Is this a good time to buy gold?
78The case against gold is complicated but I think I can boil this down to few easy to look at angles. First Gold is at an all time high, that should be your first indicator that it is not a good time to buy gold. All the people selling gold now are pushing it and exploiting the stock market situation to sell gold (selling fear). The reality is this, you should buy counter intuitive to what everone else is doing, that is buying stocks right now, because some of the best and most financial stable companies in the world are for sell at rock bottom prices. This is a near once in a lifetime oppurtunity to buy companies at this level (I say near because this typically happens about once every 20 years but most people are only in the portion of their lifetime where they have the money to take advantage of the dip once in a lifetime).
The next point against gold is this. Gold is a standard, a commodity, if you will, it's value really never changes, simply put gold is what gold is. What you see in an increase in value of gold is actually a decrease in the value of the dollar in comparison to gold. So basically what I am saying, is an ounce gold is an ounce of gold and if gold is 100 and goes to 200 an ounce, all it means is the dollar has weakend; therefore, if you bought gold at 100 an ounce a ways back and now you sell it at 200 an ounce at market rate (these numbers are for example and do not actually reflect current market values) your buying power is exactly the same therefore it can be argued that it is impossible to make money in gold.
The best thing to do, is to do what everyone else is not. Since everyone is selling their stock now, I am buying. After all of that, I do recomment some of your assets be in gold. I say this for an entirely different reason than investing though. As stated earlier I do not believe gold is an investment, but I do believe it is a currency that will always be universally accepted, and when the United States prints to much money in order to pay off the massive amounts of needless debt it has been creating for itself, the value of the US dollar will sink so low you will need a wheelbarrow full of money to buy a loaf of bread, and when that point comes it is nice to have some gold to trade for passage to some place much better off.
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hey thanks for your input. I'm still thinking....
I agree when everybody is sellling that's time to buy and when everybody is buying that's the time to sell. Good hub.
I tracked Gold, Oil, Us Dollar for about 6 months. When oil went up gold went and dollar went down. Had all these cities that are over budget on fuel cost his year would have put the money in gold they never would have been over budget. They more than likely now would have a surplus.
Precisely my point,
Oil like gold is a commodity priced in dollars, Oil and Gold are real assets where as the dollar is just paper, what you saw was the dollar decline in value therefore all commodities priced in dollars go up. Supply and demand. Futures markets in commodities were created to provide end user price protection.
It allows the end user (some business) to set and know the future value of said commodity. The futures market uses speculators money to make up for losses incurred by suppliers of said commodity. Since we are talking about real assets with fixed value, that means for every winner on a particular trade there is an opposite loser. The same statistics as flipping a coin. Yet, the CBOT gets suckers to put their money in play every day. I find it more fun and personal just to gamble with my friends.
TMG
Great hub - if only people kept the simple laws of economics in mind when they invest! For me, gold doesn't quite give me the high that stocks do - but as an investment I agree with you - it makes so much sense!
But it's a good time to SELL your gold, right? Maybe I can liquidate some old jewelry and use the proceeds to buy some stock dirt cheap!
Thanks for a very informative hub. MM
MM, god forbid, not stock!
Misha says it still has a lot of room to drop...
I'm only kidding. I am having to gnaw on my arm to keep from selling my stock in a panic. Maybe real estate? Would that meat with your approval, Milla? Or I know -- how about a lovely new purse as modeled by our lovely co-hubber Misha:-)??
I am only a girl, you know :)
Misha keeps saying that real estate is not an investment, and stock market is not a game for amateurs... Looking what is going on around, I can appreciate his advice on that...
May be we should really invest in coach purses, you know ;-)
It is pretty tricky to pick tops and bottoms - hence the saying "the trend is your friend". In the case of panic buying (covering shorts) and selling there really is no trend (well long term there is but unless you stick it out and are right you may sustain losses). The buy and hold strategy is a bit scary now so if one has any particular inclination, it is better to do a little scalping.
TMG I'm not against your stratagy of buying shares right now but you don't give the readers much of an indication which companies to purchase.
A few months ago some of the companies that have gone belly up where regarded as blue chip!
agvulpes, good comment,
As for recommendation, The big three automakers, their shares are in the tank, 3 things can happen at this point, they will get a bailout which will temporarily boost their stock price
They can file bankruptcy and reorganize and become very popular again think Chrysler in the 70's.
They can be bought up, which would put an immediate jump in price, I would sale at that point as I can only see the purchase of an american car company dragging a foreign automaker down, Think Daimler.
All financial institutions are pretty good choices, they may go down a bit but they will see the same three scenerios. The difference being choice three I would keep any equity in a Foriegn Finance company Their economies will rise faster than the US.
There is a start, don't forget the tech sector Microsoft isn't going away. Their price is around what it was when I first bought them in 98.
TMG
TMG, Daimler sounds good but I heard overnight that Germany went into official recession. That can't be good?
We have a Investment guy who writes for the largest daily newspaper in Australia.
As an exercise he started 3 years ago with $50k he built this to about 160k the interesting thing was, late last year he started selling and parking the cash at 7%
At the present time he owns no shares but has this 160k earning 7% under government guarantee. Says not buying shares for a while.
Very prudent I would say.
Very Interesting ag,
It is funny as an investment guy I saw the recession coming at around May and was positive around September of last year. Wanna Know what tipped me off?
My new clients, as I would look at their personal finances I was seeing a trend. They had no left over money. I mean literally no money after all the bills were paid they had zero or less. Meaning with credit cards maxed and no money left over it was obvious people were going to stop buying things.
If people aren't able to buy, companies cannot profit.
Anyway, I am sure your guy Australia saw the same thing.
TMG
I believe this is a good time to sell your gold because people are frustrated with the stock market behavior and are considering investing somewhere else. Therefore, refineries are buying all the gold they can from people and are paying decent prices. I have sold scrap gold online and have had a good experience. I like selling gold online better because is confidential, discreet, and secure. I would recommend it to anyone who wants to get some extra cash in a safe and guaranteed way.
Thank you for the comment.
TMG
Gold hit AU$1500 yesterday. The fear factor got it there. I agree with your call on gold as currency.I wrote a hub on it too.
Thanks for the comments I appreciate it.
TMG
greate informative hub with useful information. nice work
great hub. as regards gold, fed is printing money so fast, i am quite sure, there will be some inflation down the road. but 30s crisis shows it is really tough to tell, what will happen.
Stacie L says:
13 months ago
Thanks for answering my request.Ill consider your suggestions