Investing in gold and silver

[Ron Wenrich]

If I'm reading Qweaver correctly, he isn't interested in buying more paper, but is looking for an asset that will retain value.  Gold prices are like any other commodity, dependent on supply and demand.  Supply is being suppressed by the current value in gold.  From what I've read, the risk to the downside is about 10-15%.  Gold will never go down to zero.

The demand right now is also being suppressed by the easy money policy of central banks all around the world.  They are in the process of devaluing currency.  When the easy money dries up through a rise in interest rates, stock and bond prices will drop when money is pulled out of the market.  Where is that money going to go? 

The picture for all assets are pretty murky and their are opinions on all sides.  It all depends on your world outlook as to whether any investment is a worthwhile one.  Gold can be a pretty good hedge against asset deflation.

[Qweaver]

Exactly Ron!  Metals are not an investment that I plan to jump in and out of.  My investment strategy for years has been to  buy high quality companies that pay dividends.  Not the highest return but generally safe.  But they all can fail!  And inflation is the real thief when you are in paper.  All that I was asking about was precious metals.

[jueston]

i don't know how much gold your talking about, but would you insure it? i recently got married and added a ring to my home owners insurance policy, i don't know how similar the rates are to gold you keep in a safe, but i can say for sure, if paid an increased premium every year for 10 years, gold would have to double or triple just to pay the costs associated with keeping it.

if your plan is to keep gold in your primary residence and not insure it, then are you really hedging against risk by risking having your investment stolen by a home invader?

but maybe i'm wrong, does anyone know if gold in a safe is covered by home owners insurance without an additional rider?

[Raider Bill]

I'm willing to bet next weeks beer money that any kind of policy on gold would be filled with fine print and expensive.

Buy a shovel and don't tell anyone you have it.

[gspren]

Buy a shovel and don't tell anyone you have it.

  I don't care who knows I have a shovel  ;D

[beenthere]

Can an individual actually have gold in their possession? I understood not, that is was not legal.
Anyone know how it is done?

[red]

I have seen Gold Bars . . . kind of looks like a Shiny Brick

[Magicman]

I thought that the gold possession restriction was lifted.

Google said: Obama and Gold and Gold Ownership

I have no idea about the authenticity or the date of either.   :

[ellmoe]

Can an individual actually have gold in their possession? I understood not, that is was not legal.
Anyone know how it is done?

Yes, it is legal.... for now.  Was made illegal during the depression. The law was changed many years ago.
Mark 

[DanG]

I would certainly NOT buy a piece of paper that says I own gold.  I'm not into holding precious metals anyway, but it did occur to me what a good criterion would be.  If some washed up actor is on tv trying to talk you into buying gold, you can bet the price is headed down.  If he is trying to buy your gold jewelry, you can be sure it's headed up.  Right now, they are selling.

[pabst79]

 A great thread, there are so many posts that I would like to quote, but that would take a long time. I have invested in precious metals since I got out of high school, I would strongly caution against buying into any metal mutual funds, the management and redemption fees will eat up most of your gains. Buying into a ETF is slightly safer bet,  ETF's are the reason that most people can't trade stocks as a hobby anymore. ETF's buy and sell thousands of shares in a fraction of a second they can make money on both sides of the trade, they also trade on margin and only have to have a fraction of the capital needed to trade individual stocks. I would also caution against buying individual gold/silver stocks unless you have a VERY high risk tolerance. Its not uncommon for a gold stock to lose 25-50% of its value over a 6-12 week period and could takes years to recover. I have bought gold and silver bullion when I can and store it in a safe, I only buy American Eagles or stamped bars, stay away from one off's or gimmick coins. When you want to sell, try selling yourself, as stated in previous posts, only crooks charge to buy it back. If you have the time, selling it yourself will bring more money if you have the patience to go online and sell it. I'm no pro but I believe having 15-20% of your nest egg in precious metals  gives you some protection in a insane and unpredictable world. As already stated, gold will NEVER be worth zero, the same can't be said for stocks. Just my 2 cents.   

[Qweaver]

Well said Pabst79.  My research thus far puts me in agreement with you in all respects.  I have a good safe and I don't expect to buy enough to make a professional heist worthwhile. 

[Delawhere Jack]

Precious metals offer an "insurance policy" against insane fiscal and monetary policies in whatever currency regime you live under. Thinking of them as an investment is off the mark. In fact, what they offer is a means of retaining purchasing power compared to unbacked paper fiat currency. Metals are NOT a get rich quick investment.

Every single fiat currency (which is what the US dollar is) throughout history has eventually become worthless. Every single one, I will not even entertain arguments on this fact.

Consider this. When the US last minted silver coinage in 1964, a quarter was about what you would pay for a gallon or gas. Today, that same quarter (90% silver) is worth $2.91. More than the price of a gallon of gas in most parts of the US today. The US national debt at that time was measured in the tens of billions. Today it is measured in the tens of trillions (a 1,000 fold increase).

There are big rumblings going on across the globe thanks to our central bank "printing" money like crazy. More and more nations are choosing to transact in currencies other than the US dollar. The same is true for pretty much all of the Western world currencies, (which also happen to be the worlds biggest debtor nations).

I like metals, but I'd say that anything tangible and productive that you can own outright is better than some digits assigned to you on a computer somewhere that could vanish in a heartbeat, and leave you with no recourse.

[Ron Wenrich]

There is a downside to physical gold.  That is of government confiscation.  They did it in 1933 where the central bank bought gold at a little over $20, then raised the price to $35/oz.  In effect, they devalued the dollar.  But, they made it illegal to own gold.  I'm not saying that this will happen, just a consideration.  I don't know if insurance would cover that. 

[Delawhere Jack]

Ron, I wouldn't worry about confiscation. There is so little gold held by US citizens it wouldn't be worth the effort.

[Henk198]

Perth Mint, Australia, has an option where you open an account (in USD or AUD), and they hold the physical metal in their vault for you. If you choose the allocated option, you can also have it shipped to you at any time. It's insured, and can be inspected personally. There are fees though. Google Perth Mint and you can take a look at their website and read and learn.  :P If you're interested, give them a ring. I am NOT an expert or anything, just mentioning Perth Mint is an option for people who want to own physical gold, kept in a vault.

[Coach]

Not what you asked, but I would look for a good buy on decent farmland and rent it out for farming.  So you collect rent on it until you decide to sell some years down the road.

[ForestGump]

Nickels are the magic hedge against inflation and deflation- Just order a few boxes every time you go to the bank and youll have nothing to worry about. Plus, pretty fireproof and an average thief would be too lazy to haul them off even if you left the doors unlocked.
Youre going to need a wheel-barrow for a wallet when you go grocery shopping though!