Buying gold

Ageo said:

Each category has its ups and downs but i can tell you i have bought heaps of 24ct gold jewellery for well less the spot price just because people need money on the spot and cant wait for it to be assayed. This is what the financial guru's call buying "distressed assets".

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you my friend are a merchat of misery.

happened at a local gold dealer the other day... old bloke walks in with a think old gold chain..

old bloke> i want to sell this gold chain, it.......
sales assistant> what is the minimum you would accept for this?
old bloke> well it was bought by....
me> wtf, he is going to get raped

why people dont just assume its; check the grade, weigh it, work out the value on near spot price and then subtract the handling/melting/profit etc costs

with gold at record prices they would be making a killing with the lobotomized general public walking into their stores...

My personal experience with gold by a novice investor!

My Dad finally convinced me to enter the stock market and to buy $10,000 (alot of money to me) of shares in Nov 2007. Got advice and bought blue-chip shares which the broker claimed were "no-brainers". Sadly this was the exact peak of the market and my shares lost 50% of their value since then.

Disillusioned, I became interested in alternative investments including gold. Seemed to suit my apocalyptic viewpoint. Also gold seemed to store wealth when everything else was going down (including cash due to inflation). Read that an ounce of gold today buys 400 loaves of bread. In 1000BC (a thousand years before Christ) an ounce of gold bought 400 loaves of bread. It holds it's value. It's not an appreciating asset, unless a global crisis occurs...

About a year ago when the Aus dollar was approaching parity with the US dollar, I bought 4 Krugerands (1 oz) for $980 each ($950 bullion value plus $30 margin per coin) from a local jeweller/bullion dealer. The US gold price was about US$935. Now the gold price is around US$950, but is AU$1440 due to our dropping exchange rate. I can easily walk back into the jeweller and sell my Krugerands at near-bullion price. That is a 47% profit in the last 12 months!

I understand the craziness of gold bugs who have waited two decades for the price of gold to rise. I am also aware of the obvious insanity of investing productive capital into an inert metal. But what other investments have people on this forum made that returned 47% profit in the last year? Actually, I do know of one other --- silver. Six months ago I also bought 11 one-kilogram bars of silver for AU$480/kg. It is now at AU$660/kg, or 37% profit in six months.

I have now learnt more about the stock market and am investing a portion of my meagre portfolio in gold/silver producers and some explorers. Cost are going down (fuel, labour) while profit is increasing (price of gold). A small increase in the gold price means a big increase in producers' profits. I'll keep the precious metals I've got safely tucked away.

One thing about diamonds is that their value seems more linked to the state of the economy. When people got more money for luxuries, they pay more for diamonds. The opposite currently seems to be true and I heard about diamonds getting less at auctions nowadays. Like luxury housing.

For those who lean towards the zombie apocalypse scenario (like myself), gold is good. Some survivalists claim only guns and food would be viable. But I guess the closest the planet has come to Mad Max, was in Somalia during the civil war where men with guns were running wild. What was gold worth there? Probably more than life itself. There are also stories of Jews saving their families from the Nazi death camps with a few ounces of gold. And SAS soldiers carry a few British sovereigns to buy their way out of trouble anywhere in the world. An asset is only worth what someone will pay for it, but throughout human history, everyone has always thought gold is valuable. So it is.

There is a small possibility that the current global financial crisis could get a lot worse. Hyperinflation and massive unemployment; devaluation of paper money; civil strife and international conflict. Remember what happened after the Great Depression? Xenophobia is on the rise once again. A small proportion of your portfolio invested in precious metals might not be especially profitable, but it is good insurance and will never be worthless.

Other than that, it is simply a store of wealth. But anyone who has gone bankrupt or had problems with the taxman or even the evil ex-wife might have appreciated a store of wealth, especially a very-liquid easily-concealed asset like gold. I pay cash but will declare profits for CGT, honest.


This is my first post on this forum. Be kind. But someone asked about gold investment stories. This is mine.

Welcome to the forum greebly, and nice story

greebly24 said:

This is my first post on this forum. Be kind. But someone asked about gold investment stories. This is mine.

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Great post, a very well balanced story. I should look into holding a bit of physical gold myself, cheers.

greebly good timing but you do know that your failure with shares and success with gold was simply poor/lucky timing. It has nothing to do with the instruments you made or lost money on.

Gold does lose value and share do rise. Catching a break on one or the other proves what?

Trembling Hand said:

greebly good timing but you do know that your failure with shares and success with gold was simply poor/lucky timing. It has nothing to do with the instruments you made or lost money on.

Gold does lose value and share do rise. Catching a break on one or the other proves what?

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That is crap, like the old saying "hold for the long term"

Gold is trending. "Go with the trend untill the bend" is the one to get into the head. My rule of thumb is a 5% fall get out (or if in doubt) 10% rise get in.

Catching the break by good judgement is everything.

Welcome Greeby24. You have learnt to use your own ruler at a young age, I envy that.

explod said:

That is crap, like the old saying "hold for the long term"

Gold is trending. "Go with the trend untill the bend" is the one to get into the head. My rule of thumb is a 5% fall get out (or if in doubt) 10% rise get in.

Catching the break by good judgement is everything.

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Explod you are a ripper.

My point is there is time for everything. Which turned on its head there are times to avoid things. 07 it was shares at some time it will be golds turn to be avoided because it will be toxic priced against other instruments. I was saying just because something worked once doesn't mean it will always work therefore don't fall in love with it.


Which is unfortunately advice you didn't take with your disastrous SBM love affair. in spite of you sprouting cliches after you averaged down a couple of times and then spewed out your holding at the bottom. Just too funny!!

"Go with the trend until the bend" you should add "do as I say not as I do"!!!

Exactly when did you take on these rules of thumb??

Also new to the forum. Wanted to add my 2cents... being a PM bug and all.

Big fan of Jim Sinclair, GATA.org and Ted Butler.

Gold/silver miners are an absolute bargain now and have been trauling for good stocks at knock down prices over the past few months

On a macro level, i really do believe we are witnessing the collapse of the current monetary system. This is the real reason for the position we are in, no? Trigerred by the sub-prime crisis, yes. But certainly not the cause of the crisis as trumpeted by talking heads on TV. This monetary system must collapse eventually....i think anyone who understands the nature of fractional reserve banking realises this...the real question is in which fashion? Im siding with the hyperinflation camp as i believe its a gradual implosion that can be moulded and massaged by government throughout its duration. A deflationary collapse would tend to be more sudden and would bankrupt the current banking and corporate establishment which i dont beleive is in the interests of any government.

The current deflationary forces may continue for another 12-18ths (unless we see sudden devaluation of the USD), which means lower RE and stock prices. But eventually governments will throw enough money at it to buoy prices, and we'll be in for one last inflationary bubble before it finally collapses.Im now only interested in precious metals. But when agri-commodities such as wheat, corn, rice, soybeans (all down appox 60%) etc finally turn up...i think there will be huge profits to be made in the next big bull market in food.

Any debate on the macro level is welcomed.

Trembling Hand said:

Explod you are a ripper.

"Go with the trend until the bend" you should add "do as I say not as I do"!!!

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Spot on T/H and apologies for being too brash. I have learnt some hard lessons and would not go so far as to mean anyone to follow me. Yes sentiment gets in the way of the best plans sometimes.

explod said:

Spot on T/H and apologies for being too brash.

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Yes after all that is my job

Trembling Hand said:

Explod you are a ripper.

My point is there is time for everything. Which turned on its head there are times to avoid things. 07 it was shares at some time it will be golds turn to be avoided because it will be toxic priced against other instruments. I was saying just because something worked once doesn't mean it will always work therefore don't fall in love with it.


Which is unfortunately advice you didn't take with your disastrous SBM love affair. in spite of you sprouting cliches after you averaged down a couple of times and then spewed out your holding at the bottom. Just too funny!!

"Go with the trend until the bend" you should add "do as I say not as I do"!!!

Exactly when did you take on these rules of thumb??

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And it's gold's turn, has been for the last 9 years. At the same time don't discount it because of ??? whatever you are down on gold for? Being totally objective, even without being a 'bug' if people havn't bought gold shares recently then they will have missed a big money making oppy.

(As for SBM, it's still bottom feeding, only up another 10% today - move along, nothing to see here - would 100% return be good enough for you?)

Uncle Festivus said:

(As for SBM, it's still bottom feeding, only up another 10% today - move along, nothing to see here - would 100% return be good enough for you?)

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Yes about 4 more 100% rises from the low and you will be back to Break Even!!

I'm not down on gold. Its just another thing to trade. Not the be all and end all. Not yet. Not by a long shot. Infact most who are gold bugs have taken it in the neck with their love affair. But still like to quote numbers from the nasty lows not from where they got in much higher.

Trembling Hand said:

Yes about 4 more 100% rises from the low and you will be back to Break Even!!

I'm not down on gold. Its just another thing to trade. Not the be all and end all. Not yet. Not by a long shot. Infact most who are gold bugs have taken it in the neck with their love affair. But still like to quote numbers from the nasty lows not from where they got in much higher.

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Taken it in the neck? How did you come to that conclusion? Even if they are flatlining they are still in front of the general investing public & pros. However, I can qoute some good cold hard numbers to you - up $100k on SBM & still holding, gold portfolio showing 80% return.

Well done UF. You didn't lose any last year on SBM

Trembling Hand said:

Well done UF. You didn't lose any last year on SBM

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My big hurt was a buy at 70 cents last year and a sell after the fall at 40. A buy recently at .31 and sell at .29. Back in again last week at .395 Only had 10% portfolio in so not that bad. I often have days away from the screen and a lot can happen. I gain more than I lose or I would not be here.

And that's my point it not the instrument its the timing!!

Blind faith in an idea rarely pays. Its the execution and therefore everything works and nothing works :nuts:

Until the tanks are rolling down the street Gold is just another thing to punt on.

Trembling Hand said:

And that's my point it not the instrument its the timing!!

Blind faith in an idea rarely pays. Its the execution and therefore everything works and nothing works :nuts:

Until the tanks are rolling down the street Gold is just another thing to punt on.

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It's both actually. The instrument & timing. The instrument has been sitting up, forecasting what was going to happen, what did happen and what may happen ie it's been right so far. What practical choice is there now when even money in the bank is not as as safe as it was - or whether the global financial system will survive eg look at Japan going off a cliff?

If you are waiting for the tanks then you will have waited too long? Gold will be over $US1k by the end of this week, oh yes, you mark my words (sticking my neck out nervously ) It's only $AU13 away from $AU1500! Buy some gold and it will steady your trembles

Uncle Festivus said:

If you are waiting for the tanks then you will have waited too long? Gold will be over $US1k by the end of this week, oh yes, you mark my words (sticking my neck out nervously ) It's only $AU13 away from $AU1500! Buy some gold and it will steady your trembles

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It still easier to buy the paper Unc, till then my trembles are better in cash each night.

And anyway I need the cash to short the hell out of GC when the bugs get excited again. Next move will be a ripper for someone. :

Trembling Hand said:

greebly good timing but you do know that your failure with shares and success with gold was simply poor/lucky timing. It has nothing to do with the instruments you made or lost money on.

Gold does lose value and share do rise. Catching a break on one or the other proves what?

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Tell this to the Japanese who bought the NIKKEI at 46000 20 years ago and selling it under 7500 now.
Also see my email I sent to a friend thinking like you.

Hi Bob
How is everything there? Have you switched to gold yet?
Have you seen the ASX and A$ Gold chart next to each other? This even surprise to me. Not long ago you could buy 1oz gold for 20 NAB shares now you need over 84 to get one even more if you want physical.
Regards Peter