Are we wasting our time, (and money) with gold.

[HighlandTiger]

An interesting article appeared on the Property Partner website. It makes me think that maybe, just maybe, I got swept away on the shiny stuff, and that it is not all that it is cracked up to be. (Although I'm still not going to be selling my "precious" just yet  )

https://resources.propertypartner.co/best-performance-lowest-risk-is-residential-the-holy-grail-of-investment/

 

[KDave]

Real estate has always been the best investment in my mind, it generates a yield, it is in limited supply (artificially by planning law or physically by usable land) and people need it to go about life.

Its price is also closely correlated to the availability of credit, which for the past 20 years has been getting cheaper due to falling interest rates. The UK housing market in particular is seen as a safe asset to buy for foreign investors as seen by the recent influx of foreign buyers in the capital. Combine this with further injections of even more credit into the system via QE, rock bottom interest rates and government stimulus in all of its forms (FLS, HTB, ect), I feel that residential property is perhaps not the way to go at the moment. Prices appear to high due to foreign speculation, QE and a government attempting to keep GDP figures up with endless stimulus packages.

Alas, people need housing to go about life, and in two years I will be buying my own regardless of the state of things in the economy, not as an investment but to live in. I have taken the government up on its latest stimulus package - the help to buy ISA and will be using whatever other HTB scheme is running at the time. Why not? 

The government may continue to support high prices if it can, there may be more QE on the way, there is still plenty of foreign money out there that may come looking for a safe haven. There is also the possibility the government could withdraw support, the pound could fall forcing interest rates up, foreign money can look elsewhere, ect. With a bit of luck I might be able to pick up a bargain, but I have my doubts 

All that aside, one thing that strikes me about gold in the article is that despite it being the only asset not generating a yield it still does comparably well to the FTSE all share for risk/reward, and beats cash. Not too bad. 

[mr-dead]

All I know is if I didn’t get into gold I wouldn’t have managed to save up £35k over the last 2 years.

That money would have be squandered on crap and disappeared in to the ether with nothing to show for it.

 

[Paul]

6 minutes ago, mr-dead said:

All I know is if I didn’t get into gold I wouldn’t have managed to save up £35k over the last 2 years.

That money would have be squandered on crap and disappeared in to the ether with nothing to show for it.

Absolutely agree totally 100% @mr-dead.

It creates a degree of separation between figures on a screen in a bank account, you can spend on anything at any time on any whim 

To add on real estate, A collection of gold coins doesn't need a new roof, doesn't need chasing for rent, doesn't get set on fire by an unattended candle or flood in inclement weather

[BaldyBob]

We have been here before. My stack is not an investment, it is an insurance policy. No more, no less.

Stocks are likely to plummet, but probably return in the long run. If not I have PM insurance.

The property bubble is more of a certainty to pop, if not the Chancellor will find a new way to tax you. Worst case, you still have your PM insurance.

Diversify.

[Scuzzle]

If it were not for the advent of digital currencies and Bitcoin I would be very happy holding gold, these concern me. The recent defection of Mike Hearn from Bitcoin to the banksters which resulted in the price of Bitcoin sliding is a worry.  It means the banks plan to run a rival crypto currency is fully in motion and it could be this which is turned to as the next norm for the worlds money.

However I don't fully trust the banks to operate theirs like Bitcoin given their penchant for fraud so I will still continue to stack gold and silver.  If however in the future it turns out these metal pundits are right and that the price of PM's does increase vastly and if they ever get anywhere near being able to buy me a property then that's what I will buy without hesitation.

You see it on the constant Homes Under The Hammer reruns on TV every morning, people buying property and letting out so they can get rent during property price slumps while they wait it out for the prices to pick up.  I would not go the Property Partner route but owuld prefer to own my own property outright so I can become one of these greedy buy to let monsters that everyone hates.

[Roy]

2 hours ago, BaldyBob said:

Diversify.

The secret to investing...in a word!

[lee]

was reading an article the other day about bit-coin,that people were dumping it.some big wigs were saying it has failed.

could be smoke and mirrors I guess, but if bitcoin goes tits up it can only be good for pms.

[Cornishfarmer]

6 hours ago, mr-dead said:

All I know is if I didn’t get into gold I wouldn’t have managed to save up £35k over the last 2 years.

That money would have be squandered on crap and disappeared in to the ether with nothing to show for it.

 

And if you swapped the car for a fiesta you'd have £60k!!!!!!!!

[HighlandTiger]

6 hours ago, Paul said:

Absolutely agree totally 100% @mr-dead.

It creates a degree of separation between figures on a screen in a bank account, you can spend on anything at any time on any whim 

To add on real estate, A collection of gold coins doesn't need a new roof, doesn't need chasing for rent, doesn't get set on fire by an unattended candle or flood in inclement weather

Although it is a lot harder to steal a house than steal your gold coins.

[Pepactonius]

For me, gold is just part of a diversified portfolio of assets:

- house and perhaps summer home (real estate)

- stocks, bonds, cash (deposits, money market funds, etc.), other financial assets

- gold, silver, other tangibles, etc.

- collectibles and antiques, including numismatic coins, stamps, currency, etc.

Each of these asset classes has its own plusses, minuses, risks, etc.  For me, gold is like insurance -- during good times it's useless, and a waste of money.  It might come in handy  during troubled times, but troubled times are risky, with or without gold.   I just hope my gold stack is just a waste of money.

[mr-dead]

2 hours ago, Cornishfarmer said:

And if you swapped the car for a fiesta you'd have £60k!!!!!!!!

Everyone needs a hobby lol, just never tell the misses how much you spend on it

[Lea79]

I read the property partner article and for a few minutes thought maybe I should be putting my gold allowance into property.  Then thought no!! I enjoy collecting too much and the reason I started collecting PMs in the first place was having something with intrinsic value in my hand that isn't digits on a screen.

Im all for property partner but it's early days for the company and it could all still go tits up. 

[watchesandwhisky]

The only thing with property in any form is everyone seems to think it cant fail and everyone and thier dog now invests in it. And for good reason of course, nothing seems to beat it.

Isnt it when no one thinks something can possibly fail it does?

Interest rates could rise putting millions not being able to make the mortgage repayments, leading to reposesions , large taxes could be imposed on buy to let land barons who then decide to cash out of this long lasting gravy train..causing many houses hitting the market at the same time causing a big crash.

Maybe gold and silver just suit my doom and gloom tin foil hat outlook on the financial world:p

 

[Cointreau]

2 minutes ago, Madstacks said:

The only thing with property in any form is everyone seems to think it cant fail and everyone and thier dog now invests in it. And for good reason of course, nothing seems to beat it.

Isnt it when no one thinks something can possibly fail it does?

Interest rates could rise putting millions not being able to make the mortgage repayments, leading to reposesions , large taxes could be imposed on buy to let land barons who then decide to cash out of this long lasting gravy train..causing many houses hitting the market at the same time causing a big crash.

Maybe gold and silver just suit my doom and gloom tin foil hat outlook on the financial world:p

 

Madstacks, it's happened before and it will happen again. 

@Highland Tiger, can you not go two weeks without changing your mind?

UK property is at the top of the cycle now whereas gold is at its bottom. When people are pessimistic that's the time to buy.

Conversely when everyone is throwing their money at something that is the time to sell.

[garthy]

Gold has given us an average gain of 10.8% a year since 2001, not bad for an asset that requires no maintenance, and the economy was doing pretty well in a lot of those years with above 10% gains, looking at this chart Gold being just a good asset to hold in times of doom is a myth.

If you ask me real estate is all part of the debt bubble that isn't far away from bursting and when I hear people saying they're going to sell their gold I just shake my head and whisper, don't do it!    

[sovereignsteve]

The trouble is that's only a 15 year time span. These cycles last longer than that. 2001 was about the time the last bull run started. The period chosed covers pretty much all the price rise from $353 up to $1912 in August 2011 and then a good part of the fall down to $1090. It could well go back down to $350.

If you'd started in Jan 1980 when it peaked at $2068, your table would look very different.

[HelpingHands]

It might be best to go long on greenhouses and short on Yodel.

[craig12]

i think the problem with pm,s for me is theres 2 schools of thought , it may increase over the loooooooong term  or you believe its going to take a spike as reported by the maloneys, morgans etc  , i myself  am looking at upside in the shorter term  as apposed to shares , as they excite me more than pms , its clear to me and ive only held silver and gold for 18 months ,  but they must be held for a very long time to make money , especially with the vat on silver,  and on silver for a moment / buyback  from atkinsons   as a rough guide the other day    phils ,£10.50 ish  brits £10.80 ish  and yes you guessed it   ........drum roll please      pandas       £10.50 ish     c,mon  you buy a phil  for much less , then they kick you in the creams wit a double whammy , you dont get your vat back and you dont get the premium difference back,   hey its rip off uk dont you know im gunna risk some money in the best blue chips when this market crashes  , if i cant turn 20% on a lump sum theres something wrong    pms  .......................10 year min hold in my book to make any money at all  and silver on a buy back from atkinsons   minus vat     20 year hold  ..pathetic

 

ps dosent silver have to rise about 50% if you were selling back to a dealer and not selling on a forum, e bay to break even    you couldnt write this      and the other topics is vat on secondhand silver   but thats on another thread i believe  but in short   its being paid over and over again by us when we buy it  

 

if i see any buy back price near what i paid on my gold  and i dont have much         the lots gone ..

[lightjaw]

You can't put a house on a bed and roll around on it pretending you are a dragon.

[JB3]

I agree the VAT on silver is a killer - you might think £10 silver only has to rise to £12 to get your costs back, but actually it probably has to rise to £14 or more if you are selling retail.

What other investment would one make that needs to rise 40% before you can break even?

 

Gold, on the other hand, is a little different - the margins are smaller and there's no VAT.

 

I own silver (more than gold by weight and value) but I only buy it now in offshore allocated accounts, thus getting near-spot prices and no VAT.

 

[KDave]

@craig12 Agree that the stock market is trying really hard to 'Bear in' this year so could be some more long term holds for your money in stocks in 12 months or so, depending on how long it takes. You might get your spike in PM's because of this, so you can offload if sentiment goes the right way, but in the mean time it costs you nothing to hold your PM's so don't worry about the loss on paper. 

And surely it is worth having a go at this while you still have them? -

1 hour ago, lightjaw said:

roll around on it pretending you are a dragon.

 

[goldbones]

Real estate is a bubble, stay the hell away from it , it's the next domino to fall. Unless you like the idea of losing 80% of your money+ interest and tax.

 It was supposed to go down but was propped up on the QE and cheap money via zirp, those policies were entirely designed to pump up the stock market  and real estate. That's where the inflation went and why things are lopsided with one side in deflation and the other side inflating but eventually the inflation side falls with the rest of it.

[craig12]

1 hour ago, goldbones said:

Real estate is a bubble, stay the hell away from it , it's the next domino to fall. Unless you like the idea of losing 80% of your money+ interest and tax.

 It was supposed to go down but was propped up on the QE and cheap money via zirp, those policies were entirely designed to pump up the stock market  and real estate. That's where the inflation went and why things are lopsided with one side in deflation and the other side inflating but eventually the inflation side falls with the rest of it.

couldnt agree more  ive got some cash ready to pounce on the property drop   see if i can pick up a sub £80000 2 bed  apartment in a i in a decent area of sheffield

 

this ll crease you   my long rant over static caravans is well known as a scam on resale/part exchange  

i can lay odds that if a property crash happens  static caravans stay the same  robbing b.........

[goldbones]

3 minutes ago, Roy said:

Strongly disagree. But that's ok.

I could have read this wrong. Past, present or future?

Wheres the disagreement?, every stock on the markets earnings has been fudged meaning all the earnings are false because they bought their own stock back (on cheap money) to drive up the EPS and drive down the P/E, the real p/e could be 50 which is like a 5x overvaluation.

What does that have to do with housing? everything it means we are in a massive recession, and they can't hide the bad numbers anymore.

Not only a massive recession (far larger than any in living memory) but in a tightening environment where all the tools that could have alleviated this mess have already been used up.

People are tapped out so far they have been able to go to the bank of mum and dad and possibly use their student loans and credit cards and join forces in schemes with other people, but when the job losses start the property share will start to fall apart, parents wont feel quiet as rich when they see their pensions and savings collapse, banks will seek to protect capital because all the other areas of the economy will be straining their balance sheets so liquidity will dry up and lending will start to be pulled back particularly in the "investment" sector which is bloated by greed and not need (London is a good example).