gold: good investment?
Discussion
Gold has over doubled in value and silver has been phenomenal tripiling in value since 2001. Gold is set to break the $1000 mark this year..The rise is showing no sign of stopping either with the weakening dollar and global economic climate bringing more optimism to gold speculators. So what do you think? have we missed the boat or is there a mint to be made still?
The train has left the station at some speed.....
A couple of chaps I know of from le marche set up www.hindecapital.com lateish last year,,seems to be doing ok....agree on $1000+ valuation,,$1150 is much discussed level, but as we get nearer the higher levels it may not be a smooth ride and any improvement in the US $ from economic recovery could have a -ve impact on gold prices...have fun!
A couple of chaps I know of from le marche set up www.hindecapital.com lateish last year,,seems to be doing ok....agree on $1000+ valuation,,$1150 is much discussed level, but as we get nearer the higher levels it may not be a smooth ride and any improvement in the US $ from economic recovery could have a -ve impact on gold prices...have fun!
I think there is still some good value in gold.
Firstly, as the UK is lagging the US economy by about 9 months, I believe house prices drops and recession are fairly inevitable here (especially as with a record budget deficit there is no scope for tax cuts in the UK). This will reduce Sterling's value. As gold is priced in US$, it is a good way of betting on Sterling weakening against the $. Long term, this is a very good bet.
Secondly. Only about $80bn dollars of the expected $300bn of subprime losses have been declared. As more banks declare losses and more pressure comes on the bond insurers, bad news will lead to gold prices keep increasing. Most economist believe gold will break through $1100 by year end.
Thirdly, in the UK and US, the consumer debt crisis has not really hit home yet. Already Amex and a couple of other card issuers in the US have announce profit warnings. As credit card defaults start and hammer the banks again, gold will benefit.
I'm pretty bearish about the UK economy, equities and housing market generally at moment, but based on the above factors, I think holding gold for the next year or so if you are UK based still represents the chance of making up to a 20% return based on today's prices and GBP/USD exchange rate, with very little downside risk.
All of this is in my humble opinion. I think there is more money to be made long term by staying in cash and bottom picking equities and uk property as a recession bites (especially as gold has no yield) - but as a balanced portfolio, I'm holding about 7.5% of my portfolio in physical gold at the moment.
Firstly, as the UK is lagging the US economy by about 9 months, I believe house prices drops and recession are fairly inevitable here (especially as with a record budget deficit there is no scope for tax cuts in the UK). This will reduce Sterling's value. As gold is priced in US$, it is a good way of betting on Sterling weakening against the $. Long term, this is a very good bet.
Secondly. Only about $80bn dollars of the expected $300bn of subprime losses have been declared. As more banks declare losses and more pressure comes on the bond insurers, bad news will lead to gold prices keep increasing. Most economist believe gold will break through $1100 by year end.
Thirdly, in the UK and US, the consumer debt crisis has not really hit home yet. Already Amex and a couple of other card issuers in the US have announce profit warnings. As credit card defaults start and hammer the banks again, gold will benefit.
I'm pretty bearish about the UK economy, equities and housing market generally at moment, but based on the above factors, I think holding gold for the next year or so if you are UK based still represents the chance of making up to a 20% return based on today's prices and GBP/USD exchange rate, with very little downside risk.
All of this is in my humble opinion. I think there is more money to be made long term by staying in cash and bottom picking equities and uk property as a recession bites (especially as gold has no yield) - but as a balanced portfolio, I'm holding about 7.5% of my portfolio in physical gold at the moment.
Physical is nice - something very James Bond/Lethal Weapon 2 ish about holding Krugerrand and bullion :-D (if you have security/safety deposit box etc.)
When I picked mine up, I had the opportunity to hold a 1kg Gold bar. At the time, that was worth around £15K . Krugerrand are easier to trade though as the spread for trading physical gold is about 6 to 7% (in smallish quantities). With large denomination bars it means you have to trade the whole bar, rather than Oz's at a time.
When I picked mine up, I had the opportunity to hold a 1kg Gold bar. At the time, that was worth around £15K . Krugerrand are easier to trade though as the spread for trading physical gold is about 6 to 7% (in smallish quantities). With large denomination bars it means you have to trade the whole bar, rather than Oz's at a time.
Edited by 3doorPete on Tuesday 5th February 15:40
3doorPete said:
Physical is nice - something very James Bond/Lethal Weapon 2 ish about holding Krugerrand and bullion :-D (if you have security/safety deposit box etc.)
When I picked mine up, I had the opportunity to hold a 1kg Gold bar. At the time, that was worth around £15K . Krugerrand are easier to trade though as the spread for trading physical gold is about 6 to 7% (in smallish quantities). With large denomination bars it means you have to trade the whole bar, rather than Oz's at a time.
guys and 3door pete what do you think of mining shares? came across this company who are mining gold in russia? http://www.peterhambro.com/aboutus.htm or am i better off with buying bullion and having it stored Baird and Co charge £100 per annum for storage fully storage and then 2% off market value when you come to sell http://www.goldline.co.uk/investmentProductsPage.p...When I picked mine up, I had the opportunity to hold a 1kg Gold bar. At the time, that was worth around £15K . Krugerrand are easier to trade though as the spread for trading physical gold is about 6 to 7% (in smallish quantities). With large denomination bars it means you have to trade the whole bar, rather than Oz's at a time.
Edited by 3doorPete on Tuesday 5th February 15:40
Trust someone else with your gold? Storage charges? Pah! Out to the garden with a spade and dig a nice deep hole for it. Much more traditional. 
By the way, what's the Krugerrand at now in ££££? I bought half a dozen some years back at around £205 - £215 and salted them away. Never bothered much about them since, was just wondering now since I saw this topic.
By the way, what's the Krugerrand at now in ££££? I bought half a dozen some years back at around £205 - £215 and salted them away. Never bothered much about them since, was just wondering now since I saw this topic.
Krugerrand are trading at about £450 if you are selling at the moment.
I don't pay for my storage solution but only because I have a fairly unique situation that I don't want to go into!! If you are buying a lot of gold, it is obviously prudent to lock it up securely and insure it!
You can't really beat MoneyWeek when it comes to market sector tips and views I reckon. Its editor Merryn Somerset-Webb is a fairly common guest on financial programs and BBC at the LSE with Dermot (including this morning), and they write for the Sunday Times money supplement. Their recommendation is to take profit on big miners at the moment, but reckons there is some value in the junior miners areas.
Personally, with my bearish view of an impending global recession, I'm keeping away from miners given that if demand for goods drop in the West, China's economy will slow it's rate of growth and stock brokers will sell the hell out of miners.
There's been talk of high yield portfolios (HYP's) on here before, which is how my portfolio is looking for what shares I have left.
I don't pay for my storage solution but only because I have a fairly unique situation that I don't want to go into!! If you are buying a lot of gold, it is obviously prudent to lock it up securely and insure it!
You can't really beat MoneyWeek when it comes to market sector tips and views I reckon. Its editor Merryn Somerset-Webb is a fairly common guest on financial programs and BBC at the LSE with Dermot (including this morning), and they write for the Sunday Times money supplement. Their recommendation is to take profit on big miners at the moment, but reckons there is some value in the junior miners areas.
Personally, with my bearish view of an impending global recession, I'm keeping away from miners given that if demand for goods drop in the West, China's economy will slow it's rate of growth and stock brokers will sell the hell out of miners.
There's been talk of high yield portfolios (HYP's) on here before, which is how my portfolio is looking for what shares I have left.
Edited by 3doorPete on Tuesday 5th February 18:52
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