Is Gold a Good Investment?

Sel | @/11?09 | OneVike

[OneVike]

I would like to start a conversation about the logic behind investing in gold. I am in the process of transferring a good portion of my investments into gold. Now I am just a hard working Joe who wants my future retirement to be better then this current government wants it to be.

That being said, I would like to get those of you who are more conversed in the subject of investments and gold then I am into a healthy debate for me to sit back and learn from.

Don't expect much input from me other then my original plea for a debate on the subject. I will tell you what I believe and why I am interested. You can in turn tell me I am either on target or out there on Pluto. So here is my uneducated, yet serious understanding of the situation.

First off, I have watched with many of you, as our government has been giving money to whomever comes to them with hat in hand, and it promises to continue this giveaway. Then I see the trillion dollar stimulus bill being readied for the "Great One" to sign it. Also I have read that the government is prepared to buy as many bad mortgages as it can get away with. A dollar amount I have seen discussed is supposedly somewhere around 5.7 trillion dollars. Now those are some facts that I have at my fingertips, only God knows of the ones we will be blindsided with in the coming two years.

Now I do have a basic understanding of economics, and my head tells me that the government needs to print money, something I believe they even admit they are all ready doing. However, my head tells me that the government will need to print almost 7 trillion dollars just to meet their already committed expenditures.

So it is only common sense that the money already out there will be worth less, and eventually inflation will set in. Not just a little inflation but inflation that could rival the third world countries that we have regularly bailed out time and time again.

Now as I understand it, gold has always been a hedge against a weak dollar and high inflation, if I am wrong I am sure someone will correct me. However if I am right, then it would only make sense for me to take at least 30% of my worth and put it in gold. Right?

Well, I patiently await the discussion that will hopefully unfold before my eyes. I have nothing but the utmost respect for a vast majority of my fellow Freepers. I may not always agree on every subject, especially when it comes to religion, but I do enjoy the debates I have with everyone on here. Well, here I am with my hat in hand as I humbly ask you, my peers, for advice on this matter.

May we have a good respectful debate that will benefit all.

[Liberty Ship]

Of course, if The Chosen One continues to emulate FDR:

“.... But the orchestrated hysteria not only prevailed, it prevailed in a single day. By 7:30 p.m. the Emergency Banking Act had also passed the Senate, and later that night it was signed into law by President Roosevelt. The following month, on April 5, the president issued Executive Order 6102, declaring that a “national emergency still continues to exist.” Therefore, he ordered: “All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve Bank or a branch or agency thereof ... all gold coin, gold bullion and gold certificates.”

“Failure to comply could bring one a fine of up to $10,000 and/or a prison sentence of up to 10 years. All safe deposit boxes were sealed, and all gold that could be found, with few exceptions, was confiscated. In some cases, other contents besides gold in the sealed safe-deposit boxes were not returned to the owners. The Federal Reserve Board also instructed all banks to provide a list of customers who had withdrawn gold or converted their paper currency into gold in the month prior to the bank holiday and had not turned it in afterward as mandated...”

“...One of the best-known victims of the FDR gold heist was Frederick Barber Campbell, the first American to be indicted as a felon for owning gold. Several months before Roosevelt’s proclamation, Campbell deposited 27 bars of gold at Chase National Bank, with Chase agreeing in writing to safeguard the gold for a fee, and to return the gold to Campbell upon demand. Campbell, a Manhattan attorney, put up a spirited defense, but was squashed by the New Deal steamroller, nonetheless—along with millions of American “hoarders,” who were stripped not only of their gold, but of other valuables and personal, sentimental effects as well.”

http://www.articlearchives.com/trends-events/holidays-observances/823863-1.html

[OneVike]

Woulda, Coulda, Shoulda!

If my grandmother was my grandfather, my grandfather would still be alive.

However, then my grandmother would be dead and I would still be less one grandparent.

I don't live in the past, except to learn from it, and that is why I want to know about the thoughts about gold investments. It is a discussion on the future, because of what has happened in the past.

Obama's not the only one who is well versed in double speak.

[Dixie Yooper]

Any time gold is above $900 an ounce, sell.
When it gets down to $750 an ounce, buy.

[PGR88]

Just be wary of things like gold coins marketed by Ed McMahon - not saying they aren’t gold, but on many gold products, you are paying a big premium and/or high commissions.

Consider Gold mining shares (ABX, Newmont, Freeport) or low cost mutual funds.

Physical gold - where will you keep it?

[mosaicwolf]

Yes it was a good investment at $270.00 and I sold at $850.00. But I held it for many years while it did almost nothing. I was in a Precious Metals Fund at the time and did well. Now I have about 15% of my investments in physical gold, ie Krugerrands. I have made 21.8% on these coins in three months.

I would recommend physical gold rather than paper gold. 1 oz American Eagles if you can get them; Krugerrands as a second choice. I believe there is about a 4 week wait for Krugerrands. Yes the demand is that high!

If you go that route, get a good high quality gun safe for your guns and gold. The rest is up to God and Guts. :-)

[Ghost of Philip Marlowe]

My understanding (limited) is that shares in precious metals won’t cut it as an insurance policy against a dead dollar. You need metal in your hand. Gold, silver, or steel.

[mnehring]

With all that has been said, if you are looking at own physical gold, I would suggest an alternative route, either jewelry or a good Swiss watch. This will hedge some of the value. For example, you can spend $25k on bullion or $25k for a gold Audemars Piguet watch. If the value of gold crashes, you still will have the inherent value of the watch. If the value goes up, so will the gold within the watch. You won’t have as much physical gold per price and weight, but you will have an object that through history, holds its value (and even increases) comparable to some of the best investments.

[ken5050]

I'm a retired CFP, CFA and stockbroker. I've long advocated precious metals as part of an overall investment strategy.

There are three areas of this topic that merit discussion.

1.Should you hold paper representing PMs, ( i.e. mutual fund shares or or the depository receipts) or take actual possession of the metal..i.e. Kruggerrands)? If you believe that the financial system is indeed headed towards meltdown/implosion, then obviously you should favor physical possession.

2. Remember that PMs do NOT produce/earn anything..no dividends..no interest. There have been many studies of long term stock market performance, which show that over ANY 20+ year period, 60-70% of long term growth in stock portfolios is a result of REINVESTED dividends...You have none of these with PMs...

3. As to what % of your assets should be invested in PMs..I think that 10-20% is a reasonable number for most people..

[AngryJawa]

If I had invested in lead - bullets - a year ago, I could have doubled my money.

Me too, but the investment was vetoed by SWMBO. She hates it when I point this out to her now. 8^(

[Eric in the Ozarks]

Unless you have a very secure place to keep it, I’d buy gold mine shares.

[lucky american]

I buy gold and silver coins. Pre 1964. I have never been reluctant to put my money into something I can sell later and make a small profit. I can spend a lot of money each month or a little.I look at it as a nest egg. It gives me joy to see sets and collections grow. It gives me a hedge against the unknown and pleasure to look at. Insurance.

[kanawa]

FWIW

http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2079&Itemid=2

“Everyone wants to buy gold! “I buy gold. Pay cash” signs are everywhere, even on TV! I can’t believe I’m that silly!

I just didn’t relate it to what I read here because they deal with junk gold, like jewelry, either stolen or sold because they needed the money, not the gold coins that you guys talk about. No one pays for the true value of the stuff, so big WARNING! Sign on people that are buying gold coins.

Since it is impossible to determine the true mineral percentage of gold, small shops and dealers will pay for it as regular jewelry gold.

What I would do if I were you: Besides gold coins, buy a lot of small gold rings and other jewelry. They should be less expensive than gold coins, and if the SHTF bad, you’ll not be losing money, selling premium quality gold coins for the price of junk gold. If I could travel back in time, I’d buy a small bag worth of gold rings.

Small time thieves will snatch gold chains right out of your neck and sell them at these small dealers found everywhere. This is VERY common at train stations, subways and other crowded areas.

So, my advice, if you are preparing for a small economical crisis, gold coins make sense. You will keep the value of the stuff and be able to sell it for its actual cost to gold dealers or maybe other survivalists that know the true value of the item.

In my case, gold coins would have been an excellent investment, saving me from loosing money when the local economy crashed. Even though things are bad, I can go to a bank down town and get paid for what a gold coin is truly worth, same goes for pure silver. But where I live, in my local are small time dealers will only pay you the value of junk gold, no matter what kind of gold you have. So, I’d have to say that if TSHTF bad, gold jewelry is a better trade item than gold coins.”

[mnehring]

Another option is Swiss Franks.

[AngryJawa]

If I had invested in lead - bullets - a year ago, I could have doubled my money.

Me too, but the investment was vetoed by SWMBO. She hates it when I point this out to her now. 8^(

[Jim Noble]

Gold is a terrible investment.

It's an excellent life preserver, though.

[ml/nj]

Of course gold is normally a good investment in an inflationary environment. But you need to remember that our government has already outlawed gold ownership once. Who's to say that Obama won't follow the lead of the sainted FDR? If that happens you probably wouldn't be able to legally sell/transfer your gold to anyone except the government at the price it sets. Getting your gold out of the country would me virtually impossible, and almost certainly illegal too.

ML/NJ

[Ghost of Philip Marlowe]

Yes, but bullion only. Other precious metals with intrinsic value (usually coins) cannot be confiscated. Yet. If they try, there will be enough heads-up to plan and act.

[mc6809e]

Treat Gold like insurance — and hope things don’t get so bad that you actually have to use it.

[lucky american]

$25 K for a watch? Common sense and logic tell me there are NO watches out their worth $25 K. Those people who sell you these things see you comming. Like a Pravda pocketbook for $25 K? I don’t think so!

[cc2k]

Gold and silver are useful as hedges.

They have never been worth nothing. This makes them good hedges against complete Armageddon and system wide meltdowns.

But as an investment, I'm not sure. Both are at or near all time highs. They could go up more. They could go down.

I wouldn't hesitate to recommend putting a small percentage of your long term investment money in gold or silver. I'm talking about real, physical gold or silver that you can keep in your safe at home. There's some security in knowing that if everything melts down completely, you've got something valuable to fall back on.

As for "paper gold" like the exchange traded GLD and SLV, I'm less enthusiastic. Again, they are trading near all time highs. And if the whole system implodes, electronic or paper shares of GLD and SLV won't buy you much in a bartering society.

And for the "Armageddon" hedge at home, don't forget the lead. As others have pointed out, 5.56mm, 7.62mm, .45acp, .357 magnum denominations are both useful and valuable for barter in a post meltdown society.