I just saw a Utube video with Robert Kiyosaki and he was talking about the need to buy gold and silver. He feels it’s the only protection during a recession/depression. Do any of you invest in gold/silver?
I invested in precious metals a little bit in the past. In retrospect I would have been better off putting my money into guitars. Gold does seem to be glittering up a storm these days though. But there was a secular bear market in commodities for a long time. A couple of things to remember about gold: one is that something like 25% of all of the gold ever mined is in some sort of Gov’t. reserve somewhere and if this ever started to be sold that could change things. So the idea of a shortage (supply) is something to be realistic about. Also, from what I’ve been led to believe, over the long run the value of gold hasn’t kept up with inflation. Not counting temporary runs, obviously. Say what you want about support levels but there was an old rule of thumb that an oz. of gold would buy a half way decent man’s suit. But we might see $1500 gold. And $300/oz. isn’t going to happeny’s opinion again in most anybodThe question is what price would it more or less be stable at.
Sorry about that. I hit the wrong key. That last sentence should have read : $300/oz. isn’t going to happen again in almost any one’s opinion.
But do some serious research before you get caught up in the excitement and decide to do a Plastic Carry Trade. You know, getting low interest credit card advances to buy bullion
Something to of course to remember is that dealers usually sell for over spot and buy for less; something like the dreaded “spread” which can take a lot of the fun out of a commodity trader’s plans. kitco.com is a great metals site with charts, articles and forums. They tend to be bullish so do a search and get all sides of the picture.
Gold and silver are good buy and hold in times of inflation.
I would not use precious metals to hedge for recession. If you want to hedge for recession, hoard cash.
In recession (a genuine recession) your cash will buy more and more per dollar. Which means that your dollar will buy more gold per dollar.
In inflation, where the dollar is dropping value fast, everyone is trying to get their wealth out of dollars and into hard assets. Best investmetns for inflation: gold, a bit of silver, and real estate.
If you are a survivalist and still believe the crunch is coming, I would recomend silver coins in small denominations. You don’t want to give an entire krugerand to pay for a loaf of bread, just becasue nobody has any change.
Here’s what gold does for you:
In the mid-1800s, one ounce of gold would buy a nice, tailored man’s suit. Today in 2008, an ounce of gold would, uhhh…buy a nice, tailored man’s suit.
Keith
If someone really is intent on investing in PM (precious metals) they need to concern themselves with the ratio between the cost of gold and silver. As of late that ratio has been over 50. Historically maybe even going back centuries the ratio was around 20 (or less). Which means you could buy an oz. of gold with 20 of silver. So that might tell you that silver in today’s mkt. is undervalued. The gold bugs and bulls would tell you that if gold can hold above 950 than the sky’s the limit. But that would be a bubble and we all know about those. Institutional short selling is a big factor in these markets. A question:
what is the REI equivalent of a short position? Some sort of option?
This is only a 2 year chart of the Gold ETF…
http://finance.yahoo.com/q/bc?s=GLD&t=5y
Keep in mind that Donald Luskin was buying gold at $225 per ounce during the tech wreck and investors demanded their money back from his fund…
Gold is up %400 from that point…Gold just like Oil is extremely overbought…My feeling is that gold is going to have a severe pullback…I would bet that gold has made at least %80-%90 of it’s move and buying now is nothing more than impulse buying…You make money when you are ahead of the buying curve…
The pros are getting long the US dollar…The fed is nearing the end of cutting rates and the dollar has been hammered…
Investing In Gold 2008 Learn About the Five Reasons You Should Own Gold in 2008 I did click here and get free information and pricing like I did a few months ago when it was lower. They give free information so click this link and fill out your name and get a free catalog of all type of gold and silver coins catalog.
http://publishers.xy7.com/z/51888/CD8119/
The time to buy gold was a while ago. The time to buy something is NOT when everyone is talking about it. That’s called jumping on the bandwagon. I’ve read somehwere that you want to buy after the first 20% have bought and get out before it reaches 80% of the peak… Or something like that… :banghead
You know, those are good thoughts and nice sayings, but a little harder to implement.
I remember reading that Kyosoki was saying to buy oil several years ago, when it was hitting $50 a barrel. I thought like you said that everyone was talking about it, the charts showed that it was overbought, it was hitting historical highs, blah blah blah. So I shorted oil at $55. It did exactly what I thought and dropped for while, then took off again. Turned into an expensive lesson. Things can and will always show overbought in an extended run, when there is reason for it. Remember, everyone was talking about oil at $55, $75, $85, $109 a barrel, and in all cases but the last, it was still a good buy. How do you know that the commodity run is over?
DB
I wish I knew the answer to that. I’d be a rich man.
How do you know that the commodity run is over?
Bernanke is close or done lowering rates…He will only stay flat or increase over the next few years…Oil and Gold will plateau as the US dollar slows the selling pace…Thats how you know the commodity run is way past the 7 inning stretch…The time to buy gold was long ago…I’m not saying it’s over I just wouldn’t touch it here…
Another way to play this is to BUY Crude Oil PUTS.
Crude Oil puts have been HAMMERED because of the weakness in the dollar and the strength in OIL.
Two things at play here…1st… Rookie’s excellent observation that the interest rate cutting has probably reached it’s end… and 2nd…The U.S. economy is going down the tubes. AAA released a report last week which showed that people looking for a new car said GAS MILEAGE was THE determining factor in their buying decision.
As our economy slows…so will demand for Gasoline…people are cutting back ANYWHERE they can. I work with Firefighters, these guy’s LOVE their pickups, EVERY single guy I work with has bought a used Toyota 4 cylinder to drive back and forth to work in. (they used to break my b@lls about driving Toyotas until they saw the mileage on these cars, 200K PLUS and STILL can’t hear the engine running) Now they’re all asking me to find them one. That may sound overly simplistic…but I can assure you this is NOT happening just with these guys.
You can buy Crude Oil August 79 PUTS for around $500 right now. The “in the money” CALLS currently trade at $7100. If Rookie is right (he does have an excellent track record) and Oil breaks down due to a stronger U.S. Dollar and weaker demand… these options could EXLODE over the summer!!!
I think the stuff, (gold), is highly overrated.
What are you gonna do with it?
I should have paid more attention to those marble-shaped pellets of iron-ore that landed me flat on my ass in 2005:
Drove my vehicle from Niagara Falls, New York to Toledo, Ohio to meet up with the ship I was working on. It hauls 25,000 tons of the stuff from Lake Superior to the southern Great Lakes port cities.
Trying to find the dock, after parking my vehicle, walked across a clearing that had these pellets scattered everywhere and within a second I was horizontal.
Oh…and then my job on the boat was to work the 45 levers that spilled this cargo out onto the conveyor belt in the bowels of the ship.
Instead of cursing, shoulda been researching:
1600% increase in it’s stock price these past 3 years:
CLF
Not too often you can turn $10,000 into $160,000 in 1000 days.
:banghead
Much more practical than gold…you can build a lot with it, especially when the country’s population is 1,300,000,000.
-Mike
My spouse had been pestering me to get in on gold back when it was around $300. When it shot up to $500 (back in June 2007???), he bought and I was FURIOUS. I yelled and screamed, “since WHEN do we ever buy HIGH?!?!?!?”
Now, I’m pestering him to sell sell sell! He’s saying it will get to $2K before the election. I’m nervous and I don’t buy it. $2k??? Maybe $1000 or $1200, but $2k is pretty hard to believe. Then again, I was wrong when it was at $500.