Discussion
I invested a tiny amount in Gold via Bullionvault and had forgotten about it until this thread!!
28/08/2012 - invested the huge amount of £19.46
13/04/2018 - if I withdraw it today, I can get £39.74
what I'm genuinely confused at however is the fact that I bought it at a 'peak' $57,059 USD/kg, and now the price is $43,109 USD/kg
therefore I think I'm well qualified to say I have absolutely no idea what I'm doing.
28/08/2012 - invested the huge amount of £19.46
13/04/2018 - if I withdraw it today, I can get £39.74
what I'm genuinely confused at however is the fact that I bought it at a 'peak' $57,059 USD/kg, and now the price is $43,109 USD/kg
therefore I think I'm well qualified to say I have absolutely no idea what I'm doing.
clubsport said:
Basically, for the ten year period after 2007 (incorporating financial crash) Gold bullion prices advanced by 80.6%.
However the total return performance of gold funds over the period ranged from -44.75 to +76.1%.
.
Most gold funds invest into shares in mining companies not gold bullion. Reason is that it a form of leveraging the gold (an increase in gold prices can make an unprofitable mine suddenly profitable). Equally, for a mine operating at the margin of profitability, a small drop in price can have a catastrophic effect. So the volatility is magnified and it is just one more equity fund that pays dividends and can go bust. However the total return performance of gold funds over the period ranged from -44.75 to +76.1%.
.
I think sometimes those close to investing the stock market etc are very (have to be) results and efficiency/ return focused. In their (the current) world gold has few/no upsides, fair enough but lots of people hoard or collect stuff or even make normal investments but they get forgotten about.
I'm sure lots of people have died with worthless share certificates, or a stash of old tenners that are no longer legal tender etc not everyone is investment savvy or diligent all their life. Obviously makes sense to monitor things and move in and out of various stocks even cash etc then you'll out perform gold barring Armageddon!, but if you know that you won't necessarily keep track of this then gold historically can be guaranteed to be worth a substantial amount per ounce.
I think that's it for me, not an investment vehicle, but like having a Ming vase or painting it's worth a chunk of cash, with gold always having a buyer and likely a higher price in difficult economic times when the above two examples might struggle more.
It always raises an interesting point on wealth and what things, physical, promissory or almost virtual hold more value at various times.
I'm sure lots of people have died with worthless share certificates, or a stash of old tenners that are no longer legal tender etc not everyone is investment savvy or diligent all their life. Obviously makes sense to monitor things and move in and out of various stocks even cash etc then you'll out perform gold barring Armageddon!, but if you know that you won't necessarily keep track of this then gold historically can be guaranteed to be worth a substantial amount per ounce.
I think that's it for me, not an investment vehicle, but like having a Ming vase or painting it's worth a chunk of cash, with gold always having a buyer and likely a higher price in difficult economic times when the above two examples might struggle more.
It always raises an interesting point on wealth and what things, physical, promissory or almost virtual hold more value at various times.
ikarl said:
I invested a tiny amount in Gold via Bullionvault and had forgotten about it until this thread!!
28/08/2012 - invested the huge amount of £19.46
13/04/2018 - if I withdraw it today, I can get £39.74
what I'm genuinely confused at however is the fact that I bought it at a 'peak' $57,059 USD/kg, and now the price is $43,109 USD/kg
therefore I think I'm well qualified to say I have absolutely no idea what I'm doing.
Brexit FX win. 28/08/2012 - invested the huge amount of £19.46
13/04/2018 - if I withdraw it today, I can get £39.74
what I'm genuinely confused at however is the fact that I bought it at a 'peak' $57,059 USD/kg, and now the price is $43,109 USD/kg
therefore I think I'm well qualified to say I have absolutely no idea what I'm doing.
Ayahuasca said:
DonkeyApple said:
Why would the FX thing not be an issue to you?
It doesn't concern me. I have GBP and USD assets and income. One goes up, one goes down. Net effect is not much difference either way. I do not live in the UK by the way. 
Ayahuasca said:
Most gold funds invest into shares in mining companies not gold bullion. Reason is that it a form of leveraging the gold (an increase in gold prices can make an unprofitable mine suddenly profitable). Equally, for a mine operating at the margin of profitability, a small drop in price can have a catastrophic effect. So the volatility is magnified and it is just one more equity fund that pays dividends and can go bust.
That explains part of the problem, I'm not sure about "most funds", the paper I mentioned goes into more detail. You need to consider hedging and attribution to come to a rounded conclusion.DonkeyApple said:
Ayahuasca said:
DonkeyApple said:
Why would the FX thing not be an issue to you?
It doesn't concern me. I have GBP and USD assets and income. One goes up, one goes down. Net effect is not much difference either way. I do not live in the UK by the way. Short term trading is not what Donkey does from memory. The point is the stock market will grow much more than gold over the same amount of time in general. Gold has had a few big hikes, otherwise it is often static.
Your argument seems to be "gold is simple, so good for people who don't know what they're doing". The reality is it isn't, it's just that you buy gold for one price, and sell it for probably a pretty similar price to buying it. Therefore you don't see the lost money that you missed out on by not investing in shares.
It's a bit like saying you should just put money into a savings account at 1.5% interest, as the value will grow. The money will go up, but it will be worth less in reality.
Your argument seems to be "gold is simple, so good for people who don't know what they're doing". The reality is it isn't, it's just that you buy gold for one price, and sell it for probably a pretty similar price to buying it. Therefore you don't see the lost money that you missed out on by not investing in shares.
It's a bit like saying you should just put money into a savings account at 1.5% interest, as the value will grow. The money will go up, but it will be worth less in reality.
Ayahuasca said:
The contra posts are laregely cherry picking chart dates that back their argument; anyone can do that and it is a fruitless discussion. What about my fag packet calculations on the purchasing power of gold in the 1800s compared to now, and its purchasing power in Tudor times compared to now? I think we are approaching this subject from diametrically different backgrounds. You are approaching this from the POV of a short term investor with capital to invest and a world of analytical tools at their fingertips. I am coming at it from the POV of financial planning where the objective is to convert a proportion of an unsophisticated USD based investor's income over a period of years into something that has a value. It is a fact that most people do not have enough savings and so existing solutions - no matter how brilliant they may be - are failing them. It is also a fact that the vast majority of long term savings plans are stopped a long time before their term, and the investor pays heavy penalties for this. One of the main reasons it is stopped is that the investors do not understand what they were sold, or why they should keep it. Everyone can understand gold.
"Everyone can understand gold." Apart from you, apparently.You completely ignored my last response, as it proved you were wrong at every level.
You are now shifting the discussion away from your previous position as it has been shown to be false.
That you consider an unsophisticated investor to be a suitable candidate for currency fluctuations/trading is telling,
Just give up or respond. I am sorry to be bothering you with facts.
Ayahuasca said:
The contra posts are laregely cherry picking chart dates that back their argument; anyone can do that and it is a fruitless discussion. What about my fag packet calculations on the purchasing power of gold in the 1800s compared to now, and its purchasing power in Tudor times compared to now? I think we are approaching this subject from diametrically different backgrounds. You are approaching this from the POV of a short term investor with capital to invest and a world of analytical tools at their fingertips. I am coming at it from the POV of financial planning where the objective is to convert a proportion of an unsophisticated USD based investor's income over a period of years into something that has a value. It is a fact that most people do not have enough savings and so existing solutions - no matter how brilliant they may be - are failing them. It is also a fact that the vast majority of long term savings plans are stopped a long time before their term, and the investor pays heavy penalties for this. One of the main reasons it is stopped is that the investors do not understand what they were sold, or why they should keep it. Everyone can understand gold.
I’m not approaching it from that angle at all. I can’t even fathom why you would make such a wild claim. There has been no talk of trading. We have been discussing investment and suitability. But you have declined to supply any practical evidence to support your claims, ignored all data and now twice tried to make up things that I am alledged to have said which are manifestly untrue. You have claimed text-book stuff about inflation hedging, wealth protection, ease of comprehension. All theee have been disproved but at no point have you attempted to defend your claims by any means other than trying to distort what others have said.
I’m very happy to have my mind changed that gold is not remotely suitable for either unsophisticated investors or the average U.K. income earner but you need to supply actual evidence and date to support your views that it is.
It does seem massively volatile. 40% drop in a month or so seems common.
Mentioned before but https://www.portfoliovisualizer.com lets you backtest scenarios and it appears very easy to lose money.
Mentioned before but https://www.portfoliovisualizer.com lets you backtest scenarios and it appears very easy to lose money.
DonkeyApple said:
I’m not approaching it from that angle at all. I can’t even fathom why you would make such a wild claim. There has been no talk of trading. We have been discussing investment and suitability. But you have declined to supply any practical evidence to support your claims, ignored all data and now twice tried to make up things that I am alledged to have said which are manifestly untrue.
You have claimed text-book stuff about inflation hedging, wealth protection, ease of comprehension. All theee have been disproved but at no point have you attempted to defend your claims by any means other than trying to distort what others have said.
I’m very happy to have my mind changed that gold is not remotely suitable for either unsophisticated investors or the average U.K. income earner but you need to supply actual evidence and date to support your views that it is.
Isn't he just saying in the very long run Gold preserves wealth? simple as that? It's physical, it doesn't corrode, it has since it's discovery been prized by the wealthy, was used as currency or backed currencies until very recently. So you can argue it's over priced, or perhaps a there are better physical things to own but its super super safe (if you keep it safe and in your possession) hence why countries have stocks? You have claimed text-book stuff about inflation hedging, wealth protection, ease of comprehension. All theee have been disproved but at no point have you attempted to defend your claims by any means other than trying to distort what others have said.
I’m very happy to have my mind changed that gold is not remotely suitable for either unsophisticated investors or the average U.K. income earner but you need to supply actual evidence and date to support your views that it is.
Scootersp said:
Isn't he just saying in the very long run Gold preserves wealth? simple as that? It's physical, it doesn't corrode, it has since it's discovery been prized by the wealthy, was used as currency or backed currencies until very recently. So you can argue it's over priced, or perhaps a there are better physical things to own but its super super safe (if you keep it safe and in your possession) hence why countries have stocks?
That wasn’t what was being argued though. It was being proposed that it was a good means to match inflation, which it Isn’t. And suitable for the unsophisticated investor ehichbit isn’t and suitable for people of average U.K. income, which again it isn’t. Some central banks hold some reserves because firstly it is only a tiny fraction of the country’s wealth so the risk is infinitesimal, it is used in certain cross border payment transactions between certain countries as well as being used as security in certain national transactions. Plus it is kept secure enough for loss risk to be almost immeasurable and even when in transit it is protected and insured. Central banks also have investment horizons far longer than people on average.
Gary the shop keeper in Stevenage, as much as he may dream, is not a well diversified central bank executing enormous international transactions.
. Gary is busy making sure he is tax efficient in his income and business, busy ensuring he has the best deals for his mortgage and focussed on building an appropriate pension so that when he retires he is able to maintain his standard of living. Gary really doesn’t have the time, money or expertise to be farting about with costly foreign exchange transactions. DonkeyApple said:
It certainly seems like it. All the same traits. Example of one person who may have made money, claims that aren’t strictly correct and then multiple postings on gold all the time.
Wasn’t it about 5 years ago when gold was at $1300 that we had the same discussion and I explained that gold wouldn’t be going anywhere for a long time? I believe I mentioned that it would require QE to end and the BRICS to increase reserves in the open market. Nothing else really matters. QE is tapering so you’ve seen a recovery from 2016 but any signs of China or Russia buying?
But all of that is moot as nearly all the time retail investors are confusing gold with cable and in fact just trading cable via the incredibly expensive medium of gold. Pull up the 5 year charts for gold in both USD and GBP and feel free to explain why for someone who is based in GBP trading gold is a credible strategy.
Also, how does it store wealth for the average U.K. individual?
How does it match inflation or protect against it?
Ever since 2008 we’ve had endless websites, charlatans, scammers, liars, thieves and scaremongers trying to convince the average retail investor to take long side exposure in gold. But for what exact reason? Genuinely, list the credible benefits to the average person in the U.K. in taking on currency exposure and holding a product that has no use to them and no yield, an opportunity cost.
The thing about gold is that it serves zero credible investment opportunity for the average U.K. investor or individual. In fact it is worse than that as the vast majority lose wealth through holding it.
It spikes in value every second or third decade due to economic fears. If you just happen to be holding at the start of one of those events then you might make a profit but at all other times it is an FX play over Cable and a very expensive and inefficient way to do so.
It’s an asset that only has credible viability to the very wealthy, those who invest over multiple major currencies and those whose wealth vastly exceeds any protections offered by the jurisdictions that they hold funds within. So, if you base your wealth out of Cayman and have a blended portfolio of assets in the US, UK, EU and the BRICS then a store of gold has great credibility and value and you can offset its cost by using it as part of your currency hedging program. If you’re just a normal, average salary earner in the UK, sitting in an average house, living an average life then paying wide costs to buy something that costs you to keep, ignoring that it’s a currency trade, ignoring the risks of storage, ignoring the drivers for the price then unless you have a cultural legacy of ‘flight’ such as the Jews or Indians there is genuinely no economic logic to buying gold. It’s really just a bit of fun to have a few dozen krugerands and sovereigns piled in a metal box in the floor to be opened and pretend to be Scrooge McDuck for a moment.
So sorry to bring this up after months but I'm looking at the global financial climate and the bit in bold in DA's post above is of prime interest now. It appears that Russia and China are buying gold by the tonne!! Many nations are repatriating their stored reserves from the US in order to store domestically - but the 'rub' here is that the repatriation deals are over time-spans of YEARS, which does, to me, seem strange. WHy would a few tonnes of metal not just be surveyed, assayed, containerised and popped in the post?? RMSD, of course!Wasn’t it about 5 years ago when gold was at $1300 that we had the same discussion and I explained that gold wouldn’t be going anywhere for a long time? I believe I mentioned that it would require QE to end and the BRICS to increase reserves in the open market. Nothing else really matters. QE is tapering so you’ve seen a recovery from 2016 but any signs of China or Russia buying?
But all of that is moot as nearly all the time retail investors are confusing gold with cable and in fact just trading cable via the incredibly expensive medium of gold. Pull up the 5 year charts for gold in both USD and GBP and feel free to explain why for someone who is based in GBP trading gold is a credible strategy.
Also, how does it store wealth for the average U.K. individual?
How does it match inflation or protect against it?
Ever since 2008 we’ve had endless websites, charlatans, scammers, liars, thieves and scaremongers trying to convince the average retail investor to take long side exposure in gold. But for what exact reason? Genuinely, list the credible benefits to the average person in the U.K. in taking on currency exposure and holding a product that has no use to them and no yield, an opportunity cost.
The thing about gold is that it serves zero credible investment opportunity for the average U.K. investor or individual. In fact it is worse than that as the vast majority lose wealth through holding it.
It spikes in value every second or third decade due to economic fears. If you just happen to be holding at the start of one of those events then you might make a profit but at all other times it is an FX play over Cable and a very expensive and inefficient way to do so.
It’s an asset that only has credible viability to the very wealthy, those who invest over multiple major currencies and those whose wealth vastly exceeds any protections offered by the jurisdictions that they hold funds within. So, if you base your wealth out of Cayman and have a blended portfolio of assets in the US, UK, EU and the BRICS then a store of gold has great credibility and value and you can offset its cost by using it as part of your currency hedging program. If you’re just a normal, average salary earner in the UK, sitting in an average house, living an average life then paying wide costs to buy something that costs you to keep, ignoring that it’s a currency trade, ignoring the risks of storage, ignoring the drivers for the price then unless you have a cultural legacy of ‘flight’ such as the Jews or Indians there is genuinely no economic logic to buying gold. It’s really just a bit of fun to have a few dozen krugerands and sovereigns piled in a metal box in the floor to be opened and pretend to be Scrooge McDuck for a moment.
DA, always valued your opinion on the subject, but I'm wondering if the market has or is changing now???
https://www.ft.com/content/4edf00ee-a43c-11e7-8d56...
http://therealasset.co.uk/repatriating-gold-bullio...
http://heartlandpreciousmetals.com/russia-and-chin...
http://uk.businessinsider.com/russia-sells-us-trea...
Now, I know some of the links are not exactly FT-worthy, but is something really going on? If gold is truly valueless, WTF is happening?
Also, a bit 'conspiracy', but according to this: https://www.zerohedge.com/news/2017-08-22/us-treas... the FK gold hasn't been 'counted' since 1953...
Any views??
All the fundamentals are the against it, I believe (no dividend or coupon, costs to insure), but I’m still tempted to have some physical gold.
One of the big reasons for me is the tiny bit of paranoia about a government starting to tax assets. They would likely start with things that are easy to see, houses, ISAs, bank accounts etc, so a few KG of gold could be worthwhile having at that point.
Just as big a reason, though, is that it’d be nice to have a 2kg bar as a paperweight. Working twelve hours a day in finance, and having a big chunk of the resultant wealth visible only as account balances on my broker’s web page is a bit dispiriting. Walking past a heavy, shiny chunk of gold when I come home seems like a nice idea.
One of the big reasons for me is the tiny bit of paranoia about a government starting to tax assets. They would likely start with things that are easy to see, houses, ISAs, bank accounts etc, so a few KG of gold could be worthwhile having at that point.
Just as big a reason, though, is that it’d be nice to have a 2kg bar as a paperweight. Working twelve hours a day in finance, and having a big chunk of the resultant wealth visible only as account balances on my broker’s web page is a bit dispiriting. Walking past a heavy, shiny chunk of gold when I come home seems like a nice idea.
I have a percentage of my holdings in funds that have a percentage of their holdings in gold but overall it's enough to make sod all difference in a financial apocalypse.
I'm also unsure what the benefit is for the average investor holding it, other than when that apocalypse comes you're able to physically hold it.
If I look at putting money into any gold fund it doesn't looks like a sensible use of money because as I understand it the thing that holding physical gold protects you from is the kind of break down that means holding gold in a fund is useless as you couldn't get at it?
Is JP Morgan's "Gold Is Money, Everything Else Is Credit" still accurate?
I'm also unsure what the benefit is for the average investor holding it, other than when that apocalypse comes you're able to physically hold it.
If I look at putting money into any gold fund it doesn't looks like a sensible use of money because as I understand it the thing that holding physical gold protects you from is the kind of break down that means holding gold in a fund is useless as you couldn't get at it?
Is JP Morgan's "Gold Is Money, Everything Else Is Credit" still accurate?
jshell said:
So sorry to bring this up after months but I'm looking at the global financial climate and the bit in bold in DA's post above is of prime interest now. It appears that Russia and China are buying gold by the tonne!! Many nations are repatriating their stored reserves from the US in order to store domestically - but the 'rub' here is that the repatriation deals are over time-spans of YEARS, which does, to me, seem strange. WHy would a few tonnes of metal not just be surveyed, assayed, containerised and popped in the post?? RMSD, of course!
DA, always valued your opinion on the subject, but I'm wondering if the market has or is changing now???
https://www.ft.com/content/4edf00ee-a43c-11e7-8d56...
http://therealasset.co.uk/repatriating-gold-bullio...
http://heartlandpreciousmetals.com/russia-and-chin...
http://uk.businessinsider.com/russia-sells-us-trea...
Now, I know some of the links are not exactly FT-worthy, but is something really going on? If gold is truly valueless, WTF is happening?
Also, a bit 'conspiracy', but according to this: https://www.zerohedge.com/news/2017-08-22/us-treas... the FK gold hasn't been 'counted' since 1953...
Any views??
If you look at the gold charts in all three main currencies, USD, GBP and EUR you can see that the value of gold has fallen steadily since May against all three. Or in fact, more correctly the value of all three currencies have risen against gold. DA, always valued your opinion on the subject, but I'm wondering if the market has or is changing now???
https://www.ft.com/content/4edf00ee-a43c-11e7-8d56...
http://therealasset.co.uk/repatriating-gold-bullio...
http://heartlandpreciousmetals.com/russia-and-chin...
http://uk.businessinsider.com/russia-sells-us-trea...
Now, I know some of the links are not exactly FT-worthy, but is something really going on? If gold is truly valueless, WTF is happening?
Also, a bit 'conspiracy', but according to this: https://www.zerohedge.com/news/2017-08-22/us-treas... the FK gold hasn't been 'counted' since 1953...
Any views??
Money is becoming more valuable for the first time in a decade.
You need to look at gold in relation to your own currency as most of the time any visible change in the price of gold is not anything to do with gold at all but the currency it is priced in and how that has changed.
I still don’t see gold as any form of relevant play compared to what is going on with three of the largest and most important currencies on the planet. The trend that they are in just dwarfs the local activity within the gold supply and demand dynamics at the moment. All gold is doing is offering a visual representation of what is happening to money.
If money is to continue climbing in value then maybe the medium term play is to short a gold etf, take the income and the capital appreciation rather than swapping real money that is climbing in value for a non yielding product that is currently falling?
I still don’t see it’s value for us normal investors beyond ornaments and tart procurement.
DonkeyApple said:
If you look at the gold charts in all three main currencies, USD, GBP and EUR you can see that the value of gold has fallen steadily since May against all three. Or in fact, more correctly the value of all three currencies have risen against gold.
Money is becoming more valuable for the first time in a decade.
Is this because of rising interest rates? Money is becoming more valuable for the first time in a decade.
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