Gold

Bro. Noble · July 28, 2010, 03:31:07 PM

The Fed made a statement recently that indicates that interest rates are going to be low for several years.

We've had posts on investing in realestate, or at least timberland.

There's lots of ads on TV about investing in gold. What's your opinion on this compared to stocks or mutual funds.

Of course it's a moot point for me cause I invest all my cash in groceries :D :D

DanG · July 28, 2010, 03:49:36 PM

A year ago, and for a while before that, all the tv ads about gold were trying to get you to sell your gold. That told me the value of gold was going up. Now, all the ads you see and hear are urging you to buy gold NOW! That is telling me that the price has peaked and is headed back down. Regardless of what they say in the ads, the people that are advertising have only their own pocketbook at interest, and will do everything they can to seperate you from your wealth, and that includes your favorite Talk Radio hero.

Chris Burchfield · July 28, 2010, 05:02:34 PM

In 1978, my first son was born on Dec. 12th. The price of gold was $198. an ounce. The following years most of my earning went into putting biscuits on the table and a roof over our heads. About 1990 I began buying stocks with a few coins. I'd add to the number of stocks I bought with raises. Some time after the market started dropping. I'd lost everything they had made and it started getting into my money. I'd always heard "you stay in this game for the long haul." I began making plans to retire effective end of April 2007. My stocks had built back up and worth about twice what I had in it, with a loss of $600 first quarter of 2007. On retirement, I cashed out. Paid about 30 percent in taxes on that money. Yea, I could have rolled it over into something more stable. I paid my truck off and had a little coin left over. Paying the truck off was like a $750. a month raise for us. Being retired with a pension based on 30 years of service, 20% penalty for leaving 5 years early, we have more usable income now then when I was making about twice as much. The government was getting most of it in taxes.

Ron Wenrich · July 28, 2010, 05:10:40 PM

I don't listen too much to those that are selling gold on talk shows. But, I do listen to guys that invest for a living. I have yet to hear any of them say that gold is overpriced or that gold is going into the tank. All are saying that gold has yet to peak. This move up in gold is going to take years.

Interest rates are going to stay low, but the real story is going to be the value of the dollar. As the dollar slips in value, gold will go up. In normal situations, gold values go up when the dollar slides. Some are expecting the dollar to go into crisis in the next few years. That's when the debt catches up, as well as all that surplus money that's slopping around thanks to all the borrowing for the stimulus. So, basically gold is a hedge against the dollar's value.

There are several ways to take advantage of the increase in value. You can buy gold bars. Some are also talking about silver, as well. Values are down right now, but it is traditional that the jewelry makers in India will start buying gold and silver in the next few months. That usually leads to a push in prices. Having gold bars adds to the problem of where to store them, and how to cash them in some time down the line.

You can play the futures market. You control 100 oz. at per contract and it costs about $5800 for the margin. But, you better be on the right side of the market. If you lose $1/oz, you lose $100. $10 price swings are not uncommon. And contracts are for only set amount of time.

You can play the options market. Its based on a strike price and you can either buy a put or a call, depending on your market outlook. The value of the option is based on what the underlying commodity is doing. It helps protect against those violent market swings. You sleep better at night.

You can buy an ETF (electronically traded fund). It mimics the price of gold and they are supposed to have the physical gold to back it up. Very liquid in an upward trending market. I don't know how well they do when markets fall.

You can invest in mutual funds that deal in mining stocks. When gold goes up, so do those mining stocks. You could get just the mining stocks on your own.

How does it stack up against stocks? In 2007, the S&P was trading around 1500 and gold was worth about $800. Today, the S&P is trading around 1100 and gold is around $1200. The S&P dropped 27% and gold went up 50%. Back in 2007, it would have taken nearly 2 oz of gold to buy the S&P. Today you can do it for less than an oz.

gary · July 28, 2010, 05:46:11 PM

I started buying gold in 2008. I have a few pounds of it now. Not going to sell yet. I am getting ready to get rid of my silver. I am going to sell it next week. The problem with own gold and silver is where do you keep it. I don't trust banks so no safety deposit boxes for me.

red oaks lumber · July 28, 2010, 05:52:32 PM

when the economy is weak gold is strong, now is not the time to buy gold. invest in any stock that has to do with "green, thats the trend for the next 5-10 yrs. also buy up bp stocks hold for awhile it will come back..
but, i work with wood all day so what do i know.

Raider Bill · July 28, 2010, 05:58:33 PM

Quote from: gary on July 28, 2010, 05:46:11 PM
I started buying gold in 2008. I have a few pounds of it now. Not going to sell yet. I am getting ready to get rid of my silver. I am going to sell it next week. The problem with own gold and silver is where do you keep it. I don't trust banks so no safety deposit boxes for me.

Bring it to the pig roast. I will hide it for you

Kansas · July 28, 2010, 08:22:03 PM

I can't see investing in anything that just sits there. If you are really worried about inflation, or the falling dollar, and are convinced that gold is safety, invest in a gold mine. A good mutual fund that invests in them, or better yet, a variety of metals. At least then you are investing in a company, not an inert object. If everything does go to hell in a handbasket, in all reality, how much will gold be worth. You can't eat it. And it is only valued what someone places on it.

SPIKER · July 28, 2010, 11:15:21 PM

some good thoughts I myself want to say GOLD is not very liquid, it is hard to buy & hard to sell (the physical metal) and you can easily be taken for a ride to the poor house by buying it. like many other commodities it goes UP slow but can drop 10 points really quick. there are other metals that are better to own as they are easier to sell. Mining stocks are OK for a few select miners but for the most part it is hit or miss and is very market dependent. (saying this I bought PAL this week) PAL is a mining stock they mine platinum & palladium (stuff needed for catalytic converters & EXPENSIVE jewelery. there are only a couple players in the field. most for them have smaller gold holdings as well. In this market is it probably better to be playing STOCKS than GOLD. I been doing well the last few weeks...

I might add Ron did a good job above.
Mark

gary · July 29, 2010, 02:49:25 AM

If the economy crashes what are you going to do with your stocks? At least with gold in my hand even if it is worth less than I paid for I can still trade it for food. I guess you could heat your house with the stock certificates.

LeeB · July 29, 2010, 02:55:06 AM

If the economy truly crashes, I would prefer for my metals on hand to be iron and lead.

WH_Conley · July 29, 2010, 06:39:32 AM

I only metals I have invested in is ordinance steel.

DanG · July 29, 2010, 08:27:29 AM

A fork with something on it would be my choice. ;D

OneWithWood · July 29, 2010, 10:41:18 AM

I'm with DanG!

sandhills · July 29, 2010, 11:41:49 AM

me too, oh and the iron and lead (helps keep sumthin on the fork)

Brad_bb · July 29, 2010, 12:28:08 PM

The best plan is to live within your means, and don't carry any debt that you can't deal with in a crisis. Don't carry any credit card debt. Have cash reserves to cover if you are out of work. Don't buy things you don't already have the money for(House excluded, but you still need to have reserved to cover it's payment if you lose your income for a minimum of 6 months). This economy shows you need to be prepared for even longer than that. Be prepared to live frugally if you need to.
I've never bought Gold. I've practiced what I've preached, and now the worst case has happened(though I do not own a home). I've been able to get though because I have prepared, and can live frugally as needed. And I don't have debt. I'm a long term investor. If I do want to take more risk, I will do it with money I can afford to lose, and I will risk it on myself, making a personal business move.

fuzzybear · July 29, 2010, 12:35:23 PM

never invested in paper. always been the real thing for me. of course when you live in gold country it's a little easier. I own the rights to 10 claims here. we still mine by hand and can pull about 100 oz in a season.
China is pouring tons of money into buying and running mine here in the north. Selling gold here is easy with over 10 buyers giving the current prices.

mad murdock · July 29, 2010, 01:00:44 PM

Gold is artificially low, as big money players (i.e. the Fed, and US treasury, as well as others) are gaming the market. With the invention of the latest treasury bills the so-called "inflation-proof" T-bills, they are attracting money that way rather than to the gold market. My opinion on precious metals is that if one is truly concerned about protecting some "excess" money that they have laying around in a bank, buy silver coins. THere are the 90% silver content (pre-'64) coins, or bullion coins that one can buy. Silver is easier to break down into a usable quantity for day to day items. You will have ahard time trading a 1 oz gold coin for a truckload of bread or eggs, but you sure can trade a 1 oz worth around 20 bucks, or even a 1/2 oz coin, for some bread and eggs, or some meat or ammo or what have you, without having to figure out large value amounts like with gold. As said by others, if one is really worried about the future, invest in a patented claim somwhere in gold country. Investing cash now in good tools, or supplies that can be utilized to maintain ones equipment and be more self sufficient, will pay back big dividends over time, and will always have value, whereas a bunch of paper, either in cash money, or stock and bond certificates can become worthless, and will only serve as fire starter if things get real tough.

red oaks lumber · July 29, 2010, 01:14:49 PM

listen to what you guys are saying! acting like its the end of the world. the economy is stalled for awhile.
i for one feel that things are improving slowly, if every one looked at things more posativly things would grow faster.

Cedarman · July 29, 2010, 05:23:05 PM

In my book, the wise person plans for both contingencies.

Raider Bill · July 29, 2010, 05:43:21 PM

Beans, Bullets and bandages..........

sandhills · July 29, 2010, 08:45:04 PM

I never once meant the end of the world was coming, yes the economy is in the dumps but I will say that in my opinion history definetly repeats itself . The nice thing is we're living in the best country on earth, all you have to do is look at those who are fighting for it! I'AM PROUD

Raider Bill · July 29, 2010, 10:17:24 PM

But then look at the fools that are running it....into the ground. :'(

sandhills · July 30, 2010, 01:28:03 AM

No arguement here

Carpenter · July 30, 2010, 06:48:42 AM

The value of gold and silver both is very stable. An ounce of gold is always worth an ounce of gold and an ounce of silver is worth a dollar. I couldn't find the dictionary this morning, but the way it was explained to me is that when we were on the silver standard, pre 1963 or 64 that the dollars were silver and the paper money said silver exchange note on it. So all of the money either was gold and silver (or copper or nickel, which has value as well) was backed by gold and silver in fort knox. All of the gold and silver was supposed to add up to all of the goods and services available, and thus it should have been a relatively stable economy. I can't speak from experience of course, but I know several older people. Of course the price of goods would still vary some due to supply and demand at the time. What you are seeing now with the price of gold is the devaluation of our paper money.