Gold?

[zerogravity]

Hello: my daughter is researching the topic of gold as a means to retire safely. Does anyone have any opinions or can point me to a thread that has already discussed this topic?




ZeroGravity (ZG) :a condition of apparent weightlessness such as that experienced in orbit. Causes blood flow to the brain that might result in amazing thoughts!

[Senator]

Historically, gold is a terrible investment. For the future, who knows. I have heard that GLD could not cash out in actual gold if it had to.

If you buy physical gold, there is a big spread, and generally a commission. Then you need to store it. When you sell, the same. No one is going to use gold to purchase anything, no matter how bad things get. Gold coins cost more than the metal is worth.

It doesn't hurt to have ~5% of a portfolio in some sort of precious metals or commodities. If it's for security in case of world a currency collapse, buy guns and bullets instead. Lots of them.

[Gumby]

This is the most recent thread: http://www.early-retirement.org/foru...ing-76541.html

You can probably find more using the search function.

[dallas27]

Gold is not an investment by any definition of the term.


Sent from my iPhone using Early Retirement Forum

[eta2020]

Quote:

Originally Posted by zerogravity Hello: my daughter is researching the topic of gold as a means to retire safely. Does anyone have any opinions or can point me to a thread that has already discussed this topic? ZeroGravity (ZG) :a condition of apparent weightlessness such as that experienced in orbit. Causes blood flow to the brain that might result in amazing thoughts!

gold is terrible means to retire safely.....

[VFK57]

Gold is not an investment. However as some economists point out (Jim Rickards, Peter Schiff, Mark Faber etc) it is a good insurance against high inflation on a long run. I agree that 5% to may be 8% of your assets (if you can afford it) could be kept as an insurance just in case above mentioned economists are correct.

[traineeinvestor]

Gold is an investment - it's just a very bad one.

Over the longer term, it has underperformed the major asset classes such as equities, bonds, real estate, at least some collectables and even interest bearing bank deposits. There have been rare moments when gold has done well in both absolute and relative terms (the removal of the fixed price and high inflation 1970s). There have also been several periods when it has failed to serve as a preserver of wealth.

The one situation where gold may be worth owning is to provide portable wealth in the event of a massive local political event (e.g. revolution, war). However, given that it is currently easier to move money around by bank transfer or other means, even this role is highly questionable today.

For my sins, I have a handful of gold coins sitting in a safe deposit box. Buying them was detrimental to my wealth - just about anything else I could have purchased would have been a better investment. Fortunately, the amount is not material. One day I will give them to my children/ grandchildren and they will take that as evidence that it is time to ship me off to the old folks home and wash their hands of me.

[petershk]

I like the image that Buffett raises. Gold is a hedge against fear. When you buy, say, P&G, you are investing in the future productive returns of that slice of the economy (which could be negative, but generally over time has been positive). If you extend that to the whole market... Buying something like VTI is an investment in the future return of the productivity of the country.

If you buy all the gold in the world you have a 67' cube of gold worth 7 trillion $ or so. In 50 years it's still a 67' cube. What it's worth (corrected for inflation) is based purely on what other people will pay which is primarily based on fear.

So instead of that cube you could buy (at the time Buffett said it) all the farmland in America, 6 Exxon Mobils and have about a trillion in walking around money.

When I thought about it that way gold suddenly made a lot less sense to me.

I get the short term value and the long term sense of having something safe that can't ever lose value. But really... If the currency fails and the banks fail and the businesses fail... That gold is only worth something if you manage to hold onto it which would also be true for the land

Sent from my HTC One_M8 using Early Retirement Forum mobile app

[Sunset]

Quote:

Originally Posted by petershk I get the short term value and the long term sense of having something safe that can't ever lose value. But really... If the currency fails and the banks fail and the businesses fail... That gold is only worth something if you manage to hold onto it which would also be true for the land ....

Except gold does lose value and could be worthless if anyone ever develops a way to extract all the dissolved gold in the oceans.

If banks/currency/businesses fail the world will be a horrible place.
The only thing that will be worth a lot is guns and lead (bullets) because then you can take the land and everything else from others or defend yours.

So I don't own gold , but have a couple of guns and don't hunt.

[StuckinCT]

Gold is insurance, plain and simple. As such, it is not an investment but rather disaster protection. I would keep it less than 5% of your portfolio, I was 2% but now I have 0% because I think it is going to fall a lot more.

[Onward]

Wow. Eight bad reviews out of eight responses.

I'm buying.

[Fermion]

Quote:

Originally Posted by Sunset Except gold does lose value and could be worthless if anyone ever develops a way to extract all the dissolved gold in the oceans. If banks/currency/businesses fail the world will be a horrible place. The only thing that will be worth a lot is guns and lead (bullets) because then you can take the land and everything else from others or defend yours. So I don't own gold , but have a couple of guns and don't hunt.

Lots of things could be worthless with vast improvements in technology (which would be required to economically extract the minute quantity of gold per cubic meter of sea water).

Cold fusion would make oil and gas worthless (probably solar, wind too)

If we go by past history of a few thousand years, it is likely gold will retain value and be of more use during a disaster than weapons.

Imagine in WWII if you were trying to cross a border to freedom. What might work? Gold for bribes or going up against a fence and 10 guards with a handgun you don't even know how to use very well?

[StuckinCT]

I used to move 10s of millions of gold per day. I could not think of a worse environment for gold, low inflation dollar strength. Historically it follows long cycles that roughly tracks inflation, but right now it is mis priced.

[MasterBlaster]

For fun and adventure, check out all-weather investing (ie. no matter what happens) such as Harry Brown's so-called "Permanent Portfolio". It has equal amounts of stocks, T-Bonds, cash, and gold. In theory, it should do OK no matter what happens. These type portfolio's were somewhat popular several decades ago.

Quote:

Originally Posted by traineeinvestor Gold is an investment - it's just a very bad one.

Gold is only bad when the economy is good. When the Mad-Max scenario plays out it just may be very handy to have lots of gold, ammo, and canned beans.

[Sunset]

Quote:

Originally Posted by Fermion Lots of things could be worthless with vast improvements in technology (which would be required to economically extract the minute quantity of gold per cubic meter of sea water). Cold fusion would make oil and gas worthless (probably solar, wind too) If we go by past history of a few thousand years, it is likely gold will retain value and be of more use during a disaster than weapons. Imagine in WWII if you were trying to cross a border to freedom. What might work? Gold for bribes or going up against a fence and 10 guards with a handgun you don't even know how to use very well?

I agree inventions can make others worthless, oil will not always be so valuable if solar & batteries get more efficient, cold fusion will take a long time if ever.

History seems to say weapons are more useful than gold, I never heard of any nation throwing gold at another as a form of attack.

I imagine WWII would be better with a gun.
I'd use my gun to take gold from some idiot carrying it without a gun, or I'd just cross the border where there is 1 guard and snipe him before I even went through.
In war rules are made by the winner.

Who is to say the guard won't take all your gold and then shoot the silly gold carrying idiot who has no gun? The guard would get the gold and a commendation from his superior for stopping an infiltrator.

I don't own gold other than jewellery. Same with diamonds.

[retiredinnyc]

When gold was 350 an ounce I bought some small bouillon bars. HUGE mistake, you need to have it assayed (tested), store it etc. I wound up dumping it and bought $50 American eagle coins they have about one ounce of gold in them much easier to trade . I bought them not so much for an investment but just in case of hyper inflation I figured I would be able to feed my family for a while till things got sorted out. I saw films about post war Germany with wheel barrow s of money just for a loaf of bread. In hind sight it was just my effort to try to be prepared for the zombie apocalypse. As far as an investment for me it was lousy. Showing off the coins are a conversation item over house parties but that's it

[Fermion]

So explain how buying gold at $350 an ounce was a bad investment when it represents a 300% gain to today's price of gold? Even if you have held the gold for 20 years that outperforms an EE bond by far.

Also, the world did not end and hyperinflation did not happen so the gold did its job.

I think the car insurance I have bought over the past 20 years was a bad investment too.

[retiredinnyc]

I have them since late 1999 as best as I can remember. I dont have the know how to compare them heads up to a sp500 fund with dividends reinvested, but I think the fund would have done better. If it turns out that they beat the fund then I stand corrected about them being a bad investment, I hold them as my hedge against paper money being worthless in case of economic chaos,

[Totoro]

Quote:

Originally Posted by Fermion Imagine in WWII if you were trying to cross a border to freedom. What might work? Gold for bribes or going up against a fence and 10 guards with a handgun you don't even know how to use very well?

I would expect the guards robbing you, and back you go empty-handed.

That said, in WWII many people did flee with golden fillings in their teeth and diamonds tucked away. Just enough to start a new life.

Not to repeat the gold thread, but it's a poor core investment by most standards, including mine.

[Fermion]

Quote:

Originally Posted by Totoro I would expect the guards robbing you, and back you go empty-handed. That said, in WWII many people did flee with golden fillings in their teeth and diamonds tucked away. Just enough to start a new life. Not to repeat the gold thread, but it's a poor core investment by most standards, including mine.

It isn't the way bribes work in real life. If the guards take the gold and turn you back, then they get a reputation for this and they get offered no more bribes. In the real world they turn out to be quite honest in their dishonesty because it nets them more bribes.

I mean we can go all fantasy here and not actually use past history. Aliens could come down and shoot you with a ray gun before you can use your gold, something like that.

An individual using a gun to get past a border only works in James Bond films. Again, we go go all fantasy and pretend we are all James Bond with our Walter whatever he uses.