Is it a bad idea to buy Gold/Silver Coin right now?
September 30, 2010 by
Filed under Silver Investment FAQ
Looking at the graph of the history of gold/silver prices. Is it a bad investment to buy Gold/Silver right now? I mean if the price goes up from here(~785USD/ounce), wouldn’t that be a an bad indication the economy is failing/collapsing and so I should get some for backup/emergency situations?
And if I do buy some now and the price goes down like it should naturally, then I’m out a bunch of money right?
The thing about gold and silver is that it is safe. Put it this way, if you think that the dollar is going to get pounded, then you buy gold to hold to protect the value of your money. I bought gold when it was about $435 an ounce a few years back because I was looking for a way to shield myself from taxes I would have to pay if I had put my money in a bank and collected interest. I lucked out when I did buy it. The normal thinking is that you should have no more than 5-10 percent of your assets in gold or precious metals.
There are some that believe that we could be heading into a depression. We have 53 trillion dollars in debt obligations, about a 12-13 Trillion dollar budget deficit, and the FDIC only has about $50 billion on hand to cover all of the potential bank failures, which right now is about 13 banks so far. 50 billion is not a lot of money when compared to over a Trillion dollars in deposits. Gold is a good place to save for a rainy day, especially if the US dollar becomes worthless.
Compare 3 options:
1) Buy an ounce of gold today for $779.20
2) Put $779.20 in a bank account earning 3% per year
3) Go buy $779.20 worth of Lehman Bros stock.
Wait a year. What do you have?
1) an ounce of gold ,worth anywhere from $400 to $1600, depending on inflation. If inflation is 12%, Gold will be in the neighborhood of $860. I’m betting it will be higher.
2) About $800 in dollars that have depreciated 12% in the past year
3) A worthless piece of paper.
Grandpa
It is always a good time to buy gold, but last week or last month would have been a better time.
The question should have been is it a good time to sell gold at the moment?
then I would have said NO! I feel that in the current economic climate , gold is undervalued even though it has gone up $70 per ounce today.
Having your funds in one of the companies that had gone under in the last few weeks would have given you more “Ouch” than having the funds in gold.
Hindsight is fine but it is always the difficult decision to invest without foresight.
Where are all the people who promoted the failed schemes and companies now?
Gold (and Silver) that you can hold and sell if necessary is always a good safety net. If it drops , just buy some more when you can, when it goes up and you are comfortable with the profit then sell some or all if needed. But I would always keep some as a comfort zone.
These derivatives, hedge funds, and other paper/fictitious gold seem exciting when the profits are there, But where is your actual gold? technically it is only someone else’s IOU that you are holding , and if they go broke, what chance have you of getting your money?
Ok, here :
Look at the data of the gold prices since 2000.
You’ll see that gold has always been under $400 until 2003.
Now, add the fact that economy was always considered calm and stable until about 2004.
That’s one reason gold is good to have.
So you ask, BUT WHAT IF….
If you buy gold today at $800-900, the WORST that’ll happen is it’ll drop back to 2003’s prices. Which means you lose 50%. But how can that happen? If that happens, the country would have to stabilize the economy so nicely that you won’t mind losing half of your money.
HOWEVER, if the instability and fear continues, your gold will most likely preserve its value or appreciate. So to me, this is a no brainer. Either I earn some money on gold, or I lose some and the rest of the economy gets better and it won’t matter.