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Help Me Out with Gold Holdings
Old 03-10-2008, 05:06 PM   #1
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Help Me Out with Gold Holdings

I remember when times were bad (or were they good? Depends on who you are at the time, I guess), my mom bought gold bullions and coins. I mentioned this in another thread. Looks like prices are going up to a point where I feel comfortable selling what I have in the safe deposit box. If I'm right, it's about $10K - $20K worth - I have no idea because I can't remember exactly what and how much I have. I don't know how much my mom paid for the items, but the price is finally at a point where I feel comfortable selling them and not worrying about a loss - I suspect she got them when they were about $600 (on a bandwagon), but there might have been a few that she bought at the high, which I remembered to be about $900'ish.

Anyway, before I sell, I figure I should ask some questions like (1) what exactly is the gold for? If paper money is worth nothing some day (will that day really come?) ... maybe we're at war (like we're being attacked) - how exactly am I supposed to use this gold to buy food or pay my health care premium?

Assuming that I'm convinced that I should keep the gold... or even buy more, how much gold should I have? Our total assets are about $2M which includes 2 CA homes. Right now I guess I have 1/2 to 1% of holdings in gold. I wouldn't buy more now but hopefully will remember when the prices go down the next time around.

Anything else I should know? What to do? :confused:
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Old 03-10-2008, 07:43 PM   #2
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Please forgive my whippersnapperish question:

If you have 2M in assets, why are you worried about market-timing 10-20k in gold?

If I was in your shoes, I'd probably either forget about it or sell half now so you can feel good about locking in the gain.

But - what will you do with the money? Strong enough to sell gold when its strong and buy stock funds when they are beaten down?
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Old 03-10-2008, 08:00 PM   #3
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Please forgive my whippersnapperish question:

If you have 2M in assets, why are you worried about market-timing 10-20k in gold?

If I was in your shoes, I'd probably either forget about it or sell half now so you can feel good about locking in the gain.

But - what will you do with the money? Strong enough to sell gold when its strong and buy stock funds when they are beaten down?
Sounds like most of it is in the CA real estate.

Gold has had a good run recently so selling it now to lock in gains makes sense. It could go higher but who knows? I don't have it as an asset in my AA so wouldn't keep it long term so wouldn't rebalance into or out of it. If world finances collapse you don't have enough to really make much of a difference.

DD
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Old 03-10-2008, 09:39 PM   #4
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why bother. just keep the gold. Don't sell any asset unless you need the money. Remember, the rich buy asset and everyone else buy consuming products.

OTOH, if the 2m asset that you own in CA real estate not making any money for you other than provide a roof on your head and also costing you high dollars real estate taxes and you need the money now, then i would sell.

enuff said.
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Old 03-10-2008, 09:45 PM   #5
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You didn't say when Mom bought the gold. Hopefully in the $600s in the last few years, not in 1980!


If you don't intend to hold gold, by all means sell it. Find an understanding coin dealer and do it in cash and under $10K at a time. No sense paying income taxes on the (small) gains, unless you feel highly patriotic. [Disclaimer: I do not advocate cheating on taxes, just on careful tax planning.]

If you do want to invest in gold, you need probably $200-400K worth of it to hedge your other property. Now might be a great time to buy, or not.

Quick tip (hopefully not too late, if applicable) NEVER NEVER NEVER "shine up" or do anything at all, to apparently old or discolored coins or other valuables, until you've had an expert appraise them. If it is ("was") a rare coin (object), you could do huge damage to its collectible value.

Might as well get more than one guy to look at the loot, too. Coin dealers are human beings and thus should not be trusted in important matters like money any more than the next guy.
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Old 03-10-2008, 10:59 PM   #6
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Gold has had a good run recently so selling it now to lock in gains makes sense. It could go higher but who knows? .

DD
"The trend is your friend". We still have at least a double from here.
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Old 03-10-2008, 11:58 PM   #7
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To answer some questions, I don't know exactly when my mom bought the gold, but I know it's around that 1980 time. I think she bought some on the way up and possibly bought some more at the high thinking it's still going up because I remember her commenting in a negative way that she bought all this gold, and the prices were going down. In the mean time, it's been in the safe deposit box for the past 25+ years!

Most of my assets are in real estate. I guess my current home is worth about $800K and the rental is at about $600K - we break even on the rental. Oh wait, I'm worth more... $750K in non-IRA mutual funds; $100K in liquid CD (we're going to remodel our home very soon); and another $300K in IRA. We don't need the money, but it seems like a waste to have this money in the safe deposit box when I don't know what to do with it if I needed it.

Yes, the problem is what to do with the money... although 3.5% in VG MM sounds really good right now. Maybe selling 1/2 just to make me feel good might help. I guess I'll go tomorrow to check out the "booty" and share more!
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Old 03-10-2008, 11:58 PM   #8
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what a riot!

If they are just garden variety Kruggerands or something similar of recent vintage, you can check prices quickly on the web to get an idea. I have a few passed on to me, too --not near as much as you-- and to simplify my life I was gonna cash 'em in and then I figured, why? They add diversity and in a pinch you will always get something for them which can't be said about some other investments.

If you have the safe deposit box just for the sake of keeping this gold.. I might look into another strategy. Besides the yearly cost, you have to ask yourself if things get so bad that you really need this gold.. will you be able to get IN to the SDB?

I had a weird experience with a SDB; the bank got sold, and it never crossed my mind that the SDB wouldn't just still be there right along with my old/new account at old/new bank. No one sent me a notice or anything.. but thankfully the bank manager (who was kept over from the "old" bank) recognized me as I was opening up a business account and said "we were gonna drill that box"!! So I closed out the box and now I just keep stuff with me, knock on wood.
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Old 03-11-2008, 12:06 AM   #9
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Besides the yearly cost, you have to ask yourself if things get so bad that you really need this gold.. will you be able to get IN to the SDB?
Never thought of not being it access it. Again, it goes back to, how exactly would I use the gold in case something terrible happens to the economy/country? I can't really take my bullion to Lucky's and hammer out a section to buy bread and water, right? So if I can't use it, why do I have it? (I don't know) The box cost $70/year and holds other stuff too.
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Old 03-11-2008, 12:23 AM   #10
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I can't really take my bullion to Lucky's and hammer out a section to buy bread and water, right?
well, I wouldn't exclude it. That's what people did for thousands of years. You'll have that, and the people next to you will have a plastic debit/credit card.. There's something to be said for not being in that latter group in an extreme situation.
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Old 03-11-2008, 10:16 AM   #11
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They say that hundreds of years ago an ounce of gold could buy a fine set of clothes. The same is true today.

35 years ago $3000 would buy you a decent brand new car, thanks to inflation, today it would get you tires and cruise control for your brand new car.

Gold is simply a store of wealth. The same could be said for a bag of wheat. The reason that these things hold value is that it took time and effort to produce them. The gold won't do you much good in a famine, and the bag of wheat won't do you as much good as gold in periods of high inflation.

In the case of gold, the mining and processing of your gold was done with effort for which someone was paid, but your paper dollars are rifled through a printing press just like the newspaper (and there's a lot more paper in a newspaper than a dollar). So one should ask, what is the real value of a dollar?

The reason that gold has been accepted as the ultimate store of wealth is that it is relatively rare, doesn't deteriorate over time, is portable, malleable and can be easily divided and rejoined.
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Old 03-11-2008, 11:44 AM   #12
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They say that hundreds of years ago an ounce of gold could buy a fine set of clothes. The same is true today.

35 years ago $3000 would buy you a decent brand new car, thanks to inflation, today it would get you tires and cruise control for your brand new car.

Gold is simply a store of wealth. The same could be said for a bag of wheat. The reason that these things hold value is that it took time and effort to produce them. The gold won't do you much good in a famine, and the bag of wheat won't do you as much good as gold in periods of high inflation.

In the case of gold, the mining and processing of your gold was done with effort for which someone was paid, but your paper dollars are rifled through a printing press just like the newspaper (and there's a lot more paper in a newspaper than a dollar). So one should ask, what is the real value of a dollar?

The reason that gold has been accepted as the ultimate store of wealth is that it is relatively rare, doesn't deteriorate over time, is portable, malleable and can be easily divided and rejoined.
in the roman empire they used to pay people with salt and that's where the word salary comes from

only reason gold was popular as a store of wealth was you couldn't make fake gold like you could paper money and it was an easy means of international exchange since everyone had some gold. but then china has used paper money when the europeans were still calling themselves Franks, Lombards and Goths.

in the days of watermarks and computers there is no reason to use gold which has also caused inflation like it did in spain and the romans also mostly used silver and bronze for money and not gold
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Old 03-11-2008, 12:12 PM   #13
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in the days of watermarks and computers there is no reason to use gold which has also caused inflation like it did in spain
C'mon, that was 500 years ago, and it was caused by the discovery of America which of course led to many more gold discoveries and a bigger supply of it coming onto the market in Europe. They say that history repeats itself but unless you believe that another gold rich continent will be discovered soon, this scenario is unlikely to play itself out again. I think one would be wise to examine more up to date cases like Argentina or Zimbabwe for examples of paper dollar inflationary disasters.

In a high dollar inflation period I wouldn't suggest using gold as something to trade directly on a shopping trip, but rather to sell the amount that you need that day for paper dollars and then buy your groceries with those.

For the record, I'm sure that our elected government and the Federal Reserve are full of well meaning people but I'd take an ounce of gold any day over some paper that is only backed by faith in the wisdom of these folks.
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Old 03-11-2008, 12:13 PM   #14
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Sell houses. Dump dollars. Bonds? Like that yeild? Whipsawed by stocks? Gold? Pfft. Sometimes the old ways are best:

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Old 03-11-2008, 12:16 PM   #15
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gold doesn't prevent inflation

back in the day there was globalization and international trade as well and gold was an easy store of value just like it was for the templars. everyone had it and it was the same around the world. it was a lot easier to use gold for the venetians and the turks or romans to trade with each other and value the goods than try to make up a system of international trade with the poor communications system.

today it's easy to trade and value currencies to each other so playing games like the US Government does will result in your currency being worth less. same concept as hundreds of years ago but today we have computers instead of gold
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Old 03-11-2008, 01:24 PM   #16
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Get it out of the safe deposit box, put it in a big oak chest, dress up like a pirate and parade around the house singing

oh, and you'll need ale

wait, ale and wenches

yes, can't forget the wenches.
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Old 03-11-2008, 02:33 PM   #17
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[quote]
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gold doesn't prevent inflation
Correct, and seatbelts don't prevent car accidents, but if I'm in an accident, I'd like to be wearing a seatbelt.
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