older people.  Of course the price of goods would still vary some due to supply and demand at the time.  What you are seeing now with the price of gold is the devaluation of our paper money. 

[Ianab]

The thing about buying gold is that it's only method of saving. It doesn't generate any new wealth.

So if your aim is to save your money, then buying krugerrands and keeping them in a box under your bed is actually a reasonable investment. Maybe Gold will increase in value more than inflation, and even if it doesn't it will probably still increase in value long term.

But it doesn't produce any new wealth.

Buy shares in a gold mine, new gold gets dug up. Maybe you invest $1,000 and they dig up $2,000 of gold. New wealth has been created. Of course you take the risk that the mine is a dud and your $1,000 just gives you a big hole in the ground, but thats about researching what you are investing in.

The original idea of "Shares" was to raise money to set up a business. A mine, a sawmill, a shipping company etc. 100 people put in the cash to get things started, and they shared in the profit (or loss).

It's just in recent years that companies have sprung up that do nothing but invest in each other. That just makes a house of cards with no real assets behind it. Happened in the 70s, and again last year. You end up with a big tangle of companies, all holding stock in each other, but no actual assets to back up the paper value that they claim.

The advice to invest in a working gold mine company is sound, even if things turn to custard, at least there is a hole in the ground thats still producing gold. If thats not worth something, then the krugerrands under your bed wont be worth any more.

Possibly something to do with the present economic problems, people chasing paper money on investments, not thinking about investments that actually generate more wealth.

Fuzzybear has the right idea, go out and dig up your own gold 

Ian

[Ron Wenrich]

Wealth is only created from things you can extract from nature.  You're basically taking natural things and turning them into money.  Mining, farming, hydroelectric generation, oil drilling are examples of this.

After the wealth is created, markets spread it around.  But, that wealth has to have some way to be monetized.  It used to be that gold was a universal unit.  It could be used in any country, since its value was understood and it was stable.

But, since then, the British pound was considered universal until WWII.  After that, the US dollar has been the universal currency. 

It makes little difference what I think the value of gold or any other investment is worth.  Its what the markets think.  Its what a motivated seller will accept from a motivated buyer.  Its sort of how all markets work.  Whether you want to take part in the market or not is up to each participant.

[pappy19]

As part of our portfolio we have both gold mutual funds (Fidelity) and gold/silver stocks. With the economy going the way it is, precious metals will continue to do well, IMHO. I have also acquied a few troy ounces of old US silver coins and a few gold coins for instant use if necessary.

[mad murdock]

listen to what you guys are saying! acting like its the end of the world. the economy is stalled for awhile.
 i for one feel that things are improving slowly, if every one looked at things more posativly things would grow faster.

I know that the end is near, as far as the economy is concerned, it will survive, as long as there are people on the earth who need things to sustain life.  I am with Cedarman, it is wise to have a contingency plan, come what may, if you can't eat it, use it to fix something, plant it, or use it to make something, spend it towards one of those areas, paper dollars will eventually be worthless, the only out that the government has to meet debt obligation in the end, is hyper-inflation, print enough to satisfy indebtedness, and move on.  Look at what happened in Pre-WWII germany.  We are headed a long way down that same road, with no exits in sight.  Land, good tools, good books, and raw materials, are things that will always have value.  Like Ron said very well, wealth is created from tangible assets, like natural resources, or things you grow or cultivate or make. The market is the outlet for that wealth creation, and spreads that wealth around.  I have a lot invested in the stock market via a retirement trust, it has lost a lot of money, hopefully it will recover in the long haul.  Look at the new financial reform bill, er rather law now.  Rep. Waters from california was successful in tacking onto the bill, now law, a provision that requires a lot of the financial players to create a diversity office within these private companies, that can ensure proper participation levels within employment and in contracting of women, and minorities, and if they find that things are not in check, the government now has the power to nullify contracts, without any sort of oversight whatsoever.  Nothing is sacred anymore.

[red oaks lumber]

i suppose a few on here were prepared for y2k, what happened? nothing, so are the few worrried about 2012?
 so if you really think its nothing but doom and gloom, the end is here why worry about your retirement? or the price of gold, or anything for that matter?

[fuzzybear]

i suppose a few on here were prepared for y2k, what happened? nothing, so are the few worrried about 2012?
 so if you really think its nothing but doom and gloom, the end is here why worry about your retirement? or the price of gold, or anything for that matter?

   I'm not worried about any of those things. What scares me and worries me is the fact that every day another farm is lost. Every week another species of animals is lost. I just got back from fish camp.  My family depends on salmon to survive the winter.  This year we will just make it. next year I don't think we will.
   In human kinds need for wealth and greed we have destroyed so many life forms on this planet. We have gotten to the point that we are scrambling to feed our people. There is just not enough food to go around.
   Gold, silver. minerals are not going to be worth anything.
   Like the Cree prophecy goes.... only when the last tree is cut, only when the last fish is caught, only when the last river is poisoned, only then will you realize that money cannot be eaten.
   I've said it before and I'll say it again...... take off the blinders and take a HARD look around the chunk of rock that we ALL live on....it's much scarier than any doom and gloom prophecy
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[gary]

I don't think the end is near. I do believe in being prepared though. Everyone should have some gold, silver , lead and diamonds stashed in case of an emergency. Should also have gunpowder and a gas mask. 

[isawlogs]

 Well , I would rather have a fish to cook and a steak to grill ..  We really need to slow down and smell the roses ..

[Ron Wenrich]

One thing you have to realize is that the world demand for gold is higher than the amount that is being mined.  What's that do to the value?  I'm not talking about the stuff folks hoard, but the gold needed for jewelry and other commercial products.  Its a supply and demand thing.  We hit peak gold a few years back.  That's not doom and gloom prophecy, its market economics.

[Mooseherder]

Disguy buys Gold.
I pass a dozen of these people every day.
This character is the scariest.  I'm not sure what he would do if he knew I was video taping. 
He may play it up even more.

[SwampDonkey]

About 15 years ago, an old timer told me, "this is the time to buy gold". It was somewhere around $300 an ounce then. This guy had quite a bit of insight and quite knowledgeable about who was in the control of the country. On that note, a good Canadian author who was once editor of Macleans magazine (kind of a Canadian Newsweek), has a good series of books on the subject. But anyway, investing in gold back a few years ago would have been a good investment with the idea it's a long term deal. A good many people are after the get rich quick deals and like to see those 30 % returns and blat to the government when they loose 60% or more in a few months down the road in a shaky high risk deal to begin with. If you look at the big wigs, most of them got wealth legitimately over a long term or there was something pretty shady going on and eventually got found out. Just think of Bernie Madoff and Conrad Black and a whole lot of others that got found out. I just think of the Irvings and McCains here in New Brunswick when I talk investing in the long haul. Their wealth was from long term investing and now supports many generations, at least 4 by now. Food and forest products are both renewable and you can use the same patch of dirt. Petroleum, we know as liquid gold, will continue to climb until the last drop in sucked from the ground. It drives our standard of living and has value as long as we want to maintain our way of life. I mention petroleum because the Irvings are big investors, also in power generation, but they are a private company and the only share holders are the family members. Around these parts, if you look at most any committee or board that deals with economic issues, the Irvings and/or McCains have a seat on those boards.

[Magicman]

We've had a Gold "Road Show" in town for this past week.  Mostly looking to buy junk jewelry from folks.  Some went and when they saw how much they were being paid they said "no way", packed their stuff up and went home.

[rpg52]

Whether to buy gold or not is an impossible question - it all depends.  What are your assets?  How lucky are you?  Where do you live?  Swamp Donkey had some good insights, the world has become dependent on petroleum, the rising price of which will become a wrenching change to our economic system.

Gold is only valuable during relatively stable times - natural disasters (floods, earthquakes, droughts, wildfires, etc.) accelerate instability.  What do you think gold would buy if you are swimming through a flood?  On the other hand, a bit of gold might be handy if it is cold and miserable.  Here's my strategy, only applicable to myself and where I live, in no particular order.

1)  get out of debt
2)  learn how to grow and cook food, and accumulate several months supply
3)  buy quality (hand) tools (even used).  If you can't use them, likely someone can
4)  try to minimize the threat of natural disasters likely to be found in your area
5)  be a good friend and neighbor, you'll need help
6)  accumulate a bit of liquid assets - gold, silver or something for some dark days
7)  figure out a stable water supply
8.  practice walking and biking, it may become handy
9)  learn or befriend those with some medical training  

Good Luck!  
Ray

[routestep]

To buy gold/silver or any precious metal (PM) or not.

I think everyone on this board should buy a little, a couple of fractional coins of gold and either 90% silver coins or one ounce American Silver Eagle (ASE).

Silver is used to buy day to day supplies and gold to buy capital assets if the day ever comes when you find you can't eat Federal Reserve Notes (Dollars) (or a bank statement)  and a wheel barrel is needed to buy food.

I have read that gold has been remarkable stable. A gold piece bought a nice Roman tunic 2000 years ago and at $1200 today buys a nice three piece suit. It's the dollar that has lost value and will continue to loose valve as the Federal Reserve Bank continues to print money. The slide started in 1913 and hasn't stopped. That's why the penny is now copper clad zinc instead of pure copper; copper pennies are worth more than one cent hence add zinc.

Quarters and dimes are nickle clad copper and may very well be zinc soon. Not a gram of silver in the new coins, maybe the Eisenhower had some silver.

The Chinese hold 800 Billion plus dollars and the Japenese hold around 700Billion. The Chinese are slowly building their gold reserves and not adding to their dollar position. If the Chicoms are buying gold I'll buy some too, when I can.

There are plenty of smart men on this forum. As Cedarman said plan for any eventuality. Have your house bought, stock up some food like the LDS do, make a garden if you have the room, and buy some silver and some gold. Don't count on gold making wealth, it perserves wealth.

Go find FOFOA on the internet if you want to read some high tension thoughts on the subject.

[petefrombearswamp]

I agree with Ray
Have zero debt and be somewhat self sufficient.
pete

[SPIKER]

I posted my thoughts once and here is a wright up about gold http://seekingalpha.com/article/220307-tips-and-gold-as-inflation-hedges-risk-and-rewards?source=email

trying out the link to make sure it works, it is to a article on seeking alpha web site which is popular with investing people lots of good info there.

the above info is regarding what is going on with US finances.   while a lot of good info here about gold, the simple facts are in the above link on where gold is at in regards to all time and near term costs.   

one thing is clear if you think we are in a deflationary period (think what a house costs today vs 3 or 4 years ago "deflationary")   Then gold is going to drop from here much much lower.   Now if you think in a year it will take 22.50 to buy a gallon of gas or milk then by all means buy gold and hope that Inflation goes wild.

I had a bad week in the markets on my long term holds but still to the good 30% for last 18 months...


mark