Gold as an investment

[rmcelwee]

You could have done worse though. You could have bought Kodak in 1982.

I could have bought Apple - the company. A third share of the company sold for $800 a few years earlier.

 

[Fermion]

I could have bought Apple - the company. A third share of the company sold for $800 a few years earlier.

More recently, you could have bought bitcoin when 100,000 of them were a $1.

Hindsight is great isn't it?

 

[rmcelwee]

More recently, you could have bought bitcoin when 100,000 of them were a $1.

Hindsight is great isn't it?

I passed on bitcoin at $8.

EDIT: This was back before anyone had ever heard of it. I would have sold it months later at $16 and doubled my money (probably a $15K gain). Then for the rest of my life I would have been crushed that I sold early. So, in a way I'm actually thankful I didn't buy any way back then. It was a big topic of conversation between me and my tech friends. I talked a few of them out of buying it. A few of them built mining rigs for fun which is what I would have done. I haven't heard back from a couple of the guys so I am assuming they made it big.

 

[Koolau]

You could have done worse though. You could have bought Kodak in 1982.

Yeah. They only invested in silver - not gold.

 

[Koolau]

My stash of several ounces of gold (in 1/10 oz bullion coins) was purchased in the "lows" (below $300) back in the early 2000s. So vs today's spot of a little over $2000, that's not a great investment. Much better to have purchased stocks.

But, I wouldn't say my life insurance policies have been a good investment either - after all, I didn't DIE. But they (like a bit of gold) have brought me enough peace of mind to be worth the "drag" on my portfolio. AND, during the great recession, my gold (and silver) kept my portfolio almost even, on a value basis - partly because I have generally held less than 50% stock. Some "experts" have suggested that a small commitment to gold in an AA (1% to 5%) tends to smooth out the ups and downs in portfolio value. I don't have a citation for that but have seen the theory many times over the years.

Over time - quite a long time, generally, PMs are negatively correlated with stocks/bonds/currencies. If you want to think of them as a generally lousy investment that (roughly) keeps you even with inflation but also has a "crisis" insurance value, you might consider a small amount of the stuff. Just don't count on it making you rich.

By the way, the one issue I always take with those who don't favor gold is that they tend to set up the age-old straw man argument, best summarized as "you can't eat gold." My answer is "you can't eat stocks or bonds or houses or rental properties or farm land or guns and ammo either." In fact, at the "end of the world" nothing will be valuable. BUT, in a non-end-of-the-world situation (such as mentioned by one poster whose relatives escaped their "personal end-of-the-world" by having a small amount of the stuff, gold IS the original crisis investment.


Old Joke: The richest man on Earth decided he WOULD take it with him when he died. He arranged to have several hundred gold bars entombed with with his body. When he arrived at the pearly gates with his stash, St. Peter asked "Why did you bring these paving stones with you?"


Returning you now...

 

[rmcelwee]

Yeah. They only invested in silver - not gold.

I was only 15 years old. How much did you invest in gold at that age?

 

[mathjak107]

a mix of 60% equities and 40% gold , last time i ran the numbers beat equities and bonds for over two decades over most time frames .

ever since gold etfs made gold a main stream investment it has been a different animal

 

[catii]

I hold physical gold and silver. Not for an investment, but as a hobby and as a store of wealth (basically, an emergency fund). I don't even calculate it in my net worth.

Yup, what he said. Back in the early 80s, I found myself with some excess cash, & put an ad in the local paper that I was buying gold & silver. We were living in a poor part of Louisiana, & I got a massive response. Checked everything with a sensor before I bought it, but the items poured in for months.

Ended up with a dozen or so 100-ounce bars of silver, as well as a bunch of loose stuff that I melted into the same size bars. I don't remember the exact weight of gold jewelry we ended up with, but it's several pounds. I've put it all in a bank deposit box, & there it sits, ready to be converted into cash, traded, or left for kids/grandkids to find, some far-future day. The box is listed in our wills, so it won't be forgotten.

Never missed (or noticed) what I spent on it, 40 years ago, but it gives me a warm fuzzy feeling every time I think about it! Certainly nothing that I've plugged into FIREcalc for our retirement, or included in net worth. I could probably cash it out, & buy a top-of-the-line Mercedes, but I can't see myself getting the same enjoyment, as having that stash of cold, hard metal.

 

[Koolau]

Yup, what he said. Back in the early 80s, I found myself with some excess cash, & put an ad in the local paper that I was buying gold & silver. We were living in a poor part of Louisiana, & I got a massive response. Checked everything with a sensor before I bought it, but the items poured in for months.

Ended up with a dozen or so 100-ounce bars of silver, as well as a bunch of loose stuff that I melted into the same size bars. I don't remember the exact weight of gold jewelry we ended up with, but it's several pounds. I've put it all in a bank deposit box, & there it sits, ready to be converted into cash, traded, or left for kids/grandkids to find, some far-future day. The box is listed in our wills, so it won't be forgotten.

Never missed (or noticed) what I spent on it, 40 years ago, but it gives me a warm fuzzy feeling every time I think about it! Certainly nothing that I've plugged into FIREcalc for our retirement, or included in net worth. I could probably cash it out, & buy a top-of-the-line Mercedes, but I can't see myself getting the same enjoyment, as having that stash of cold, hard metal.

I try never to give financial "advice" but I'd suggest you determine your actual value in silver and gold. You mentioned a dozen 100 ozt silver bars. Those are easily worth $2300 each. You mentioned "pounds" of gold jewelry. Assuming it's mostly 14 kt, 1 "pound" of it would be worth roughly $17K at melt value.

I think that's enough money to include in your NetWorth calculation. I bought virtually all my PMs back when it cost less than 20% of what it would sell for now. I keep a running total (on a yearly basis) of what that adds to NetWorth. I don't think so much about selling it (just like I don't plan to sell my condo.) BUT I do include PMs in NW but not my condo.

It's all up to the individual, but I certainly wouldn't ignore your PMs in NW calc but YMMV.

 

[catii]

I try never to give financial "advice" but I'd suggest you determine your actual value in silver and gold. You mentioned a dozen 100 ozt silver bars. Those are easily worth $2300 each. You mentioned "pounds" of gold jewelry. Assuming it's mostly 14 kt, 1 "pound" of it would be worth roughly $17K at melt value.

I think that's enough money to include in your NetWorth calculation. I bought virtually all my PMs back when it cost less than 20% of what it would sell for now. I keep a running total (on a yearly basis) of what that adds to NetWorth. I don't think so much about selling it (just like I don't plan to sell my condo.) BUT I do include PMs in NW but not my condo.

It's all up to the individual, but I certainly wouldn't ignore your PMs in NW calc but YMMV.

We thought about including the Au & Ag, but they turned out just to be too manini (small) to matter. We own our home & two rental properties, free & clear, & you know how expensive Hawaii property is! When we added up everything, the PMs didn't make enough difference to matter. Besides, I have no idea how much I paid 40+ years ago, & NW is just a number, as far as we're concerned, because our other investments are what provide our income.

That said, we've been happily retired for quite awhile, & despite pulling out living & considerable unexpected expenses, & not including real property appreciation (+31.2%), our estate has increased by more than 22%! DW expected that, as she has done most of the planning & investing, but it still blows me away! It really does take money to make money, & once you get to a certain point, it's difficult to outspend the appreciation (assuming that you take a rational approach).

Not sure about the rest of the country, but Hawaii property values are increasing so fast, that's almost ludicrous! I get a report from Redfin every month on each of our properties, & seldom is the increase less than 3%, month over month! When each is valued at $1.5 million plus, even a small increase adds up, & so do our property taxes! Hard to imagine how anyone can afford to buy in Hawaii!

 

[Koolau]

We thought about including the Au & Ag, but they turned out just to be too manini (small) to matter. We own our home & two rental properties, free & clear, & you know how expensive Hawaii property is! When we added up everything, the PMs didn't make enough difference to matter. Besides, I have no idea how much I paid 40+ years ago, & NW is just a number, as far as we're concerned, because our other investments are what provide our income.

That said, we've been happily retired for quite awhile, & despite pulling out living & considerable unexpected expenses, & not including real property appreciation (+31.2%), our estate has increased by more than 22%! DW expected that, as she has done most of the planning & investing, but it still blows me away! It really does take money to make money, & once you get to a certain point, it's difficult to outspend the appreciation (assuming that you take a rational approach).

Not sure about the rest of the country, but Hawaii property values are increasing so fast, that's almost ludicrous! I get a report from Redfin every month on each of our properties, & seldom is the increase less than 3%, month over month! When each is valued at $1.5 million plus, even a small increase adds up, & so do our property taxes! Hard to imagine how anyone can afford to buy in Hawaii!

The trick is to buy before prices go up (that's what we did, buying in the mid 80s.) Also, a condo may well be suitable for one's needs and cost half what a single-family house costs. Housing is on the order of SoCal/NoCal. Very expensive, but doable if you can cut other things. The really good news is our RE taxes are the lowest in the nation. YMMV

 

[catii]

The trick is to buy before prices go up (that's what we did, buying in the mid 80s.) Also, a condo may well be suitable for one's needs and cost half what a single-family house costs. Housing is on the order of SoCal/NoCal. Very expensive, but doable if you can cut other things. The really good news is our RE taxes are the lowest in the nation. YMMV

Tell DW & her 10 big Maine Coon cats, that I want to move into a condo? Umm, no! Besides, we love our 3550sqft house, with our right-of-way to KBay! Guess we'll just muddle along, & spend more $$ than we have to.
Actually, I'm almost ready to post "Who gets the money" because none of our 3 kids or 3 grandkids are the least bit interested in our Hawaii assets, but they'll all take the money!

 

[Koolau]

Tell DW & her 10 big Maine Coon cats, that I want to move into a condo? Umm, no! Besides, we love our 3550sqft house, with our right-of-way to KBay! Guess we'll just muddle along, & spend more $$ than we have to.
Actually, I'm almost ready to post "Who gets the money" because none of our 3 kids or 3 grandkids are the least bit interested in our Hawaii assets, but they'll all take the money!

I loved living in Kaneohe for a couple of years, but DW couldn't take the rain - we lived in a heavy rain band. Our son actually lived on Big Island for 2 years but couldn't make his little farm w*rk out. The other kids show little interest either. Oh, well. I guess we'll just give it all to charity.

 

[catii]

I loved living in Kaneohe for a couple of years, but DW couldn't take the rain - we lived in a heavy rain band. Our son actually lived on Big Island for 2 years but couldn't make his little farm w*rk out. The other kids show little interest either. Oh, well. I guess we'll just give it all to charity.

We've been here for 33 years, so I guess we're not likely to move anywhere else. Not too rainy, although I sometimes wish I had gills!

Interesting that we aren't the only ones with descendents who aren't interested in enjoying what we worked so hard to acquire. Oldest son lives about 5 miles away, & is civilian manager for the military, but he's married to a Japanese lady, whose mother lives in Tokyo. When she finally needs help (she's 85), they will move to Japan permanently, as they will inherit her home, & son has a j*b promised at the local Air Force base. Daughter is disinherited, & other son is a permanent resident in another state, after trying to kill my ex-wife. Aren't families fun?

 

[Koolau]

We've been here for 33 years, so I guess we're not likely to move anywhere else. Not too rainy, although I sometimes wish I had gills!

Interesting that we aren't the only ones with descendents who aren't interested in enjoying what we worked so hard to acquire. Oldest son lives about 5 miles away, & is civilian manager for the military, but he's married to a Japanese lady, whose mother lives in Tokyo. When she finally needs help (she's 85), they will move to Japan permanently, as they will inherit her home, & son has a j*b promised at the local Air Force base. Daughter is disinherited, & other son is a permanent resident in another state, after trying to kill my ex-wife. Aren't families fun?

Whoa! That's a new one (I think.) Sorry you have such family issues to think about.

 

[catii]

Yeah, one can get used to anything, after a couple of years. Doesn't help with figuring out an estate plan, though.

 

[mathjak107]

My stash of several ounces of gold (in 1/10 oz bullion coins) was purchased in the "lows" (below $300) back in the early 2000s. So vs today's spot of a little over $2000, that's not a great investment. Much better to have purchased stocks.

But, I wouldn't say my life insurance policies have been a good investment either - after all, I didn't DIE. But they (like a bit of gold) have brought me enough peace of mind to be worth the "drag" on my portfolio. AND, during the great recession, my gold (and silver) kept my portfolio almost even, on a value basis - partly because I have generally held less than 50% stock. Some "experts" have suggested that a small commitment to gold in an AA (1% to 5%) tends to smooth out the ups and downs in portfolio value. I don't have a citation for that but have seen the theory many times over the years.

Over time - quite a long time, generally, PMs are negatively correlated with stocks/bonds/currencies. If you want to think of them as a generally lousy investment that (roughly) keeps you even with inflation but also has a "crisis" insurance value, you might consider a small amount of the stuff. Just don't count on it making you rich.

By the way, the one issue I always take with those who don't favor gold is that they tend to set up the age-old straw man argument, best summarized as "you can't eat gold." My answer is "you can't eat stocks or bonds or houses or rental properties or farm land or guns and ammo either." In fact, at the "end of the world" nothing will be valuable. BUT, in a non-end-of-the-world situation (such as mentioned by one poster whose relatives escaped their "personal end-of-the-world" by having a small amount of the stuff, gold IS the original crisis investment.


Old Joke: The richest man on Earth decided he WOULD take it with him when he died. He arranged to have several hundred gold bars entombed with with his body. When he arrived at the pearly gates with his stash, St. Peter asked "Why did you bring these paving stones with you?"


Returning you now...

since gold has become a pretty main stream investment , for more than two decades there are very few time frames that equities and bonds have beaten equities and gold .

much to everyone’s surprise , non interest paying gold has beaten bonds when used in a balanced portfolio.

in fact even wellesly income has done so much better with 15-20% gold.

gold isn’t a competitor to stocks , it is a competitor to the dollar and bonds so it needs to be compared as such.

quite a few popular portfolios use gold today as a component

 

[catii]

I don't get much of a kick from holding our gold bars, because they're only 10-20 ounces. But those 100-oz silver bars are fun to play with!

 

[Spock]

I've put this in other gold threads, but there is an interesting Van Eck ETF ticker OUNZ. It is supposedly (never done it) redeemable in bullion. If you buy 15 ounces and the price goes up, you get 15 ounces. If the price goes down, you get 15 ounces. Or just click the sell button on your brokerage screen like any other ETF.
YMMV.

 

[Sunset]

since gold has become a pretty main stream investment , for more than two decades there are very few time frames that equities and bonds have beaten equities and gold .

much to everyone’s surprise , non interest paying gold has beaten bonds when used in a balanced portfolio.

in fact even wellesly income has done so much better with 15-20% gold.

gold isn’t a competitor to stocks , it is a competitor to the dollar and bonds so it needs to be compared as such.

quite a few popular portfolios use gold today as a component

It sounds like Gold is good, but not when compared to bonds strictly , ie a $100K in bonds and $100K in gold at the start.

The balanced portfolio suggests to me, you are saying when gold is bought on dips it's a investment that can beat bonds, but not stocks.

I know comparing the past 30 years of gold to SPY, the gold does poorly.

 

[Koolau]

I don't get much of a kick from holding our gold bars, because they're only 10-20 ounces. But those 100-oz silver bars are fun to play with!

I gave mine to our kids - hoping they might hang on to them. No idea if they did. I would never ask. Personally, for silver, I like USA coins (mostly) pre '65. Very small denominations and no one would ever question their authenticity. On a very rough basis, a bag of silver USA coins ($1000 face value) is equivalent to one 10oz gold bar. Advantage to the bar for storage and portability and advantage to the silver bag for divisibility. YMMV

Heh, heh, I don't ever recall seeing a 100oz gold bar. That would be cool. I did see either a 500oz or 1000oz silver bar once - I've forgotten as it's been a long time ago. Ugly, ungainly thing, but still pretty cool. Wouldn't want to be lugging that thing around, but it would be nice in the bottom of your safe - ballast, you know.