Has anyone tried to buy gold lately?

[Indifference]

Hi Guys,

I am totally new to the topic of gold and metals investing in general.
Looking at the growth of gold prices over the past 30 years (see the chart attached), I am wondering what has prompted the extraordinary growth started in 2002? What are the factors driving this?
According to the chart, the price of gold has remained pretty steady over the 20 years period between 1980 and 2000, and in 10 years, the prices has been multiplied by about 6!
I'd love to hear the story behind this and the reasons underpinning this growth.

What is the general view of the people trading in this area? Are the prices considered to be over inflated?

Keen to learn more about the topic.

Ta

It is a boring tale of expansionary monetary policy, monetizing debt, currency devaluation and the economic climate forcing people to seek out capital protection on a portion of their investments..... boring stuff that most people think doesn't directly affect them.

Of course, I am not "most people".....

As for "are prices considered to be over inflated", I present exhibit A:

If you agree that ^^^^ amount of currency devaluation will have a significant currency devaluation affect, then sure you can also consider that gold has a long way to go....upwards.

Additionally, the Federal Reserve recently announced more quantitative easing, without limit.... yep, they are going to print, print, print.....and that will be in addition to that sharp rise in exhibit A! That is very bullish for gold.

The only way out of this mess would be to stop deficit spending, pay down the huge sovereign debts & get productivity growing again so that surpluses can be realized..... LOL, like that will happen any time soon! Just read the news and you will see we are heading the other way!

 

[hobo-jo]

I'd love to hear the story behind this and the reasons underpinning this growth.

What is the general view of the people trading in this area? Are the prices considered to be over inflated?

Keen to learn more about the topic.

I would highly recommend this PDF as a place to get started:

http://www.erstegroup.com/en/Downloads/0901481b800bb26c.pdf

Yes it's long, but easy reading, well structured, provides good background and insight into what we might see next.

 

[hobo-jo]

Another interesting read (shorter than above ):

GOLD – The Simple Facts

When it comes to investing in gold, investors often see the world in black and white. Some people have a deep, almost religious conviction that gold is a useless, barbarous relic with no yield; it’s an asset no rational investor would ever want. Others love it, seeing it as the only asset that can offer protection from the coming financial catastrophe, which is always just around the corner.

Our views are more nuanced and, we believe, provide a balanced framework for assessing value. Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies.

We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio. The supply of gold is constrained, and we see demand increasing consistent with global economic growth on a per capita basis. Regarding inflation in particular, we feel that the Federal Reserve’s decision to begin a third round of quantitative easing makes gold even more attractive.

We see the Fed’s actions in the wake of the financial crisis as a paradigm shift whereby the Fed is attempting to ease financial conditions and encourage risk-taking by increasing inflation expectations. Its policies will likely result in continuous negative real interest rates because nominal rates will be fixed at close to 0% for the foreseeable future.

To be sure, gold isn’t the only asset with the potential to hold its value in inflationary times. For U.S. investors, at least, Treasury Inflation-Protected Securities (TIPS) offer an explicit inflation hedge. What’s more, TIPS tend to be less volatile than gold and, if held to maturity, are guaranteed to receive their principal back – barring a U.S. government default (which we see as incredibly improbable). Still, history shows that gold is highly correlated to inflation and has unique supply and demand characteristics that potentially lead to attractive valuations.

Continues at: http://www.zerohedge.com/news/2012-10-01/pimco-gold-simple-facts

Note the above is not material from some crackpot perma-Goldbug, but an article from PIMCO, investment firm overseeing some $1.7t funds:

http://en.wikipedia.org/wiki/PIMCO

 

[Phiber]

Hi Guys,

Thanks for the replies and sharing your views, it's very much appreciated. A whole new world to me and something I have always been pretty curious about to tell the truth.
Hobo, appreciate you posting the link to the pdf document.
I've printed it out and will have a ready through.
The authors are this Erste bank, apparently pretty big in Europe.
I wonder if the nature of what they are reporting would then to be biased towards a certain side...?
Anyway this looks like a good starting point and I will certainly have a closer look.

For you guys who invest in metals, do you invest with physical gold?
To be honest, I like the idea of holding physical gold in storage somewhere, this certainly would deliver a feeling of safety different to other types of investments (and it's also why I like properties - holding something physical, brick and mortar).
If I hold some gold in a storage of mine, and want to sell it back, how can I go about it? Pretty curious about the process.

Cheers guys

 

[Indifference]

Try looking at:

silverseek.com
goldsilver.com
TFMetals.com
Kitco.com
MorganReport.com
PerthMint.com.au
JSMineset.com
traderdannorcini.blogspot.com
And of course hobo's sig link.... just to name a few

As for whether to Phys or not to Phys.... well that is a personal preference just like property. Some like LPTs while others want the bricks & mortar.

I'm a bricks & mortar kind of person. If you can't hold it, you don't really own it.... Just look up rehypothecation of precious metals and the like, to see my POV.

As for buying, selling, storing etc.... many choices available. Perth Mint, bullion dealers, safe deposit boxes, secure storage vaults etc... Once again, personal preference.

I've only been involved in this PM stuff for a few years and so far, so good. Read, Read and read some more. Sort the Bulls from the Bears and draw your own conclusions. The truth normally resides somewhere between the 2 extrema and only you can determine where your "comfort zone" (a.k.a. risk tolerance) actually is.

One final word of caution: be prepared to discover a whole new world of economic theories, stories, fairytales and truths.... you just need to determine which is which! Good Luck!

 

[saiman]

physical is always better particular when it comes time to sell

coins and small denominations are also much easier to sell and trade than kilo bars for example

be aware that certain brands have recently been found to have fakes floating around like PAMP bars....they fill it with tungsten and are identical in look feel and weight

where possible, trade in cash to avoid CGT - you can get some good deals at silverstackers.com at spot prices or less!

meanwhile gold has jumped almost $50 aud in the past 10 days!

 

[Sunfish]

And if you start stacking at home, bite your tongue about owning physical on forums.

 

[Aaron Sice]

And if you start stacking at home, bite your tongue about owning physical on forums.

hahahaha - stacking at home.....those gold bricks holding your door open, are they real or fake?

 

[willair]

physical is always better particular when it comes time to sell

coins and small denominations are also much easier to sell and trade than kilo bars for example

be aware that certain brands have recently been found to have fakes floating around like PAMP bars....they fill it with tungsten and are identical in look feel and weight

I don't know who told you that but it would be hard to match it up,per gram plus a simple acid test would tell you within 3 seconds how pure the gold is,after all the Chinese have be using that 100% bulletproof test for 100;s of years..



[FONT=Arial,Helvetica]Scratch the object with a file and apply a drop of Nitric Acid. If the object turns a bright green it is gold plated or gold filled on base metal. If the object turns a pinkish cream colour it is plated or gold filled on silver. 10 karat gold will turn dark brown. 12 karat gold will turn light brown. 14 karat or higher will have little or no reaction.[/FONT]
[FONT=Arial,Helvetica]A test stone can be used to test a streak of metal laid down from the jewellery, or a small groove can be filed on an inconspicuous place of the jewellery and tested.[/FONT]

 

[saiman]

I don't know who told you that but it would be hard to match it up,per gram plus a simple acid test would tell you within 3 seconds how pure the gold is,after all the Chinese have be using that 100% bulletproof test for 100;s of years..



[FONT=Arial,Helvetica]Scratch the object with a file and apply a drop of Nitric Acid. If the object turns a bright green it is gold plated or gold filled on base metal. If the object turns a pinkish cream colour it is plated or gold filled on silver. 10 karat gold will turn dark brown. 12 karat gold will turn light brown. 14 karat or higher will have little or no reaction.[/FONT]
[FONT=Arial,Helvetica]A test stone can be used to test a streak of metal laid down from the jewellery, or a small groove can be filed on an inconspicuous place of the jewellery and tested.[/FONT]

I think counterfeits have come a long way since your acid test was effective - the only real way to tell nowadays is using ultrasonic....

http://www.zerohedge.com/news/2012-...ten-filled-gold-bars-are-discovered-manhattan

http://www.myfoxny.com/story/19578206/fake-gold-bars-turn-up-in-manhattan

these bars were sold with "certificates"....they were hollowed out and filled with tungsten and wrapped up again or replicated perfectly ....the cover is still 9999 fine gold

 

[Aaron Sice]

I don't know who told you that but it would be hard to match it up,per gram plus a simple acid test would tell you within 3 seconds how pure the gold is,after all the Chinese have be using that 100% bulletproof test for 100;s of years..

will, they're core drilling gold bars and filling the cores with tungsten.

impossible to tell without destroying the bar.

 

[willair]

will, they're core drilling gold bars and filling the cores with tungsten.

impossible to tell without destroying the bar.

Aaron,saiman,Thanks for that i was wrong,most of the gold bars i see go through the auction is old and has been in someone safe for 20 years,i'll run that past the Chinese scrap gold buyer next week and watch their faces but i think they would be onto that scam..

 

[Phiber]

Hi guys,

Thanks for the replies, much appreciated!
Thanks for the links too, this is good info.

These fakes are pretty well done and it would be quite hard to detect I reckon.
Given some of these go around, how does one go about selling gold?
I imagine there would be some sort of inspection of the bar prior to the sale?

How do these typically get sold? Directly to individuals through a private sale?
Through some sort of retailer?
Basically if you wanted to sell your gold tomorrow, how would you do it?

Saiman previously said smaller bars are easier to sell – is that the general consensus? I imagine it’s like trying to offload a unit in your average suburb vs a mansion in Potts point?

Great topic, cheers everyone

 

[Aaron Sice]

it's harder to tell with the 1kg+ bars, but witht he smaller stuff like coins etc just be wary of fakes - things like very detailed items that aren't detailed (like QE2's crown), odd spaced lettering etc.

i stick to smaller bars most of the time - the 1oz/5oz/10z size and small coins - 1oz, 1/2oz and 1/4oz.

 

[Sunfish]

With the smaller stuff, be careful of anything out of China. I would even avoid Pandas. [Where have we heard that before?]

But I haven't heard of them counterfeiting legal tender coins such as those from Perth Mint, US Mint, Canada etc.

If you are thinking of going this way you could do worse than sovereigns. All the "old" nations minted them by the millions and in a rare display of common sense they are a standard size and purity. If ever our financial systems failed to the point where we were trading in gold, the sovereign could once again be "The Standard".

You shouldn't pay a lot over spot of nondescript dates either.

 

[hobo-jo]

But I haven't heard of them counterfeiting legal tender coins such as those from Perth Mint, US Mint, Canada etc.

It is happening, but still currently easy to tell the difference between real and fake if you know what to look for:

Maple: http://forums.silverstackers.com/topic-20677-fake-and-genuine-2011-maples-side-by-side-page-1.html
Lunar: http://www.silverlunar.com/2012/03/silver-lunar-dragons-fake-vs-real.html

 

[saiman]

Hi guys,

Thanks for the replies, much appreciated!
Thanks for the links too, this is good info.

These fakes are pretty well done and it would be quite hard to detect I reckon.
Given some of these go around, how does one go about selling gold?
I imagine there would be some sort of inspection of the bar prior to the sale?

How do these typically get sold? Directly to individuals through a private sale?
Through some sort of retailer?
Basically if you wanted to sell your gold tomorrow, how would you do it?

Saiman previously said smaller bars are easier to sell – is that the general consensus? I imagine it’s like trying to offload a unit in your average suburb vs a mansion in Potts point?

Great topic, cheers everyone

if you are really paranoid you can pick up an effective ultrasonic detector from ebay for around $100.

small denominations are easier to sell because they appeal to a wider audience who:

• may not have a lot of money
• are moreso collectors rather than speculators
• you are able to sell 20 coins to 20 different people fairly quickly and with less risk

If I REALLY needed to liquidate my gold/silver/platinum/palladium tomorrow I will probably approach some jewellers or casting companies like Palloys or Kashine who are always interested in some cheap metal

That or I can sell it back to any reputable bullion company for 2% under spot

 

[Graemsay]

Not about buying or selling gold, but an article about the precious metal outperforming super prime London property.

http://www.telegraph.co.uk/finance/...outperforms-London-mansions-Knight-Frank.html

Looks like Hobo-Jo was right.

 

[Phiber]

Hobo-Jo, I liked your gold report.
Has anyone got something for Silver?
Sounds interesting too

 

[Aaron Sice]

phase three coming - i think maybe Mar 2013 ish...