So I was reading an article in the paper yesterday about the current value of gold and the possibility of it rising even more in the future: http://www.guardian.co.uk/business/2010 ... e-for-gold

Then I was thinking, why am I putting my money into savings accounts with appalling interest rates when I could be buying bullion? It's pretty straightforward to do it: http://www.guardian.co.uk/business/2010 ... ins-shares

I'm considering this as a serious option even if it was just a section of my savings, say £3k.

So what are the opinions of our more erudite contributors? Is this a goer over the next few years? If I'd have done this in 1999 I'd be sitting on over £13k now.

edit: alright anyone's opinion........

It's another bubble.

There is massive demand for "gold" on behalf of investment funds/ETFs (exchange-traded funds) etc., offering the public access to gold as an asset class. But demand for a gold fund and demand for gold itself are two very different things. While bulls will argue that "emerging market demand" is structurally positive as more and more consumers have the ability to buy gold jewellery, it is too simplistic to project past demand onto new markets.

It is arguable that gold has been more attractive at a time when nations have raced to devalue their currencies - but this state of affairs won't last for ever.

And finally, the more a sector or an asset is talked about as offering great potential returns even given recent performance, the more you can be certain its days are numbered.

You wouldn't have done it in 1999 as no-one cared for commodities then and you would have been told to buy tech funds.

Edit - just wrote that before reading the article I'm not a bull.

I think it's done well in part because people see it as the ultimate safe investment, and in troubled times, people go for safer assets. That increase in demand is probably partly why gold has done so well.

Personally, I think with interest rates so low at the moment, if you have a bit of cash available, it's well worth investing in some funds. There are equity income funds out there still paying 4-7% interest, and you may well get a bit of capital growth with it too, albeit you could equally lose value. The longer you can stay invested though, the more likely you are to make money IMO, certainly more than you'd get by having it sitting in a bank. For the more adventurous, emerging market funds should be worth a look at. More of a rollercoaster ride, but bigger risk = bigger potential rewards.

I invest in various funds in my pension, and I've got a holding in the BlackRock Gold & General fund mentioned in that article. It's only a small holding, and I'd view it as one of my safer assets.

If memory serves me correctly, gold reached around $950 at one point during the 70s oil crisis. One can clearly make money by investing in gold but equally one can lose money. For the likes of golden bear (and most of the rest of us), to be investing in gold is a real punt. I'd leave it to the experts.

For most of us to invest in gold after reading just a couple of articles by "experts" would be like your granny selecting her fantasy football team after reading just a couple of articles on potential players by the likes of Alan Hanson.

As shares go down, gold goes up, and vice-versa; is the general trend.

There is a gold dispensing machine, in Germany I think. A particularly strange news item and it wasn't April 1st.

Sounds like Christmas has come for the ramraiders.

My thoughts exactly, very peculiar.

Isn't the vending machine in Abu Dhabi?

i bought alot of gold in the 90`s but sold it in 2007,stupid i know,i feel so cheesed off now how much its gone up,mine were mainly gold guineas or soveriens,my coin dealer said gold would go up 10yrs ago,should have bought shed loads

I read something recently (Citywire I think) that basically said similar to what el_pap said, i.e. buying into something that is being touted as a solid pick based on a period of record returns is rarely a good idea. Whilst it may have some movement left every relative point it moves up moves it further into territory that will lead people (institutions) to fear its downside.

Anyway, if George Soros is concerned I think I'd side with him.

Yup, it's like bonds at the moment - in a huge bubble but no immediate catalyst for them to be sold off/crash. But you earn a pitiful return on "quality" sovereign and corporate debt, whereas you can look around and find well-financed, global companies with good market positioning that are offering dividend yields way in excess of bonds. That's where I would want to be parking my money.

Bloody dream shatterers..........

Wise sages, you mean?

Wise sages, my anus!



http://www.bbc.co.uk/news/business-14195981

In economic downturns everyone turns to gold for investment.

The UK used to have very large gold reserves. Unfortunately, one prudent scotsman decidely to flog a great chunk of the UK's reserves - when it was priced rock bottom

You will probably never lose with it. Greece is in turmoil, Ireland bankrupt, Spain and Italy about to go tits up...as may the euro....seems like a sensible investment to me.

I'm just waiting for the markets to crash to see if I can take out a FTSE related ISA again

On the other hand if this happens my pensions will be worth didly squat

Well, to be fair, on a 9-month view I got this wrong.

My defence is that I don't invest based on months, more multi-year.

I am very, very wary of gold now that it has continued to run up. However, in the intervening period, the scale of problems affecting the Western economies and the solutions presented make it no surprise that gold has responded how it has. With those weakened nations that can devalue their currency and need to doing so, the race to the bottom is on. Gold is money, and is thus more than holding its own.

On top of that, it appears from doing some research that gold is also based on a fractional reserve system (i.e. it's like bank deposits - if everyone withdraws them at the same time you get a bank run; there are many investors holding paper claims to gold that aren't backed by the physical, so if everyone demanded their gold in physical form it couldn't be met, and the price would go vertically up).

In which case it is only fair to say that as preparation to cover myself, I've opened an account with a physical gold dealer. Being a student of behavioural finance, I'm probably going to let gold go up another 20% before buying right at the very top

Update - I've wired money into the account in case I want to buy physical gold.

Given news out of Libya, namely that rebels are in Tripoli and Saif Gaddafi has been captured, if true then markets will likely rally hard tomorrow and gold will fall.

Of more interest to me is the news that Chavez in Venezuela has ordered the repatriation of foreign-held gold. Which potentially suggests JP Morgan will have to send back 100% of the physical gold it holds. So the conspiracy theory should probably be decided for good in either direction in the coming weeks.

Cash is King

"Cash is king" is an expression sometimes used in analyzing businesses or investment portfolios. It may refer to the importance of cash flow in the overall fiscal health of a business. For investors it may also describe times when it is advantageous to have a large percentage of cash or short-term debt instruments available either due to falling financial markets or due to the availability of investment opportunities.

Cash is king - just as long as the currency you hold it in isn't being debased at a rate of knots......

I've stubbornly stayed out of gold over the last couple of years and my principles have ended up hurting me but now is exactly the sort of time only a crazy fool/fervent bear would invest into it. It's had a great run but the upside is so small now (surely!) compared to the downside. I think it'll hover around where it is now as markets try to work out what's going on. I don't personally think the Libya situation will have too much of an effect as the focus is elsewhere but it could be that even this limited degree of stability will have some impact on the gold price.

At the end of the day most people would have to agree that the current level just isn't sustainable as it's based on nothing but a fear of being invested elsewhere; there's no underlying reason that would keep people in it (especially with its negative yield) once everyone accepts that we're on a very slow road out of the current predicament.

Oh, and all aboard the silver (no, not Silva) bandwagon!

I'm gambling on a good yield from my twin investment portfolio - Carbon / Potassium

Well, fervent bear approximates me

I think physical gold is somewhat overdone short-term - and the ratio of gold/precious metals equities to the underlying commodities is at a very low ratio.

But if it all goes pear-shaped I want to have the ability in place to buy physical gold.

UK Gold ATM
Link

I'm talking an ounce or two

(and with storage & insurance covered!)