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  • Gold investing hits the front page

    As Mega is resting, I shall fill the gap today. On the front page of the online version:

    The Guardian (UK): How Can I Buy Gold?

    I hope this is not a contrary indicator, but the beginning of a stampede.

    With the markets going haywire, and investors concerned that their savings could disappear in a puff of smoke, a growing number of people are choosing to transfer their money into something more tangible than a bank account. There have been queues outside some bullion merchants, and one online gold broker, Bullion Vault, is opening around three times as many accounts a day as it was in early September. One couple told the BBC website they had gone so far as to sell their house and invest the cash in gold. "The phones haven't stopped ringing," says a spokesman for bullion merchant Baird and Co.

    Gold's appeal is that it is less prone to the fluctuations of the global market. Its value is fixed twice a day by the five members of the London Gold Pool. On Friday afternoon it sat at just over 526 a troy ounce (the unit of weight for precious metals) - although this is expected to rise.

    The London Bullion Market Association publishes a guide for those wishing to buy over the phone, online or in person, and you should note that, as a commodity, it is subject to capital gains tax. Dealers sell bars varying from one ounce to 100 ounces or larger, or you can buy gold coins - if you can find them. "We can't buy any more coins," says the spokesman for Baird and Co. "There are no sellers, only buyers right now."

    Many people choose to invest in exchange-traded funds or buy stocks in gold mining companies. However there may be transaction fees, and an added risk of volatility. You could cut out the middle man and stash your gold at home, though it's worth considering the extra insurance costs - and the added lumpiness to your mattress. From a financial point of view, there is little point in panic-buying jewellery - you will pay extra for the craftsmanship, and the metal will be less pure than investment-grade gold.
    It's Economics vs Thermodynamics. Thermodynamics wins.

  • #2
    Re: Gold investing hits the front page

    I am not touching gold, right now it seems the fear premium is going out qucikly. I think oil and uranium are a far better play right now.

    I believe that when all the probems are pronounced 'solved', and they will as soon as the governments takes over all the derivative bubbles, gold will not do well.

    While the banks had at least some oversight and minimum capital requirements governments have none and they have the ability to blow up these bubbles much bigger than they were before.
    Last edited by Tulpen; 10-13-08, 12:27 PM.

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    • #3
      Re: Gold investing hits the front page

      Originally posted by Tulpen View Post
      I believe that when all the probems are pronounced 'solved', and they will as soon as the governments takes over all the derivative bubbles, gold will not do well.
      Where are the governments of the world going to get the money to take over that $1.2 quadrillion derivative bubble? If you say print it . . . you better have gold!

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      • #4
        Re: Gold investing hits the front page

        This also appeared on the BBC News website a couple of days ago.
        http://news.bbc.co.uk/2/hi/europe/7663753.stm

        Anecdotally, I was visiting the Bay Area last week. I spent a total of one hour driving (airport to office and back) during which time I heard 2 radio adverts encouraging people to buy gold coins.

        This week I'm in Wyoming, and the TV adverts are telling people to sell their old gold jewellry for cash. I think these adverts have been around for a while, but are maybe becoming more common?

        If the gold price moves significantly up from here (in GBP, Euros or USD), I can see the mainstream media all jumping on the bandwagon, which could be the catalyst for a big run up.

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        • #5
          Re: Gold investing hits the front page

          Is this the equivalent of stories about people quitting their jobs to day trade during the Tech Bubble? Usually, the popular media are contrary indicators, no?
          Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. -Groucho

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          • #6
            Re: Gold investing hits the front page

            Originally posted by Master Shake View Post
            Is this the equivalent of stories about people quitting their jobs to day trade during the Tech Bubble? Usually, the popular media are contrary indicators, no?
            If so, no one has made enough money in gold yet for the party to be over. Some of the brighter bulbs around here (by my estimation) have posited that the groundwork is being laid for the type of hype to which you refer, and that the party won't start for another few months. If that's so, the true run-up is yet in front of us. Just, you know... don't blink if it happens, because when a hype-driven party ends, it tends to happen quickly.

            GRG55 pointed out the distinction between a hype-driven investment fad (gamed by Wallstreet) and a true bubble, like the Tech Bubble. The time scale is a lot shorter for a Wallstreet fad. If there is a big hype-driven run-up in gold, I would think it would be of much shorter duration than the Tech Bubble, because the precious metal asset class is much less "meaty" than high tech industry, and there are fewer ways to obfuscate.

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            • #7
              Re: Gold investing hits the front page

              Wait for the new A&E TV series "Melt That Gold" to complete its first season before jumping out

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              • #8
                Re: Gold investing hits the front page

                Originally posted by ASH View Post
                If so, no one has made enough money in gold yet for the party to be over. Some of the brighter bulbs around here (by my estimation) have posited that the groundwork is being laid for the type of hype to which you refer, and that the party won't start for another few months. If that's so, the true run-up is yet in front of us. Just, you know... don't blink if it happens, because when a hype-driven party ends, it tends to happen quickly.

                GRG55 pointed out the distinction between a hype-driven investment fad (gamed by Wallstreet) and a true bubble, like the Tech Bubble. The time scale is a lot shorter for a Wallstreet fad. If there is a big hype-driven run-up in gold, I would think it would be of much shorter duration than the Tech Bubble, because the precious metal asset class is much less "meaty" than high tech industry, and there are fewer ways to obfuscate.
                This is what I've been anticipating ASH. A long term appreciation of gold due to inflation, but a short term hype driven jump and then decline. Even though I think there will be long term gains to be made it will be somewhat masked by the little hype bubble.

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                • #9
                  Re: Gold investing hits the front page

                  Interesting to see the POG moving so strongly in EUR, AUD, CAD, NZD and dare I say . . . Icelandic Kronas & South African Rand . . . commodity based currencies have been whacked. Anyone in Australia not holding gold just got a 30% haircut in terms of their purchasing power in just two weeks.

                  There are enormous economic problems in this current crisis that were not present in the 70's. Global fiat currencies are on a race to the bottom as they try and reflate their economies. This has never been attempted on a global scale, my guess is it will fail spectacularly.

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                  • #10
                    Re: Gold investing hits the front page

                    Originally posted by ltullos View Post
                    Wait for the new A&E TV series "Melt That Gold" to complete its first season before jumping out
                    It's is not over till Suzie Orman says "BUY", that will be the top.

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