Investing in Gold

[miawilson]

Hey everyone,

I've been contemplating investing in gold lately, but I'm a bit torn on whether it's the right move for me. On one hand, gold has historically been seen as a safe-haven asset, providing a hedge against inflation and economic uncertainty. Plus, it's a tangible asset that holds intrinsic value.

However, I've also heard some arguments against investing in gold, such as its lack of yield compared to other investments like stocks or bonds. There's also the consideration of storage and security costs.

I'd love to hear your thoughts and experiences on investing in gold. Are the potential benefits worth the drawbacks? Or are there better investment options out there?

 

[miawilson]

Hey everyone,

I've been contemplating investing in gold lately, but I'm a bit torn on whether it's the right move for me. On one hand, gold has historically been seen as a safe-haven asset, providing a hedge against inflation and economic uncertainty. Plus, it's a tangible asset that holds intrinsic value.

However, I've also heard some arguments against investing in gold, such as its lack of yield compared to other investments like stocks or bonds. There's also the consideration of storage and security costs.

I'd love to hear your thoughts and experiences on investing in gold. Are the potential benefits worth the drawbacks? Or are there better investment options out there https://www.moneycontrol.com/news/brand-connect/american-hartford-gold-review-best-gold-ira-12340241.html?

thanks in advance for any input

 

[divs4ever]

There's also the consideration of storage and security costs.

would you trust your gold ( or girlfriend ) with somebody else and pay for the privilege

there are ways and means of seizing/freezing your assets held by somebody else

gold is an inert , lifeless metal , human civilization revolves around it

currencies may topple. , empires collapse , but an ounce of gold is still an ounce of gold , and most likely worth something to somebody else , so think of it as a compact swap device

if you are completely self-reliant then you probably don't need gold , need to acquire something from somebody else( even when the power/internet is down ) gold might be useful

cheers

BTW if you do buy gold be very careful who you mention it to ( i only trust Mr. Nobody with secrets like that )

 

[greggles]

There is a reason governments around the world hoard the stuff. It's been considered a store of wealth for thousands of years while countless fiat currencies have come and gone.

The price goes up and down like most commodities but they can't make any more of the stuff and it takes a lot of work and a lot of money to get it out of the ground and refine it into a pure form.

Long term, I think gold will do as it has it in the past and rise in value. How much do you think it will cost to find, mine and refine an ounce of gold 25 years from now? Inflation will work to steadily increase all of those costs and the price of gold will rise accordingly. If not, companies won't dig it out of the ground and new gold supply will dry up. However, I think that is an unlikely scenario because I think gold demand will continue to be strong in the future as it is not just a hedge against inflation but also a reliable and proven store of wealth in uncertain times.

Not advice, just my opinion.

 

[Value Collector]

There is a reason governments around the world hoard the stuff. It's been considered a store of wealth for thousands of years while countless fiat currencies have come and gone.

The price goes up and down like most commodities but they can't make any more of the stuff and it takes a lot of work and a lot of money to get it out of the ground and refine it into a pure form.

Long term, I think gold will do as it has it in the past and rise in value. How much do you think it will cost to find, mine and refine an ounce of gold 25 years from now? Inflation will work to steadily increase all of those costs and the price of gold will rise accordingly. If not, companies won't dig it out of the ground and new gold supply will dry up. However, I think that is an unlikely scenario because I think gold demand will continue to be strong in the future as it is not just a hedge against inflation but also a reliable and proven store of wealth in uncertain times.

Not advice, just my opinion.

I agree with everything you said, But its a store of value, but not an investment, so on average over time you would be better holding real investments, not just a store of value, because unless you have inherited or saved more value than you will ever need in your life already, then you don't just need a store of that value, you need some where to deploy that value where it will generate earnings to live off.

 

[greggles]

I agree with everything you said, But its a store of value, but not an investment, so on average over time you would be better holding real investments, not just a store of value, because unless you have inherited or saved more value than you will ever need in your life already, then you don't just need a store of that value, you need some where to deploy that value where it will generate earnings to live off.

I guess it depends on how you view investing. A troy ounce of gold has gone up in value from US$200 to US$2000 in 25 years. That's a pretty good return. Had you deployed a million dollars into gold in 1999 you would have gold that is worth in the vicinity of $10 million today. That seems like a good investment to me.

 

[Value Collector]

Hey everyone,

I've been contemplating investing in gold lately, but I'm a bit torn on whether it's the right move for me. On one hand, gold has historically been seen as a safe-haven asset, providing a hedge against inflation and economic uncertainty. Plus, it's a tangible asset that holds intrinsic value.

However, I've also heard some arguments against investing in gold, such as its lack of yield compared to other investments like stocks or bonds. There's also the consideration of storage and security costs.

I'd love to hear your thoughts and experiences on investing in gold. Are the potential benefits worth the drawbacks? Or are there better investment options out there?

Consider this short story that will describe the difference between holding gold and holding other assets.

Imagine a Genie came to you an offered to give vast amounts of 10 Trillion dollars of assets, the catch was these assets were the only assets you family could ever own for future generations, they could sell them as needed, but couldn't buy anything else, She gave you 2 options.

Option 1 - All the gold the has ever been mined worth about $10 Trillion, it is a large cube that would fit between the legs underneath the Effiel Tower.

Option 2 - The Entire City of New York + All the farmland in the USA + The entire sharemarket of Australian share market + Apple, Google and Berkshire Hathaway, and still have about $1 Trillion left in cash to spend or deploy as you wish.

Obviously being felt that hand would be amazing and if you chose option 1 your family would live a very rich life for a long time, but over time your cube of gold would shrink, and your future generation would eventually run out of gold having sold it all to fund their life style.

But, if you selected option 2, your family would never run out of funds, because the rental checks from New York and every farm in the USA, dividends from the entire Aussie sharemarket and APPLE and Google, and share sales from Berkshire would never run out.

If you can understand that, you should be able to see why storying your retirement funds in gold might not be great if you plan to live off them in the future.

 

[Value Collector]

I guess it depends on how you view investing. A troy ounce of gold has gone up in value from US$200 to US$2000 in 25 years. That's a pretty good return. Had you deployed a million dollars into gold in 1999 you would have gold that is worth in the vicinity of $20 million today. That seems like a good investment to me.

1999 to 2024 was a rare case because it had steadily dropped in value for 21 years before that, so earned appreciated by about 12% per year mostly just as a one time recovery to mean after 21 years of dropping, over time though you will only get about inflation rates on it. But it still didn't out perform BHP for example from 2000 to 2024 when you factor in BHP's dividends and stock splits, it earn 20% per year.

If you want to see the difference between holding a productive asset vs gold, in 1960's gold was worth about $20 an ounce, and Berkshire Hathaway was worth $6 per share, today gold is worth $2000, but the 3.3 Berkshire shares you could have purchased are worth over $2,000,000.

might think thats an extreme case, but even if you just bought the sp500 index and reinvested the dividends you would have over $1,000,000 instead of just $2000

 

[divs4ever]

I agree with everything you said, But its a store of value, but not an investment, so on average over time you would be better holding real investments, not just a store of value, because unless you have inherited or saved more value than you will ever need in your life already, then you don't just need a store of that value, you need some where to deploy that value where it will generate earnings to live off.

there was on the internet somewhere a comparison over the ages of an ounce of gold would buy you a high quality suit and the relationship stayed relatively static ( unlike the suit paid for in a fiat currency )

but long term gold resists inflation , etc etc it's real value is whatever you can exchange it for when you need to acquire something

 

[Value Collector]

there was on the internet somewhere a comparison over the ages of an ounce of gold would buy you a high quality suit and the relationship stayed relatively static ( unlike the suit paid for in a fiat currency )

but long term gold resists inflation , etc etc it's real value is whatever you can exchange it for when you need to acquire something

Yep, but to get that suit you would have to sell your gold, and then the suit wears out and you have nothing, if you bought an investment that throws off income, you could get a new suit every 10 years for ever, you grand kid could still be getting a new suit 100 years after you die.

Lots of assets resist inflation, and they also provide income.

As I said if you already have all the money you ever need and don't need any real growth, just inflation hedging on your pile of capital, then sure buy gold, just don't out live your stock pile, but if you require your pile to keep growing in real terms or throwing off income so you can eat, avoid gold.

 

[divs4ever]

I guess it depends on how you view investing. A troy ounce of gold has gone up in value from US$200 to US$2000 in 25 years. That's a pretty good return. Had you deployed a million dollars into gold in 1999 you would have gold that is worth in the vicinity of $10 million today. That seems like a good investment to me.

i see it from the other angle , that the US dollar has devalued astonishingly ( about 90% over those 25 years )

 

[finicky]

Bit stale on this.

There's no way to invest in gold that doesn't carry risk, whether real or imagined. Go one way you risk theft, go another punitive storage fees, go another government confiscation or forced conversion to unfair fiat money. I still think I forgot where I buried some of mine (really), that's probably how some of the Anglo-Saxon hoards got left behind - that or getting your head hacked off by barbarians. Now I pay exhorbitant storage?

I used to recommend pooled allocated storage at my bullion dealers to newcomers but that doesn't look too damned appealing now with the 2.5% margin they charge for turning your allocation back to cash.

Looking around, I'd probably go for the PMGOLD etf today. Check out this balanced article comparing products:

Perth Mint Gold ETF (ASX:PMGOLD) - Best ETFs

Perth Mint Gold ETF (ASX:PMGOLD) share price analysis.The Perth Mint PMGOLD ETF represents a right to gold created by The Perth Mint, Australia’s largest fully integrated precious metals enterprise. The ETF gives investors the ability to purchase Government-backed gold via the ASX, rather than...

www.bestetfs.com.au

P.S. never assume a gold or silver miner is gold or silver. It's a highly vulnerable, unsafe, endlessly capital intensive business that you're buying into where managements typically serve themselves and investors have no meaningful say (I do own gold mining stocks)

 

[greggles]

Yep, but to get that suit you would have to sell your gold, and then the suit wears out and you have nothing, if you bought an investment that throws off income, you could get a new suit every 10 years for ever, you grand kid could still be getting a new suit 100 years after you die.

Lots of assets resist inflation, and they also provide income.

As I said if you already have all the money you ever need and don't need any real growth, just inflation hedging on your pile of capital, then sure buy gold, just don't out live your stock pile, but if you require your pile to keep growing in real terms or throwing off income so you can eat, avoid gold.

There are so many more risks and variables with companies, such as bad management, bad economic conditions, excessive debt and many more. Companies that can produce solid and consistent economic growth and returns to shareholders over many decades are very rare. But if you are prepared to diversify into a broad index ETF then history shows the returns can be very good over time.

But if you believe that the deteriorating value of the US dollar is only going to accelerate in coming years due to increasing money printing on an unprecedented scale and that unsustainable levels of public and private debt will continue to grow, and that the global geopolitical situation will also continue to deteriorate with an increase in war, conflict and civil unrest, then I wouldn't discount precious metals over the next couple of decades.

 

[greggles]

i see it from the other angle , that the US dollar has devalued astonishingly ( about 90% over those 25 years )

See my previous post.

 

[divs4ever]

Yep, but to get that suit you would have to sell your gold, and then the suit wears out and you have nothing, if you bought an investment that throws off income, you could get a new suit every 10 years for ever, you grand kid could still be getting a new suit 100 years after you die.

Lots of assets resist inflation, and they also provide income.

As I said if you already have all the money you ever need and don't need any real growth, just inflation hedging on your pile of capital, then sure buy gold, just don't out live your stock pile, but if you require your pile to keep growing in real terms or throwing off income so you can eat, avoid gold.

well personally i would only buy that suit for a special reason ( to get that high paying job , or a brilliant new wife )

however others place a different value on a quality suit

i would probably exchange it for livestock or something i could use to create income/or a food source ( say some dairy cows )

gold can be easy to transport in small quantities and accepted in many nations ( if you can get over the borders safely )

gold comes into it's own when your society/civilization is on the verge of collapse ( and you are migrating )

 

[Value Collector]

There are so many more risks and variables with companies, such as bad management, bad economic conditions, excessive debt and many more. Companies that can produce solid and consistent economic growth and returns to shareholders over many decades are very rare. But if you are prepared to diversify into a broad index ETF then history shows the returns can be very good over time.

But if you believe that the deteriorating value of the US dollar is only going to accelerate in coming years due to increasing money printing on an unprecedented scale and that unsustainable levels of public and private debt will continue to grow, and that the global geopolitical situation will also continue to deteriorate with an increase in war, conflict and civil unrest, then I wouldn't discount precious metals over the next couple of decades.

If you re look at my posts, at no time did I say hold all your money in US dollars (or any other fiat), I spoke about real assets, eg land, buildings, companies etc etc that throw off earnings.

if you are worried about any one company as you said diversify, it’s easy To do with one purchase.

as already pointed out by finicky, gold is not risk free, besides its inbuilt risk and volatility you have counterparty risk, fraud risk, theft and the risk that storage fees might eat up your entire capital base if you store it long enough.

 

[Value Collector]

well personally i would only buy that suit for a special reason ( to get that high paying job , or a brilliant new wife )

however others place a different value on a quality suit

i would probably exchange it for livestock or something i could use to create income/or a food source ( say some dairy cows )

gold can be easy to transport in small quantities and accepted in many nations ( if you can get over the borders safely )

gold comes into it's own when your society/civilization is on the verge of collapse ( and you are migrating )

if Society collapses we will have bigger issues to worry about than gold.

 

[greggles]

Bit stale on this.

There's no way to invest in gold that doesn't carry risk, whether real or imagined. Go one way you risk theft, go another punitive storage fees, go another government confiscation or forced conversion to unfair fiat money. I still think I forgot where I buried some of mine (really), that's probably how some of the Anglo-Saxon hoards got left behind - that or getting your head hacked off by barbarians. Now I pay exhorbitant storage?

I used to recommend pooled allocated storage at my bullion dealers to newcomers but that doesn't look too damned appealing now with the 2.5% margin they charge for turning your allocation back to cash.

Looking around, I'd probably go for the PMGOLD etf today. Check out this balanced article comparing products:

Perth Mint Gold ETF (ASX:PMGOLD) - Best ETFs

Perth Mint Gold ETF (ASX:PMGOLD) share price analysis.The Perth Mint PMGOLD ETF represents a right to gold created by The Perth Mint, Australia’s largest fully integrated precious metals enterprise. The ETF gives investors the ability to purchase Government-backed gold via the ASX, rather than...

www.bestetfs.com.au

P.S. never assume a gold or silver miner is gold or silver. It's a highly vulnerable, unsafe, endlessly capital intensive business that you're buying into where managements typically serve themselves and investors have no meaningful say (I do own gold mining stocks)

If you want exposure to physical gold, but don't want the hassle of holding physical gold, take a look at PHYS.

https://www.sprott.com/investment-strategies/physical-bullion-trusts/gold/

 

[divs4ever]

if Society collapses we will have bigger issues to worry about than gold.

i agree , but the gold might get you working transport or something else of value ( to you at the time )

and since gold is accepted widely in peace-time , war-time and general chaos and not reliant on a power grid , not the worst asset to offer ( since industry has wrecked the diamond/precious gem trade )

 

[Value Collector]

If you want exposure to physical gold, but don't want the hassle of holding physical gold, take a look at PHYS.

https://www.sprott.com/investment-strategies/physical-bullion-trusts/gold/

Am I reading that right? they charge a fee of 0.41% per year for storage/management.

So, technically if I buy a holding of 1 ounce, and hold it with them for a year, at the end of the year I actually only have 0.959 of an ounce left, and it keeps decaying away.

So not only do I not earn any income, but my "physical asset" is being eaten away, in you original example of gold going from $200 to $2000 over 25 years, how much of that original ounce you bought for $200 in 1999 would you have left? by my calculations you would only have 0.35 of an ounce left, worth $700 not $2000, After another 25 years you have 0.12 of an ounce left.

I think I would rather own the storage company than the gold.