Looking To Buy Gold Bullion, Couple Questions

Why would they take anything? If not gold, then bullets, etc.? Completely flawed example when you do not offer an alternative. You are the same person that said on this same thread that gold had not been used as currency since the Roman empire........I know people that are chromisomal deficient that would not have made such a foolish statement.
Don't let your moniker reflect the person that appear to be in your statements, CoinNut.
I am not a gold fan per se, but you are obviously an enemy of it. Gold is only valuable because we say it is? Under that assumption, the societies from the dawn of man has been wrong. And you are the messiah that has gotten it right? If you are indeed correct, sign up and run for office. I'll vote for you in a New York minute.

1st, bluemule, I am not the enemy of gold. If you read my first post you will see that I clearly say that I have made plenty off of gold. A quick buy and sell. Not investing which was the original post. I am not a messiah that has figured it out. Give me an example of any financial "expert" that recommends gold as an investment that does not have an interest in a company selling it. I like gold. Its pretty and very profitable over short period of times. It just sucks over long periods of time.

2nd Bluemule, I have looked at the history of gold. Have you? before 2001, what is the annual rate of return of gold? Can you tell me? What is the point of bringing up fiat money? That was not the original question in the opening post. Why are you getting so upset?

Not trying to get in the middle of this but gold can only be viewed from the early 1970's forward in USD terms. Price controls (gold standards)were in place prior to that and what's happened from 1971 to 2011 is what needs to be considered. Looking at 1971 when price controls were lifted ($35/oz) to 2011 ($1338/oz today) yields a 9.5% return.

There are only two ways to calculate a rate of return for gold.

One is against other items of value. Oz au = so many gallons of gas, hours of labor, loaves of bread, tons of coal, etc, at two different dates. Those comparisons won't show much change. Another way of saying this is gold is a store of value--one, ten, or fifty years later, the same amount of gold can be traded for the same other items of value.

The other is to compare gold to a universally accepted bargaining unit, which is invariably a fiat money. Eighty years ago, oz au = 20 USD, today it = 1500 USD. The gold is the same as ever, so what looks like a 5.5% rate of return is really nothing more than the fiat money losing 74/75th of its value, or roughly 1% a year.

You must compare the gold to something to calculate a rate of return.

I agree with biggfredd. Gold is a store of value - not a currency. It is a commodity - not a practical money even if it does have $5 stamped on it. It is worthwhile to look at the buying power that the value of gold has. Can you correlate the price of gold to some consumer price index? Does the rising price of gold exceed the climb of the CPI? For example, if a loaf of bread cost $1 in 1980, how many equivalent milligrams of gold would it take to get that $1 loaf of bread. Track that year by year. If the number of milligrams to get a loaf of bread goes down while the price of bread goes up then you could start saying that gold is a good store of wealth.

Being a store of wealth is only half the story. The other half is translating that wealth into cash or money. Like I said before, gold is not money. No retailer in their right mind would take 1 gram of gold as payment for that $50 stereo you are trying to buy. Things are only worth what people are willing to pay for them. Gold can rise all it wants but that's useless if nobody wants to buy it or if you have to pay a premium to sell it.

Here's a counter argument to investing in gold. Gold is a shiny metal that is relatively rare which gets dug up out of the ground. It's pretty, it's soft, and it has a long history of being "valuable". But, gold doesn't do anything. It doesn't stimulate investment, feed the hungry, or employ the unemployed. That argument is used by investors who advocate smart stock investing. You have heard of many people making a fortune on the stock market but very few make a fortune in physical gold.

Don't get me wrong here. I like gold and I think it's a great thing to own in whatever quantity you feel comfortable with. Gold's long history, physical appeal, and usage in coins is enough for me to appreciate it. However, I don't know if I would stake my retirement on it.

Just some thoughts...

-- Boris