Explain gold investing to me??

[John White]

I have some questions on gold or silver investing. A friend and I were having some discussions on investing. He said he has had $10k in a savings account for a rainy day fund. He said for the last 5 years is has produced no interest at all. The only good thing is that if something happens that he needs the money he can go and get it out right now. In five years he has actually lost money. He was telling me about his Grandmother, over 20 years who bought gold and silver coins and maybe belonged to a coin of the month club or something like that. He said she passed away and he was in charge of admisterting the estate and that she had recipts where she had paid $22k for the coins. He took them to several gold buyers and the most he could get out of them was $12k. He said he kept them for about 6 years and finally got around $18k. Not a good investment or a hedge against inflation. Lets say I buy a 1oz gold bar at lets say $1500. Six months later something happens that I need the money. How much will I get back if the price of gold remains the same? I know some gold dealers give you a gold certificate and you are not in physical possession of the gold. What is to protect you against them not having enough physical gold on had to back up all the paper certificates on hand especially if the economy collapses? I wish I knew ten years ago what I know now. I should have cashed in my IRA and bought $10,000 in bricks of 22 ammo. Our govt. is just simply printing up money at alarming rate and it will collapse .

 

[forgeblast]

Physical gold, you pay the spot price plus a dealer premium. Meaning for most 1 oz coins look at what gold is trading at and add 20-40 dollars. You could go online but then you pay shipping....
If the price were to stay the same and you had to sell them back you would be loosing money then.
There are IRA gold plans but you are not holding the physical gold.
APMEX | Silver, Silver Bar, Silver Bars, Silver Bullion, Gold and More - APMEX.com | APMEX.com is a good site, has info on the ira/physical gold. Also has historical charts so you can see price fluctuations.

 

[michael.white]

Even though I recommend not dealing with them, go to Precious Metals Investing - Gold Trading - Invest in Silver and Gold for some quick price quotes. They have both bid and ask prices, which will give you an idea of your loss if you buy and sell at that price.

FYI, you can buy gold with your IRA if set up as a self-directed IRA. Whether to hold the gold yourself or not is up to you.

I recommend going to a reputable dealer; when all's said and done with shipping and insurance, you won't save much versus on-line. Also, some states (e.g. Texas) don't charge sales tax on sales of precious metals over a certain amount.

 

[jinman]

John, I have both money market and mutual funds through Vanguard IRAs. They have precious metals and mining based funds, but those don't seem to be performing well at this time. With Vanguard, you get a fund with exceptionally low fees and access to your money within two or three business days if you have it sent to your bank account through direct deposit (EFT). There is no guarantee with these funds, but they have provided me with lots of income via gains in my IRA. If you are buying funds with money you want tax sheltered on gains, IRAs are great. You only pay taxes on gains on money you take out of the account. I strongly suggest anyone who has funds to invest in a 401K or IRA. I am not a CPA or financial adviser, so this is not professional advice. I just caution your friend to be very careful when seeking investment advice. Many firms (and almost every firm you hear with radio programs) are self-serving brokers who will have their own welfare as their first/only priority.

 

[Larry Caldwell]

If all you have is $10k, just keep it in the bank. That's less than a 6 month cushion. Don't even think about investing your ready cash, because investments are not liquid and not reliable. You need at least 6 months income in readily available cash, and a minimum of $500 ($1000 is better) cash on hand in your house somewhere.

Next, buy a home. A few years of hyperinflation will make your humble abode on a fixed rate mortgage look like the work of a genius. I bought my first house for $10,000, in 1976. Three years later I sold it for $49,000.

If you are going to buy gold, wear it. I have picked up several ounces of gold and several pounds of silver just by cruising estate sales. At one sale I picked up 17 lbs. of coin silver platters for $70, because they didn't have the Sterling stamp on them. At one time, it was cheaper to melt down coins than the buy new silver, so manufacturers used tons of the stuff. There is more silver in coin silver than in Sterling.

If you are determined to buy gold, don't go to the system, buy it from the guys who make the stuff. Haul a wad of cash, scales and a field assay kit off to the gold fields. September or October are good months in Alaska, when the miners have been working their claim all summer and have gold to sell. You might try the area around Chicken. Take your own tent, and don't forget the mosquito repellent.

 

[Gary Fowler]

If all you have is $10k, just keep it in the bank. That's less than a 6 month cushion. Don't even think about investing your ready cash, because investments are not liquid and not reliable. You need at least 6 months income in readily available cash, and a minimum of $500 ($1000 is better) cash on hand in your house somewhere.

Next, buy a home. A few years of hyperinflation will make your humble abode on a fixed rate mortgage look like the work of a genius. I bought my first house for $10,000, in 1976. Three years later I sold it for $49,000.

If you are going to buy gold, wear it. I have picked up several ounces of gold and several pounds of silver just by cruising estate sales. At one sale I picked up 17 lbs. of coin silver platters for $70, because they didn't have the Sterling stamp on them. At one time, it was cheaper to melt down coins than the buy new silver, so manufacturers used tons of the stuff. There is more silver in coin silver than in Sterling.

If you are determined to buy gold, don't go to the system, buy it from the guys who make the stuff. Haul a wad of cash, scales and a field assay kit off to the gold fields. September or October are good months in Alaska, when the miners have been working their claim all summer and have gold to sell. You might try the area around Chicken. Take your own tent, and don't forget the mosquito repellent.

Also don't forget your body guards with their full auto guns to keep you from getting robbed which is a more likely scenario if you have a pocket full of cash.

 

[Larry Caldwell]

Also don't forget your body guards with their full auto guns to keep you from getting robbed which is a more likely scenario if you have a pocket full of cash.

Getting robbed is only a problem in cities, though taking a couple of guns along is only sensible if you are going to be camping. The bears are over on the coast, but wildlife can be a problem wherever you go.

 

[TnAndy]

He was telling me about his Grandmother, over 20 years who bought gold and silver coins and maybe belonged to a coin of the month club or something like that. He said she passed away and he was in charge of admisterting the estate and that she had recipts where she had paid $22k for the coins. He took them to several gold buyers and the most he could get out of them was $12k. He said he kept them for about 6 years and finally got around $18k. Not a good investment or a hedge against inflation. .

Grandma got scammed into buying overpriced numismatic (collector) coins, or coins of dubious quality from pushy private 'mints'......happens a lot to folks, and not just in the coin business. There are con artists everywhere.

2005, I took out all my IRA money from 'good growth stock mutual funds' ( another scam ), bought 90% US silver coins by the $1000 face bag ( 4,000 quarters, 10,000 dimes, 2,000 halves.....all pre-1965 ), paying about $6/ounce ( bag contains 715oz melt value ).....roughly 4200 'dollars' a bag. I can sell those back to APMEX (online metal dealer....used as an example since they post their buy price online) today for a shade over 15,000.....and it has recently been as high as upper 20,000 range.

That's a 3.5x return on my money, compared to the average "GGSM fund" that has done nearly nothing for a decade. ( YES, if you'd bought in at the bottom in 2008, you'd be up over 100%, but most people invest in them regularly and aren't up anything like that over time )

I've been buying gold since the late 90's, and my average buy in over time is around 700/oz

That said, you don't buy gold or silver for an investment, although it beats a whole lot of conventional investments.....you buy it because the dollar is becoming more and more worthless (by design and intent of the FED) and you hope stay to stay at least even with purchasing power over the long haul.

There are LOTS of real things you could invest in.....owning your home outright is one of them.....22 ammo is another....almost ANYTHING real isn't bad ( unless it depreciates in value fast ), but you also have to consider liquidity. Hard to pull liquidity out of a house unless you borrow against it ( and even that may take months to pull off ). Ammo prices are falling as demand is satisfied and production increases, though I doubt we'll ever see prices of years back ( see chart above for why ).

But my silver, I can FedEx to a dealer, and have a check in hand inside a week.....if I need to. My metals are money of LAST resort. I'd spent every paper buck first. I fully expect to see silver bust 100 bucks in a few years, and gold go to 3-5,000. It is a mathematical certainty as the FED continues down the path of paper dollar destruction.

 

[gwdixon]

In my uninformed opinion, there is no advantage to owning or investing in a rock. The value is dependent on what others think the value is (supply/demand/artificial supports). If the economy, government, and financial institutions collapse you will have rocks to throw at people.

It seems preferable to buy guns, ammo, and supplies. Any of those can be resold and, in case of a total catastrophe, would be valuable bargaining chips.

And, no, I'm not a Prepper.

 

[azkubotaguy]

Buy low and sell high on Craigslist, Garage Sales, etc. lot's of people do it and make great money if you know the market on items.

 

[Larro Darro]

One of my friends own a pawn shop. He always pays current market price for rings and such. Jewelry stores have a 1600% markup over market prices, by the way. When the price of gold was so high, he sold a couple of pounds of old rings and necklaces a month. Now that it has dropped again, he is holding on to them. If you realy want gold, go to your local pawn broker and ask to buy up some of his old jewelry in bulk. He will sell it for just a little over market price if he has a bunch of old stuff he hasn't sold. But don't melt it down. That is against the law.

Larro

 

[TnAndy]

But don't melt it down. That is against the law.

Larro

What law ?

 

[TnAndy]

In my uninformed opinion, there is no advantage to owning or investing in a rock. The value is dependent on what others think the value is (supply/demand/artificial supports).

That is pretty much true for every single thing on earth. The market in anything is established by folks wanting to buy it.

Just so happens gold and silver have thousands of years of history of folks wanting them, so the value of it has never been zero.....whereas every paper currency that ever came off the press has a history of being worthless at the end of it's scam.

Personally, I'd likely never trade a gun or ammo, since you might find yourself on the wrong end of them down the road if things got tough.

And the reason money was invented ( real money ) was barter is clunky. I have two chickens to trade, but can't find anyone that has socks I want.

Money is also handy as a storage of labor for rainy days. I raise a perishable crop ( say watermelons ) with a limited shelf life...if I can sell them, I can store that money away to purchase things I need later that might not be available today at Barter Town. If I sell my melons for a dime each, I can reduce a truck load to a pocket load.

Many folks don't believe in real money. I understand, the FED and the feds have done a tremendous brainwashing job over the last 100 years. I'm not here to convert anyone.

But I do often hear the same argument...."I'd rather have this or that over gold or silver". To which I reply "Nothing says you can't do both". And I am a prepper.

 

[MossRoad]

One of my friends own a pawn shop. He always pays current market price for rings and such. Jewelry stores have a 1600% markup over market prices, by the way. When the price of gold was so high, he sold a couple of pounds of old rings and necklaces a month. Now that it has dropped again, he is holding on to them. If you realy want gold, go to your local pawn broker and ask to buy up some of his old jewelry in bulk. He will sell it for just a little over market price if he has a bunch of old stuff he hasn't sold. But don't melt it down. That is against the law.

Larro

I don't think its against the law to melt your own gold. In fact, I know several people that do it and sell it.

 

[Larro Darro]

I don't think its against the law to melt your own gold. In fact, I know several people that do it and sell it.

You are right. I was thinking of minting.

Larro

 

[TnAndy]

You can mint it as well.....you simply can't use the word "dollar" on it, or call it anything in dollar terms. There are private mints around that crank out all kinds of coins.....usually overpriced, and/or with just a fraction of plated metal on a cheap slab, but they are commemorative coins....not money per se.

THEN there are quite a few mints around that crank out REAL coins:

Forum I belong to: Gold is Money - The Premier Gold and Silver Forum -- Goldismoney got together some years back, designed our own 1 ounce silver round, and had our own coins stuck by a mint.


One of my favorite 1oz rounds is the Constitution round:

 

[Larro Darro]

I did a quick google search, and I must have been thinking about bullion. But since it has been legal since 1974, it shows how much I know about the subject. I'll just shut the door as I leave.

Larro

 

[LD1]

In my uninformed opinion, there is no advantage to owning or investing in a rock. The value is dependent on what others think the value is (supply/demand/artificial supports). If the economy, government, and financial institutions collapse you will have rocks to throw at people.

It seems preferable to buy guns, ammo, and supplies. Any of those can be resold and, in case of a total catastrophe, would be valuable bargaining chips.

And, no, I'm not a Prepper.

That is pretty much my stance on it to.

I hear all these radio and TV ads (for the last several years) that claim now is the time to buy, blah blah. Whel, when you are selling, you are always going to tell your customers that :mur:

And it always seems places want to sell for more than market value, and buy for less than market value. Makes no sense to me. If an ounce of gold is worth (lets say) $1500, why on earth would I want to spend $1600 for it, and if in a few weeks I need money, and gold is still stable at $1500/ounce, I would have to sell it for $1400????

It really seems to me (and my un-educated self) that gold isnt really worth what gold is worth. And it seems there are alot of folks out there taking advantage of people needing money and paying well below what value is. And taking advantage of people who are buying into all the hype of owning gold, and selling it to them for way more than it is worth telling them that prices are set to skyrocket.....:mur:

 

[grsthegreat]

I used to purchase gold coins years ago thru bullion dealers. Was just for fun. Nothing like the feel of 1OZ gold coins. This was back when gold was $300/oz or so. Mind you 20 years ago, $300 was worth WAYYYYY more than $300 today is worth.

After several years, i got tired of hiding them so i decided to sell them. Gold had gone up about $100/oz at that time, so i thought id make a little money. Then the dealers took their cut, then the fed govt took its cut (capital gains). I ended up with about the amount of cash i invested.

I guess if i had bought at $360 and sold at 1,900 id be in pig heaven, but i know i wouldnt have sold then, and it would now be worth 1,200. Still not bad,but then i probably wouldnt sell it at 1,200 cause i was sure it would go to $5,000 like all the talking heads have been saying for 5 years. So id probably just hold onto it until it goes down to $400/oz again.

My biggest problem with gold investment is i dont believe the price of gold has really increased much over the past 20 years. 20 years ago gold was 300-360 per oz. Today its 1,200. But 20 years ago 360 had so much more buying power than it does now. If you look at the average value of gold over time, it hasnt kept up with inflation. Gold SHOULD be selling at $2,000 just to be what it was worth in 1980.


Id NEVER buy gold certificates... only real tangible gold (also look up how much fake gold has been selling out there...buyer beware)



but heres the kicker. At the same time i played in gold i purchased 20 acres in Idaho for $2,000 per acre. That property in today's market is selling at aprox $15,000-20,000 / acre . I built a nice ranch on this property, and love it way more than any gold i might have purchased hehe

 

[newbury]

And it always seems places want to sell for more than market value, and buy for less than market value. Makes no sense to me. If an ounce of gold is worth (lets say) $1500, why on earth would I want to spend $1600 for it, and if in a few weeks I need money, and gold is still stable at $1500/ounce, I would have to sell it for $1400????

Because just like everything else they are in the BUSINESS of buying and selling. Or do you work for free?

But there were many threads on here about the great value of buying gold when it was at about $1700. Surprised they haven't chimed in. Oh wait - it's down to $1250.

Gold goes up and down. If your going to get in it you've got to buy low, sell high and hope you know the difference.

I prefer to buy land and not sell. Just sell trees.