Does anyone here buy gold? If so, where do you buy from?
Gold
- Thread starter AndrewWiggin
- Start date
not at this price Im not
I keep seeing TV commercials for buying gold. In fact, I saw a TV ad today for buying silver. The thing that puts me off is the TV ad lure, "Gold has never been at a higher price, which is why you should buy gold right now. The price of gold is so high because the value of the US dollar is so low, etc, etc." Well in their commercial, they've essentially explained the reason for why buying gold now is not a good idea. Why buy gold when it's overpriced and the American dollar is worthless?
Last edited:
- Thread starter
- #4
Mainly because some investors don't see the dollar stopping its slide (I'm in that camp), and gold would hedge against inflation.
My father used to buy gold from coin dealers back during the boom of the 80's. That was right before the bubble burst and he eventually had to sell them later at a "lower value" to pay for house repairs and such.
Because of that, I have a hard time buying anything I don't understand how they assess the value of and that includes stocks and gold.
Because of that, I have a hard time buying anything I don't understand how they assess the value of and that includes stocks and gold.
They are looking to buy your gold for the reason stated below.
your local coin or bullion dealer is the best option
http://www.tulving.com/ is the online place I hear the most positive stuff about
http://www.coloradogold.com/ is another one I hear good things about
http://www.tulving.com/ is the online place I hear the most positive stuff about
http://www.coloradogold.com/ is another one I hear good things about
The commercials I see are 3 or 4 different companies attempting to convince one that purchasing gold is a safe investment for the future (as opposed to stocks or real estate). If the worth of the dollar keeps slipping, yes, buying gold now would be smart. If we believe when the government tells us the economy is turning around, buying gold is not a good idea. At this point, I'm inclined to agree with Andrew: The government will keep printing money causing the value of the dollar to go down, and the price of gold to go up.
- Thread starter
- #9
I'm accounting, not finance or economics (because macroeconomics at this point seems like magic), so what happens if we keep printing but no one buys the bonds?
Thanks for the sites, I'll check those out. I have very little money to actually invest, so I was looking for something to just keep my small amount of savings level with inflation. I don't think there's a danger of a bubble with gold now since the 70s was largely fueled by the new availability of gold if I understand it correctly (couldn't buy gold since the depression in the 30s).
Thanks for the sites, I'll check those out. I have very little money to actually invest, so I was looking for something to just keep my small amount of savings level with inflation. I don't think there's a danger of a bubble with gold now since the 70s was largely fueled by the new availability of gold if I understand it correctly (couldn't buy gold since the depression in the 30s).
That is the question.
- Thread starter
- #11
It's terrifying that that has become a legit answer to the question. Most economics majors I know are uncomfortable giving any answer because they don't know either, or don't want to think about the consequences.
I agree... I'm neither educated in finance nor economics but even I know that this is no bueno. Printing money will only cause further problems, no solutions.
There are several ways to "deposit" relatively small amounts of money that stays denominated in gold, but I'm not comfortable suggesting any of them--each has its own problems--so I'll leave you to do the work. What I would suggest, if it fits, is to talk to a local coin dealer and let them know you want to purchase small coins regularly, say 1/10 oz or 1/4 oz or British sovereigns, Francs, etc. Maybe they'll give you a good price, and order and store them for you while you purchase them slowly. Be careful to keep the percent over spot you pay low--1/10 oz coins can have a very high premium (as a percent) if you buy them one at a time. You really want to keep the premium to 3%, unless you're buying collectible coins, like Double Eagles, which isn't a bad option at all. Or pick something from the current US Mint offerings, as long as the premiums aren't too high. For these last few options you want to compare the buy and sell prices as a percent, and not the percent over spot.
As for investment advice, not too long ago precious metals were part of every recommendation for a diversified portfolio, with a typical recommendation of 5-10% of the portfolio. One basis for that is that it's counter-cyclical vs. stocks, and the math for (unmanaged) diversified portfolios works out better when parts of the portfolio move counter to other parts. I think this has always been good advice, and remains so today. Now if you want to time the market...
Last edited:
I guess it depends on the kind of gold you are talking about. I would imagine that for coins, you could go to a coin shop nearby and talk to them about it. As far as the commodity, you can do a little dabbling in the gold market with Forex, though there might be better options out there.
Personally, I love gold. Oil is great too. Even getting into the currencies can be fun. If you are thinking of getting into futures trading, I would try locating some websites that offer free mock trading in futures.
Personally, I love gold. Oil is great too. Even getting into the currencies can be fun. If you are thinking of getting into futures trading, I would try locating some websites that offer free mock trading in futures.
- Thread starter
- #15
Could you perhaps explain the 3% over spot and what the difference is between normal gold coins and Double Eagles?
South Africa Kruggerrands can be a nice option to anyone buying gold...
Just like with stocks, you want to keep the commission or transaction cost down. With stocks you pay a commission when you buy and sell. With coins you lose the difference between the buy and sell price.
Here's a buy & sell price I took off tulving's web site
2009 Gold Eagle 1 ounce BU..................... $24 Over Gold Spot
2009 Gold American Eagles 1 Ounce........... Spot +$44.95
The difference between the buy and sell price is $21, which is below 2% of the spot price. Forgetting about the fact that the prices of gold and the dollar float vs each other, you'll lose $21 or 2% of your investment when you sell, or you can just recognize the loss immediately if you mark to market.
Keep in mind that there's a VAT on bullion in many countries, so those people have a huge transaction cost. I think Canada has one. Also, make sure you understand the tax implications to holding/storing (the vault might be tax deductible), buying and selling. This is what makes some of the "paper" gold attractive, like the ones that trade on the stock exchanges. You can also find retirement accounts that hold bullion in storage for you.
Note that some dealers set their buy (from you) prices above spot and others at or below, so you should be careful where you buy and sell. Also, some coins demand a higher premium, and have higher buy-sell prices than others. Kruggerands probably have the lowest cost, and new Amercian Eagles are higher.
The Double Eagle is a $20us US gold coin minted from 1849 to 1933. Since it's older, you'll pay a lot more (than the spot price) for it than for a newly minted coin, especially in better conditions. You'll also get more for it when you sell it. Since you're not doing this to collect old coins, but rather to store wealth, you want to look at the transaction cost--the difference between what you can buy and sell them for. I don't know the numbers, but for example, you might pay $1500 for a particular coin in fine condition and be able to sell it for $1350, giving a transaction cost of $150 per coin, or about 10% of the investment. (I don't know whether you should use the buy or sell price here, but either way it's an overhead you lose once you sell.) One interesting investment aspect to these older coins is that collectible coins were exempt from the 1933 confiscation, so some people think they won't be confiscated should that happen again, but I won't speculate about it.
In new coins, I really love the Austrian Philharmonics. 0.9999 fine (24K) and gorgeously detailed work, but it's really about the music lover in me.
Last edited:
Buying Gold for an investment is not for the uninitiated. Back in the 1970s and 80s people were buying krugerands as the price of gold was high. Then the price of gold went bust and all these people with their krugerands lost big time. That's the problem with gold. over time the price always goes down.
As far as the dollar goes maybe in 20 years or so when China replaces us as the major world power we will have to worry but for the time being if the dollar sinks the world is in big trouble
As far as the dollar goes maybe in 20 years or so when China replaces us as the major world power we will have to worry but for the time being if the dollar sinks the world is in big trouble
Similar threads
- Locked
- Article
