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Gold. Some Advice Please.

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I'm concerned that my strong belief in Gold as an alternative to paper money is becoming somewhat blinkered because it's been the pet subject on this forum and has already made people here plenty of money.

I now have some money invested in Gold but on this forum people mention "percentages of their wealth" rather than absolute figures.

I'm not well off by any means, but as a priced-out FTB I feel reluctance to take risks with the capital I have worked so hard to save.

Recently, there has been some very bullish opinion expressed on the HPC forums regarding people's "Gold fever" causing rapid price rises and how great it all is...

This just smells like "VI smugness" from house owners to property investors alike that we've all got so p****d off with over the last 5 years.

Because I bought about 1/3 of my investment 6 months ago, I consumed nearly all the profit in the average buying spread, the increased priced from then to now, and insurance, buying the reaming 2/3. If Gold drops below about 610 I'm in loss trying to sell back at spot. The Gold price would have to fall to 580 an ounce if I assume I can sell the physical Gold in small quantities with the same spread, e.g. Ebay.

I'm glad I bought because as most people will admit, there is a finite risk to the banking system and national economies given continuous middle-east unrest, potential dumping of the petro dollar, threats to and demand for oil supplies and the global asset bubble deflating.

However, it's the "speculation" element I'm adverse to, and I feel I need to retain a level head. Some advice from the Gold and non-Gold investors here would be greatly appreciated. Here are my questions:

1. Anyone prepared to give a percentage AND an actual figure to the amount of money that have invested in Physical / Allocated / Fund Gold, to say whether they have other assets or whether they are using their one and only source of "savings" and roughly what their salary is, so I can get an idea of how much risk people are actually taking in the belief of real gains.

2. I'd love to hear what Dr. Bubb is doing with regard to Gold purchasing as a few people on here seem to be tuned to the cyclical buying and selling nature of day trading and are openly wary of purchasing Gold now because even I have to admit, the graph looks very peaky all of a sudden. Dr. Bubb, are you buying now to protect your wealth, or does the current market present you with a significant dilemma ?

3. Are people on here trying to protect themselves from inflation, hoping for large gains because they missed the housing bubble or just being sensible in unsettled times ?? I personally feel the mood has changed from informed, modest advice for the money-cautious letting them know how to protect their wealth, to one of blinkered euphoria that takes the place of the HPC victory we have, after all, been waiting for, for so long now...

4. Anyone prepared to venture a table of percentages that reflect different financial tactics with respect to Gold. For example, the lowest entry could be "5% invested - minimum risk, aim to boost income from BS interest on your capital", through "10% invested - inflation protection" to "100% invested - Purely speculative / high gain / high risk".

5. Out of interest, given that my capital is intended to buy a house and we nearly all think prices are coming down in the long term but that may be achieved through a mixture of falls plus general inflation, what percentage of my capital should be in Gold to ensure I get the complete benefit of a stagnant housing market with high background inflation. Surely I don't need 100% invested in Gold to get my "50% fall" in house price in real terms ???

6. Cygano (and other confirmed Gold bugs) what return on your capital would you need from an ultra-safe investment (return guaranteed, capital absolutely safe) to make you switch back to paper currency ?? Now there's a question...

Any answers and advice duly welcomed.


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1. 8.5% of net worth in gold an amount equal to 20% of pre-tax salary.

2. Dr Bubb buys shares because they give greater gearing with respect to the gold price itself. I know this as he has stated it many times!

3. YES to these. Cgnao is mega-bullish on gold, he always has been, don't read too much into that - it's not something that's just happened recently.

4. I'm thinking 10% for inflation (major idea), the US dollar situation (major idea), unsettled times is only a bonus (ahem) and not a serious reason for me. Would consider 20% for a speculative venture if things start hotting up.

5. You assume high background inflation. The supplied money got priced VERY quickly into houses, and foreign central backs are saying inflation is creeping into other things now which is why they are raising. To what extent the money has leaked out into non-house stuff I can't really say, it's a subject of much discussion here. Some people have claimed that we are "nearly done with inflation". I don't see how its possible for prices to stay high once consumers stop spending in the US and here. This is world thing. The deflation-bugs, like jonpo, have a good case, but I would only see this as the end-game finale. My interest is: Are we done with inflation yet? I hope "no" so that my gold-play can work! ;)

5. Surely you can't compute this in advance. We don't know how much WAGE inflation there will be, or how much house prices would come down.

What's really pissing me off at the moment is this: People have been calling a pullback since JANUARY, and it hasn't damn well happened, and I've been waiting and waiting and waiting to get IN. Now people are saying this is a local-top and we could see a summer mini slump.

I got in at 575, and I could sell 50% of my holding now to protect it against such a slump at next to no profit. I'm tempted. But this means that I'm starting to listen to other people again, and look where that got me.

Although I would listen to Dr Bubb - he called the breakout in gold last august perfectly. I didn't get in because I wasn't sorted out, and because you guys are a bunch of nutters on some internet forum or other ;) I needed some time to see if you're right about anything.

Edited by megaflop

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1. I am 'about' 5% in Gold (as a total of my liquid assests - not including property), I am also about 12,00 Quid invested in a 'World Gold Fund, which is a Unit Trust arrangement. Gold is not my only source of savings - I am heavy on Cash (Sterling off-shore accounts) and Commodities (again Unit Trusts Funds).

2. I am buying Gold to protect myself from higher inflation - nothing more.

3. I would recommend you hold at least 'some Gold bullion' - if only for peace of mind - say a few thousand Quid.

Frankly speaking onbody on this forum really knows where the Gold price is heading - some have a better idea than others of course - and Dr.B has made some accurate calls in the past.

Why don't you just buy a little & then watch for a while - then a bit more etc......

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I bought a gold panda for £283.00 last October. They're going for around £390.00 now :o

Wish I'd filled my boots.

In one sense the spot price of gold is irrelevant. It's the eBay price that matters!

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Okay, not quite the set of replies I was hoping for. Megaflop scores highest so far.

Of course investment of this kind is a personal thing, so I expect that's why people are reluctant to give too much away.

Megaflop, BTW, my percentages are around twice yours, give or take a few percent, so I expect with a salary over the national average I'm probably into Gold in a bigger way than you already...

I'm still wrestling with the concept of "wealth protection" which I want, and "speculation" which I've never been into as the potential losses of my hard-earned cash give me sleepless nights...

Thanks for your honesty so far...


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