Is investing in gold a good idea?

Question

I have a lot of money invested in mutual funds and am concerned with the recent drop in the stock market as well as the recent concerns with subprime lenders....do you think that investing in gold is a good hedging strategy? Do you think that the price of gold would rise if some of these lenders tank?

Answer 1

When you say "invest in gold" you have to separate your ideas into "investment" and "Survival"

Gold as a metal is for Survival...If a catastrophic event hits the capital makets, or if WW 3 happens etc, you will need actual gold for some things (like jews fleeing the Nazis in WW 2) .

Gold in the form of ETFs or "GoldMoney" or certificates , or even gold coins or bullion in your safety deposit box, is not a good "Investment". Shares in gold producing companies, or shares in a precious metals mutual fund is a good "Investment" if gold goes up. This is because shares in gold companies have leverage to the price of gold.

If you have an ounce of gold $650US and it goes up $100, you clear $80 after selling commission.

If you had $650 US in Producing gold shares, if the gold price went up $100, your gold shares would probably go up $200. Why? because It cost $X to produce an ounce of gold.
if it sells for $650, that price minus $X gives profit per ounce. Sell it for $100 more and the profit is $100 more per ounce, cause it still costs $X to get it out of the ground

SO, IF you beilieve gold is going up, buy Gold shares or a Gold Mutual Fund, But beware .this is a volitile sector and hence has it's own particular set of risks. This should contain a small part of your investment portfolio, Most advisor say 5-10 %.

That being said, I am a gold bug, I beleive in gold, but at the moment I own 1 Gold maple leaf coin which I will never sell, I sold my gold shares at gold $680 and am waiting to buy back in as I expect a further drop from here.
When I am happy about the timing, I will go back into shares with $600,000

Answer 2

I have asked my peers who prefer commodities while I invest
in active entities only; RE and small biz, what they are hedging from? Commodities are hedges; protections.
That is simliar to the philosophy, reduce your risks first,
then consider investing or whatever it is you are doing.
think this way;

in the morning, put on strong hiking boots and have a helmet and rope, and put on a life preserver and gps, and also
carry water and food for 3 days and sun screen and
a jacket --now you have hedged against all emergencies
for travel.

Sort of a funny sight. And perhaps illogical.

I like to invest in an active activity where i have maximum
control.

Thus, I buy real estate where i control its use and i own
businesses where I control what it sold and how its
customers are treated. That is why both RE and small biz
have the greatest leverage available and the best returns.

THEN, the idea is to HEDGE investments in RE and biz..
I have found those specific hedges!

Answer 3

in case you're paying for definitely gold, the commodity, or a futures settlement on gold, that's a undesirable concept. that's no longer an investment that's a organic hypothesis. in case you're paying for gold mining inventory that's an investment, regardless of the undeniable fact that that's a very risky investment. There are lots extra effective investments accessible.

Answer 4

Gold WAS great to get into just a few years back when it was half the price. Buying now while its high is a terrible idea unless you simply like having it.

Buy LOW and sell HIGH is how you make money... with this market crash I step in and make a killing buying up things that stupid scared people are dumping. Learn to handle fear and know that the market changes everyday. It will not be this low forever and it WILL crash again. That's when you step in and buy.

Best of luck to you and happy investing!@

: )

Answer 5

I think that investing in gold is a very good idea, simply for the fact that the dollar is ready to tank anytime now. I'm no expert, mind you, but I see two things happening that I think are going to speed this along:
The first thing is that OPEC want to start trading oil on the Euro, not the dollar. Bad for us.
The second thing is that China is now in possession of more US treasury bonds than our country and our entire populace combined. That's the cost of our debt! So they could drive our currency into the dirt whenever they want.
If I was wealthy enough, I would definitely invest in gold.

Answer 6

buy gold mutuals or ETFs- gold as a commodity has risen 20% over the past 52 weeks.

Answer 7

Max 5% in gold & none physically held. IAU & DGL solid gold etfs.