Comments on: When, If Ever, Should You Buy Gold?

By: Jim

Jim — Mon, 08 Mar 2010 19:42:55 +0000

Gold is as valuable (or not) as people agree it to be, just like paper money. Gold is seen as valuable because it has been seen that way for a long time, not because there is any intrinsic value in it (other than the minor manufacturing and jewelry uses.)

If you think gold will continue to be agreed upon by the world as valuable, buy gold, but don’t think, as so many gold sellers tell you, that it’s a “hard” asset, insinuating that it has intrinsic worth. Humans give value to things, whether it be paper money or gold or whatever, because they need to in order to trade, etc. Gold is only one among these. If you think the world will be going to hell in a handbasket, you might do as well to stockpile food, water, and such as buy gold. Bet that if the badness lasts long enough, your gold won’t help you fend off the hungry crowds that don’t own gold!

By: David Shafer

David Shafer — Thu, 04 Mar 2010 21:24:48 +0000

Purchasing gold is speculation. It doesn’t provide cash flow, income, or dividends. You might want to start enlarging your thinking beyond growth to a value approach like Warren Buffett. As to speculating on gold, your guess is as good as anyone’s.

By: Steven and Debra

Steven and Debra — Mon, 22 Feb 2010 16:53:15 +0000

Confidence in the dollar and our economy is certainly a consideration when buying gold. The dollar has been the reserve currency of the world for quite some time. The question is, will it be a permanent condition? What might replace the dollar? And, upon what foundational basis will the new currency be any better than the old one?

Right now, Euroland is coming apart at the seems. All the media focus is on the PIIGS (Portugal, Italy, Ireland, Greece, and Spain). In comparison, it would appear the U.S. economy is doing much better than Euroland because of all the media attention. Is this comparison justified or just feel good media noise?

Britain is also on the financial ropes and after the currency raiders get through with Euroland who is to say the pound won’t be targeted next? Would the dollar be next after the pound? The currency markets are the most sophisticated and largest of all markets and also the most ruthless. When the currency market smells blood, as in Euroland, no one is shown any mercy. We wouldn’t be surprised, however, to see the Federal Reserve coming to the PIIGS rescue in attempt to confuse the currency sharks circling the Euro. How much more can the Federal Reserve and the U.S. Treasury paper over these problems without destroying the dollar in the process?

Ultimately, it is a choice between paper promises and that which is tangible. If one believes that society’s values, overall, are in a state of improvement, paper promises might be the preferred “safe harbor.” If, on the other hand, one believes that society’s values are in still in a bear market of sorts, gold would offer a much more “safe harbor.”

It is really a fundamental consideration of where one believes we are in the cycle of trust. Trust is cyclical and trust is often thrown under the bus when society’s core values tank. Do you trust the Big Five banks, Goldman Sachs, AIG, the Federal Reserve, the U.S. Treasury, and our politicians to be open and transparent? If you do, buy the paper. If you don’t, buy gold.

By: The Rat

The Rat — Sun, 21 Feb 2010 20:38:54 +0000

Personally, I find gold overvalued and I’m waiting for it to come down a sizable level before I make a move.

To date, I have absolutely no gold exposure in my portfolio (physical gold, certificates, stocks, etc.); however, given the financial collapse over the past year or so and devaluation of the U.S. currency, my goal is to eventually buy a few 1oz gold bars (physical gold) in the advent of a global crisis.

Nice post!

By: Daddy Paul

Daddy Paul — Sat, 20 Feb 2010 00:27:11 +0000

My two cents if you are going to invest in gold buy gold mutual funds. Most of these funds invest in mining stocks. Often these firms store gold and sell when the price is high making the fund price very volatile. Many times these firms are diversified into more than just gold making them better investments for the average joe.

By: MoneyEnergy

MoneyEnergy — Wed, 17 Feb 2010 16:40:27 +0000

Agree with Matt SF on the parabolic slope – that’s a bad sign. That said, gold has corrected recently, blunting its parabolic pattern. Nice article!

By: Matt SF

Matt SF — Wed, 17 Feb 2010 16:35:29 +0000

“Last time I checked buying something when it is at its most expensive is a bad idea.”

Agreed, or when the slope of the stock chart has a rate of appreciation larger than 45 degrees.