Is Gold An "investment"

[southmartin]

Mods, give it a while can you?

I'm trying to ascertain whether holding AU can be classed as an "investment" or is it a 'something that you own' such as a car, or a house etc.

Ok, so the chances are that it may rise in value (not trying to turn this into a bug thread) but it could fall. The reason for asking is in relation to tax & benefits purposes... let's say you had a 30k car, ok so it's likely that the car will depreciate, but then again maybe if it's a 'classic' it won't. So if you apply to your local authority for benefits, and don't have any money in your account, but you do have a 30k car - can they refuse as you have 'assets'.

So my question in relation to AU, is the same. What if you try to claim for JSA, but you have a 1kg bar hidden in your loft / buried in the garden (current value 30k)... is that an "investment".. and following the argument forward, would it matter if the bar was physical or paper?

I suppose it's different if you'd had sovereigns, as they technically are currency... but I can't see how the benefit offices can say you could get JSA if you had a 30k car, but not if you had a 30k bar? Both had cost you 30k, both might go up or down in value...

So, irrespective of whether the value of AU goes up or down..... is it classed as an "investment" an "asset / liability" or something else?

[Quiet Guy]

I'm trying to ascertain whether holding AU can be classed as an "investment" or is it a 'something that you own' such as a car, or a house etc.

I think of investments as things that pay dividends or interest such as equities, bonds or even saving accounts whereas buying gold is a form of speculation.

Note that buying equities in the hope that the equity price will rise, instead of collecting dividends, is another form of speculation.

So my question in relation to AU, is the same. What if you try to claim for JSA, but you have a 1kg bar hidden in your loft / buried in the garden (current value 30k)... is that an "investment".. and following the argument forward, would it matter if the bar was physical or paper?

I would say that the gold is a (highly liquid) asset that should be counted for assessing benefit claims.

I suppose it's different if you'd had sovereigns, as they technically are currency... but I can't see how the benefit offices can say you could get JSA if you had a 30k car, but not if you had a 30k bar? Both had cost you 30k, both might go up or down in value...

Hmm. I doubt the benefits people would be impressed by that argument - particularly since sovereigns are pretty much useless except as a means of storing monetary value.

So, irrespective of whether the value of AU goes up or down..... is it classed as an "investment" an "asset / liability" or something else?

I'd still say that it's an asset.

[southmartin]

Thanks.

I agree with you on the point about sovereigns - I actually said as much in the OP.

So, if PMs are an "asset" (no matter how liquid), then as the benefits guidelines - which state "savings or investments" don't mention anything about "assets"... could you claim housing benefit whilst sitting on top of £1m of bullion (or 1m of paper gold?) no?

After all, if you have an "asset" such as an original Picasso, a Ferrari 250GT (or even an amount of equity in the home you're claiming SMI for), then you're entitled to handouts... Am I missing something?

[Stay Beautiful]

Gold is a hedge against fiat currency (you know, the stuff that can be made out of thin air) with the $ being at the frontline. It would be wrong not to have at least 10% of your net worth transfered to gold/silver/pm's in some form or another. Fwiw,imho, Gold is Money.

[DTMark]

I'd say that from a JSA/claimant perspective, the presence of a 30k car is pretty easy to detect. It's sitting on the drive, has a tax disc and presumably insurance.

A gold bar can be hidden under the floorboards and traded in for cash "off the books" without any tax implications. The cash can then be similarly hidden under the floorboards, etc

Gold would have been a pretty good investment over the last few years for sure.

Normally people would speculate on commodities, stocks etc but when the return is becoming worthless because the currency it's denominated in is becoming worthless, then you might be better speculating on currency itself - like gold.

I'll bet that gold prices will fall and rise over the next two years or so, but I'd be very surprised if the value of gold is less in two years than it is now.

[southmartin]

Thanks - trying to keep this from going off into a goldbug thread, so please avoid talking about the value (or lack thereof ;-)

My point about the 30k car on the driveway is that of course it's detectable, but that having a 30k car isn't included in a JSA claim and ownership of such a vehicle - irrespective of how much it might be worth - doesn't count toward your net worth (according to the rules)

So if PMs (though not sovs) are an "asset" - it looks possible that you could own tons of the stuff, yet still get your rent paid for from the taxpayer...

I'd suspect that there may be rules about suddenly 'losing' 30k from your bank account and then claiming poverty... but the principle is possible, is it not?

[Guest_ringledman_*]

Gold is an insurance policy against government theft through inflation.

So if you have £100k in cash then putting £5k-£10k into gold acts as a hedge against negative interest rates and currency debasement, ie as we have now.

As Quiet Guy said a true investment produces income, whether rent or dividends. This is what you should invest in for the long term (20-40 years).

However during certain periods in history, gold becomes an investment as now.

Gold will only fully crash when interest rates become real. This is a good 5 to 10 years off at least. So until then it is an 'investment' after that probably not.

lis not a 'widows and orphans' investment, ie something to hold for decades on end and pass onto your offspring. It goes through secular uptrends (ie now) that last approx 15-30 years and then secular downtrends (ie early 1980s to 2000) when gold was a dog of an 'investment'.

It remains in a secular bull market. It will collapse once this bull market turns to bubble market and gold is going parabolic. Having said that its due a good 10-20% correction from present price.

The top will be once everyone talks about it, companies are selling you gold (not buying it off you as now) and CNBC talk of it daily. Many years off.

[Quiet Guy]

Thanks - trying to keep this from going off into a goldbug thread, so please avoid talking about the value (or lack thereof ;-)

My point about the 30k car on the driveway is that of course it's detectable, but that having a 30k car isn't included in a JSA claim and ownership of such a vehicle - irrespective of how much it might be worth - doesn't count toward your net worth (according to the rules)

So if PMs (though not sovs) are an "asset" - it looks possible that you could own tons of the stuff, yet still get your rent paid for from the taxpayer...

I'd suspect that there may be rules about suddenly 'losing' 30k from your bank account and then claiming poverty... but the principle is possible, is it not?

What a complicated business benefits is. Here's an index to some information about JSA:

http://www.legislati...7/contents/made

I cannot find anything that contradicts the idea that if you own gold and become unemployed then the gold is not counted for assessment purposes because gold does not pay an income!

That said, note this bit from "SCHEDULE 8, CAPITAL TO BE DISREGARDED" (from income assessed for a JSA claim) at

http://www.legislati...schedule/8/made

"15. Any personal possessions except those which have or had been acquired by the claimant with the intention of reducing his capital in order to secure entitlement to a jobseeker's allowance or to income support or to increase the amount of those benefits."

So this seems to me that imply that owning gold is not relevant if you become unemployed but switching cash into gold just before making a claim is not acceptable.

[southmartin]

What a complicated business benefits is. Here's an index to some information about JSA:

http://www.legislati...7/contents/made

I cannot find anything that contradicts the idea that if you own gold and become unemployed then the gold is not counted for assessment purposes because gold does not pay an income!

That said, note this bit from "SCHEDULE 8, CAPITAL TO BE DISREGARDED" (from income assessed for a JSA claim) at

http://www.legislati...schedule/8/made

"15. Any personal possessions except those which have or had been acquired by the claimant with the intention of reducing his capital in order to secure entitlement to a jobseeker's allowance or to income support or to increase the amount of those benefits."

So this seems to me that imply that owning gold is not relevant if you become unemployed but switching cash into gold just before making a claim is not acceptable.

Good info -thank you.

So it looks like if you buy PMs for the reason to hedge against a currency debasement (which is probably the only reason for acquiring it) then you'd be fine... there might be some awkward questions about why (depending on timing) but purchasing on a backdrop of global financial uncertainty seems to be within the rules!

[thod]

There is a problem with the idea of an investment as being something that bears interest. All wealth is relative. If you have a million pounds and so does everyone else, you are not wealthy. When it comes to bidding for that desirable house you will be in no different a position than if everyone had a thousand pounds. The prices of real world goods, and labour, adjust to the quantity of money available.

Thus to become wealthier gaining interest is not enough. You must gain more interest than everyone else. If you gain 5% when the market has gone up 10% you are poorer not richer. When markets are falling, the reverse is true. You may lose money on your investments, but provided everyone else has lost more, you are richer. Thus if the price of gold remains static whilst the stock market falls, you are richer.

[Mark Uttley]

It would be wrong not to have at least 10% of your net worth transfered to gold/silver/pm's in some form or another.

Net worth? Absolute rubbish! For the majority of people this advice is so impractical as to be completely useless.

It may be correct to put 10% of your investment portfolio into gold, but net worth? Never!

[Errol]

Gold is money.

[Injin]

Gold is money.

Gold has never, ever been money for the vast majority of the population.

OT - Gold is not an investment. it's a lump of metal that has an incredibly long half life, that some people like to make jewelry out of. You'll never completely lose with it, but one must recognise it's full on mania that gives the bulk of it's exchange value, pure sentiment.

[Stay Beautiful]

Net worth? Absolute rubbish! For the majority of people this advice is so impractical as to be completely useless.

It may be correct to put 10% of your investment portfolio into gold, but net worth? Never!

Investment portfolio/net worth, its all the same to me.

[Stay Beautiful]

Gold has never, ever been money for the vast majority of the population.

OT - Gold is not an investment. it's a lump of metal that has an incredibly long half life, that some people like to make jewelry out of. You'll never completely lose with it, but one must recognise it's full on mania that gives the bulk of it's exchange value, pure sentiment.

Pure sentiment, the driver of any investment.

[Injin]

Pure sentiment, the driver of any investment.

No, not really.

You can invest in apple seeds because you want an apple tree.

It's an investment because you are going to add labour and expertise and wind up with more stuff than you started with. Gold isn't in this category at all. Quite the reverse in fact - for gold to do well, everything else has to be in the toilet.

[ken_ichikawa]

No, not really.

You can invest in apple seeds because you want an apple tree.

It's an investment because you are going to add labour and expertise and wind up with more stuff than you started with. Gold isn't in this category at all. Quite the reverse in fact - for gold to do well, everything else has to be in the toilet.

Check!

[Stay Beautiful]

No, not really.

You can invest in apple seeds because you want an apple tree.

It's an investment because you are going to add labour and expertise and wind up with more stuff than you started with. Gold isn't in this category at all. Quite the reverse in fact - for gold to do well, everything else has to be in the toilet.

I see your point regarding apple pips. Though if you invest in gold and add your labour and expertise to sell at a higher price and then buy "on the dips" you will also wind up with more of the stuff than you started with.

Gold has done rather well during the world credit boom times 2000-2008 also.

[Mark Uttley]

Investment portfolio/net worth, its all the same to me.

You must still be living at home with your parents then.

What about a retired person with no mortgage on a 150K house and 10k in savings? Should they have 16Ks worth of gold?

A late thirties working family with a 50% mortgage on a 200K house and £2000 in savings? Should they MEW in order to put 10K into gold?

[Errol]

Should they MEW in order to put 10K into gold?

10 years ago, yes. Now - still yes. Gold is going to $5000+.

[Stay Beautiful]

You must still be living at home with your parents then.

What about a retired person with no mortgage on a 150K house and 10k in savings? Should they have 16Ks worth of gold?

A late thirties working family with a 50% mortgage on a 200K house and £2000 in savings? Should they MEW in order to put 10K into gold?

No i dont live at home with my parent.

no mortgage on a 150k house (its tricky to value a house at the moment) and 10k savings, personally yes they should have 16k in pm's (not just gold), spread out over physical, etf's, miners.

late thirties working family 50% equity on 200k house (again, tricky time to be valuing houses) and 2k in savings, well i suppose its down to their personal position (secure work ect). Short answer though, yes.

[Injin]

I see your point regarding apple pips. Though if you invest in gold and add your labour and expertise to sell at a higher price and then buy "on the dips" you will also wind up with more of the stuff than you started with.

Because someone else has less.

The above scenario is betting, not investment.

Gold has done rather well during the world credit boom times 2000-2008 also.

It really hasn't. Gold has done bupkis except sit there, glinting.

[Mark Uttley]

no mortgage on a 150k house (its tricky to value a house at the moment) and 10k savings, personally yes they should have 16k in pm's (not just gold), spread out over physical, etf's, miners.

This one roughly equates to my 79yo mother. Advising a retired person to give up their life savings or remortgage is just crazy.

late thirties working family 50% equity on 200k house (again, tricky time to be valuing houses) and 2k in savings, well i suppose its down to their personal position (secure work ect). Short answer though, yes.

Short answer. No f***ing way!! Remortgage on an already sizeable mortgage, when you have virtually no savings, in todays job market? Stupid.

What you are suggesting is not investment. Neither is it insurance against inflation. What you are suggesting is that people borrow money against an asset in order to speculate on a market they probably know nothing about.

Both these households, along with millions of households in the UK, already hold the correct amount of their wealth in gold. Zero.

[Stay Beautiful]

Because someone else has less.

The above scenario is betting, not investment.

It really hasn't. Gold has done bupkis except sit there, glinting.

Betting/Investing two words that to me mean pretty much the same thing.

Gold may have done "bupkis" but the amount of currency one needs to purchase a gram of gold has risen hugely from 2000 to the present day.

[Stay Beautiful]

This one roughly equates to my 79yo mother. Advising a retired person to give up their life savings or remortgage is just crazy.

Short answer. No f***ing way!! Remortgage on an already sizeable mortgage, when you have virtually no savings, in todays job market? Stupid.

What you are suggesting is not investment. Neither is it insurance against inflation. What you are suggesting is that people borrow money against an asset in order to speculate on a market they probably know nothing about.

Both these households, along with millions of households in the UK, already hold the correct amount of their wealth in gold. Zero.

Well ok, you can mess around with the personal profiles till the cows come home. eg, a one year old with £2000 in a bank acount, would it be crazy to withdraw £200 from that acount and purchase a Soveriegn?

Looking at your replies it seems that you are 100% anti gold. Holding the correct amount of ones wealth in gold is not, zero. Do you and RB drink in the same pub?

A little diversification is good for the soul.