Gold Hot...hold It And Get Burned?

From a very long term perspective, gold will be a store of value and an inflation hedge. You can expect it to maintain its purchasing power over time but it is not going to grow above the rate of inflation over the long run. It is a commodity and has no intrinsic growth.

Whether you can profit by making shorter term calls on interim price movements is a different question. Most studies indicate that this cannot be reliablly and consistently achieved.

Ken

Will you get burned if the spot price goes back down?

I look at it this way....let's say you bought 2 Liberty Eagles, and 2 French gold coins when spot was $900. Spot drops to $750 so on paper you may have lost, but you still own the gold. So really you havent lost anything yet. You only gain or lose when you go to sell.

With that said, a diversified portfolio including a mix PM's is a prudent move, but I look at it more for the long haul. If you sit there and watch the daily swings in the spot price, you will drive yourself crazy. Sit and hold, and also decide on an exit strategy if a certain spot price is hit. If it's not hit, sit and hold until you need to sell or you pass away and your kids inherit these. Sure you might get burned, but you could get burned buying numismatics, silver, holding onto cash, etc. Everything has a risk. Personally I think you made a wise move to get into gold on the last dip, but not everyone will agree with me.

I have a problem with all the gold bugs that seem to be everywhere these days. Commodities markets are quite efficient. Sure the banks got burned with CDS and risky mortgages, but the degree of due diligence necessary to understand these is much higher than a simple commodity with little or no commercial demand.

I think the reason gold is $900+ currently is due to the fact that inflation is eminent. The smart money got in months ago (or even years). The surge in the price of gold was peaking as the market was beginning to fall. Look at a chart of gold factored for inflation. We are now nearing the adjusted nominal peak in 1980, just a few months before inflation rapidly moved up. If and when the current recession shows the first meaningful signals of ending, gold will plummet.

This is just my opinion, not investing advice, blah, etc. If I was such a seer I'd be wealthy by now, so do place no weight on my opinion.

Unless someone has an overabundance of food and would like some shiny trinkets

When I was away at school in my dorm (in the mid-1980's), we were all
on the "Ramen Noodle Standard" (our 'de facto' currency), and
that Standard would work well even in 'doomsday' scenarios.

Edible, non-perishable, easy to store and transport.

Even if there's no water and you eat the Ramen uncooked,
it's still easier to eat and tastier than Hardtack.

( If you ever want a REAL taste of the Civil War, just
ask a re-enactor for a Hardtack biscuit! )

What did the American Indians trade for?

I must chime in... you are all correct and even those posts not in yet are probably correct. Each persons level of correctness fluctuates with the markets/economic conditions.

Gold as an investment should be treated as any other investment... know what you're doing, seek advice and read up on varying opinions. Only months ago gold was at 670 odd US dollars. There was also a point not long ago when day trading gold ETFs may have been a gold mine in an extremely volatile week... if you're into sitting in front of a computer all day.

I remember about a year ago being told of the great advantages of mutual funds... times change and you hafta keep up with the changes for any investment strategy. At some point, for a true investor, gold may be out and the mutual funds back in. If I'd have listened to my "advisor" I would have those mutual funds. It is her job to sell them; even the best ones weren't for me. Currently I would only buy what appeals to me and not worry about getting a volume at spot. That is my strategy for me... not anyone else. I don't care if someone doesn't agree with me... and I will tell them so... then ask how their investments are doing. And I'd actually really listen... I might learn something or at least want to research it.

But... You gotta know when to hold 'em, know when to fold 'em, know when to walk away, and know when to run...

I've heard for the gloom and doomers saying to invest in brass and lead in the form of bullets... diversification! Don't put all your eggs all in one basket. Now imagine that being said by a grizzled old prospector from the dust bowl, depression, dirty 30s era... "You youngins shouldn't be puttin all yer eggs in one basket". Words from the wise.