Hello there,
So after a very long period of discussion (not due to my own fault), I've decided to invest in gold.
Up until this point, I've been stubborn in thinking that buying gold and physically storing it myself would be the best way to store it. However - it has recently been recommended to me to look into companies such as BullionVault, whereby you add funds to an account to buy gold/silver, and they store & insure it for you.
I have two concerns and questions with this:
Firstly:
With the amount I'm purchasing (probably £5,000/$8,132 at first, then £15000/$32,529 at a later date) I think with a company like bullionvault, depending on the amount you buy, you only own a certain amount of a bullion bar. For example, if I bought 0.15kg, it would be that amount of a 1kg bar. So essentially all bars are part-owned by many people. I cannot confirm this, but I believe that is how it works.
In your opinion, do you think this is much of a concern or problem?
Secondly, is there anything more unsafe/risky in purchasing gold at a company like bullionvault as opposed to buying it and storing it myself?
Just looking for some advice on this from those who know a lot more than I do. All this time I've convinced myself self-storage is the way to go, but buying it from somewhere like BullionVault seems very simple for the average individual to do.
Thanks,
Toby
I would rather have the physical metal on hand. It could be seized from bank vaults and deposit boxes by governments in future. They could fix the price of gold against a new currency. They could do any number of awful things, but they can't do anything to gold coins you have hidden and on-hand which they do not know about. I would buy coins if I were you.
That has been my thoughts for the most part. But because of it's simplicity to buy and store it's quite appealing to do.
What would you say if the gold I bought I owned fully, but was stored via a company? So if I bought a 100g bar or 1oz coin, it was allocated just to me, and not partly owned. Would you have a different opinion then or still prefer physical metal to hold personally?
(I believe bullionvault does this at higher prices than I can afford, but I know of other companies that accept this. And thus if you ever wish to have it delivered to you there is that option)
I saw some guy on MSNBC that was saying that the plan the whole time has been to go back to a gold standard and he divided the amount of gold held by the governemnt to M1 and the price of gold will be revalued higher than it is now to avoid deflation. At the time (2010 sometime) he said that the price would be around $5000. So we can still make money on the devaluation, especially if they do not confiscate the holders of it.
It almost sounds like a reward for those that hold gold...
Don't buy gold right now...
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
1. Grab all the gold you can get your hands on. If Esuric is foolish enough to sell you his, well some people have to learn the hard way.
2. Funny thing about gold. People like to steal it.
They will give you pages and pages of paperwork proving you own the gold in their vault, but when the chips are down, their vaults might be empty. Or they might have sold the same gold coin to twenty people, "storing" it for them all.
3. Keep it in your physical possesion. Don't tell anyone you even have it, much less where it is.
4. Don't buy anything fancy. Go with bullion, or the standard coins, Canadian Maple Leafs etc.
5. Beware who you buy from, that he isn't marking up way past the spot price.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
I would say that land is a better physical asset to hold than gold at present. By most measures, land is cheap at its current prices, and has lower taxes on transactions than gold for longer holding times. You can rent property to offset the holding costs, or you can develop a property and sell it at a profit to offset the holding costs (or even add to your wealth).
The advantage to gold, of course, is that the holding costs are extremely low and it is a very compact place to store wealth. Unfortunately, if you sell your gold in the US after holding it for a long time, it'll cost you a mint in capital gains taxes (since the dollar likely fell apart over the time that you held it). So, the transaction costs go up exponentially the longer that you hold your gold.
That said, maybe gold is still the best short-term wealth storage vehicle... or a long term wealth storage vehicle so long as you sell it in Mexico.
If you pay for gold in cash, and store it yourself, there is no trail. It is essentially tax free. You can look up ways to hide your valuables on google. Floorboards, false light switches. Lots of creative stuff.
Well, practically yes, but legally no. By the law, you're supposed to report your capital gains; however, as long as you do small transactions, nothing is reported to the government. Anyhow, with recent developments, I think that trading in dollars for gold is probably a really good bet at the moment.
I'm not saying that capital gains tax law is good, or even that it's not extremely harmful... I'm just pointing out that it is.
After some reading and some of my other posts on this forum, I've come to realize that the capital gains tax is probably the #1 reason that the Federal Reserve has a monopoly on the medium of exchange in the United States.
I don't think that you will have to pay any capital gains taxes on the sale of gold, the physical commodity, if you make a private sale. Your ownership of gold is not registered anywhere, nor is there a record of cost basis.
If, however, you had invested in an ETF -- or some other investment vehicle -- that is based on gold, then you would be liable for capital gains taxes.
Also, the ownership of the physical commodity is safe so long as you abide by the rule of not bragging about your ownership. You can easily have a safe mounted in a concealed space between walls or underneath floors. I have even heard of people creating a concealed safe in the concrete floor of their basement. You could also go the route of burying sealed containers on your property.
"All men having power ought to be distrusted to a certain degree." -James Madison
"If government were efficient, it would cease to exist."
Tobe: Hello there, So after a very long period of discussion (not due to my own fault), I've decided to invest in gold. Up until this point, I've been stubborn in thinking that buying gold and physically storing it myself would be the best way to store it. However - it has recently been recommended to me to look into companies such as BullionVault, whereby you add funds to an account to buy gold/silver, and they store & insure it for you. I have two concerns and questions with this: Firstly: With the amount I'm purchasing (probably £5,000/$8,132 at first, then £15000/$32,529 at a later date) I think with a company like bullionvault, depending on the amount you buy, you only own a certain amount of a bullion bar. For example, if I bought 0.15kg, it would be that amount of a 1kg bar. So essentially all bars are part-owned by many people. I cannot confirm this, but I believe that is how it works. In your opinion, do you think this is much of a concern or problem? Secondly, is there anything more unsafe/risky in purchasing gold at a company like bullionvault as opposed to buying it and storing it myself? Just looking for some advice on this from those who know a lot more than I do. All this time I've convinced myself self-storage is the way to go, but buying it from somewhere like BullionVault seems very simple for the average individual to do. Thanks, Toby
Probably one of the first questions you need to ask yourself [even before you consider where you want to store it] is:
" am I buying gold with money I can, or cannot , afford to lose?".
Please see: "The Golden "Bubble" - Time to Buy, or Sell?
Regards, onebornfree.
For more information about onebornfree, please see profile.[ i.e. click on forum name "onebornfree"].
I'd say that you should purchase a safe if you're buying that much gold. They're not terribly expensive. It's probably best not to advertise your gold ownership by involving another party. A $300 safe discreetly bolted to your concrete basement floor somewhere out of view can store a lot of wealth, and defeating said safe would require a bit of effort for any would be criminal.
I don't see a real reason to have someone else hold your gold.
Chris:I don't see a real reason to have someone else hold your gold.
Division of labor?
But more practically, what about the military ransacking homes, like happened to the Jews during WWII? You could have a bank vault in your basement, but the military has enough C4 to blow it open.
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
Do you think we'll really see the days of superpolice brutality again?
Sure. Cops are already brutal if they want to. I think there isn't more police brutality because not many people resist arrest.
Thanks for all the responses, they have been very thoughtful and helpful!
After some thought I decided to pass buying gold on bullionvault. I liked the idea of the simplicity of being able to buy and sell on there, but if I ever had a company store gold on my behalf I would prefer to have the choice of it being delivered to me if I chose too.
What I’m hoping to do is make a small purchase of gold first, then get large quantities later on.
I’ve seen many financial advisors recommending to put only 5-15% of my portfolio/investment into gold, at most. However, I was considering to buy a much higher % than this. Do you think this would be much of a concern if I chose to?
My main concern is if I don’t look at buying gold soon, it will reach a much higher price. It’s taken me over a year to make a decision, and gold has gone up £250 since then.
I was also considering an investment in silver as well
If the US military starts ransacking homes for treasure (a good reason to keep your wealth on the down-low, mind you), there are bigger problems, and I'd suggest taking your gold and quietly relocating to Mexico or Canada.
Buy commodities, just not gold right now. Even compared to food and oil, gold has risen in price dramatically. While the international central banking system is definitely coming apart at the seams and they are all printing money competitively, it is not clear that hyperinflation is the inevitable result. The trouble with gold is not that it can't keep going up forever... as long as there are central banks it not only can but must. But that doesn't mean it can't crash from $1,650. The trouble with gold is that it has attracted a lot of fair-weather investors, a lot of "technical" investors, and a lot of other latecomer herd investors. These people will shed their paper gold in a nanosecond if the gold price drops, say, 15-20%.
I believe the central banks are looking for an opportunity to punish gold investors. If a panic starts in gold, I anticipate the central banks to pour fuel on the fire by announcing large sell-offs and a formal end to quantitative easing to "harden up" the paper money. I don't see how it's impossible to have a 50% correction in gold.
In the long run, of course, gold will just continue going up and up until the central banking system implodes on itself. But until it does implode, they will keep playing the same games they've been playing for centuries. I recommend buying any other commodity right now than gold or silver. Buy copper, buy platinum, buy oil, etc. It's not clear that we are certainly headed for war. Until war becomes certain, you really can't be sure that gold couldn't have a massive correction on the downside. The safest thing to do is stay out.
Clayton -
^great post. I still say that you should buy land at the moment. To quote Samuel Clemens, "They aren't making any more of it."
...well, except in Dubai.
Just don't buy land within the US. The trouble with land is you can't take it with you. Faber and Rogers also recommend buying land and I would direct anyone considering buying land in foreign countries to read what they've said about this.
Actually, I'm looking at platinum spot which is almost 1:1 with gold. I recommend dumping your gold holdings for platinum. Platinum:gold was riding around 2:1 just in 2006. Unless a new global monetary system based on gold is right around the corner (hahahahaha!!!!!!!!), gold will not likely achieve a permanent 1:1 or lower ratio with Platinum. This says to me that gold/silver are overbought for inflation sheltering and should be sold into platinum or some other cheap commodity. This will continue to provide inflation sheltering while avoiding the bubbliness of gold/silver.
What about palladium and rhodium?
I'm nervous about Rhodium... the market is extremely tiny. Looking at old charts shows that Rhodium was selling almost as low as $100/oz. as recently as the mid-1990's but it hit over $10,000/oz. in 2008. Volatile, to say the least. I don't really know anything about palladium.
My thinking is that unless the paper money system is dismantled and a new commodity standard (e.g. gold) is chosen, gold/silver/platinum will likely return to something resembling their usual (aka pre-2001) ratios. When I bought my gold coins, I would have killed to exchange them 1:1 for platinum coins. I don't think a whole bunch more platinum than gold has been mined in the meantime. I don't think there are vast above-ground stocks of platinum like there is of gold. This partly speaks against platinum because this means it is not behaving like a true monetary metal but at least you don't have to worry about stocks of platinum being dumped into the market. So, unless paper money is dismantled worldwide, either gold will correct downard relative to platinum or platinum will correct upward relative to gold. Either way, exchanging gold coins almost at par for platinum coins seems like a no-brainer.
Depressing quote:
"I think we’re moving into an environment where if you lose only 50% of your money, you may actually be lucky."
- Marc Faber
Tobe: Thanks for all the responses, they have been very thoughtful and helpful! After some thought I decided to pass buying gold on bullionvault. I liked the idea of the simplicity of being able to buy and sell on there, but if I ever had a company store gold on my behalf I would prefer to have the choice of it being delivered to me if I chose too. What I’m hoping to do is make a small purchase of gold first, then get large quantities later on. I’ve seen many financial advisors recommending to put only 5-15% of my portfolio/investment into gold, at most. However, I was considering to buy a much higher % than this. Do you think this would be much of a concern if I chose to? My main concern is if I don’t look at buying gold soon, it will reach a much higher price. It’s taken me over a year to make a decision, and gold has gone up £250 since then. I was also considering an investment in silver as well Smart move. You can buy the physical bullion and store it yourself. Personally I don't like not having direct ownership of the physical stuff. As for buying right now or delay purchase... bear in mind gold is long term inflation insurance. You are buying to hold unto it for as long as possible and, possibly, pass it on to your heirs. In the end gold always wins, mostly because I don't see a full gold standard making a comeback in our lifetime (though I'd so like to be proven wrong) and there's very strong demand from Asia, particularly India. I wouldn't consider anything over 10% of your portfolio in precious metals. There are still other ways to diversify investments and right now it's a good time to buy stocks and other (sound) financial products. I am not a believer in silver: yes, I have some but it's small fries compared to gold. You may consider platinum as an alternative to silver: right now it's about the same value as gold and not as subject to market fluctuations. In my opinion it's still a bit undervalued compared to gold but that could change as investors look for alternatives to gold. Also consider palladium and rhodium. Right now they both good value for money, though they are seen as commodities and not as an inflation insurance. Together we go unsung... together we go down with our people | Post Points: 5
Te best thing I see that you'd get from it is that you are much secure specially when it comes to price range and insurance issues.
Esuric: Don't buy gold right now...
Sunday: gold at $1,694. up $44 in one day. All time high.
up $44 in one day. All time high.
Don't you think such price movements indicate abnormality? There are other things to buy that won't lose their value to inflation and which are not experiencing dramatic price movements like gold and silver are. The prices of platinum, oil, agriculture and other commodities will rise at least on par with inflation. I call it quits for gold at $1,650... I'm priced out.
Sell me all of yours at spot, gladly.
I've got nothing against all the commodities you mention. They are good things to invest in now, too.
But the fact that gold is manicly high, more than the other stuff, is not a sign that its price is an illusion. There is a reason for it, to wit:
The way it's been explained to me, people see gold as money. Even though it is not legal tender anywhere in the world, they still think it's money. In 2008, when things went bad, people ran like sheep to the dollar. This time round they have wised up, and don't want the dollar. Which is making them think, well why any paper currency. So they are running to gold.
Since nobody is planning on printing less, the reason for the rush to gold will continue, for the same reason it started. The only question is, when will it become a true mania, bubble, folly, whatever you want to call it, meaning that people will buy it not as a run to safety, but to speculate with. And I've heard that the sign of a mania is when all the people on the street who don't know anything suddenly start buying gold, too. Then it will be a bubble.
When will the bubble burst? When interest rates are so ridiculously high that people will want to sell their gold, inflation be damned, in order to get that high interest. Not gonna happen that quickly.
Clayton: Don't you think such price movements indicate abnormality?
Don't you think such price movements indicate abnormality?
Gold is not going up. It's the paper currencies by which its value is measured that are melting down. Gold is cash. Buying paper currency with gold (i.e. selling gold to hold currency) is the risky speculation -- the proverbial catching of a falling knife. Why should USD stop falling at 1/1650 oz and not go all the way down to 1/100,000 oz instead?
Gold is cash.
No, it's not.
Buying paper currency with gold (i.e. selling gold to hold currency) is the risky speculation -- the proverbial catching of a falling knife.
Who said to buy paper?
Why should USD stop falling at 1/1650 oz and not go all the way down to 1/100,000 oz instead?
Given the broad swath of things against which USD is not devaluing at a rate even close to its devaluation against gold and silver, I'm inclined to believe that gold and silver are in a bubble rather than that everything else is depressed.
people see gold as money
About the video.
They might think it fake. I would, too, when approached by some guy in the street practically giving it away.
Think Nigerian prince.
It broke $1700!!! Donde esta el PPT?
If someone offered to give me a $100 bill for $5, I too would be skeptical. However, I would definitely be interested. Unless I was in a terrible rush, I would at least see if I could figure out if it is a fake and point out what I thought was fake about it. If they offered it for free, I would definitely take it, what's there to lose? I think most people would behave similarly. The difference in behavior between offering a massive discount on a $100 bill versus a gold coin means that people don't see gold as money and gold is not cash. By virtue of disuse, people are not generally able to tell genuine gold from a fake.
Clayton: Gold is cash. No, it's not.
Markets are forward-looking.
gold is at 1719.6 at 2:30.
Huge leaps while the stock market gets beaten like its staying in abu ghraib
I may be wrong, and it may very well be a good time to get into gold, but I believe that it's way too early to reach a definitive conclusion. There are certain anomalies present within the market at the moment; traditional relationships have broken down, and there are contradictory signals.
For example, the stock market is crashing and bond yields are falling, representing deflationary expectations, and yet the price of gold is sky-rocketting, which traditionally represents inflationary expectations. This means that a part of the market seems to believe that there will be a traditional deflationary recession (double-dip), while another portion of the market expects future rates of inflation. This could be in anticipation of QE3, which will most likely be extremely aggressive (Bernanke is a hardcore inflationist).
Additionally, gold seems to be decoupled from other commodities which, historically speaking, have been inflation hedges as well. I'm referring to silver and petroleum. So I still think it's too early to call. I personally would not buy gold at the moment; a deflationary double-dip seems likely. But you definitely want to get into gold before Bernanke begins QE3.
One of the reasons bond yields are falling while the price of gold is hitting new times high is the newly announced ECB policy. On Saturday the ECB announced it will start purchasing Italian bonds while, at the same time "will provide liquidity to the markets".
I believe the ECB, like it did before, will closely coordinate its inflationary policy with the Fed. QE3 is on the way, investors have taken the hint and are buying gold.
By contrast crude oil futures fell last week by about 20% (NYMEX). This latter part may be physiologic: oil demand isn't increasing as sharply as expected worldwide, consumption in Europe is still contracting and, most importantly, oil futures cannot be hoarded like gold. They have an expiry date on them. As for silver I reiterate my opinion: supply is more than able to meet demand, demand which is not increasing as expected by some people. Asia isn't interested in silver: they want gold. And as far as Europeans and Americans are concerned... we all know the answer.
The purchase announcement was a political move which had the expected result: allow bond yields to drop low-term to give some respite to exhausted treasuries. Details of the deal are extremely sketchy (no mention of how much is worth, rumors Spanish bonds may be next etc) but it seems like, after pressuring Italy into increasing taxes earlier this year, our wise European overlords realized higher taxes will negatively affect an already critical growth situation...
Esuric: ...but I believe that it's way too early to reach a definitive conclusion.
...but I believe that it's way too early to reach a definitive conclusion.
When a definitive conclusion can be made, then it's way too late to act in the market. Speculation is all about probabilities. Opportunity appears when the market miscalculates the probability of a certain outcome -- in this case, the probability of gold replacing USD as the reserve currency, and the inability of the fiat currency cabal to prevent that from happening.
One more, speculation in unprecedented waters is not done by comparison to precedent (historical) price levels.