How does investing in gold work?

think for a moment what you are saying. When there is a bull market in stocks why are there sellers? Shouldn't they all be hoarding the shares? You see how silly that sounds. There are always buyers and sellers as some believe prices will fall while others think prices will rise....its the difference that determines which direction the price goes....if there are more buyers than sellers then prices rise and if there are more sellers than buyers then prices fall!

 

well.....I have been buying since 2004 and I can sure you I made a tidy sum!

 

look at all the corrupt stock peddlers......funny how when its gold....its the evil scammers...but when its stocks....oh well thats different

 

whether you want to believe it or not....gold "IS" money...why do you think central banks hold it for? For decoration perhaps?

 

trust me, bullion coins are better.....very little mark up so you get more gold for your money!

 

this post is actually funny......ignorant, totally incorrect....yup.....funny!

 

ya think?

in 2007 interest rates peaked at almost 8% ( 7.6 I think) and more importantly there was a yield inversion.......do you understand economics at all?

 

ah lets have fun with the clueless gang here

they are going to learn the hard way that gold is nowhere near the top!

 

Not really. The rise in gold reflects the lack of confidence in the dollar, the admin, and the long term outlook of our fiscal solvency/debt.

You can't blame people for hoarding gold and silver. Our political parties aren't serious about the spending and debt.

The R's mildly so, and the dems NOT AT ALL.

Honey, get your head outta the sand - no offense.

 

Which of the points I made do you disagree with?

 

well lets see LOL!

1) that gold is near the top ( WRONG)
2) that this is a bad time to invest in gold ( WRONG)
3) you say its already an overpriced commodity? ( WRONG) as gold only buys today about the same as it bought in 1910...perhaps a little more but not much!


and finally....you do realize that as of now, about 90% of the population still has very little if any gold right? Compare that to the housing or dot.com bubble where you have participation rates close to 50% or higher!


and look at the gold mining stocks.....they are selling at very low multiples...this suggest alot of pesimism still out there....had this been a bubble as you state, then these share would be selling at rediculous multiples like what happened in the dot.com bubble when even companies with no earning were selling in the billions. You really need to learn more about investing

 

A lot of people agree with me, but a lot agree with your position as well so let's leave this as a difference of opinion that will be settled in the future as we see where the price goes.

A bad time to invest in anything is when the price has been driven up by speculation. And there's no way you can claim that isn't happening with gold.

From 2009 to 2010 gold rose 25%, but inflation didn't. So gold has risen far faster than inflation recently, and buys much more than it used to.

True but the number of people holding the investment isn't an indication it's not a bubble.

Barrick Gold share price has risen 56% in a year.

 

has it ever occured to you that in those two years that you named it was just underpriced just for that period? Also you do realize that inflation adjusted, gold still sells for less thn it did in 1980 right?

 

actually more agree withy you than with me.....those mainstream losers also thought that housing would never collapse and that they didn't think that subprime was a problem even a few months before the crisis.

 

^^^^

something else for you to think about!

Bubbles dont burst with super low interest rates! Name me one bubble that has ever burst with low interest rates?

1) the housing bubble
2) the dot.com bubble
3) the LBO market of the 80's
4) the commodities boom in the 70's
5) even the roaring 20's interest rates started rising a few years before the 29 crash

like I said.....learn a bit about investing OK?

 

Not sure where you are getting this.

A year ago it was just over $45 and today it is just under $53. That's less then 20% - and gold has risen 49% in that time.

http://www.barrick.com/Investors/StockPerformance/default.aspx

 

Bad example - there was a spike in gold prices in the 80s. If you exclude that spike gold's inflation-adjusted price dropped steadily over the years from the 1930s to 1970s. After the 80s spike it dropped steadily again and by the 2000's was worth less on an inflation adjusted basis than it was in the 1930s, less in fact than it was way back to 1913.

If you bought an ounce of gold in 1930 and sold it in 2000 you lost money on an inflation-adjusted basis.

 

You're right - I meant Sept 2009 to Sept 2011 so two years. Point is that the largest gold mining company's stocks have risen sharply.

 

you obviously dont read my posts. Many times I have stated that the decades of the 80's and 90's was the era of paper assets...this was the main reason why gold was falling...why own gold that pays no dividends when stocks were both appreciating anf paying nice dividends?

But what has the DOW or NASDAQ done since 2001? You see....once government starts to distort the markets as greenspan did in 2001 this is the end result. You have stagnant markets and an exploding commodities markets...especially since the US dollar is the reserve currency this compounds the results!

 

and why do you paper lovers always point to the period up to 2000 LOL?

how many times do I have to say it?

THE PERIOD BETWEEN 1980 AND 1999 WAS THE ERA OF PAPER ASSETS LOL

now tell me.....what has gold and the DOW done since 1999

 

Fair enough.

But in those two years - gold has risen 91%.

And I think bacardi's point on this is that gold stocks are lagging far behind gold prices - which they seem to be.

http://goldprice.org/gold-price-history.html

 

The point is that gold is a poor performer over time. It's natural value as an investment with no intrinsic value is reflected in the fact that it historically under-performs on an inflation-adjusted basis. It's not high with occasional drops, it is low with occasional peaks. Almost any other sound investment does better in terms of historical value growth and many have the additional value of cash-flow.

 

hmmmm

1965 to 2011:

gold was 35 dollars and now 1850.... a 53 fold increase

the DOW went from 1,000 to about 12,000 ....a 12 fold increase




uhmmmmm....you were saying about poor performance over the long term?

 

I can answer this...

Since May 1999, the DOW has risen less then 2% while the price of gold has risen 660% - or 55% per year (on average).

Not trying to jump on anyone though...just sayin'...

 

You've forgotten we're talking inflation-adjusted?