Gold vs Property

[Sunfish]

Yes but eventially it will produce an income

How so? Is this just another unsupported platitude?

The "usual" recommendation here is for interest only finance. If you are not repaying principal how/when does the property become income producing?

Oh! Inflation will do it! @ 3% CPI it will take a long time (remember "in the long run we are all dead".... Keynes) and don't tell me rents received will increase significantly faster than inflation for more than a couple of years at a time.

There is nothing magic about property. It is just another asset class which must be done well to make a dollar. Relying on "Property doubles every 7 years" and other platitudes and just buying is a flawed technique.

 

[DeeHwa]

i'm also wondering, how many gold can you buy, and seriously where do you store them? i was contemplating on this too 3 years ago i think, when gold was about $800++ after listening to robert K. but becos of the question above, i gave up and just speculating it for awhile... now, i'm over it. So, if you can provide a good suggestion of where to store all these gold... that would be great! i'm not sure if we can get "rich" by holding the few gold jewelery as suggested by mum when i was age 7. So ??

well, property is definitely another place to store the money, but then again, Aust's property is well over price don't u all think? i hear people keep saying migration and population increase so there are limited houses, but frankly, i've been looking around Aust and i can see ALOT OF EMPTY land... and alot alot alot of land release over these few years...So now i'm also confused.

it will be good to hear what you all think about that as i'm very open to all suggestions

Most people I know store gold in safety boxes. At least that is where my parents and relatives keep them. Gold, like land is also finite in supply except the difference is that gold is transportable. I believe most things that are finite in supply are worthy investments, although it really does come down to the personal appreciation of the investor themselves. For example, there is no way I would pay millions of dollars for some random Picasso painting but rather, spend it on quality property assets and hot chicks.

Perceived value is a loaded term in my opinion. Gold is only worth what it is because the market accepts its tradability. It is also governed by timing and cultural aspects amongst other things. For example, a starving African child would view a piece of bread more valuable than a million dollars. Nevertheless, people often underestimate the worth of gold, most likely because it is attached to traits of materialism and its inability to generate income the same way as property, shares and business does. However, as proven over years and years, gold has been a great hedge in terms of crises because it is movable and recognisable to everyone. Governments can collapse, currencies can collapse, money can be rendered worthless overnight (refer North Korea recently who redenominated their currency to combat the black market and money launderers who now cannot change into the new currency because they would be caught for fraud) but gold is universal. In such dark times, the most valuable assets are usually those that have universal value. Perhaps this aspect alone makes gold a popular and blue-chip investment.

The people complaining about property being overpriced and unaffordable are usually those that are ‘not’ in the market. I am sure those baby boomers would not complain about this so called ‘frenzy’ in property prices. The situation is actually not that bad because there will be many Gen Y’s who will inherit these estates from their baby boomer parents (and probably a few extra IP’s) so they won’t actually be in the situation of not ‘owning their own home’. Sure, many would probably get it when they are 40 or 50, but hey, better than finally paying off a shoebox when you are just about to hit retirement yeah?

No doubt there are lots of empty lands in Australia. But it doesn’t matter because no one wants to live there. The value of time is a precious commodity (I doubt it will ever change) and I ain’t spending 2-3 hours a day going to work. I am sure most people won’t either.

 

[pelanie]

well, it is just like shares, previously everybody said that share is not "overprice" it has been up, up, up since i dont know when,,, so, everybody started putting more n more in it.. guess what!!! boom, it fell like never fell before!!! last year.. so i'm just abit concern about the property market too seeing that property has a lagging effect. so not too sure what's gonna happen there.

Also, when one made the comment that no one wants to stay in those empty land, hey, remember, all those houses that people were staying were once empty!!! once they start developing it.... wala....... it's a gold mine!

 

[ianvestor]

I believe most things that are finite in supply are worthy investments.

Clean water is still insanely cheap.

I suppose the downside of storing it as an investment might be that down the track the government could simply seize your supply for the greater good with no compensation to you whatsoever.

 

[House_Keeper]

During this seminar on the week-end, this video was mentioned:

The Money Masters

It's really long, but it includes quite a bit of US history from a bankers perspective.

It seems a bit of a conspiracy theory, but the private nature of the federal reserve is a bit disturbing.

They also mentioned that most of the gold is held by reserve banks.

 

[Aaron Sice]

...which is why you don't want to buy from a mint. keep your gold OFF records.

 

[bene313]

Here's a twist on a return from gold:

----------------

Airmile hackers figured out that they could buy dollar coins (free shipping!) from the US Mint, using credit cards that gave them airmiles for purchases. Then they took the dollar coins straight to the bank and deposited them, paying off the credit card bills before any interest was incurred. The only cost was gas for the bank-runs. The Mint has tried to put a stop to it.

http://online.wsj.com/article/SB126014168569179245.html

 

[Aaron Sice]

awesome work - kudos to them.

got to love a FIAT economy.

 

[Player]

Nice strategy

Perhaps purchasing some US houses/properties with CC will yield a similar benefit. Assuming one were to buy cash there anyway, why not use the card (pay off promptly) and rack up some points and fund airfares to inspect or buy more

 

[Sheryn]

Nice strategy

Perhaps purchasing some US houses/properties with CC will yield a similar benefit. Assuming one were to buy cash there anyway, why not use the card (pay off promptly) and rack up some points and fund airfares to inspect or buy more

Agree

I have been thinking for a while, why doesn't China buy American property with some of the USD it currently holds and dry up the US property market whilst it is low?

Cheers, Sheryn

 

[steveadl]

How so? Is this just another unsupported platitude?

The "usual" recommendation here is for interest only finance. If you are not repaying principal how/when does the property become income producing?

Rents increasing, about 2 years going by a couple of my properties. Sometimes quicker if rates slide at the same time. I wouldn't refer to the figures involved as an "income", but they're positively geared if that's what your referring to, more so than gold anyway.

 

[WinstonWolfe]

Since September 08, gold has kicked up in USD.....
the AUD hasn't gone anywhere in gold terms.

Doesn't mean it won't sometime in the future.
But pays to remember spot gold is denominated in USD.

 

[travelbug]

Since September 08, gold has kicked up in USD.....
the AUD hasn't gone anywhere in gold terms.

Doesn't mean it won't sometime in the future.
But pays to remember spot gold is denominated in USD.

Wouldn't that be explained away by the exchange rates? In March 09 the exchange rate (AUD-US) was 40% lower. Now they are closer to even.

 

[WinstonWolfe]

Wouldn't that be explained away by the exchange rates? .

and nothing else.......but many investors just track gold performance in USD, which is a little unwise if you invest AUD.

 

[redwing]

I was at a seminar last week-end, from Bill Zheng. One of things he is pushing at the moment is gold. The argument for gold being that, with all this money being issued after the GFC, high inflation is inevitable. So to protect yourself against inflation, you buy gold.

You could also buy property though. At least, property provides an income, while gold has little practical use beyond jewerly. As long as population is growing, demand for property keeps increasing. The demand for gold seems more speculative to me.

Does anybody hold part of their wealth in gold? If so, why?

How about Silver, or Platinum

Here's one option for Gold?

How does Bill suggest we invest in Gold?


Well worth reading the Index Post by Twitch (currently hoping for an update on my part)

Agree

I have been thinking for a while, why doesn't China buy American property with some of the USD it currently holds and dry up the US property market whilst it is low?

Cheers, Sheryn

They have been purchasing haven't they, since the GFC started?

Google is your friend

 

[Piston Broke]

Could property replace, or has property replaced, gold as a store of wealth?

As far as I can tell property was considered wealth in ancient egypt.

 

[alexlee]

As a store of wealth, gold's advantage over property is that it's portable. When governments and countries topple, and no one trusts the currencies, it's better to have wealth that you can carry.

However, gold has lost its other function as a medium of exchange. It's now only convertible into us dollars, and other currencies via the us dollar. But all currencies are fiat currencies. Fiat currencies can't all fall against each other, since they're all priced relatively.

 

[Tony3008]

Long term gold price chart at http://www.the-privateer.com/chart/gold-pf.html . In US$ if you bought at the high in Dec 1987 you would have had to wait until around 2005 to see this price again whilst getting no income.

 

[hobo-jo]

I'm not sure why some posters are trying to justify property over Gold over the long term, I don't think anyone here is claiming that Gold will make you wealthy if you just buy and hold for 40 years. Going back 10 years though physical Gold has outperformed all other asset classes (including property) and suspect it will continue to in the short to medium term. It's hard to say what sort of time frame because a few different scenarios could play out, we could just see a bubble formed and then pop as it did in the years leading up to 1980, but if Gold needs to be once again used in some form to stabilise fiat currencies then we could see it rise and plateau at a higher price for a greater period of time.

 

[Jodie701]

Would I be right to assume that most people still have a PPOR mortgage?

Wouldn't it be wiser to store extra funds there?

I don't know if we'll ever be able to pay off our ppor (I live in hope) but until then, I don't see the point in investing in gold, shares or anything else.