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6 Responses to “Investing in Gold: Are you a Gold Bug?”
Anonymous
Chucks) If that is what you are preparing for, then you need to be buying gold and taking _Possession_ of it. I wouldn’t be making the purchases via an ETF (or similar fund) where you don’t actually have physical access to the gold.
Now, beware the markups on gold coins, etc. Personally, my metal of choice for an ‘insurance policy’ in your hypothetical would be lead (as in bullets). If the economy craters so bad that you’d need gold — you will likely need weapons more than the gold…
The use of gold as a means of purchase would occur only in the event of a complete collapse of a currency. 10% inflation is awful, but it’s not high enough to make currency insolvent, and that’s what some people are buying gold to prepare for. The fact that gold is so dense, uniform and immune to any corrosion makes it ideal for a physical store of wealth. Its properties make it inherently useful for a host of electronic, medical and other industrial applications and with that comes an inherent value. Gold is fairly useful in a bartering system, as most other valuable goods are either perishable, large, or of subjective condition.
It’s very true that the price of gold is subject to fluctuation and sudden changes in market demand. However if you want to have assets that you are certain will be valuable to just about everyone in the event of a complete economic collapse, gold is it. If the dollar collapses down the line, all of your stocks, bonds, mutual funds and money hidden under the mattress will be completely worthless. None of these deficit reduction plans passed by Congress are debt reduction plans and debt is expected to almost double in the next ten years. If the economy doesn’t perk up, the debt will be unsustainable relative to GDP and the only short-term solution to making payments will be printing more money, which in term drives up borrowing costs and also creates massive inflation. Gold would be the main flight to safety. The situation is the same but more pressing in the Eurozone, where the euro is also more likely to collapse because it’s not the world reserve currency like the dollar is. Greece will likely default on it’s debt, Italy and Spain will follow and Germany may abandon the euro entirely. This would lead to a collapse of the banking sector and massive gold buying in Europe as people try to preserve what money they have and send the price soaring.
These are all hypotheticals, but my point that purchasing gold is essentially like buying insurance for these situations. Long-term and without a disaster, gold should essentially track the inflation rate more or less. It’s not for everyone, but it could be for some.
I’m not buying gold, and am in fact contemplating selling gold jewelry we have laying around and collecting dust. Pointers on how to find reputable dealers who buy gold?
Whats the opposite of a gold bug? Cause I’m one of those people.
Tamara: I don’t know how you can possibly claim that gold will “never go down”. Its happened many times in the past and it will happen again. e.g. From 1980 to 2000 gold went from $600 to $300.
I don’t invest in gold but I believe that gold is the best investment that anyone can have. Gold will never go down with its price,as time goes by, the gold prices will still rise.
Chucks) If that is what you are preparing for, then you need to be buying gold and taking _Possession_ of it. I wouldn’t be making the purchases via an ETF (or similar fund) where you don’t actually have physical access to the gold.
Now, beware the markups on gold coins, etc. Personally, my metal of choice for an ‘insurance policy’ in your hypothetical would be lead (as in bullets). If the economy craters so bad that you’d need gold — you will likely need weapons more than the gold…
The use of gold as a means of purchase would occur only in the event of a complete collapse of a currency. 10% inflation is awful, but it’s not high enough to make currency insolvent, and that’s what some people are buying gold to prepare for. The fact that gold is so dense, uniform and immune to any corrosion makes it ideal for a physical store of wealth. Its properties make it inherently useful for a host of electronic, medical and other industrial applications and with that comes an inherent value. Gold is fairly useful in a bartering system, as most other valuable goods are either perishable, large, or of subjective condition.
It’s very true that the price of gold is subject to fluctuation and sudden changes in market demand. However if you want to have assets that you are certain will be valuable to just about everyone in the event of a complete economic collapse, gold is it. If the dollar collapses down the line, all of your stocks, bonds, mutual funds and money hidden under the mattress will be completely worthless. None of these deficit reduction plans passed by Congress are debt reduction plans and debt is expected to almost double in the next ten years. If the economy doesn’t perk up, the debt will be unsustainable relative to GDP and the only short-term solution to making payments will be printing more money, which in term drives up borrowing costs and also creates massive inflation. Gold would be the main flight to safety. The situation is the same but more pressing in the Eurozone, where the euro is also more likely to collapse because it’s not the world reserve currency like the dollar is. Greece will likely default on it’s debt, Italy and Spain will follow and Germany may abandon the euro entirely. This would lead to a collapse of the banking sector and massive gold buying in Europe as people try to preserve what money they have and send the price soaring.
These are all hypotheticals, but my point that purchasing gold is essentially like buying insurance for these situations. Long-term and without a disaster, gold should essentially track the inflation rate more or less. It’s not for everyone, but it could be for some.
I’m not buying gold, and am in fact contemplating selling gold jewelry we have laying around and collecting dust. Pointers on how to find reputable dealers who buy gold?
Whats the opposite of a gold bug? Cause I’m one of those people.
Tamara: I don’t know how you can possibly claim that gold will “never go down”. Its happened many times in the past and it will happen again. e.g. From 1980 to 2000 gold went from $600 to $300.
I don’t invest in gold but I believe that gold is the best investment that anyone can have. Gold will never go down with its price,as time goes by, the gold prices will still rise.
How can you “invest” in something with no internal rate of return?