Thursday, Sep 10, 2009
One for the precious metal bears
Times Online: Why it may not be time to invest in gold
David Budworth explains why should shouldn't invest in gold despite it breaking the $1000 barrier. I disagree on just one point, you shouldn't invest in gold because it has broken the $1000 barrier. A lot of future inflation and currency meltdown is already priced in, and in my view, probably too much is priced in.
Posted by jonb @ 01:04 PM (753 views) Add Comment
7 Comments
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1. uncle tom said...
"Gold smashed through the $1,000 an ounce mark on Tuesday"
Hardly - it stuck it's nose over the line briefly, and given the spreads, I doubt many investors, if any, actually got $1,000 nett of commission.
A cohort of bullish buyers propelled the price towards the magical $1k, only to be met by a small army who think that's a nice number to cash in at.
Will the price now rebound and soar? It might, as the world is full of surprises, but I still think the downside risks are too great.
Silver and platinum both look much more interesting - if you have a shiny metal fetish to satisfy.. :)
2. amjidk said...
surely the prospect of a possible collapse in the pound means that everyone should invest at least 'some' of their cash, in Gold...
3. a saver said...
Interesting to see how many gold-buying companies are advertising on the telly and are even popping up in shopping malls.
Personally I am going to hang on to my bits and pieces of gold jewellery, just in case the whole currency system collapses.
4. jack c said...
There is a pretty good article titled "Commodities thrive despite downturn" in this weeks Fund strategy publication for those wanting to explore a bit more (graphs and tables are particularly interesting - note S&P 500 + FTSE over 10 yrs in comparison to certain commodities)
www.fundstrategy.co.uk/cgi-bin/item.cgi?id=192807&d=11&h=24&f=254
5. quiet guy said...
Jonb,
Investing in gold certainly has risks but what doesn't have risk right now? Equities? Perhaps; if you're smart enough to dodge in and in at the right time. Property? I'll say no more. Savings account? Pretty low yield and you have to think about which banks are safe these days (remember Kaupthing.) There are some arguments that gold isn't really a protection against inflation at all - more of a bolt hole when you're scared of government incompetence or a disaster.
http://www.moneyweek.com/investments/precious-metals-and-gems/ignore-gold-investment-myths---and-look-to-the-fed.aspx
The last sentence that "gold is a fairly illiquid investment" is absurd - you can always sell it to a bullion dealer and many will pay quite close to spot. If you really want an illiquid way to invest, buy property.
6. drewster said...
@amjidk,
The pound has already collapsed.
The graph below shows Pound/Euro: for many years the ratio was between 1.40 and 1.50; now it's down to 1.15.
This next graph shows Pound/Dollar: again, we're clearly below our long term average.
7. amjidk said...
Drewster, i appreciate that the pound has collapsed, but if the bond markets lose faith then it will probably fall further......
in my opinion it's a good idea to diversify, if you have cash....