Is gold really the be-all-end-all?

Discussion in 'Commodities Forum' started by Fury, Sep 7, 2014.

  1. Fury

    Fury Member

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    I've never invested in precious metals before, but I hear SO much about gold, some of it bad some of it good. I don't even know where to start. Some people swear gold will always hold its value and that its better than putting your money in a bank, some people swear that that's a myth and that gold is just a metal like any others. I'd love to hear from an experienced precious metal trader about this.
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I don't really trade it, but I generally keep at least 5-10% of my $ in gold via ETFs. 10% is the norm for me.
     
  3. Investor

    Investor Well-Known Member

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    Gold will always be among the highest traded commodities, for centuries, gold has been there, and it will continue to be. Like all the other high trading commodities, the price of Gold is likely to tumble drastically, therefore, I would not advice anyone of modest means to invest all their wealth in gold in an effort to get rich quickly, instead, invest a manageable amount if you wish to invest. There are some very good commodities on the market other than gold so of course gold is not the end all be all of the investment market, but it will surely set you apart should you have it in your portfolio.
     
  4. SteakTartare

    SteakTartare Senior Investor

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    I think it should be part of any portfolio and I've done well over the years with gold and silver. That said, its not a huge percentage of my assets (15%-ish), and I think those that have most of their savings in said commodity are doing themselves a disservice. I can think of at least one book I read the advocating putting most or all of one's liquid assets in the commodity and, frankly, that's nuts.
     
  5. Brad321

    Brad321 Active Member

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    I never did understand how gold was priced. At least not since August 15, 1971 when we (Nixon) put an end to the international conversion of the dollar into gold. Gold just never seems to be priced to me based on any fundamental reason. It can go up or down and you will hear the "experts" give you the same reasons for the move no matter which direction it was.

    The one thing gold has going for it is you can have a higher value of gold in a lighter weight and it is easier to store. As an example, you might think copper is a wonderful metal and undervalued, but you would need tons of it to have a significant dollar amount. Silver fits the void in-between the two extremes. There is decent value in 1,000 oz of silver and it is light enough to lift. You can store many thousands of ounces in a safe and it is manageable.

    The biggest factor for me is silver is in high demand as an industrial commodity. It has a greater intrinsic value than gold and is worth something not just because people say so. The best strategy is always to figure out what your objectives are and then the choice will become more obvious.

    Diversification? Gold or silver.
    Hedging? Gold slight edge, but also silver.
    Bulk matters? Gold beats silver.
    Growing your investment? Silver with the edge over gold.
    Preserving your present wealth? Gold with the edge under current influences.

    Then we get down to taking possession or investing in ETFs or even miners. If you really want your diversification and a true hedging of possible future events, take possession. A mining stock or ETF is still priced in fiat dollars and does not protect you from a market crash where accounts become rehypothecated, nor do they protect you from inflation as their price reflects the underlying strength or weakness of the fiat dollar.

    Keep a core of gold or silver in your possession and your goals will dictate what amount of miners and/or ETFs you may want to speculate in based on where you think prices are going.
     
  6. Eziospick

    Eziospick Guest

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    I've hoarded, bought, and sold metals wayyy before it was cool to do so XD. However, I think gold, silver, etc is like any commodity, there's always the die hards who hate it and the goldbugs who swear by it. I don't think one should dump all their money into a metal. That would be like betting all your money on one hand at a poker game, it's possible to win the jackpot, but the odds are you'll lose alot more when the cards come down. Also I think it depends on how long you can sit on the metals. Some people don't have 10, 20, or even 30 years to wait.
     
  7. JR Ewing

    JR Ewing Super Moderator Staff Member

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    No, don't EVER dump EVERYTHING into ANYTHING - gold, other metals, one stock or bond, or anything else.

    Regarding physical possession vs ETFs, I prefer to stick to ETFs myself.

    There's certainly nothing wrong with having some actual hard assets in your portfolio, but I personally am more suited to unleveraged ETFs that buy the metals themselves. I prefer high liquidity and quickness and ease of transactions if I want or need to buy or sell... and I prefer not to deal with the headaches of keeping a million dollars or more worth of precious metals under my roof or stored in some bank or storage facility that is not under heavy 24 hour security and is not fireproof and otherwise indestructible.

    I also invest a few bucks in several mutual funds in my retirement accounts that own physical metals and keep them stored in places like Ft Knox.

    As far as using gold as an alternate form of currency in my portfolio, I use it as such in the investment sense - when the dollar weakens, I expect gold to generally appreciate.

    Nobody anywhere in the world will want to be around if the dollar ever truly becomes worthless and literally has no value. Gold bugs seem to not appreciate the severity of the likely effects of such a doomsday scenario. I think it would basically lead to human extinction.

    How many people in this world have the money to buy an ounce of gold? VERY few percentagewise. How many of society's most violent and unlawful people (who you always see looting, robbing, killing, etc right away during any time of unrest) have money to buy gold? If they do, it's perhaps blown on inexpensive gold chains, along with gaudy rims for their cars, as well as drugs, booze, and other wastes of money. :D

    If we ever see doomsday, and the dollar is worthless, all stocks, ETFs, and bonds are worthless, etc, it will be all about who can survive the longest. Electricity, fuel, running water, plumbing, etc will be a thing of the past. People will be killing one another over food, clean water, guns & ammo. Shelter, safety, and being able to maintain some semblance of hygiene and good health will be all that matters. I don't think gold will be anymore valuable than the dollar if the dollar ever truly becomes worthless.
     
  8. SteakTartare

    SteakTartare Senior Investor

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    ^ Without a doubt. Diversity is paramount at all times. I may be a goldbug at heart, but I wouldn't ever put anything more than the aforementioned 15%-ish into said.
     
  9. Brad321

    Brad321 Active Member

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    Most ETFs are too highly leveraged to be considered holding physical metals. If your brokerage account is rehypothecated your ETF gold is also gone.

    I thought Fort Knox only held US government property. Interesting. I'll have to look that one up. Once again though, mutual funds will go poof when the rest of the stock market does. You aren't diversified into metals unless you take physical possession.

    I would welcome it. Get rid of all the fake derivative wealth and start over with some currency backed by a basket of physical commodities.

    I respectfully disagree in the most strenuous manner! Those with the physical metals will be king. They will be able to barter for anything their heart desires. Even Comex changed their rules so they can pay off gold and silver contracts in cash if the metal is not available for delivery. That is nuts! If you want precious metals... buy them. If you want to invest in derivative financial products valued in fiat dollars... you can do that too. Just don't think an ETF or a mutual fund is going to be your salvation if the dollar implodes. ETFs and mutual funds are investments. Physical metals are insurance. I sleep really well knowing I can survive whatever the new day brings.
     
  10. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Read my post again carefully - I DO realize that all will be lost if all brokerage accounts, ETFs, stocks, bonds, mutual funds, etc are worthless - which will likely happen right away if the dollar is ever truly worthless.

    I think you and others are greatly underestimating the actual impact such a scenario would have on life as we know it throughout the world.

    Your net worth won't mean shit. Gold or metals or anything else that you can't eat, drink, or use as a weapon or shelter won't likely mean shit.

    If the dollar ever becomes truly worthless, everything will likely colapse throughout the world. I'm talking about the wild west meeting Mad Max / Bladerunner post-nuclear holocaust. I think you can forget about a normal existence at that point - it will be all about how long you can survive.

     

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