Is buying gold a good investment?

Bunka · 6 Jan 2011 at 14:21

The Halk said:
DANGER : Bad advice!

You will not just lose 10%. You will lose about 30-50% if you try to get out quick.

Haha, nice warning. Who says that the market is going to plummet 50% in the space of a day? That would be a MASSIVE drop.

The Halk · 6 Jan 2011 at 14:21

Bunka said:
Haha, nice warning. Who says that the market is going to plummet 50% in the space of a day? That would be a MASSIVE drop.

I do.

Morba · 6 Jan 2011 at 14:22

The Halk said:
I do.

The fact that you are posting here rather than sitting in golden towers says that you are not the oracle.

Why do you think the gold market would drop 50% in one day, that would not already have been predicted or known to happen?

Bunka · 6 Jan 2011 at 14:22

The Halk said:
I do.

Care to explain why?

tigerstyle · 6 Jan 2011 at 14:24

In my head gold does this soon: (warning: worst picture ever but you get the idea)

It might do nothing like that, but thats the gamble isn't it? Might as well go to the casino with it in a way IF it turns out everyone today is buying at the very peak of gold. Be fun to look back on in 5 years this thread! We can meet up and see where we are!

If I bought gold now I don't think I'd keep it long. 2 years tops? If it was doing ok still, cut my losses at the small money made on it hopefully!

eatcustard · 6 Jan 2011 at 14:24

Black Gold

Thats the way forward

The Halk · 6 Jan 2011 at 14:27

Morba said:
The fact that you are posting here rather than sitting in golden towers says that you are not the oracle.

Why do you think the gold market would drop 50% in one day, that would not already have been predicted or known to happen?

I'm saying it could, not that it will. Burden of proof isn't really on me. All I'm doing is warning of what might happen.

It's entirely possible that by the time you think "Oh, it is time to sell" and the sale going through the price will have dropped 30-50% from the peak.

It's extremely irresponsible and dangerous to tell people it's ok to invest in gold because at worst they'd lose 10%.

ProOrWhat · 6 Jan 2011 at 14:28

I bought 3 kilograms of gold in China back in March 2010. I will probably sell it end of this year when the gold market begins to peak off and hopefully I would have doubled or tripled my investment. Then I plan to make a repurchase in the markets 'dip'.

ScoTTyBEEE · 6 Jan 2011 at 14:29

The Halk said:
I'm saying it could, not that it will. Burden of proof isn't really on me. All I'm doing is warning of what might happen.

It's entirely possible that by the time you think "Oh, it is time to sell" and the sale going through the price will have dropped 30-50% from the peak.

It's extremely irresponsible and dangerous to tell people it's ok to invest in gold because at worst they'd lose 10%.

Gold won't drop 50% in a day, it's not a penny share.

kwerk · 6 Jan 2011 at 14:30

Morba said:
The fact that you are posting here rather than sitting in golden towers says that you are not the oracle.

Why do you think the gold market would drop 50% in one day, that would not already have been predicted or known to happen?

Well imagine a big country or george soros decided to dump their gold holdings at a record high price? What would everyone else do as soon as they could?

The Halk · 6 Jan 2011 at 14:33

ScoTTyBEEE said:
Gold won't drop 50% in a day, it's not a penny share.

I'm not even saying that.

Let's say it's at £1K per ounce, for example. Do you sell if/when it drops to £950? Or is that just a fluctuation? If you do sell at £950 then you're going to be selling pretty quickly after buying. If you sell at £950 then when it goes back to £1K you realise you made a mistake and buy back then you're going to lose a lot of money.

So you have to have a more reasonable point at which to sell. Do you sell at £900? Well, what if you bought at £1K and the price went down to £950 the next day and sat there for 3 months doing nothing. Do you sell if it hits £900? Or is that a fluctuation?

So the price hits £850 and it's PANIC TIME! Everybody goes to sell. You notice about 2 or 3 hours later. You can't get through on the phone to your broker, and their internet site is bogged down. By the time you get through the price is £700 and you put your instruction in. They carry out your instruction and come back to you to say they sold it at £500.

ScoTTyBEEE · 6 Jan 2011 at 14:33

kwerk said:
Well imagine a big country or george soros decided to dump their gold holdings at a record high price? What would everyone else do as soon as they could?

Buy it?

Will Gill · 6 Jan 2011 at 14:34

Bunka said:
Purely out of interest will, and a bit of a side track, but where would you be putting your money now?

mine is in global energies and base metals

ScoTTyBEEE · 6 Jan 2011 at 14:36

The Halk said:
I'm not even saying that.

Let's say it's at £1K per ounce, for example. Do you sell if/when it drops to £950? Or is that just a fluctuation? If you do sell at £950 then you're going to be selling pretty quickly after buying. If you sell at £950 then when it goes back to £1K you realise you made a mistake and buy back then you're going to lose a lot of money.

So you have to have a more reasonable point at which to sell. Do you sell at £900? Well, what if you bought at £1K and the price went down to £950 the next day and sat there for 3 months doing nothing. Do you sell if it hits £900? Or is that a fluctuation?

So the price hits £850 and it's PANIC TIME! Everybody goes to sell. You notice about 2 or 3 hours later. You can't get through on the phone to your broker, and their internet site is bogged down. By the time you get through the price is £700 and you put your instruction in. They carry out your instruction and come back to you to say they sold it at £500.

I understand what you mean and there is no reason why you can't have an automatic stop loss to avoid this. Also gold hasn't ever and will not ever drop 50% in a day because it has so much liquidity in the market.

matt_fsr · 6 Jan 2011 at 14:36

To me, its all about timing when to sell. If you buy now, get a 20% increase in a short, then sell - then yes, you've done WAY better than an ISA.

The Halk · 6 Jan 2011 at 14:40

ScoTTyBEEE said:
I understand what you mean and there is no reason why you can't have an automatic stop loss to avoid this. Also gold hasn't ever and will not ever drop 50% in a day because it has so much liquidity in the market.

A stop loss isn't a guarantee. It just becomes a sell order when market conditions enact it.

The gold market we have now is brand new and untested, anything before this boom means nothing... we just don't know what will happen.

Your stop loss could kick in at 850 but it might get only 700.

aardvark · 6 Jan 2011 at 14:47

i have been buying gold since 2006 - its not in a bubble and no where near the top.

if you believe that the financial crisis will be over soon and that there will be little inflation, no more QE and rising interest rates, then gold is a bad idea.
if you believe the opposite, gold has no where to go but up - its not the price of gold thats going up, its the value of your currency going down.

Django x2 · 6 Jan 2011 at 14:48

Gold is at $1350 a oz at the mo, the highest it has been not just in recent years but in a very very long time. I doubt it will go much higher. I love the way the government scrabbled a load of "Cash 4 Gold" companies to buy it back off the public for silly cheap money.

I would be hesitant to buy at the moment.

platinum on the other hand is *just* starting to get near the prices it was in 2008 when it was $2k an oz

Participant · 6 Jan 2011 at 14:53

Hear me now. Gold prices are about to go through the floor.

Morba · 6 Jan 2011 at 14:54

The Halk said:
By the time you get through the price is £700 and you put your instruction in. They carry out your instruction and come back to you to say they sold it at £500.

On the site i was using the instruction went through as the price when you made the instruction, even if there is a wait period for it to be actioned.

Is buying gold a good investment?

Wise Guy