The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: lolzmonster on November 04, 2014, 11:37:52 PM
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Hi all,
So i'm sure im not the only one who invests in commodities here on the forums, and in light of falling gold and silver prices here in australia, I'm wondering what are other forum member's thoughts on the commodities.
I'm wonder whether there are other people thinking of investing in the commodities in the near future, and what are the thoughts of others who are against investing in the commodities?
Personally, I know many would feel the commodities are simply a store of value and probably don't create the same value as a company that creates products and services, but in today's volatile currency environment, I feel its a good hedge against currency shock.
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Just for your information, the 30th of November in Switzerland we vote for a Referendum to tie the swiss franc to gold value (yep I'm not kidding). I can't find information about it in english, only this kid-like website:
https://goldswitzerland.com/swiss-gold-initiative-2014/
but I've read on the press that an eventual Yes to this referendum could spike a gold price increase since the Swiss national Bank will be obliged to buy a quite huge quantitiy of gold to meet the referendum quota (20% of all te active of the SNB should be gold).
It's pure speculation, since for the moment the NO seems to be in advantage (an hence this will be refused), but you could always gamble.
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I invest in Gold and Silver as a store of wealth and as long term hedge. I haven't bought for a few years, but started to buy again recently as prices dropped. I've been buying both ETFs and Bullion.
The Bullion I expect to pass onto my children/grandchildren so it's paid for with money I don't 'need'. I consider it insurance. I really do think that in my lifetime (or my sons) we'll see currencies go back to some sort of gold standard and if that happens the price will go through the roof.
I've balanced that with the ETFs so that I do hold a portion of my precious metals in a more liquid form. That's more of a speculative punt. Again, using money I don't 'need' to earn a return on.
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I think you should really understand the long, LONG term returns of commodities as well as the up and down cycles that have happened in the past.
When you look at returns over hundreds of years, metals haven't returned anything over inflation. The same with housing prices. The same with energy commodites and grains and everything else. Don't ever expect to get rich from buying and holding commodities.
When you look at commodity price cycles, you could have periods of 20-30 years of falling commodity prices. Most metals peaked in 2011. So was that just a temporary top and now is a great time to buy as we're about to continue a bull market that started in '99? Or was that THE top and we're going to see 10-20+ years of generally falling prices? What if prices fall another 50-80% from here? What if it takes decades for you to make your money back, not to mention any return whatsoever? Will you know when to sell and get out?
I'm ok with people holding a fixed % of their portfolio in gold as an inflation hedge or store of value. I don't personally do it but I'm not going to tell someone else they shouldn't. But define what that % is going to be ahead of time and don't ever expect to get rich off it. In fact, expect poor returns.
My personal gut feeling is that we have a long way to go before seeing the bottom in gold and silver, but don't take anything but a grain of salt from my advice.
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Over the long run, as a previous poster mentioned, gold barely keeps up with inflation. Even more important though, is that it has had TWICE the volatility of stocks. That means it's riskier AND returns less. That's not at all what I would call a store of value.
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It also depends on your currency. Per goldprice.org gold is down 2.9% this year in US dollars and 0.7% in Oz, but up 6.5% in Euros and 4.4% in Canadia. So realistically the dollar is gaining more than gold declining.
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in my lifetime (or my sons) we'll see currencies go back to some sort of gold standard
Ha!
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I'm wonder whether there are other people thinking of investing in the commodities in the near future, and what are the thoughts of others who are against investing in the commodities?
Personally, I know many would feel the commodities are simply a store of value and probably don't create the same value as a company that creates products and services, but in today's volatile currency environment, I feel its a good hedge against currency shock.
Set a percentage of your assets to hold in PMs, then use rebalancing bands. Don't try to guess what will happen in the future.
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I agree with previous posts, that commodities in general are not good long term investments. The venerable Warren Buffett supports this position. http://fortune.com/2012/02/09/warren-buffett-why-stocks-beat-gold-and-bonds/
If you think you are taking advantage of an over correction in the market by taking a short duration long position (days to months), then that is your prerogative.
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Hmm sorry but what are PMs?
I do agree with that, but just for the sake of diversification, I did buy some silver bullion just as a hedge.
Don't have any intention to sell it any time soon, but I guess what you said is more or less correct DrFunk, I suppose I am hoping to profit on a short duration long position..
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Hmm sorry but what are PMs?
I do agree with that, but just for the sake of diversification, I did buy some silver bullion just as a hedge.
Don't have any intention to sell it any time soon, but I guess what you said is more or less correct DrFunk, I suppose I am hoping to profit on a short duration long position..
PM= precious metals. Generally speaking this refers to gold, silver, and some platinum and palladium.
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Over the long run, as a previous poster mentioned, gold barely keeps up with inflation. Even more important though, is that it has had TWICE the volatility of stocks. That means it's riskier AND returns less. That's not at all what I would call a store of value.
It also depends on your currency. Per goldprice.org gold is down 2.9% this year in US dollars and 0.7% in Oz, but up 6.5% in Euros and 4.4% in Canadia. So realistically the dollar is gaining more than gold declining.
I think this is right -- it's more a store of value when compared to other commodities (grain, steel, etc., although of course there are individual fluctuations) than to dollars. Gold bugs will often tout that "an ounce of gold bought a good suit in 1900, and today" or something like that. The point being that gold will nominally decrease if the dollar strengthens, but the dollar strengthening means that you'll be able to buy approximately the same amount of stuff with the gold.
Not that it's exact... of course gold owners are losing money at the moment.
Also, some people profit on the volatility through rebalancing, etc.
I'm a reluctant holder of gold in my Permanent Portfolio. It's the asset I hate the most. But my reasoning for this portfolio is that I'm generally willing to accept lackluster returns when the economy is booming because that means I'm making money hand over fist at my day job. But I want downside protection in a poor economy because that's when I might lose my job. It's a form of antifragility to have your investments uncorrelated with your employment.
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Good to have a lil bit. Levels now lookin good if you want to get in various metals. Buy and hold till retirement. I hold a bit of gold, silver and platinum. Trying to get some palladium but every where I go they are out of it.
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any recommendations on online places to pickup coins/bullion? thinks it good to have a little, but keeping an eye on gold/silver prices and stocks. No need to catch a falling knife.
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any recommendations on online places to pickup coins/bullion? thinks it good to have a little, but keeping an eye on gold/silver prices and stocks. No need to catch a falling knife.
How about Apmex - Silver Eagles on a certain popular auction site
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I think there is something to be said for having part of your portfolio in an asset that tends to move in the opposite direction of the stock market. I keep about 10% in gold ETF. There are smart investors like Warren Buffett who don't like gold, there are others like Jim Rogers who do own and will buy more if it drops to $1,000.
The dropping of gold's price the last few years is discouraging. But how many people wish we had bought stocks in the late 1970s when "Business Week" had a cover story on the Death of equities? Or gold in 2002 when it was under $300 an ounce?
Note: I am not in anyway an investment advisor so please do a lot more research.
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Silver's been on a steady skid for some time now, where've you been?! There was a time I pined for a green "Monster Box" of SAEs, racked up over a thousand posts on Kitco's forum, and tied up nearly all my wealth in silver and gold. Thank god those days are past me! Was a mighty fun ride to see silver go from mid teens ($14 an oz) to an astronomical $48 per oz.