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Invest in Gold?

Wake

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I'm quite young; only 22. However, I have a penchant for planning for the future and dealing wisely with money by saving and hunting coupons. Truth be told, I want to start investing in gold; buying a good safe, some bars of gold, and having it grow in value over time is what interests me.

I've looked up some websites about gold and savings bond, but those are websites filled with general facts yet void of personal experience. Knowing that there are quite a few knowledgeable people here, I figured someone might have some sort of experience on this issue.

Is it wise to invest in gold, or is it truly just a waste of time and money?
 

Wiseone

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First step is to figure out exactly how much a standard gold bar is worth. Step two is to make a new plan because there's no way you can buy even one gold bar, let alone several.
 

tacomancer

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Given that the price of a gold mapleleaf today is about 1.4k. A gold bar is going to be VERY expensive. You may want to start on ounces instead of lbs.
 

Wake

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True, I'll try to find how much they're worth usually. I erred by stating "bars" when I meant much smaller bars/pieces. I have an amount of money from certain sources, but if I were to start buying smaller bars I'd preferably start off with little. Either that or try the "ee" savings bonds which double after only 30 years. o_O"
 

Guy Incognito

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Is it wise to invest in gold, or is it truly just a waste of time and money?

I don't think buying gold is not a smart idea. The price seems extremely high right now, and I think it is due to an artificial increase in demand. As a good barometer, IIRC, the ratio of silver to gold has historically been at 20:1, now it is at 60:1. This will probably equalize eventually. So I think gold is more likely to go down in the future than up. The appeal of gold is that it won't lose its value it, say, society collapses (but then again, that is not necessarily true).

My opinion is now is a good time to buy silver. I think it is undervalued, and the price of silver has been steadily rising for the past three months. It was at about 19/troy oz in Sept and is now at almost 28/troy oz. As a precious metal investment, I feel silver is the way to go.

But the best way to invest is to follow the standard advice and diversify your portfolio among various mutual funds and treasury bonds, international bonds, etc. Don't ever put all your eggs in one basket.
 

Wiseone

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Didnt you also state in another topic you believe Obama is going to lead the world into World War 3? I think you should be invested in canned foods, bomb shelters, and assault rifles
 

cpwill

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average return on the S&P 500 allowing for inflation and combined annualized growth between 1982 and 2009: 7.98%.

if you want a chart that doesn't account for inflation; but lines up the various investments well enough: here. Gold averages (before inflation) about 5.36% since 1972. Stocks average (again, before inflation) about 11.92%



SO: if you were to assume general averages, and invest 10,000 in Gold v 10,000 in stocks; at the end of 30 years your 10K in Gold would be worth $49,749.60. your stocks would be worth $351,054.67 (all before inflation, if we assume a 3% inflation those numbers drop in real dollars back to $20,285.19 and $143,837.99 respectively)




Gold can be good as a hedge against severe inflation; it (like all volatile commodoties) can be okay if you think you can time the market as she swings. but if you are looking for a 30 year + investment, you need to keep (again, only my untutored position) only a small percentage of your wealth in gold.

unless you forsee some kind of epic shock wave coming; at that point gold serves as a secondary currency. assuming the government doesn't just sieze it all again.
 

Guy Incognito

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Didnt you also state in another topic you believe Obama is going to lead the world into World War 3? I think you should be invested in canned foods, bomb shelters, and assault rifles

Are you addressing that to me? I never said anything of the sort.
 

Wake

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Didnt you also state in another topic you believe Obama is going to lead the world into World War 3? I think you should be invested in canned foods, bomb shelters, and assault rifles

At the end of the OP of that thread. I stated after a red "*" that my cousin had sat down and wrote that under my account with my permission. I'm trying to interest him in debating and, well, thinking; I figured this website was---and is---perfect for that.

___

Silver sounds really good, too. Honestly, I'm extremely new to the world of investing and finances.
 

Thorgasm

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Gold won't be worth spit in the Apocolypse. :mrgreen:
 

Simon W. Moon

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This is a piss poor time to buy gold.

Buy it when it's cheap. This is a good time to sell gold.

Now is a good time to buy American stocks of financially sound companies which are doing a good job at whatever it is that they do.
Brazil is another good country. If you can do your research and find a Brazilian company that is financially sound and is doing a good job at whatever it is that they do that would also be another good investment.

All IMHO and at your own risk.
 

washunut

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I'm quite young; only 22. However, I have a penchant for planning for the future and dealing wisely with money by saving and hunting coupons. Truth be told, I want to start investing in gold; buying a good safe, some bars of gold, and having it grow in value over time is what interests me.

I've looked up some websites about gold and savings bond, but those are websites filled with general facts yet void of personal experience. Knowing that there are quite a few knowledgeable people here, I figured someone might have some sort of experience on this issue.

Is it wise to invest in gold, or is it truly just a waste of time and money?

Since no one has a crystal ball you may want to think about an asset allocation startegy. That is a mix of stocks, bonds, precious metals. Many people talk about precious metals being something like 5-10% of your total portfolio. At an age of 22 it would probably call for 70% stocks and 20-30% fixed income.
 

Missed AB

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I'm quite young; only 22. However, I have a penchant for planning for the future... I want to start investing in gold; buying a good safe, some bars of gold, and having it grow in value over time is what interests me.
First, it is important to know why do you want to invest in gold? If you are fearing the end of the times, and you want to make sure you have some bullion to escape the country and pay people off... Then silver and gold are options for you. Silver is at a historic low vs the price of gold. This may signal that gold is in a bubble, or that silver is just lagging...

If you want to invest in gold, as a store of value, and you are not worried about the end of times, then you could invest in an ETF: GLD. Every share is about 1/10th of an ounce. It is easy to exchange, just go to your investment house dot com open an account transfer funds and buy and sell as you desire. Where as gold bars requires you to find someone willing to pay you for your gold, typically leading to diminshed returns on your end.

If you are looking for appreciation over time, gold is a horrible choice. Gold will always be worth gold and will never make you rich. The cheaper your currency becomes, the more that SEEMS to be worth, but it's still only worth one ounce of gold. If one ounce of gold will buy you $1000 worth of stuff in today's world, in 30 years it may be able to buy you $30,000 worth of stuff, but that still may only be a nice TV. It is not a historically good performer for making a profit as it is known as a "storage of value".

If you are afraid that the currency of the US is being devalued and inflation will make saving cash difficult, there are a lot of options. TIPS are inflation protected securities by the US government. You could invest your money in an ETF of a currency of your choice such as the swiss frank or english stearling. I would shy away from the EU...

There are plain old stocks that are very attractive. The nice thing about stocks is you own part of a company. If you buy IBM stock, and in tomorrows world the dollar is wroth less, IBM is worth more as exports boost earnings and the company is still valued in US dollar terms so an inflation of it's assetts also inflates your assets...


I've looked up some websites about gold and savings bond, but those are websites filled with general facts yet void of personal experience. Knowing that there are quite a few knowledgeable people here, I figured someone might have some sort of experience on this issue.
Gold and most commodities are very volitile. This means the price is subject to high price flucuations. Look at a 30 year gold chart and you will see in the early 80's gold was around 900 an ounce, and in 2 years it was around 300 an ounce. Check out the history on why this happened and you'll realize that people were anxious that the US dollar would lose value because of the recent movement off the gold standard 70's and increased debt in a recession, potential of war US vs USSR, a housing slump... Well you can see how things are setting up in a similar way today.

There is no game of just winners, and there is nothing which only goes up in value.

Is it wise to invest in gold, or is it truly just a waste of time and money?
That is for you to decide. But if you are 22, and looking to do more than maintain value, I personally do not feel that is a sound investment strategy at your age and wealth. This is not to say a diversified portfolio should not have some precious metals in it, but for a 22 year old to use gold as the primary investment, is most certainly a mistake.
 
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