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I know nothing about buying gold or in any way holding it in a portfolio. TV is full of ads to buy gold coins. If you buy them, how do you sell them and to who?
Anyone have any words of wisdom about buying gold in any form?
Is gold a viable investment for most people?
Posted this a few days after Adam Grossman’s article and I don’t think many saw it. Anyway, I think it applies to the question of whether gold is a viable investment. It has been for me over the past 20 years.
Reading a lot of knee-jerk reactions and not much thought in the responses to Adam’s article. It’s clear by their thumbs up/down reactions that a majority of HD readers won’t consider gold.
It seems there are generally two trains of thought when it comes to gold. First, those who believe in the USD (or other fiat currencies) and that generating income on that is the source of wealth and income. Second, those who don’t trust fiat currencies and wish to hold other stores of value such as gold. Over history, the value of fiat currencies trends toward zero in all cases. So that implies an investor must keep the currency working to offset inflation (or currency valuation loss).
There’s no doubt that most times stocks do a good job of that. But there are times such as the Great Depression and 1970s when they don’t do well, and real assets have their day. That said, I have come to the conclusion (beginning in 2006) that an allocation to gold (and other real assets) is preferable. I’m a hedger by nature and I can see the scenarios (such as this year) when gold has its day while equities may struggle. Building that allocation when gold is relatively high is difficult and probably not advisable. But when gold is relatively low is when many dis it and wouldn’t consider buying.
Here is one statistical analysis of how much gold is appropriate in an allocation: https://www.incrementum.li/en/journal/the-optimal-gold-allocation-how-much-gold-does-your-portfolio-need/
I’m sure that’s too much for this readership but something folks might consider.
Even if gold itself went up in value, which is not assured, the real killer for these coins is transaction costs, especially on the sell side. When you have them and want to sell them, you will have poor bargaining position, and a buyer will offer a price that will likely skim off most of any gains you have, if not a lot more. Gold funds might afford you a better deal if you don’t compete with thousands of other fund owners and try to sell in a big downturn. And funds obviate the need for storage, security and insurance. But you should not expect coin will ever beat all other available long term investments.
A friend of mine—who knows nothing about investing—told me they just bought a bunch of gold coins. With more people asking about gold lately, and gold ads flooding the airwaves, it got me thinking: maybe it’s time to sell anything gold-related. 😄 Or maybe not…
Having inherited and sold gold coins and bought Sprott Physical Gold (PHYS) for my mother-in-law, I prefer the latter for investing.
If it is for the zombie apocalypse, then I think guns, booz, and chickens are better investments. Can pass it on to heirs w/o the gov knowing about (big whoop). Have to store it, a real pain to worry about (and if you kick off, someone needs to know how/where to find it. Like crypto and individual stocks, something to play with on the side.