Jump to content
House Price Crash Forum

Gold strategy in the current economy


Recommended Posts

  • Replies 15k
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Popular Posts

2018 could be the year for gold https://www.goldmoney.com/research/goldmoney-insights/popular/2141-2018-could-be-the-year-for-gold

Always my experience as well, so I second your recommendation.

It's entirely  dependant on what you are comfortable with. And obviously how much you would need on hand in the effect of something seriously drastic happening.

Posted Images

IMPO, Gold will be in a bubble when bankers will LOAN you money to go and buy the stuff, as they did with houses.

open a trading a/c.

£25 down buys you $16,050 gold, funding at LIBOR +2.5% p.a.

Roughly 640x leverage.

Bubblicious enough for you yet?

Edited by Red Karma
Link to post
Share on other sites

Surely the higher this goes the more likely a correction becomes thus reducing the 'safeness' of the investment.

I think Soro's sold most of his holding recently too.

with that sort of analysis you could wait forever for a correction that never comes, better to just judge sentiment rather than price which is pretty immaterial in these sort of markets when emotions are high i think

Edited by Mary Cassatt
Link to post
Share on other sites

open a trading a/c.

£25 down buys you $16,050 gold, funding at LIBOR +2.5% p.a.

Roughly 640x leverage.

Bubblicious enough for you yet?

is that gold, or ETF?

Link to post
Share on other sites

open a trading a/c.

£25 down buys you $16,050 gold, funding at LIBOR +2.5% p.a.

Roughly 640x leverage.

Bubblicious enough for you yet?

All Fatcha's fault innit.

You could of course say the same about forex and currency derivatives, but that wouldn't help your point would it :)

Edited by 50sQuiff
Link to post
Share on other sites

As said whats YOUR alternative...

Oh right keep it in cash and let the government inflate all the value of it away. Or to stick it into a high interest :lol: bank account at 5% and only lose 10% PP per year when real inflation is close to 14-17%.

Link to post
Share on other sites

I saw them going on about gold prices have gone up consistently for the last 10 years about 3 weeks ago and painting the picture of gold only ever goes up in price. There not wrong but I do recognise the type of "journalism". Do you recon they have all sold their houses and bought gold?

Except they've got it wrong, its the paper which is becoming worthless in relation to harder assets.

Link to post
Share on other sites

It's actually the third top story on the main page now!

Except they've got it wrong, its the paper which is becoming worthless in relation to harder assets.

Exactly. All I want is a store of my wealth, something that I don't have to worry about. Paper gets worth less compared to all assetts over time; Gold remains much more stable.

When things cost more, gold prices are generally higher.

If Gold prices are lower, things generally cost less.

"store of wealth" is what Fiat currencies are phenomenally bad at. And Joe Public seem unable to grasp.

Link to post
Share on other sites

If you buy, for example, a Nokia share for 5 bucks it might double in 6 months. It might even go to 50 bucks in 18 or 24 months. Then again, Nokia might go bust and you lose your 5 bucks.

But hey, 5 bucks is 5 bucks. About the price of a MacD quarter-pounder and fries meal in the US.

I have no opinions on gold as such, but it appears to me that you have to risk an enormous amount of money just to make 20 or 30 bucks... and that is ignoring any taxes that may result of buying it... Like the Nokia share gold may well double in 6 months but that means it has to go from 1,600 bucks to 3,200 bucks per ounce.

If Nokia crashes more then you have lost the price of a MacD meal, if gold crashes then you lose a vast sum.

Seems to me that gold is a bad investment vehicle, costing a great deal to get in on now, but with tremendous risk.

Link to post
Share on other sites

It's actually the third top story on the main page now!

Exactly. All I want is a store of my wealth, something that I don't have to worry about. Paper gets worth less compared to all assetts over time; Gold remains much more stable.

When things cost more, gold prices are generally higher.

If Gold prices are lower, things generally cost less.

"store of wealth" is what Fiat currencies are phenomenally bad at. And Joe Public seem unable to grasp.

Gold has been nothing like stable over the last few years, the increase in price has been parabolic. Unfortunately for you what was a safe bet up to now is looking increasingly like a bubble, and like any bubble it is subject to harsh corrections.

You cannot account for the huge rise in gold price with the drop in the value of fiat currencies alone - part of its recent rise is speculation, and as the fever mounts in the mainstream press you can expect it to go sharply upwards, particularly after a stock market crash, and then correct savagely soon after that, as people pile back into equities and other assets which are then seen as cheap. Like any other asset, gold is not a completely reliable store of value over the long term, it has huge peaks and troughs in price, and if you don't time it right (e.g. buy lots of gold now, and then sell in 10 years), you are likely to be burned just as badly as you would be with cash or any other investment.

The gold market is also subject to speculation and manipulation by the big players and producers, just like fiat currency. It's actual use value in electronics and jewellery is way, way below the current price.

Link to post
Share on other sites

If you buy, for example, a Nokia share for 5 bucks it might double in 6 months. It might even go to 50 bucks in 18 or 24 months. Then again, Nokia might go bust and you lose your 5 bucks.

But hey, 5 bucks is 5 bucks. About the price of a MacD quarter-pounder and fries meal in the US.

I have no opinions on gold as such, but it appears to me that you have to risk an enormous amount of money just to make 20 or 30 bucks... and that is ignoring any taxes that may result of buying it... Like the Nokia share gold may well double in 6 months but that means it has to go from 1,600 bucks to 3,200 bucks per ounce.

If Nokia crashes more then you have lost the price of a MacD meal, if gold crashes then you lose a vast sum.

Seems to me that gold is a bad investment vehicle, costing a great deal to get in on now, but with tremendous risk.

Gold wont go to zero, it can be held and passed down through generations, try doing that with a Nokia share, see how many generations it lasts

Link to post
Share on other sites

There is indeed a compelling case for PMs in a balanced portfolio as an inflation hedge, but that's not the argument our more swivel-eyed goldfingers are making. For them it's an essential element of their libertarian/survivalist fantasy of societal collapse (and as has been pointed out before that doesn't even make sense; trade implies surplus implies social organization, but we'll put that to one side). Ask them when it's time to sell and the answer seems to be when you meet aunty in the thunderdrome.

That brings me to the real problem I have with Au, what are the disequilibrium conditions for that market? We're told it's negative real interest rates, but that's been true for some time. For an asset with no fundamentals and heavily effected by sentiment the only thing that is driving it that there is no viable alternative investment. What's to stop it turning on a dime?

Link to post
Share on other sites

There is indeed a compelling case for PMs in a balanced portfolio as an inflation hedge, but that's not the argument our more swivel-eyed goldfingers are making. For them it's an essential element of their libertarian/survivalist fantasy of societal collapse (and as has been pointed out before that doesn't even make sense; trade implies surplus implies social organization, but we'll put that to one side). Ask them when it's time to sell and the answer seems to be when you meet aunty in the thunderdrome.

That brings me to the real problem I have with Au, what are the disequilibrium conditions for that market? We're told it's negative real interest rates, but that's been true for some time. For an asset with no fundamentals and heavily effected by sentiment the only thing that is driving it that there is no viable alternative investment. What's to stop it turning on a dime?

They work on the premise it needs positive interest rates to fall, which it probably does, however they then extrapolate forward negative interest rates going forward, ie 10% inflation therefore 12% rates, never gonna happen. Thats reasonable however it ignores that there are 2 variables in the calculation, interest rates and inflation, a move to just 2% could probably trigger a recession and fall in inflation of 10% so the relationship is not 1 to 1, the question is whether a recession can happen at zirp, rightly or wrongly they perceive inflation cant/wont be allowed to fall, that is fallible, it can if there is a recession in one of the big economies as it is highly unlikely all economies wont join it, Govts may well act again to stoke inflation but such a recession could easily wipe 50 to 60% of Gold in short shrift, most before the actual recession actually happens as markets generally move before the economy .

They might be right or wrong and its easy not to give a sh!t and have tunnel vision with a 200% profit, not so good if you are unfortuante to buy before it happens and find yourself 60% down (at which point you will almost invariably sell because everyone will say its going back to 200 and anyone who is unfortunate and capable of buying at a top is more than capable of selling at a bottom)

Edited by Mary Cassatt
Link to post
Share on other sites

Except they've got it wrong, its the paper which is becoming worthless in relation to harder assets.

Well yes - except for houses or land or a number of other harder assets that I am sure are out there. Which is what most people on this site are probably saving up to buy.

Link to post
Share on other sites

Well yes - except for houses or land or a number of other harder assets that I am sure are out there. Which is what most people on this site are probably saving up to buy.

In paper money, which is actually counter productive since they stick it in the bank where it is loaned out and devalues their paper even more. Which stokes inflation and merely increases the speed and angle of the treadmill they are already running flat out on against.

Link to post
Share on other sites

Well yes - except for houses or land or a number of other harder assets that I am sure are out there. Which is what most people on this site are probably saving up to buy.

I'd add that there are various elements to people's safety strategy in that not all assets are perfect.

For instance land and houses are easily taxed, not exactly fungible quickly and cannot be concealed from the state.

The thing is it is different strokes to different folks. One asset class may not suit others.

I for instance I have a tendency to keep highly mobile and my worldly goods bar my books can be packed into two small suitcases. Thus PMs and esp gold which is easily hidden highly mobile and highly fungible though has significant risks. It is attractive to me.

Others who don't want to Lazarus Long and leave at the drop of a hat dont see it as good.

Link to post
Share on other sites

I saw them going on about gold prices have gone up consistently for the last 10 years about 3 weeks ago and painting the picture of gold only ever goes up in price. There not wrong but I do recognise the type of "journalism". Do you recon they have all sold their houses and bought gold?

No - this just means that Gold is in the early stages of a bubble that has now reached "Media Attention" phase. Stand by for "Enthusiasm" "Greed" "Delusion"....

bubble-lifecycle.gif

post-8966-0-24674300-1311079027_thumb.gif

Link to post
Share on other sites

In paper money, which is actually counter productive since they stick it in the bank where it is loaned out and devalues their paper even more. Which stokes inflation and merely increases the speed and angle of the treadmill they are already running flat out on against.

Well not so sure about that. Say you had 100k 4 years ago. You stuck it in various accounts. Some linked to RPI, some fixed - whatever.

It may today be sitting at 120k. House back then you wanted to buy cost 140k. Today it can be had for 110k.

That person has done very well compared to most. Compared to doing the same in gold ? Well no - but there are different risks involved with that plan as well.

Link to post
Share on other sites

I'd add that there are various elements to people's safety strategy in that not all assets are perfect.

For instance land and houses are easily taxed, not exactly fungible quickly and cannot be concealed from the state.

The thing is it is different strokes to different folks. One asset class may not suit others.

I for instance I have a tendency to keep highly mobile and my worldly goods bar my books can be packed into two small suitcases. Thus PMs and esp gold which is easily hidden highly mobile and highly fungible though has significant risks. It is attractive to me.

Others who don't want to Lazarus Long and leave at the drop of a hat dont see it as good.

Indeed. But his view is not clear when many others are talking about this subject.

The overarching impression given is gold = good. Everything else = bad.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.





×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.