Discussion
DonkeyApple said:
Please don’t take this the wrong way as it is my distinct lack of verbal skills that prevent me from find a nice way to say that is is absolutely bonkers and is verging on Freemen of the Land lunacy. 
Gold is a terrible store of wealth for the average salary earner in the U.K. the gold price very clearly does crash just like stock markets. Gold due to its lack of regulation has more scammers operating in it than any regulated instrument. Gold has high transaction costs. The salary stuff is also a very strange argument as for the bulk of average income earners in the U.K. the most significant element of their salary goes firstly on taxation and secondly on housing and finally on pension. Ergo, the primary objective of anyone is to be as tax efficient as possible, to manage their property debt as best as possible and to save enough to create an income when they can no longer earn one from third parties. The average income earner in the U.K. simply does not have spare money to be throwing at wholly innapripriate speculative punts such as gold coins!!
Arguing that any intelligent investor should ignore gold is wholly incorrect. Recognising what type of investor can obtain a return from gold and what that return is is what is important.
^ + 1Gold is a terrible store of wealth for the average salary earner in the U.K. the gold price very clearly does crash just like stock markets. Gold due to its lack of regulation has more scammers operating in it than any regulated instrument. Gold has high transaction costs. The salary stuff is also a very strange argument as for the bulk of average income earners in the U.K. the most significant element of their salary goes firstly on taxation and secondly on housing and finally on pension. Ergo, the primary objective of anyone is to be as tax efficient as possible, to manage their property debt as best as possible and to save enough to create an income when they can no longer earn one from third parties. The average income earner in the U.K. simply does not have spare money to be throwing at wholly innapripriate speculative punts such as gold coins!!
Arguing that any intelligent investor should ignore gold is wholly incorrect. Recognising what type of investor can obtain a return from gold and what that return is is what is important.
What the Donkey said (IMHO).
JulianPH said:
Exactly. Gold is one of the few investments you have to pay every year for the privilege of holding/investing.
Why would you do this? Equities pay YOU for holding them (dividends).
The reason that equities pay you is to compensate you for the risk of losing your money if the company whose stock you own goes bust. No other reason. It is a pure risk:return relationship.Why would you do this? Equities pay YOU for holding them (dividends).
Gold does not carry that risk, ergo, no dividends.
Ayahuasca said:
JulianPH said:
Exactly. Gold is one of the few investments you have to pay every year for the privilege of holding/investing.
Why would you do this? Equities pay YOU for holding them (dividends).
The reason that equities pay you is to compensate you for the risk of losing your money if the company whose stock you own goes bust. No other reason. It is a pure risk:return relationship.Why would you do this? Equities pay YOU for holding them (dividends).
Gold does not carry that risk, ergo, no dividends.
Ayahuasca said:
JulianPH said:
Exactly. Gold is one of the few investments you have to pay every year for the privilege of holding/investing.
Why would you do this? Equities pay YOU for holding them (dividends).
The reason that equities pay you is to compensate you for the risk of losing your money if the company whose stock you own goes bust. No other reason. It is a pure risk:return relationship.Why would you do this? Equities pay YOU for holding them (dividends).
Gold does not carry that risk, ergo, no dividends.
JulianPH said:
Ayahuasca said:
JulianPH said:
Exactly. Gold is one of the few investments you have to pay every year for the privilege of holding/investing.
Why would you do this? Equities pay YOU for holding them (dividends).
The reason that equities pay you is to compensate you for the risk of losing your money if the company whose stock you own goes bust. No other reason. It is a pure risk:return relationship.Why would you do this? Equities pay YOU for holding them (dividends).
Gold does not carry that risk, ergo, no dividends.
Ayahuasca said:
Enlighten me? Gold can fall in value but cannot go bump. Equities can and do. Equities ONLY pay dividends to compensate for the risk of holding them. I don't wish to get into an argument, but you sound like you might need to bone up on investment theory.
And yet the ‘total loss’ scenario for gold is there so how can that be?DonkeyApple said:
Ayahuasca said:
Enlighten me? Gold can fall in value but cannot go bump. Equities can and do. Equities ONLY pay dividends to compensate for the risk of holding them. I don't wish to get into an argument, but you sound like you might need to bone up on investment theory.
And yet the ‘total loss’ scenario for gold is there so how can that be?Ayahuasca said:
I guess you could lose it to theft, fraud, embezzlement, and so on. Is that what you mean? Equally the custodian who looks after your share certificates can embezzle, commit fraud, etc. Less likely, granted. What if the same custodian who looks after your shares looks after your gold?
Surely since the removal of the Gold Standard there is nothing left connecting gold with value other than another person's desire to buy it? Much like any other given object, such as the carrots on my table, or the grass in the garden. Its simple supply and demand. Ayahuasca said:
I guess you could lose it to theft, fraud, embezzlement, and so on. Is that what you mean? Equally the custodian who looks after your share certificates can embezzle, commit fraud, etc. Less likely, granted. What if the same custodian who looks after your shares looks after your gold?
Nominee? Any ideas on how to empty a nominee account of crest held securities? You’d have to create an whole traceable line of transactions and then the target has FSCS protections. So for the average income earner, loss of equity holdings is neither possible nor a financial risk. And how would physical gold be held in the same nominee account as equities? Even at global custodian levels such as at BoNY or State St the two classes can’t be held at the same ‘physical’ location. The point is that the argument that gold cannot go to zero is moot as someone’s gold holding can all too easily go to zero.
I just cannot think of a single credible argument for an average income earner to be pissing about with gold of any form other than a speculative punt when it is on one of its rare spikes upwards. It really is a tool for the poorest people at geopolitical risk and for the very wealthy international investor.
The fact that at the retail investor market level the firms trying to punt it mostly advertise on Channel 5 in the afternoon, clearly targeting the semi senile and non worker is somewhat revealing.
Gold has never 'gone to zero' since the time it started to be used by the ancient Egyptians. Hard to see it losing all value in any of our lifetimes. Unless they start mining asteroids of course.
Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
Ayahuasca said:
Gold has never 'gone to zero' since the time it started to be used by the ancient Egyptians. Hard to see it losing all value in any of our lifetimes. Unless they start mining asteroids of course.
Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
You got it earlier. The price doesn’t have to go to zero for your holding to go to zero. The argument that a personal holding of gold cannot go to zero verses a personal holding in an equity is erroneous. Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
DonkeyApple said:
Ayahuasca said:
Gold has never 'gone to zero' since the time it started to be used by the ancient Egyptians. Hard to see it losing all value in any of our lifetimes. Unless they start mining asteroids of course.
Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
You got it earlier. The price doesn’t have to go to zero for your holding to go to zero. The argument that a personal holding of gold cannot go to zero verses a personal holding in an equity is erroneous. Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
Only one of the assets then is at risk of total loss, and it is not the gold.
Can we agree on that?
Condi said:
Surely since the removal of the Gold Standard there is nothing left connecting gold with value other than another person's desire to buy it? Much like any other given object, such as the carrots on my table, or the grass in the garden. Its simple supply and demand.
It's worth pointing out that gold still forms a substantial proportion of many nation state's forex reserves. It certainly remains an investment asset for governments.Ayahuasca said:
DonkeyApple said:
Ayahuasca said:
Gold has never 'gone to zero' since the time it started to be used by the ancient Egyptians. Hard to see it losing all value in any of our lifetimes. Unless they start mining asteroids of course.
Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
You got it earlier. The price doesn’t have to go to zero for your holding to go to zero. The argument that a personal holding of gold cannot go to zero verses a personal holding in an equity is erroneous. Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
Only one of the assets then is at risk of total loss, and it is not the gold.
Can we agree on that?
DonkeyApple said:
Ayahuasca said:
DonkeyApple said:
Ayahuasca said:
Gold has never 'gone to zero' since the time it started to be used by the ancient Egyptians. Hard to see it losing all value in any of our lifetimes. Unless they start mining asteroids of course.
Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
You got it earlier. The price doesn’t have to go to zero for your holding to go to zero. The argument that a personal holding of gold cannot go to zero verses a personal holding in an equity is erroneous. Companies, however, can - and do - go bust with a total loss of investors' capital on a regular basis.
Only one of the assets then is at risk of total loss, and it is not the gold.
Can we agree on that?
Ayahuasca said:
I see you have at last accepted the concept and we are moving onto practicalities. Good. Though a regulated bullion fund, same as your equities. Except that the only asset the fund buys is gold bullion. Yes there are costs (same as your equity fund), but there is much less risk. And it is much easier for the average unsophisticated investor to understand. Please note that all my argument is based around unsophisticated investors, who have been and are being raped and pillaged by the UK financial services market
Well now I'm intrigued too.I have £1000.
I put it into Fundsmith or Lindsell Train let's say.
or, I put it into a "regulated Bullion fund".
Genuinely, how is that less risky?
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hstewie said:
hstewie said:Ayahuasca said:
I see you have at last accepted the concept and we are moving onto practicalities. Good. Though a regulated bullion fund, same as your equities. Except that the only asset the fund buys is gold bullion. Yes there are costs (same as your equity fund), but there is much less risk. And it is much easier for the average unsophisticated investor to understand. Please note that all my argument is based around unsophisticated investors, who have been and are being raped and pillaged by the UK financial services market
Well now I'm intrigued too.I have £1000.
I put it into Fundsmith or Lindsell Train let's say.
or, I put it into a "regulated Bullion fund".
Genuinely, how is that less risky?
Ayahuasca said:
First off, you are not an unsophisticated investor (they would not be familiar with Fundsmith or Lindsell Train). But if you want a bullion fund they are available. My argument was based around someone saving a percentage of income each month, not a one-off £1,000. For £1,000 I would buy simple gold sovereigns. You could get four of them!
Honestly, I've not heard of a bullion fund, do you just mean an ETF https://www.trustnet.com/factsheets/e/ie1e/ishares... or something like this http://www.castlestonemanagement.com/Resources/Fun... or something else?CAGR of gold seems as volatile as equities using https://www.portfoliovisualizer.com just to play a few scenarios.
Ayahuasca said:
I see you have at last accepted the concept and we are moving onto practicalities. Good. Though a regulated bullion fund, same as your equities. Except that the only asset the fund buys is gold bullion. Yes there are costs (same as your equity fund), but there is much less risk. And it is much easier for the average unsophisticated investor to understand. Please note that all my argument is based around unsophisticated investors, who have been and are being raped and pillaged by the UK financial services market
Why would you even try and twist that and distort the clear fCt that I haven’t actually agreed with anything you’ve put forward as of yet!!!You’re argument makes no sense re the unsophisticated investor. In fact it’s balls out wrong. No one has advocated the use of advisors but if you’re an unsophisticated, UK average income earner just why would you advocate investing in a dollar based instrument that is one of the hardest for a layman to comprehend?
You seem obsessed with the U.K. financial services industry but promoting a punt in a volatile, dollar based, non yielding asset that serves a purpose that no average income earner would ever have a need of is ten times worse as your advice isn’t covered by the FSCS or the ombudsman.
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