Is now the time to invest in gold or silver?
September 21, 2010 by
Filed under Silver Investment FAQ
The stock market, Bernie Madoff, real estate, the pitiful bond market/interest rates — it seems that gold and silver coins and bars is a good investment for the next several years.
gold never depletes in value so it is always a good time to invest!
I like to think of it this way. What the heck does anyone actually use Gold/Silver bars for other than Jewellery? It does not make sense why the demand/prices fluctuates so much based on its simple use. If the economy is deteriorating, then who is going to head out to Tiffany’s to buy some gold/silver pieces. In Canada, Birks increased their prices to offset the costs for Gold and Silver which was not insignificant and deterred a purchase.
I just don’t understand how it is all tied to the economy when I think of it in common sense, so for that reason I say leave those precious metals alone. If I don’t understand it I leave it…unless you undertand it of course.
gold. I go panning for it way up in New Hampshire.
I have a suspicion that if gold were to drop in value under these conditions, it wouldn’t be dropping as much as the dollar might. That means the question is really would you rather have dollars, which are likely to soon be worth less, or would you rather have gold? Bear in mind that part (certainly not all) of the high price of gold today is an adjustment because dollars have devalued. Although not as strongly as many times in the past, there is an increasing interest in monetizing gold, as in make it a store of value. So between these two things (declining dollar value and more people holding gold to retain financial worth) then this will be an upward price pressure that will be hard to ignore for long.
As for how to hold it, keep it in the form that you get it, and if the form you get it is in real coin, the value gets a tad bit complicated. Just as with the American penny supposedly being worth more when copper prices rise, if you want to cash in pennies for copper you get a price by weight, but as coins they are still a penny and for every hundred of them you can get a piece of paper that says ‘one dollar’. If it is a special promotional coin advertised on TV or some junk mail piece, then be especially aware that the price you may likely pay is often far above the actual street value. At a coin dealer I visit in my town, he was shaking his head about a customer who came in with some gold thing that he wanted to sell. The offer was $300 and the stranger said, “But I’m financing it for $3,000!” The dealer responded, “And I bet they were happy to carry that loan.”
May I make a recommendation? Check out the Ishares ETF that holds gold in a vault, IAU: http://us.ishares.com/product_info/fund/overview/IAU.htm
Gold’s historical rate of return is rather low. One might wish to be a gold speculator, but gold as an investment is a pretty poor bet.
no