Australian (ASX) Stock Market Forum

Investing in Gold

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Value Collector said:
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.
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Stocks do well over time if the stock market is not too overvalued and the economy performs okay. Look at Japan. The Nikkei 225 only surpassed its 1989 high recently. A Japanese investor in 1989 would have done better buying gold. There is argument for owning both stocks and gold. Gold will still do okay if the world economy goes to hell but stocks will under-perform. So yhes you want a greater allocation top stocks but its reasonable to own some gold as a risk management/hedge. Not too mention gold is a physical asset if the internet or electricity goes down or the stock market shuts down for a while due to a major world war/crises, etc. the physical gold will come in handy.

But yes in general if you are holding for 50 years generally stocks will outperform gold. But returns are only one aspect of investing. Risk management is the other aspect.
 
Value Hunter said:
Stocks do well over time if the stock market is not too overvalued and the economy performs okay. Look at Japan. The Nikkei 225 only surpassed its 1989 high recently. A Japanese investor in 1989 would have done better buying gold. There is argument for owning both stocks and gold. Gold will still do okay if the world economy goes to hell but stocks will under-perform. So yhes you want a greater allocation top stocks but its reasonable to own some gold as a risk management/hedge. Not too mention gold is a physical asset if the internet or electricity goes down or the stock market shuts down for a while due to a major world war/crises, etc. the physical gold will come in handy.

But yes in general if you are holding for 50 years generally stocks will outperform gold. But returns are only one aspect of investing. Risk management is the other aspect.
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Not if you are paying 0.41% storage fees, and not when you look at the gold price in 1989 (it dropped for 10 years) and the count the dividends in the share market.

I actually wrote a whole explanation on the topic of the Japanese market a few days ago, you should read it.

I can't remember which thread it was in @qldfrog do you remember which thread we chatted about the Japanese market in the other day?
 
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Value Collector said:
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.
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now you might have to dig deep into the paperwork , but some commodity ETFs had a similar shrinkage plan hidden in them as well

but i always had concerns about redeeming my PMs in crucial times

so would prefer to be solely responsible for my own storage ( if i held any PMs )
 

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Sorry you would be losing 10% of your gold over 25 years to storage charges, not 65% ( I put the decimal in the wrong spot Oops).

but the result is the same, you have a shrinking physical gold pile, that pays no income vs other assets that provide An income that can be compounded.
 

Mar 12, 2024 #fed #copper #goldprices
Jeremy Szafron, Anchor at Kitco News, interviews Brett Heath, President and CEO of Metalla Royalties, about the gold market's current state and future outlook. Heath speaks to the vital role of royalty companies in the mining industry, discussing Metalla Royalties' strategic approach amidst gold's all-time high prices. He sheds light on the challenges of capital access for junior miners, the implications of global economic trends on gold, and the potential for future growth in the sector. Heath also explores the intriguing correlation between gold and emerging technologies, such as Bitcoin's impact on the investment landscape and the younger generation's growing interest in mining equities.
 
noirua said:
View attachment 174159 Live Chart: http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif
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Good morning noirua

PoG hit US$2350 !!!

Nice

There have been considerable comments made concerning the high levels of central bank buying and signs that interest rate cuts are nearing, all of which has driven investors back to non-yielding assets like gold.
I read in the AFR today (06/04/24):


"Citi said it expected gold prices to remain around the $US2300 per ounce mark over the next six months, adding it was possible they could rally further in some scenarios. Citi sees the market supported prices well-above $US1925 per ounce and in a bullish wildcard scenario, would call for $US3000-per-ounce gold price in a 12-month context,” the investment bank’s brokers wrote, adding positive factors for the gold price included the likelihood that the Federal Reserve in the United States would cut rates."

Comments are certainly supportive of investing in gold. However, anything is possible and we all need to conduct our own due diligence.
Holding physical.

Onwards and upwards :)

Have a very nice weekend

Kind regards
rcw1
 

Dec 20, 2023
Pierre Lassonde, chair emeritus of Franco-Nevada Mining, joins BNN Bloomberg to talk about his outlook for gold and gold equities in 2024. He says the stocks are trading as if gold is still at $1,500 but that should change next year.
 

Zimbabwe's Gold-Backed Currency: A Golden Opportunity or Fool's Gold?​

Everything is on ZIG.
 
divs4ever said:
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
https://www.allaboutgemstones.com/
BTW if you do buy gold be very careful who you mention it to ( i only trust Mr. Nobody with secrets like that )
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thank you so much for your suggestion
 
divs4ever said:
currencies may topple. , empires collapse , but an ounce of gold is still an ounce of gold ,
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that’s part of the problem for me, I like assets that compound, I want the assets I own to be growing, or throwing off income I can use to purchase more of it, or atleast buy some lunch.
 

SPDR® Gold Shares > Hong Kong > SPDR Gold Shares (GLD). Bringing the gold market to investors

SPDR® Gold Shares (GLD) offer investors an innovative, relatively cost efficient and secure way to access the gold market. An initiative of the World Gold Trust Services.
www.spdrgoldshares.com www.spdrgoldshares.com
SPDR® Gold Shares now trade on the Bolsa Mexicana de Valores and the Singapore Stock Exchange as well as the Tokyo Stock Exchange and the Stock Exchange of Hong Kong.

Calendar Year Performance > Hong Kong > SPDR Gold Shares (GLD). Bringing the gold market to investors

SPDR® Gold Shares (GLD) offer investors an innovative, relatively cost efficient and secure way to access the gold market. An initiative of the World Gold Trust Services.
www.spdrgoldshares.com www.spdrgoldshares.com
 
Value Collector said:
that’s part of the problem for me, I like assets that compound, I want the assets I own to be growing, or throwing off income I can use to purchase more of it, or atleast buy some lunch.
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well silver might be useful if buying lunch especially at the prices at some eateries , a couple ounces should do ( per serve )
compounding is nice , but that implies a lack of durability if silver/gold grew by itself , the world would by mostly silver/gold by now

or at least significantly so as well have known of gold ( and silver ) for at least 4,000 years

and interest implies the risk of capital loss
 

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