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Message
Is it time to buy gold?
Posted on 7/30/15 at 2:57 pm
Posted on 7/30/15 at 2:57 pm
Watching GLD and keep waiting for it to stabilize. Can't imagine it falling much further and could be a good hedge. Thoughts?
7
Posted on 7/30/15 at 4:05 pm to Bassmaster
quote:Lots of people have imagined it falling much further, like sub 1000 lower.
Can't imagine it falling much further
This post was edited on 7/30/15 at 4:06 pm
Posted on 7/30/15 at 4:11 pm to jturn17
Long term I don't think you'd lose money at this level. Having said this, I think there is still downside.
Posted on 7/30/15 at 5:31 pm to Bassmaster
gold isnt actually cheap right now, just a heads up, its just been overpriced for the past 5 years
Posted on 7/30/15 at 5:53 pm to Bassmaster
The dollar continues to rally. As it does, gold and other commodities will continue to fall, including oil.
Posted on 7/30/15 at 6:22 pm to Bassmaster
quote:
Watching GLD and keep waiting for it to stabilize. Can't imagine it falling much further and could be a good hedge. Thoughts?
I'd rather invest in something that actually generates income instead of just sitting there.
Posted on 7/30/15 at 9:18 pm to Bassmaster
No.
Gold was at $1900/oz back in 2011. Those who bought at that price lost their shirt.
Once gold slips below $1000/oz is when I would consider. Some are even predicting $800-900/oz by years end.
If you can get past the conspiracy theories, you can read some good stuff on the Kitco message boards.
Gold was at $1900/oz back in 2011. Those who bought at that price lost their shirt.
Once gold slips below $1000/oz is when I would consider. Some are even predicting $800-900/oz by years end.
If you can get past the conspiracy theories, you can read some good stuff on the Kitco message boards.
Posted on 7/31/15 at 6:19 am to Reubaltaich
BRK generates income. It is reflected in increased share price (hopefully). It certainly isn't returned to most of the owners as ordinary income, only as a gain if you liquidate.
But I guess it is an investment since it generates income even though shareholders only benefit by liquidating at a higher price.
Gold is speculation however. Because it doesn't generate income and the owner only benefits by liquidating at a higher price.
Wait, what?
So you could argue they both sit and do nothing in the absence of a dividend, or you could factor the opportunity cost of each as being largely identical.
Anyway, I would think it prudent to have maybe 10% gold (or commodities) in one's portfolio at a decent cost basis. Maybe try to push it closer to 20% if you want to time the pricing a bit, and as it recovers, sell off and go back to 10%. If you have a cash position in your portfolio, why not?
It's going to go up. It's going to go down. That is almost guaranteed. Time frame? Exercise restraint and discipline. After all, if one has cash sitting in one's portfolio, it's really not much different. Except if cash increases in value the holder only sees a marginal effective return on this.
It's like oil really. If you look back historically, it really tracks rig count accurately over the long term. Not a daily, or three month thing, but long term. Because rig count would contemplate demand, and influence supply. As a macro indicator. Gold has much the same pattern with a different set of macro indicators.
So again, if you bought gold at today's price, you wouldn't lose money unless you turn around and sell it on the continued downward pattern. I don't know that you will make a heap of money, but all things considered, I wouldn't beat myself up for buying gold at today's levels. I'd personally wait and try to time this more. I'd wait at least until the Fed speaks again.
It's tough to buy an asset class on the way down. It's tough to sell an asset class on the way up. Most can't, or won't. Be different. Be like Mikey and try the cereal. Because if you want the results of the majority, which aren't generally very good, you should try to replicate their behavior.
An asset class that trades sideways is the toughest of all for me. But really, you'd have opportunity costs adjusted for inflation as a slow bleed, and I guess that's better than losing principal.
Just as I wouldn't shy away from buying a viable oil equity right now, I wouldn't shy away from gold. I would shy away from adding asset classes at historically high levels however. I limit my gains. Maybe significantly. But I limit my losses as well. Probably stupid because everyone knows gains, bull markets and recoveries happen instantaneously, and bear markets crashes and corrections are slow and methodical.
All these cliches. All proven historically. Buy gold and hope it doesn't work. A bottom is a V, and a top is a process.
But I guess it is an investment since it generates income even though shareholders only benefit by liquidating at a higher price.
Gold is speculation however. Because it doesn't generate income and the owner only benefits by liquidating at a higher price.
Wait, what?
So you could argue they both sit and do nothing in the absence of a dividend, or you could factor the opportunity cost of each as being largely identical.
Anyway, I would think it prudent to have maybe 10% gold (or commodities) in one's portfolio at a decent cost basis. Maybe try to push it closer to 20% if you want to time the pricing a bit, and as it recovers, sell off and go back to 10%. If you have a cash position in your portfolio, why not?
It's going to go up. It's going to go down. That is almost guaranteed. Time frame? Exercise restraint and discipline. After all, if one has cash sitting in one's portfolio, it's really not much different. Except if cash increases in value the holder only sees a marginal effective return on this.
It's like oil really. If you look back historically, it really tracks rig count accurately over the long term. Not a daily, or three month thing, but long term. Because rig count would contemplate demand, and influence supply. As a macro indicator. Gold has much the same pattern with a different set of macro indicators.
So again, if you bought gold at today's price, you wouldn't lose money unless you turn around and sell it on the continued downward pattern. I don't know that you will make a heap of money, but all things considered, I wouldn't beat myself up for buying gold at today's levels. I'd personally wait and try to time this more. I'd wait at least until the Fed speaks again.
It's tough to buy an asset class on the way down. It's tough to sell an asset class on the way up. Most can't, or won't. Be different. Be like Mikey and try the cereal. Because if you want the results of the majority, which aren't generally very good, you should try to replicate their behavior.
An asset class that trades sideways is the toughest of all for me. But really, you'd have opportunity costs adjusted for inflation as a slow bleed, and I guess that's better than losing principal.
Just as I wouldn't shy away from buying a viable oil equity right now, I wouldn't shy away from gold. I would shy away from adding asset classes at historically high levels however. I limit my gains. Maybe significantly. But I limit my losses as well. Probably stupid because everyone knows gains, bull markets and recoveries happen instantaneously, and bear markets crashes and corrections are slow and methodical.
All these cliches. All proven historically. Buy gold and hope it doesn't work. A bottom is a V, and a top is a process.
Posted on 7/31/15 at 8:15 am to Bassmaster
Wait a little longer IMO. Will test $1k Mark several times before busting through or holding steady
Posted on 7/31/15 at 9:00 am to Bassmaster
I know I might be ridiculed for this, but how do you actually buy gold?
And when you do buy it, they don't actually send you a gold brick or something, do they?
And when you do buy it, they don't actually send you a gold brick or something, do they?
This post was edited on 7/31/15 at 9:03 am
Posted on 7/31/15 at 9:35 am to AndyJ
quote:
I know I might be ridiculed for this, but how do you actually buy gold?
And when you do buy it, they don't actually send you a gold brick or something, do they?
Yea I have no clue about buying physical gold. I do have shares in a gold stock. EGO, Eldorado Gold FWI. Never have bought physical gold though.
Posted on 7/31/15 at 10:34 am to windshieldman
Buy from reputable dealer that agrees to purchase back at no less than spot price. At as low of a premium as can be had. Also one where you can take it home with you that day. Better to get sealed MSC70, and from a mint that's name is recognized so if you need to sell at a later date (and higher price) you can sell to virtually anyone without assay.
Place it in a safe. Wait. It sits there and does nothing except either go up in value, or down in value. Much like BRK.A, which pays no dividend, but sits there a either goes up or down in value.
Most just let it sit in a safe forever. Why I recommend all of the above is that I actually sell it at gains eventually, only keeping about 10% of the value of my portfolio steady as a hedge. It's debatable whether it is a hedge or not, but it's not debatable that the price goes both up and down. The beta of gold is an interesting conversation. The beta of silver even more so.
Place it in a safe. Wait. It sits there and does nothing except either go up in value, or down in value. Much like BRK.A, which pays no dividend, but sits there a either goes up or down in value.
Most just let it sit in a safe forever. Why I recommend all of the above is that I actually sell it at gains eventually, only keeping about 10% of the value of my portfolio steady as a hedge. It's debatable whether it is a hedge or not, but it's not debatable that the price goes both up and down. The beta of gold is an interesting conversation. The beta of silver even more so.
Posted on 7/31/15 at 2:40 pm to foshizzle
quote:
I'd rather invest in something that actually generates income instead of just sitting there.
+1 I love this quote from Warren Buffet about gold:
quote:
(It) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.
The only thing about gold I like is that it created one of my favorite shows in Gold Rush on Discovery.
Posted on 7/31/15 at 3:03 pm to gpburdell
Because Mr. Buffet's shares of his company sit there and pay a dividend? Or because they sit there, and either appreciate in value, or depreciate in value? Much like gold sitting in a safe?
Because Mr. Buffet has never purchased precious metals? Like he told his shareholders? Or because he later backed away from this statement and it was buried in a footnote on an annual report? A trade in derivatives, which he has made several very derogatory comments about.
Look, Buffet's a genius. I own stock in BRK. I read the annual reports, including footnotes. But he is as honest as most CEO's and uber wealthy are. He didn't really lie in the examples above, but he sure made some fairly ambiguous statements that he later had to clarify. Or his people did more accurately. If you Google this,you can barely find it, but it's there. There is also a bunch of gold and silver fanatic's analysis on this. Disregard that stuff, and read closely BRK's statements on it.
I've never claimed gold and silver were the end all of investments, but to not see a place for them in one's portfolio seems foolish to me. If you don't own it, what's your hedge? Where is the percentage allocated to commodities at? Is it really a "balanced portfolio", that advisers (with much worse results than my personal results I'd speculate) pee themselves over? I guess you could own a house. And I guess you could call your primary residence an investment, a commodity and a hedge. But when you're asked to state net worth as an accredited investor, the SEC sure doesn't think so.
About all I hear about gold or precious metals are two things. "100% Baby! The End is Coming!" Or, "It's a useless metal that one should never own"
I never hear a reasonable discussion about it's proper place in one's portfolio. But I hear all the time about how everyone's portfolio is balanced. Give me a break.
Again, I like Buffet. I own stock in his company. I just get tired about hearing his quotes as etched in stone.
Frankly, at some point for most who own either A or B shares, they'll need to sell as there is no dividend, and most will never have the type of net worth to let it sit, without dividend, and keep appreciating.
The one thing that bothers me about Warren, and I could not care less about his position on gold, is that he likes to buy dividend payers, but he doesn't really like to pay any himself.
If you're willing to sell gold high, rather than hoard it waiting for the acompolypse, you can do very well owning it. I have. I don't own a bunch of it. I sold about half at 1600. A nice gain given my cost basis. I kept about 5% in gold. Maybe not even 5%. I do keep silver, but I've sold this also. I'm not in some sort of dysfunctional codependent relationship with any of my investments. I'd sell BRK as well. I'd sell everything I own if I thought it was the correct thing to do.
Because Mr. Buffet has never purchased precious metals? Like he told his shareholders? Or because he later backed away from this statement and it was buried in a footnote on an annual report? A trade in derivatives, which he has made several very derogatory comments about.
Look, Buffet's a genius. I own stock in BRK. I read the annual reports, including footnotes. But he is as honest as most CEO's and uber wealthy are. He didn't really lie in the examples above, but he sure made some fairly ambiguous statements that he later had to clarify. Or his people did more accurately. If you Google this,you can barely find it, but it's there. There is also a bunch of gold and silver fanatic's analysis on this. Disregard that stuff, and read closely BRK's statements on it.
I've never claimed gold and silver were the end all of investments, but to not see a place for them in one's portfolio seems foolish to me. If you don't own it, what's your hedge? Where is the percentage allocated to commodities at? Is it really a "balanced portfolio", that advisers (with much worse results than my personal results I'd speculate) pee themselves over? I guess you could own a house. And I guess you could call your primary residence an investment, a commodity and a hedge. But when you're asked to state net worth as an accredited investor, the SEC sure doesn't think so.
About all I hear about gold or precious metals are two things. "100% Baby! The End is Coming!" Or, "It's a useless metal that one should never own"
I never hear a reasonable discussion about it's proper place in one's portfolio. But I hear all the time about how everyone's portfolio is balanced. Give me a break.
Again, I like Buffet. I own stock in his company. I just get tired about hearing his quotes as etched in stone.
Frankly, at some point for most who own either A or B shares, they'll need to sell as there is no dividend, and most will never have the type of net worth to let it sit, without dividend, and keep appreciating.
The one thing that bothers me about Warren, and I could not care less about his position on gold, is that he likes to buy dividend payers, but he doesn't really like to pay any himself.
If you're willing to sell gold high, rather than hoard it waiting for the acompolypse, you can do very well owning it. I have. I don't own a bunch of it. I sold about half at 1600. A nice gain given my cost basis. I kept about 5% in gold. Maybe not even 5%. I do keep silver, but I've sold this also. I'm not in some sort of dysfunctional codependent relationship with any of my investments. I'd sell BRK as well. I'd sell everything I own if I thought it was the correct thing to do.
Posted on 7/31/15 at 8:32 pm to Iowa Golfer
quote:
Because Mr. Buffet's shares of his company sit there and pay a dividend? Or because they sit there, and either appreciate in value, or depreciate in value? Much like gold sitting in a safe?
I assume you're trying to be humorous here since you're a Berkshire stockholder.
Almost all, if not all, of the companies in the Berkshire portfolio pay dividends to Berkshire and in some cases very significant annual dividends. Those dividends stay in the holding company level thus increasing the equity capital of Berkshire while providing huge amounts of unencumbered cash for purchasing additional companies when the right opportunity comes which increases the value of Berkshire shares even more.
It's an investment cycle that Buffett & Charlie Munger have nearly perfected to the great benefit of shareholders.
How is that like gold? Does gold accumulate dividends paid into it thus increasing its value which allows its owner to buy additional gold?
If you were trying to make a serious comparison between how gold and how the value of Berkshire shares increase in value, it is a majorly flawed comparison.
Posted on 7/31/15 at 8:52 pm to AndyJ
Canadian maple leafs.
Posted on 8/1/15 at 8:15 am to Gevans17
No humor. Well, a smidge of humor.
To obtain a gain in BRK, one must sell the asset as no dividends are paid. To obtain a gain in gold, one must sell the asset as the gold produces nothing for the owner.
If you wish, you can create a chart comparing the price of BRK to Gold on a historical basis for whichever time period you'd like to select.
An argument can be made that gold has created more value for its owners over BRK (and you can argue the inverse of this predicated on time periods picked). In the 90's BRK outperformed. Not recently. Since about 2000. You can go back as far as you'd like.
So go ahead and make a chart. Like all of the experts. All of the experts who come up with either BRK.A has returned (although neither has returned anything if it wasn't sold) 1330% to gold's 376%. Because they pick whichever dates to fit their narrative/argument.
But the only chart that should matter to you as a brk.a shareholder would be gold -v- brk.a, from the date you purchased brk.a, until present.
Or rather than argue the performance (not returns, as neither has returned anything), you could use this chart as one piece of evidence to come to a conclusion about which asset class might be overpriced historically. Which is probably about the only thing this type of chart is good for.
Again, these two specific assets (gold and brk.a) are purchased for appreciation, not income. Further, people hate on gold. Too much. And people have a dysfunctional hero worship for Warren Buffet. There's a correct answer at some point in between the two extremes.
So I say brk.a does not produce anything for the shareholder, until and unless the shareholder sells at a gain. The same is largely true for gold. I'm not stating anywhere on here that one should place more cash in gold than brk.a, but it needs to be seen for what it is.
To obtain a gain in BRK, one must sell the asset as no dividends are paid. To obtain a gain in gold, one must sell the asset as the gold produces nothing for the owner.
If you wish, you can create a chart comparing the price of BRK to Gold on a historical basis for whichever time period you'd like to select.
An argument can be made that gold has created more value for its owners over BRK (and you can argue the inverse of this predicated on time periods picked). In the 90's BRK outperformed. Not recently. Since about 2000. You can go back as far as you'd like.
So go ahead and make a chart. Like all of the experts. All of the experts who come up with either BRK.A has returned (although neither has returned anything if it wasn't sold) 1330% to gold's 376%. Because they pick whichever dates to fit their narrative/argument.
But the only chart that should matter to you as a brk.a shareholder would be gold -v- brk.a, from the date you purchased brk.a, until present.
Or rather than argue the performance (not returns, as neither has returned anything), you could use this chart as one piece of evidence to come to a conclusion about which asset class might be overpriced historically. Which is probably about the only thing this type of chart is good for.
Again, these two specific assets (gold and brk.a) are purchased for appreciation, not income. Further, people hate on gold. Too much. And people have a dysfunctional hero worship for Warren Buffet. There's a correct answer at some point in between the two extremes.
So I say brk.a does not produce anything for the shareholder, until and unless the shareholder sells at a gain. The same is largely true for gold. I'm not stating anywhere on here that one should place more cash in gold than brk.a, but it needs to be seen for what it is.
This post was edited on 8/1/15 at 8:19 am
Posted on 8/1/15 at 9:33 am to Iowa Golfer
quote:He's talking about how gold has absolutely no practical value. You can't eat it. You can't make good tools out of it. All it really does is be shiny. If the world went to hell, most people would take a pile of canned food and rifles over a pile of gold. It has no use, no "utility."
Because Mr. Buffet has never purchased precious metals? Like he told his shareholders? Or because he later backed away from this statement and it was buried in a footnote on an annual report? A trade in derivatives, which he has made several very derogatory comments about.
We're just a bunch of monkeys who have based much of our civilization on the lust for shiny shite. It's depressing, and advanced races would not understand why we do it. That's what Buffet is getting at. He understands and capitalizes on gold, but I think he's a bit disappointed with humanity for assigning such value to it.
Posted on 8/1/15 at 9:44 am to blueboy
I get that. BRK certainly does own stock in companies that have gold as a main part their model. He also purchased a lot of silver on behalf of his shareholders.
His comments about the utility of gold, and more so how he emphasizes his benefit to society are revealing. He is hugely liberal in some areas, and overstates his contributions to society (my opinion), all the while profiting on some things he is critical of.
I'm not saying that is good or bad, I'm just saying see him for what he is, and see gold for what it is. I didn't make the rules, I just learned how to play successfully inside of the rules. So has he. He creates jobs. He creates wealth. He creates goods and services. A lot of us on here do to some extent.
Some sort of commodity is appropriate in everyone's portfolio. BRK might be as well. But at some point neither gold, nor BRK is going to be appropriate for the vast majority of people as they reach retirement age. Both will likely need to be sold. Very few of us will be able to hang on to A shares at age 75.
Personally I have been considering liquidating some BRK, and trying to replicate some of the holdings for the dividends. Which seems pretty simple, but it's not.
Look, he prefers to measure the value of BRK at book value. Book value doesn't mean a whole lot to someone who needs retirement income and has to sell BRK at market value. Neither does all the love for gold if someone needs to liquidate at the present market price and they entry price is not well timed.
There appears to be extreme views on both BRK and gold, more than many other investment options for whatever reason. I've just never understood either. Undoubtedly BRK is easier to own. Subject to less whimsical movements and potential manipulations. I think BRK will outperform gold in the short and midterm. But that doesn't matter to anyone that owns either, all that matters is at what level they entered both at.
His comments about the utility of gold, and more so how he emphasizes his benefit to society are revealing. He is hugely liberal in some areas, and overstates his contributions to society (my opinion), all the while profiting on some things he is critical of.
I'm not saying that is good or bad, I'm just saying see him for what he is, and see gold for what it is. I didn't make the rules, I just learned how to play successfully inside of the rules. So has he. He creates jobs. He creates wealth. He creates goods and services. A lot of us on here do to some extent.
Some sort of commodity is appropriate in everyone's portfolio. BRK might be as well. But at some point neither gold, nor BRK is going to be appropriate for the vast majority of people as they reach retirement age. Both will likely need to be sold. Very few of us will be able to hang on to A shares at age 75.
Personally I have been considering liquidating some BRK, and trying to replicate some of the holdings for the dividends. Which seems pretty simple, but it's not.
Look, he prefers to measure the value of BRK at book value. Book value doesn't mean a whole lot to someone who needs retirement income and has to sell BRK at market value. Neither does all the love for gold if someone needs to liquidate at the present market price and they entry price is not well timed.
There appears to be extreme views on both BRK and gold, more than many other investment options for whatever reason. I've just never understood either. Undoubtedly BRK is easier to own. Subject to less whimsical movements and potential manipulations. I think BRK will outperform gold in the short and midterm. But that doesn't matter to anyone that owns either, all that matters is at what level they entered both at.
This post was edited on 8/1/15 at 9:55 am
Posted on 8/9/15 at 9:01 pm to AndyJ
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Karatbars Product Overview
Karatbars Overview
You can create a free gold savings account to buy gold as a customer and you have the option to become an affiliate.
If interested, email Josh at synergygold@outlook.com
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