The Gold thread

[MrKeane]

The only problem about the demand is that people will stop using / buying gold as jewellery, who's to say some artificial product is no on the way that looks and lasts better than the real thing?

If 2500 tonnes are mined and the price goes up then less viable mines will be opened, the same as oil, at low prices the less lucrative wells were not as attractive but they might be now.

 

[room305]

The only problem about the demand is that people will stop using / buying gold as jewellery, who's to say some artificial product is no on the way that looks and lasts better than the real thing?

If 2500 tonnes are mined and the price goes up then less viable mines will be opened, the same as oil, at low prices the less lucrative wells were not as attractive but they might be now.

Gold is free market currency. Canadian banks trade it off their currency desks. It's unlikely the ability to make a metal as inert as gold is just around the corner. There is very little easy gold mining left, except maybe in the oceans themselves.

As for demand? Someday (nobody will know when) some extremely rich people will realise that the value of their vast horde of paper assets is rapidly reducing to zero. If they wish to preserve their wealth they will need to exchange it for silver and gold.

It is not necessarily about exchanging gold for more paper, it is about already having gold when everybody else needs it.

 

[rock3r]

The only problem about the demand is that people will stop using / buying gold as jewellery, who's to say some artificial product is no on the way that looks and lasts better than the real thing?

If 2500 tonnes are mined and the price goes up then less viable mines will be opened, the same as oil, at low prices the less lucrative wells were not as attractive but they might be now.

You should also remember that the price of gold is only a small component of your average ring's retail price. So a 50% rise in gold would only add 5% to the cost of a high-end ring.

If you think it takes a long time to get new oil production and refining on line, gold is many times slower. There's room for gold to grow massively as mines go through the ultra-slow process of becoming productive.

The whole commodity complex is slowly adjusting to Greenspan's easy-money regime of 1996-2006. The adjustment will be slow and orderly, but it'll happen.

 

[rock3r]

Fyi

somebody said on here that it will always be impossible to get market value or better for a Krug.

If you go onto ebay.co.uk today, you'll probably see krugerrands available and getting bids for £380 plus postage, yet today's price for that much gold is £344. So clearly, beating the spot price is possible on ebay (although maybe not in the face-to-face world).

I've noticed that on Mondays, krugerrands fetch a low ebay price, and it gets better throughout the week, seeming to always end Friday at a better-than-spot price.

 

[gonk]

Re: Fyi

somebody said on here that it will always be impossible to get market value or better for a Krug.

If you go onto ebay.co.uk today, you'll probably see krugerrands available and getting bids for £380 plus postage, yet today's price for that much gold is £344. So clearly, beating the spot price is possible on ebay (although maybe not in the face-to-face world).

Somebody else was asking how to sell krugerrands without "faffing about on ebay". You'd be a braver man than me to buy and sell gold on ebay, but if you think it's such a good idea why aren't you doing it yourself?

 

[rock3r]

Re: Fyi

You'd be a braver man than me to buy and sell gold on ebay, but if you think it's such a good idea why aren't you doing it yourself?

Buying might require courage, but surely selling is reasonably safe. You get your money before you post anything.

Why amn't I selling right now? Well, I think the price'll go higher if I wait a bit longer. No great mystery there, surely it's occurred to you that people don't always sell assets immediately.

I wish there was a way to reliably get a premium for your Krugs in person as distinct from online. I like people, and all else being equal I prefer the human touch, but I'm not prepared to take such an illogical hit for a real-life transaction.

Does it really seem illogical to you?

Why the hostility, dude?

 

[MugsGame]

I've moved some general discussion on gold here from the Savings and Investments forum. The Savings and Investments forum is primarily for specific questions, rather than ongoing discussions.

 

[gonk]

Re: Fyi

Buying might require courage, but surely selling is reasonably safe. You get your money before you post anything.

Just because it seems buyers are willing to pay 10.5% over spot for krugerrands on ebay doesn't mean the seller would receive that much. Selling on ebay isn't free. If you were using Paypal to receive payment, total costs in your example above would be £14.95 to ebay and £13.27 to Paypal. This would bring your margin down to 2.26% over spot.

Why amn't I selling right now?

That's not what I asked. In your first post you expressed an unwillingness to sell on ebay. I asked why if you now say such good premiums over the spot price are available on ebay you won't use it.

Does it really seem illogical to you?

Yes. If you can sell for immediate cash payment a few points below spot and not have to go to the hassle of listing on ebay, waiting for the auction to end, wait for payment (if your buyer doesn't renege), then pack & post the gold, it does seem illogical to me. You'd gain maybe £20 or £25 on the deal. I've better things to do with my time . . .

Why the hostility, dude?

There are many ways of expressing hostility. One is to come onto a site like this asking for advice and when it's offered in good faith respond with smart alec know-it-all answers, which as we can see above, don't bear scrutiny.

 

[rock3r]

I think you're just looking to demonstrate some kind of superiority, yet you still admit that a premium is to be had on ebay which is apparently absent in real life for no apparent reason. Have you demonstrated why this ought to be the case?

There's nothing "smart-alec" about expressing a desire that the real-life world should be able to match the prices of the online world.

Anyhow, now that we have that ugly business over with: I propose to keep a loose record on here of bidding prices available on ebay.

 

[room305]

I propose to keep a loose record on here of bidding prices available on ebay.

Please don't. If the incredibly boring bickering back-and-forth between yourself and gonk doesn't see this thread moved to "Letting off steam" by the moderators, then lists of ebay prices for gold surely will.

 

[rock3r]

request noted.

What is, in your view, an acceptable thing to discuss on this thread?

I won't rise to anything gonk posts in future so that's clearly not going to be an issue.

 

[conor_mc]

The thread is about the merits of investing in gold, posting available commentary etc.

I wouldn't imagine there's much interest in tracking ebay prices because there probably aren't too many people looking to sell gold coins at any given time.

 

[rock3r]

I wouldn't imagine there's much interest in tracking ebay prices because there probably aren't too many people looking to sell gold coins at any given time.

That's one way of looking at it.

Another way would be to say: millions of people own coins in one-ounce form.

The only investment gold business in this state only offers gold in the form of one-ounce krugerrands.

Ergo: anyone who wishes to invest in gold in this state will probably buy in the form of one-ounce krugerrands.

Ergo: anyone at all who has become a gold investor in Ireland will want to know how she can realise her investment. At present, the two options for realising a gold investment are:

• sell your krugerrands at a hefty discount to spot price to a jeweller for scrap
• sell your krugerrands at a possible premium to spot price on ebay

So, if you are serious about investing, ebay is probably your only reasonable way of selling any potential investment you are likely to make.

Certainly, you can buy gold in London or New York. But that hits you for a huge transaction cost of travel and currency. You can buy Perth mint certs, but they demand a huge investment for ordinary people.

The non-krugerrand options for Irish gold investors are slight indeed. Krugerrands are, and are likely to remain, the dominant method of gold investment in Ireland.

And while ebay remains the only place you can sell a krugerrand at a premium to spot, it makes sense for somebody on the internet to track it.

It's not as if anyone else is barred from making comments. Lots of other investment threads on other boards keep track of various things: the price of MSFT; dollar/yen; Brent crude.

They manage very well to track AND discuss without any brain aneurysms resulting. It is hyper-relevant info, after all.

 

[room305]

If you plan on tracking ebay prices for gold please do it on another thread. This thread is for commentary and analysis on why people might invest in gold.

With regards to exit strategy it all depends on your investment and circumstances. If you are buying a view to selling in a few months for a profit, it seems a bit silly to actually buy the physical stuff. Trade through an ETF or spreadbetting company.

If you are investing for the long term, the Perth Mint is probably the way to go. I would disagree that amounts are out of the reach of ordinary investors as the minimum entry is only $10k which even I managed to amass.

Someone who only has a single kruggerand to sell and needs to sell right now, will either have to take their chances with ebay or try and negotiate with a jeweller. Either it is a fairly specific set of circumstances and I'd appreciate if you didn't clog up half the thread endlessly raving about it.

 

[MugsGame]

If you plan on tracking ebay prices for gold please do it on another thread.

In fact rock3r, please do it on another site. You could even setup a site dedicated to watching commodity prices. Feel free to post a link or aggregate statistics here.

This thread is for commentary and analysis on why people might invest in gold.

And also how they might divest, which is why I merged the discussion here.

But like you I don't see how a long discussion on spot prices adds anything that's useful to the vast majority of investors/speculators.

MugsGame (moderator)

 

[rock3r]

If you are investing for the long term, the Perth Mint is probably the way to go. I would disagree that amounts are out of the reach of ordinary investors as the minimum entry is only $10k which even I managed to amass.

My notion of an ordinary person would be a person who had 10K invested in the normal way (equities and securities) and €500-€1000 in gold as a hedge against a market disaster.

Most gold-friendly investment analysts suggest no more than 10% of total investments in any precious metal. By your reckoning an "ordinary person" would need to have 100K in total to invest in order to follow their advice. If one should only have 10% in gold and it's ordinary to put 10K into Perth mints, then the total investment would be 100K

Possible news for you: someone with 100K to invest is affluent, not ordinary.

They could stick it in Rabo and/or comparable bonds, move to Poland and live comfortably as hell.

Ordinary people would have to work for a living, no matter where in the EU they are.

 

[conor_mc]

To be fair, someone with total investments of 10k or so doesn't need a hedge like gold. They'd be better off sticking the whole lot in equities and trying to build their wealth before they start trying to protect it.

 

[rock3r]

To be fair, someone with total investments of 10k or so doesn't need a hedge like gold. They'd be better off sticking the whole lot in equities and trying to build their wealth before they start trying to protect it.

Someone who bought only equities in late 2001 would've been severely hurt by 2005. For that time frame, owning gold would've seriously relieved their inflation burden. You might call turning €500 into €1000 small beer, but it's serious money for most people.

Nobody "needs" a hedge, anyway. Hedges are about risk appetites, mostly. Also, the fact that it's tax-free is also important.

 

[gonk]

the fact that it's tax-free is also important.

It is not. Gains on investment in gold are subject to capital gains tax in the normal way.

 

[room305]

My notion of an ordinary person would be a person who had 10K invested in the normal way (equities and securities) and €500-€1000 in gold as a hedge against a market disaster.

Most gold-friendly investment analysts suggest no more than 10% of total investments in any precious metal. By your reckoning an "ordinary person" would need to have 100K in total to invest in order to follow their advice. If one should only have 10% in gold and it's ordinary to put 10K into Perth mints, then the total investment would be 100K

Possible news for you: someone with 100K to invest is affluent, not ordinary.

They could stick it in Rabo and/or comparable bonds, move to Poland and live comfortably as hell.

Ordinary people would have to work for a living, no matter where in the EU they are.

Is this a socialist diatribe or an investment strategy? It is not my reckoning that only 10% of your portfolio should be in precious metals. Apart from a few long term share holdings which I have trimmed of late, I am about 50% in gold and silver and 50% in cash.

In this scenario of a person hedging a €10k shareholding with a kruggerand or two (gold as insurance) why are they so concerned about whether they can sell now on ebay for a premium over spot-price? When it comes time to cash in that insurance policy you'll be able to sell that coin to your neighbour for all the paper money he has if you so wish.

Of course, presumably at that stage you won't want that paper money because it will have debased to nothing.