Gold Investment

I've seen this ad enough times around now, so I thought I might start a discussion on it. I'm curious to hear informative thoughts on it.

What's the value of investing in gold? Is it a good idea or not?

That bubble is gonna pop.

But if you want to put a little in gold why not.

The whole thing? Lol no.

edited 17th Sep '11 3:28:48 PM by Thorn14

Bad idea in the 5 year term. There's a serious bubble building up in the gold markets and when it breaks (and it will) it's going to break harder than any bubble or economic upturn since the Second World War.

Gold prices fluctuate with economic stability. The more stable the markets, the less gold costs, worse markets cause gold to cost/be worth more. Its a hugely bad idea to invest in gold right now, with markets which are doing badly and the aforementioned bubble.

And avoid Cash 4 Gold at all costs. Its a scam.

Right now? Absolutely not. The prices are much too high.

If one had enough money to do this without contracting debts, perhaps it could make sense to buy housing now that the prices are relatively low, instead — I'm mostly thinking in areas a little far from the city, where the prices are cheaper.

Buy low, sell high - this is the wrong end of the boom/bust cycle to be buying, that's for sure.

Yes, it's the wrong time to be buying.

It's good to have some gold reserves as a rock of stability, but it's not going to be a worthwhile investment in the long term. It's a bubble and it's going to burst. Now is the time to be selling reserves if you want to make a profit. People are arguably gullible morons for buying into it.

Gold is generally a worthy capital asset in retaining its value. Yet its monetary value at the moment is vastly inflated by peoples' assumptions that it will keep increasing in value forever.

edited 20th Sep '11 4:24:37 PM by Shichibukai

The average idiot doesnt understand a bubble when they see it. especially with Gold since theyre taken in with the ridiculous populist sentiment that Gold has some sort of inherent worth the dollar doesnt

It's good for locking away in a safe or vault as insurance against currency destabilisation or worse. And also for bubbles such as this. However, when everyone gets the same idea and its price becomes vastly inflated, it somewhat loses its effectiveness as insurance. If everyone has their own hoard of solid gold, what's the point in calling it a precious or rare metal?

edited 20th Sep '11 4:35:46 PM by Shichibukai

For two reasons. One is, so many people buy the myths, nobody is around to explain it (I was certainly surprised, although it immediately makes sense to me upon elaboration) and two, gold is seen as "eternal," as if it will never lose value.

When the government has vaults full of the stuff people get the wrong idea and think economics don't apply if something is shiny enough...

Exactly. It defies all economic common sense.

The cash 4 gold scammers are laughing all the way to the bank.

Is there any reasonable prediction of when the bubble will burst?

edited 20th Sep '11 4:38:36 PM by Shichibukai

One argument in favor of gold is that its supply is more limited. It's not just something you can fabricate for almost no cost. You need actual gold to make gold currency.

Complex economics aside, if you think about it, it seems obvious to buy it when the cost is low, and sell when the cost is high, so that you get more money in the long run. The issue is, who is going to buy it when it's costly? That's the part I don't get. Whoever buys it will have to find another person that will give you profit before the price declines again.

Edit: I suppose I'll leave a link before I leave for now. I haven't fully read it, but I thought I would show it and read it when I return. The comments bring up some in-depth economic arguments.

http://thepoliticsofdebt.com/2007/12/02/the-myth-of-gold-as-inflation-hedge/

edited 20th Sep '11 4:59:05 PM by abstractematics

I should think that there are easier things to exploit in the "buy-sell low-high" dichotomy...

I found an interesting article about this...

Gold: Bubble or Not?

I'm with Major Tom. Gold is a bubble.

Schmuck Bait pure and simple. People like Glenn Beck are pushing for people to shift their savings into gold because now is the time to sell.

I agree for once with Tom as well, but thats because anyone who doesnt see the gold bubble a mile off learned absolutely nothing from the last two recent bubbles.

Agreed. It's a bubble. Some of the gold sellers try to convince people of the myth that gold is going to be useful in a post-crash economy. Ridiculous. Gold is only valuable as money in a stable economy when there is plenty of stuff to buy and sell.

It's not even that great of a hedge. What do you do when you run out of money? Sell the gold for cash. It doesn't produce anything or contribute to the economy in any way. If you want something totally safe, put your money in the bank or buy Savings Bonds.

Gold cant be a bubble. It is different from everything else.

There are many many reasons. Should the price correct (which it will) it will recover its price in a couple of years.

The thing about Gold is that, unless alchemy happens to be something other than utter bullshit, we will always have the same quantity while demand rises do to 3 factors:

1. More population i.e more demand for the same amount of gold

2. Use in electronics which drives demand up

3. The fact that ppl trusth mother nature more than the federal reserve.

Like... ppl who dont like Glenn Beck are betting against gold and that is just the same as ppl who bet against global warming because they dont like Al Gore. Gold is one of the few things we can be almost absoluteley certain about.

edited 21st Sep '11 9:15:08 AM by Baff

Certain that its a useless metal, that is

Well, not entirely useless — it has its uses, as it is a good electric conductor which is malleable and does not oxidize.

But its price is much too high, I agree.

Gold is a hedge against inflation. If the government were to cause severe inflation, you would not want to be caught holding cash. However gold is in a bubble and real estate is likely bottoming out.

Good real estate is still a worthwhile investment, I think. But you need to know the territory well, and you need to have the time to take care of it, and, most of all, you need to have enough money to invest — it's not the sort of thing in which you can put your 10,000 $ (this is more or less a random amount, equivalent to what a young person with a pretty good — but not exceptionally well-paying — job can save in a few years, if he or she knows how to save) towards.

Well, not unless taking loans, and if you have enough money to eat until tomorrow evening you should not take loans, no matter what.*

edited 21st Sep '11 10:17:01 AM by Carciofus

By the same token, Gold's problem is that unless theres a standardized rate of exchange for the stuff based on dolla5rs or some other currency, you're left to the mercy of whoever you trade with

If that is the case, can we expand this discussion into talk of what else there is right now that IS a good investment? particularly in the 5-year term?