Investing in physical gold

[simonbart]

What are your thoughts on investing in physical gold?

Is hording gold coins just for the tin foil hat boys…or is it good sense to cover all your bases in uncertain times?

[Anonymous]

I used to think it was a really good idea. Now I’m at the point where, if stuff gets that bad that you need actual, physical gold, then you might have other things to worry about that would take precedence.

[Eugene]

it’s a good way to diversify, and it’s an OK way to prop up your self esteem if you have too much money (compared with what people do when they want to feel filthy rich). If I were rich, I’d rather have a stack of pretty gold bullion coins on my desk than a Rolex watch or a designer handbag for my wife. At least gold coins don’t depreciate.

Gold works best if you have a way to hide it from the government. Last time United States were in a major financial crisis (1929-1933), government ended up trying to confiscate all gold held by private citizens. If you had gold in a safe deposit box in your bank, you were screwed.

[tugg49]

I’ve read that if you hold bulk gold you have to make sure the assay certificate is valid. A means of verifying it’s not a painted bar of lead. But what do I know. I’ve got a piano bench full of Iraqi Dinar I bought at 1600 to a buck.

[delicious irony]

>At least gold coins don’t depreciate.

Tell that to the people that bought gold in 1980 🙂

http://www.fullermoney.com/content/2006-04-24/goldinf.png%5Bimg_assist|nid=4781|title=inflation adjusted gold prices|desc=|link=node|align=left|width=466|height=266]

[partypup]

>At least gold coins don’t depreciate.

Tell that to the people that bought gold in 1980 🙂

Nice chart. But if you really want to understand the effects of inflation on the dollar and why you never really lose purchasing power when you hold gold, consider the following:

Gold will buy the same amount of goods today that it did in 1975, because the purchasing power of gold rises or falls to reflect the relative strength (or lack thereof) of the dollar.

In 1975, 100 oz of gold would buy a mid-size care for $3500.

In 2003, 100 oz of gold would buy the same mid-size car for $35,000.

Today, 100 oz of gold will buy the mid-size car PLUS a couple of Rolexes. Granted, it is historically unusual for the purchasing power of gold to be so completely disproportionate to that of the dollar, but hey — that’s what happens when your currency is collapsing.

So even though gold has fallen, for the past two (2) decades, from it’s all time high of $800 oz (which was, incidentally, the last time we faced a near-currency collapse), gold has always bought the same amount of goods in those intervening years. Meaning, whether gold was $50/oz or $250/oz, it always bought the SAME mid-size car.

There aren’t many investments that will give you that kind of security. Scratch that, there aren’t ANY other investments that will give you that kind of security.

[stockstradr]

Tell that to the people that bought gold in 1980 🙂

That is EXACTLY the kind of chart that makes me want to BUY whatever is being charted.

If you don’t git that, you are clueless on investing.

[Eugene]

“Tell that to the people that bought gold in 1980 :)”

What I really meant is – gold coins don’t depreciate simply because you bought them. If you buy a Gucci handbag, or a Rolex watch, or even a diamond necklace, can you sell it back to the same dealer who sold it to you, without significant loss? No you can’t. Even a car will depreciate 10% the moment you drive it off the lot.

If you buy gold bullion coins online at kitco.com or onlygold.com, you can turn around and sell them back and only lose 5% of the price.

[LookoutBelow]

Buy brass and lead instead.

[one_muggle]

I’ve the secret of alchemy.
Send me your brass, lead, or iron and I’ll turn it into the equivalent mass in gold. Right now it costs about $850/oz, but I’m convinced that I can make you money on the volume.

-one muggle

[johnnyre]

Not just gold, but if not mistaken Silver led the charge in 79-80 it ran up to $50 an oz..thanks to the greedy Hunt family.

[Author]

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