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Is Gold worth owning?
Old 03-24-2015, 11:07 PM   #1
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Is Gold worth owning?

I have never felt the need to own Gold. However, a relative of mine has wanted to own Gold for a long time now. I am against it for myself because I can't think of a reason to own it. I am afraid this relative will buy Gold and it won't be a positive experience. I think we are talking about 70k. I would rather they buy Vanguard Wellesley fund and forget it. My relative is dissapointed because the CD rates are low. I agree , they are. But Gold? My relative is retired, has a nice pension, SS,etc. Please advise.
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Old 03-24-2015, 11:29 PM   #2
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That's a lot of gold. Is he planning on keeping it in a home safe or at the bank? If he has to buy a safe or pay to store it, then I'd consider it a liability and not an asset.

Is he going to hide and bury it somewhere? That sounds extremely risky to me.

I am a bit of a silverbug myself (almost 2% of my AA is in bullion), but I recognize that it's not a smart bet. If the s really hits the fan and the dollar goes out the window, then beans, bullets, and bottled water will be more useful. having a large amount of gold is either very risky or incurs costs, which means likely negative returns.

But if he's a real goldbug and being able to go to his bank's vault and hold those beautiful krugerrands makes him happy, then God bless him. Who are we to stand in the way of his happiness?
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Old 03-24-2015, 11:37 PM   #3
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They want to have the physical Gold at home. It makes me nervous this is even being considered for them. I am kind of a conservative stock investor through mutual funds. I am going to push hard for the Wellesley fund for them. They also want to buy a little silver too.
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Old 03-24-2015, 11:45 PM   #4
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I put ~70k in gld, it's worth ~40k today.Tell him I'll make a deal just for him at $50k. He can have "experienced" gold. UP I'm with cooch96 why own physical as you pay money to secure it. Lead would be worth more if shtf. As an investment I'm not smart enough. Might as him why he thinks it's a good investment.
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Old 03-25-2015, 08:42 AM   #5
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Gold is sort of inverse to value of the dollar. Right now dollar is strong, so it seems exactly the wrong time to invest in gold.

I would never own gold directly myself as investment.
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Old 03-25-2015, 09:05 AM   #6
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I always thought of gold as sort of inflation proof. Can't really make money at it unless you are speculating against the general population's FUD (Fear Uncertainty Doubt). The desire of the prepper types to own it always amazes me. You can't eat gold and as someone else here hinted at, lead is much cheaper and useful if you reload. Why we, as a species, have such desire for gold and diamonds all out of proportion to their utility as materials never ceases to amaze me.
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Old 03-25-2015, 09:17 AM   #7
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Doesn't take up much room in a safe deposit box. OTOH, Austrian Philharmonics are now being bought for $1197. February 3rd they were being bought for $1258. 8/28/11 I show them being bought at $1819. Buy prices from AJPM.com up in Oregon. Still ahead of our purchase price of $425 each back in 7/2006. Quicken claims that with inflation at 4% that is about a 16% real return over the last nine years.

That's crazy. Must be doing something wrong math wise, or maybe it is time to seriously consider buying gold again, which I wasn't going to recommend.
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Old 03-25-2015, 10:25 AM   #8
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I have some of the yellow metal, some of the silver metal and some shares of tgldx.

It is undervalued now? Not sure. I bought most of it late 2000 when it was under $300 an oz. Silver was under $5 an oz (I think).



I like gold.
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Old 03-25-2015, 10:31 AM   #9
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Silver bags of $1,000 face value US coins are an excellent alternative to gold. With interest rates at 0% it is not like you are loosing much.
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Old 03-25-2015, 10:37 AM   #10
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I ended up getting a box (500) silver eagles. It was mailed. I still remember the postal worker kicking that box across the floor.
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Old 03-25-2015, 02:23 PM   #11
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Quote:
Originally Posted by UnrealizedPotential View Post
I have never felt the need to own Gold. However, a relative of mine has wanted to own Gold for a long time now. I am against it for myself because I can't think of a reason to own it. I am afraid this relative will buy Gold and it won't be a positive experience. I think we are talking about 70k. I would rather they buy Vanguard Wellesley fund and forget it. My relative is dissapointed because the CD rates are low. I agree , they are. But Gold? My relative is retired, has a nice pension, SS,etc. Please advise.
Seems that your relative could afford to make mistakes, if gold indeed might turn out to be a mistake.

Does he/she live with you? Do you have financial responsibility for him/her?

Ha
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Old 03-25-2015, 02:27 PM   #12
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I go with mr. Warren Buffett: Gold is silly.

Top 7 Warren Buffett Quotes On Gold Investing | Commodities | Minyanville's Wall Street

In summary: most of the value in gold has nothing to do with its value as a production metal, but everything with fear.

In short term you are betting on the belief that more and more people will believe the world will end, AND that extraction cost will go up.

In the long term that is a losing bet any which way you think. If the world ends and everyone is fearful, you can't eat it and its valueless. If it doesn't end, fear will subside and the value drops.

Only buy gold if you are an expert in mass psychology.

Otherwise, plant some fruit trees. That'll keep you more safe in bad times.
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Old 03-25-2015, 02:38 PM   #13
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Is $70K only a fraction of their savings? Does SS and the pension cover all their expenses? If that's the case, I see no harm in it. But if I were your relative, I'd tell you to mind your own business.
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Old 03-25-2015, 02:53 PM   #14
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Whenever the topic of gold comes-up, the topic of complete societal breakdown (CSB) is not far behind. In that scenario, everyone imagines mean people taking others' food by force, so food and guns are valuable. But there's quite a range of things in between today's "stability" and CSB. It might just happen that there's hyper-inflation, for instance. I think that's more likely than CSB. So let's play-out that scenario for someone who has some gold.

Would the equity markets be seriously down (since uncertainty causes people to flee to "safe" investments)? In this scenario that I'm proposing, factories still produce, people still work, but prices are higher every day. I'll wager that selling your equities in this environment would generate quite a hefty loss. Right or wrong, gold is considered by many (most?) as an asset to use to weather the storm. In this scenario I'm proposing, the economies of the world would get on their feet again, at which time the fractional ownership of the companies of the world might have shifted (could be that a lot of companies must close their doors, leaving investors with nothing), but the total assets before and after the disruption will still exist, generally, and I suggest that the markets will get priced properly again, given time.

If one holds gold before this kind of disruption, they would uniquely have the opportunity to "sell high", and, oh by the way, keep-up with those ever-increasing grocery store prices. Those with gold might also be able to get some good companies at a fraction of their book value (if they have the guts to invest in equities before the rebound).

Is this scenario likely? No. But like I said, I think it's more likely than the complete collapse of order and the launching of the world into complete mayhem. Maybe my faith in humanity is misplaced? Anyway, no, you can't eat gold, but it doesn't mean it might not come in handy some day.
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Old 03-25-2015, 05:52 PM   #15
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As others have hinted at, holding “precious metals” is a strategy to compensate for concerns of events such as hyperinflation. To that end, if there are extra funds beyond other rational investments, go for some.

Consider though, if there is the global crash that gold bugs seem to expect, who is it that is going to buy your gold at the hyperinflated price, and what are you going to do with the money?

Overall, it’s just a commodity to speculate in.
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Old 03-25-2015, 06:48 PM   #16
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If you are looking to diversify your "cash" holdings, gold is ok, as long as you understand the volatility.

http://www.bloomberg.com/news/articl...g-power-slides

I just posted this in a separate thread. "Currency" almost always loses purchasing power. Gold may not.

But for long term safety, safety being increasing purchasing power, equities win out.

I vote for having the guy buy Wellesley.


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Old 03-25-2015, 07:10 PM   #17
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I kind of wonder why the price is still so high . IIRC , the lower cost miners can produce for about $800 oz in today's dollars (read it on the internet somewhere L.O.L.) . I know, supply and demand , and not every producer has low cost.
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Old 03-25-2015, 11:08 PM   #18
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Seems that your relative could afford to make mistakes, if gold indeed might turn out to be a mistake.

Does he/she live with you? Do you have financial responsibility for him/her?

Ha
Yes, they could defiinately afford to make a mistake. I just hate to see it happen. No ,they do not live with me nor am I responsible for them. But it is a close relative so I feel obligated to look out for them. I used to swing for the fences on every pitch, now I am happy hitting singles.
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Old 03-25-2015, 11:11 PM   #19
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Is $70K only a fraction of their savings? Does SS and the pension cover all their expenses? If that's the case, I see no harm in it. But if I were your relative, I'd tell you to mind your own business.
They asked for my advice.
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Old 03-25-2015, 11:48 PM   #20
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GSR is 70 to 1 currently
Maybe other metals would be a better investment?
Then when the ratio changes to like 40:1 trade the
other metal for gold straight across.

If you live long enough
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