Gold hits $875

[Trek]

Got gold?

"The weak US dollar and a skyrocketing oil price have boosted the precious metal as market players look for an alternative to the most common source of cash reserves and a hedge against inflationary pressures, while the economic uncertainty emanating from the subprime debacle has seen gold reassert itself as a store of wealth in times of turmoil."

"JP Morgan analyst Michael Jansen, adding that he expects gold to trade in a range between 800 usd and 950 usd an ounce in Q1 08."

Metals - Gold hits all-time high above 875 usd on weak dollar, oil bounce UPDATE - Forbes.com

 

[d]

so, from it previous high (Jan, 1980 ?), the average annual return has been ...? how much?! oh.

 

[Notmuchlonger]

What is the return from 1980?

 

[cute fuzzy bunny]

Basically if you bought gold in 1980, adjusted for inflation, you'd have lost half your moneys purchasing power by now. And you'd have had to have been pretty patient between then and now to see it come back that far.

 

[Notmuchlonger]

Thanks, Guess Im fairly ignorant when it comes for commodities. I would have never guessed gold has done so bad.

 

[Trek]

But if you bought it in 2001...

Anyway, I wasn't advocating buying gold for investment purposes. I inherited a few ounces (bullion) years ago that I keep stashed away and just like to follow it (and other precious metals) for fun.

Thought some others might as well.

 

[A854321]

It might be fun to have some bullion stashed away. Anyone know how one goes about buying it?

 

[cute fuzzy bunny]

I would have never guessed gold has done so bad.

Except for the spike around 1980 when people got jittery about inflation and for some reason thought gold might be a solution to that problem, and the advent of modern portfolio theory (which advocated a ~3% holding in precious metals) as a widely adopted standard investment strategy in the late 90's/early 2000's, gold hasnt been very interesting to own unless you like losing money.

Broad based holdings of commodities have some advantages, at least they did historically before you could buy commodity ETF's.

Hard to say going forward if they're good investments based on their history of reacting to unexpected inflationary situations or if they're going to become in general an emotional/behavioral investment like gold

 

[cute fuzzy bunny]

It might be fun to have some bullion stashed away. Anyone know how one goes about buying it?

Go buy some coins at your local coin dealer. Better still, buy one, wait a month or two and then try to sell it back to the dealer.

Might be an interesting experience in capitalism.

If you just want to jump to the answer and avoid the lesson, my FIL bought a bunch of gold coins a while ago and since the price has gone up, has been making a mild to moderate effort to sell them. None of the coin dealers in town including the one he bought them from is interested in buying them.

 

[Trek]

If you buy bullion you can try selling back to high end jewelry stores. They'll often make a deal. Don't know if they'd buy coins to melt.

 

[Khan]

Back when gold peaked (1980?) I sold my class ring.

 

[haha]

I'm already pretty much out of gold, though I wish I weren't. When my last small miner got taken over, I just didn't find anything that seemd to have the value that I think I can see in financial stocks.

Of course the market has been strongly disagreeing with me on this so far.

By the way, all the "Yeah, but how about return since 1980" is ridiculous.

Do you wear a condom all day long or only when you need one for protection?

It was easy to buy gold stocks in the early 70s, and sell them perhaps not at the top but at a decent gain before the top. It was also easy to buy gold back at its 2002 lows around $250-$300. For me at least it is harder to buy now, not because it may not keep right on rising, but because I also know that there is alot of air below. It might be a good entry for someone who feels competent with the momentum approach.

I am of the "Hard to get killed falling out of a basement window school", mainly because I don't trust myself to get it right. I do however trust others to often get it spectacularly wrong.

Ha

 

[W2R]

Go buy some coins at your local coin dealer. Better still, buy one, wait a month or two and then try to sell it back to the dealer.

Might be an interesting experience in capitalism.

If you just want to jump to the answer and avoid the lesson, my FIL bought a bunch of gold coins a while ago and since the price has gone up, has been making a mild to moderate effort to sell them. None of the coin dealers in town including the one he bought them from is interested in buying them.

Well, now I feel dumb. Why wouldn't the dealers want to buy them back? The price has gone up so they could sell them to someone for more than they would have paid your FIL.

 

[lazygood4nothinbum]

i inherited a few pretty maple leaf coins but i used them to update the house.

 

[mathjak107]

Basically if you bought gold in 1980, adjusted for inflation, you'd have lost half your moneys purchasing power by now. And you'd have had to have been pretty patient between then and now to see it come back that far.

id love to figure out though had you bought it in 1980 at 800.00 bucks but rebalanced your portfolio all those years buying cheaper and cheaper gold all along just how you would have faired now

 

[Notmuchlonger]

id love to figure out though had you bought it in 1980 at 800.00 bucks but rebalanced your portfolio all those years buying cheaper and cheaper gold all along just how you would have faired now

Would have sucked if you were in the nest egg consumption years

 

[calmloki]

Because we could and because we tend to cover bases we bought some Philharmonics back in '99 to put with our barrels of water , propane tanks, kerosene lamps, .22 shells, and such like. Because they are pretty and we suffer from inertia we haven't done anything with them. The price goes up and down. In that respect it seems a bit like i imagine owning bonds would be like - as long as you hold to maturity then the rise and fall of the bond value before maturity is meaningless and the bond is just like a CD. 'Course there's no guarantee that gold will be worth any set increase, but what it does before you sell doesn't mean much. It is pretty and heavy though. CFB - has your father-in-law tried MONEX to sell his coins or is he just trying small local coin dealers?
Or these guys up in Portland Or? Gold Coins and Bullion Dealer - American Gold Eagle, Canadian Maple Leaf, Panda and Krugerrand Gold Coins

 

[cute fuzzy bunny]

id love to figure out though had you bought it in 1980 at 800.00 bucks but rebalanced your portfolio all those years buying cheaper and cheaper gold all along just how you would have faired now

Thats easy. The money you invested in 1980 would be worth half today. The money you put in since then would have barely broken even vs the CPI after the recent uptick.

For the last 20 years you would have been taking money away from appreciating assets and burying it in this giant loser.

Lets not forget that this "asset" pretty much did nothing PRIOR to 1980. For decades and decades.

CL - I'm sure he could sell them if he really wanted to, but he's a busy guy. I think the point is that the dealers have plenty of inventory and are looking for the price to head south. Holding a huge mound of depreciating inventory isnt good business. Whats telling is that he didnt ask for market price, just what they'd give him. "Nothing. Dont want them right now. Have all we need. Ask again later.".

I'm sure some of the larger gold handlers would execute the transaction at market, otherwise they'd have a heck of a liquidity problem.

 

[haha]

Lets not forget that this "asset" pretty much did nothing PRIOR to 1980. For decades and decades.

Very catchy statement until you remember that the US government controlled the price of gold for those decades and decades; until 1971 when President Nixon refused to redeem $s for gold, even from foreign governments.

At the time of gold’s release, it was selling at $35. From there to the present, a period of 36 years, really doesn't look too terrible even with absolutely zero tinkering.

If you bought it when it was uncontrolled, and held to today it returned 9%, according to Excel. Not half bad, for a truly uncorrelated asset class

Of course, ymmv.

Ha

 

[cute fuzzy bunny]

I never thought I'd miss Nixon.

I think the key word there was "uncorrelated". I still havent heard anyone explain to me the correlation (or lack thereof) for gold to other asset classes. I appreciate that its uncorrelated, but so are loofah's and hubcaps. For the last 35 years its shown its lack of correlation by losing value (real and unadjusted) while everything else made money. Usually you want uncorrelated asset classes where one goes up while another goes down. Or at least have it go up once in a while, a while being a little less than 20-25 year periods.

On the other hand, I have this weird thing about collecting pots and pans, so who the heck am I to question?

 

[Brat]

Let's get practical here. I have a charm bracelet with a high gold content. Know an honest assayer who buys those things?

 

[TargaDave]

Coins (gold and silver) and a smaller percentage of mining stocks have crept up to about 5% of my holdings. Only reason I picked some up in 2004 was because of my mildly gold bug dad who wouldn't let me sleep until I did. Thanks dad. Normally I'd reallocate but I'm holding for now since helicopter Ben and Washington seem intent on keeping the money presses going to avoid recession at all costs. When they seriously talk about bringing in a "Paul Volcker" type to shore up the dollar I'll dump. I fully appreciate that it's mostly a lousy emotional investment that only does well in those few unsettled times, and takes a bit more stomach (and luck) than your basic index fund.

 

[youbet]

About three decades ago, I accumulated a few hundred ounces of silver in 10 oz bars. Put them in the basement with some guns and war surplus rations. What was I thinking?

I paid between $9 and $11 dollars an oz. Today it's worth about $15 an oz. Gee, I wonder if I would have been better off putting that several thousand bux into an MF?

Oh well..... Despite my propensity to do dumb stuff like that, I still found some way to get to FIRE!

 

[Medit8]

Bought Exchange traded bullion at USD 736 an ounce about 6 months ago. Now at USD 885.80. Not gloating, but not complaining either.

 

[FUEGO]

Check w/ your local scrap metals dealer. I worked w/ one recently that would buy anything from old junk cars by the hundredweight up to pure gold bullion by the ounce. And they would give pretty close to market price minus a small fee. Silver, copper and everything else, too. I never asked about silver and gold, but copper was getting spot market price minus about 10 cents per pound. That reflects about a 3% commission when copper was at ~$3/lb. My guess is the commission would be even less on higher value metals (they are easier to move and don't require 18-wheelers to haul off a few dozen tons). The scrap metal guy I worked with would resell them to precious metals specialists that I suppose would melt them down and resell them.