Buying Gold?

[mhk7]

I have heard for years that we should have some gold. Is this mostly hype and scare tactics? Should I be in a hurry to get into gold and out of the dollar?

Is there a fund that we can buy using our Schwab account to invest in gold, metals, hard assets?

Birch Gold told me this morning that gold has been going up every year around 9%...does anyone know if this is true?

If this is true, I'd much rather buy gold and I would be happy with the 9% of returns. Thanks for any advice!

 

[COcheesehead]

Who says you needs gold? Gold dealers.
I have never owned it. I’ve traded it using an ETF RING. Some people buy it as an inflation or safe haven play, but I think there are better options.
10 year return on GLD a popular gold ETF is 4.42%
1 year return is 4.82%

 

[calmloki]

just looked - AJPM says they will buy our Philharmonics for $1945, which is exactly $100/oz less than 4/13/2023. Now back on 10/1999 we bought them at $425/oz (world gonna end on 1/1/2000 doncha know). Quicken says if we put $425 in an account making 9% for 24 years and ignored any inflation in our figuring, that we would have $3362 in that account now. Instead we have $1945. hmmm. not seeing 9% over the last 24 years...

If I do figure 3.5% inflation (just a number I picked) in then if the Philharmonics were making 10.3% they would be worth $1957 now, which is close to 9%? Not a big or regular money maker for us.

 

[braumeister]

Here's the five year chart for GLD, compared with SPY (the red line). Doesn't seem worth investing in for me, but it's not hard to research things like this yourself.

 

[mhk7]

The salesman from Birch said that GLD is 'paper backed by gold' (or something like that) so it's one layer deeper than what Birch sells...he said it's not really buying gold. When you buy gold, he said you buy the actual gold. I don't see much of a difference but he did.

I'm thinking that if gold was consistently giving 9%, everyone would be buying it.

 

[Aerides]

I have heard for years that we should have some gold. Is this mostly hype and scare tactics?

What I have heard for years are commercials by gold companies.

 

[threegoofs]

The salesman from Birch said that GLD is 'paper backed by gold' (or something like that) so it's one layer deeper than what Birch sells...he said it's not really buying gold. When you buy gold, he said you buy the actual gold. I don't see much of a difference but he did.

I'm thinking that if gold was consistently giving 9%, everyone would be buying it.

Theres a huge difference.

Its called the ‘Birch salesman’s commission”

 

[joesxm3]

If you want some gold as insurance rather than an appreciating investment you could buy some gold eagles from a reliable source like APMEX. Best to buy 1 ounce coins.

If you want to buy shares, a fund likely to actually have the gold might be PHYS or SGOL. GLD is rumored to not be fully backed by physical gold.

The main reason to have some gold is hyperinflation insurance.

 

[COcheesehead]

Theres a huge difference.

Its called the ‘Birch salesman’s commission”

Beat me to it. I was going to post the exact same thing.

 

[Sunset]

OP - Sounds like a scam, as gold has never made 9%/yr in the last 20 years.

The time to buy gold was when it was regulated and $25, now it's expensive, pays zero dividends, and has very little real use.
Silver actually has a real industrial use, putting a floor on the price.

I read where folks bought gold and when the authorities raided the place, they found IOU's in the empty drawers... the gold was gone! (can't find the story again).

Did find this story of theft of money from gold "investors":
https://www.fbi.gov/news/stories/fools-gold

 

[erkevin]

I hold physical gold (less than 1% of net worth) because I am a numismatist and I like to hold precious metals as a store of value (and it's fun!). It is definitely not an investment.

 

[Retiired]

Gold is just one leg of an asset diversification plan. In some scenarios it will be an outperformer, in others a laggard. However, physical ownership of a small percentage of your overall net worth provides protection from currency disruptions.

History has proven, once a currency not backed and restrained by HARD assets gets in the hands of politicians, the end of that currency can 100% be predicted over time. Within 10 years, net interest costs on the debt will EXCEED federal spending on programs like Medicaid and defense unless the debt is inflated away.

Is it unwise to have a small percentage of your assets in a hard currency that has withstood the test of time for thousands of years?

P.S. No need to pay a Birch salesman commission to own it! You can buy it periodically at Costco for below spot before it sells out usually the same day it is listed.

 

[COcheesehead]

I think the Birch sales guy is here.

 

[Spock]

Only you can decide if you want to own gold, but do not expect "gold has been going up every year around 9%".



If you decide to own gold, there are two types: physical gold (bars, coins, jewelry) and "paper gold" (ETFs backed by gold). Various ETFs claim to be backed by physical gold... and a very small few claim to allow you to redeem your ETF shares for physical gold, but there maybe some rather high balance minimums.

Physical gold gives two choices: 1) hold it yourself or 2) letting somebody vault it for you. It is these various vaults that have a history of shady deals and going bankrupt.

The frequently used phrase with gold is the same as bitcoin: "if you don't physically hold it, you don't own it".


IF you decide you want to buy gold. I strongly suggest not buying it from a salesman or anyplace that makes you call to find out their price. Go to your local coin shop or buy some common coins online from a place like APMEX. You can see what their prices are online, buy it, send them the $ and they ship you whatever you bought.



I do own a gold ETF OUNZ in my ROTH IRA that supposedly lets you redeem in physical coins, but most of my holdings (66%) is in physical coins split between a safe deposit box and somewhere else.


Also. If just starting out, buy common bullion products like American Eagles, Maple Leafs, or Krugerrands. "Collectibles" and rarities are for people who know what they're collecting.

 

[mhk7]

Thank you all for giving me an overall look at buying gold...much appreciate it...I've always wanted to buy me a ring with an investment grade diamond from Sam's...I think I would enjoy that ring a lot more than gold in a vault!

 

[Winemaker]

Just buy the stock in gold mining companies if you feel you need to own gold. Back when gold became legal to own again ca.1975/6, my research showed to by gold mining stocks.
I was 16, had my first job, put my cash there. I made out real well; that's what led me to mining engineering.

 

[OldShooter]

The gold debate always rages and the points arguing that it is not a good investment always make the most sense to me.

But the other of life's mysteries is "Why 5%?" That is an almost meaningless fraction of a portfolio. If one really believes that gold (or anything else) is a worthwhile investment, why not invest in enough of it to make a difference?

 

[braumeister]

IMHO, gold can be a very useful part of one's portfolio at times. The problem is trying to pick those times. In recent years, that has become a lot harder than it used to be.

 

[joesxm3]

The idea of 5% to 10% as hyperinflation insurance is that when the currency collapses the small amount of gold will increase enough to balance the loss in the rest of the portfolio and could be used to snap up real estate or a different currency. That worked in 1933 Germany, but now everything is connected and it won't be as easy to step across the border to dodge the currency collapse.

 

[OldShooter]

The idea of 5% to 10% as hyperinflation insurance is that when the currency collapses the small amount of gold will increase enough to balance the loss in the rest of the portfolio and could be used to snap up real estate or a different currency. That worked in 1933 Germany, but now everything is connected and it won't be as easy to step across the border to dodge the currency collapse.

Interesting, but it would seem that one's gold might maintain about the same amount of purchasing power that it did before the hyperinflation event. The rest of the portfolio would be in the toilet. I don't see how the gold could balance against that unless its purchasing power increased by 19x, which doesn't seem likely.

 

[MC Rider]

I'm in Gold Rush country and have read the heavy rains last winter has exposed things that were covered and washed gold into rivers. I have not tried panning for gold, but at least you could get some good outdoor nature time. At our place the rain exposed things like old screws, bolts, nails, washers, nuts, and assorted hardware. None of it gold.



I'm not buying those gold eagles.

 

[folivier]

A few years ago I bought 8 maple leafs for about $1200/ounce. Not really for an investment but I give each grandchild 1 at their first birthday. Just a fun thing to do. Maybe someday when I'm long gone they'll remember me.

 

[joesxm3]

Wow. Very generous. Tightwad that I am I bought one ounce Chinese zodiac silver rounds.

 

[Sunset]

The idea of 5% to 10% as hyperinflation insurance is that when the currency collapses the small amount of gold will increase enough to balance the loss in the rest of the portfolio and could be used to snap up real estate or a different currency. That worked in 1933 Germany, but now everything is connected and it won't be as easy to step across the border to dodge the currency collapse.

Wouldn't other hard things also go up in price with the inflation. Like real estate.
If not, then I think I can fly to Venezuela and buy an apartment building for cents on the US dollar as they've had high inflation for years like 1,500%.

If a person want's gold as a hedge for hyper inflation, then a mortgage would be fantastic. Borrow $500,000 against a property, and if hyper inflation hits, pay it off with a couple of hours work.

 

[mrfeh]

I have heard for years that we should have some gold. Is this mostly hype and scare tactics?

Yes

Should I be in a hurry to get into gold and out of the dollar?

No