You've got a pretty bad sunk cost fallacy here. You're focusing on how much unrealized losses you have. But how much you bought it at is irrelevant. That's in the past and can't change. What you can do now is either sell it or hold onto it.
Suppose your gold is worth 30k now.
You keep asking yourself should you lock in a 8k loss to pay down the mortgage. That's the wrong question. You should be asking yourself if you had 30k lying around, would you invest it in gold or pay down your mortgage? (You can always sell your gold and then just buy it right back, so this is an equivalent situation)
Can't wait to unload the three gold coins I picked up in mid-2011. I've been holding based on the fallacy you mentioned here, in part. Now to work out how to get a half-day off of work so I can take them into a local dealer.
Excellent advice there. Thanks!
I think this was in reply to me. I sold some of it, but i havent sold the stuff that cost me more yet. one thing that stops me is- if people say not to sell stocks when you panic and they are doing really badly- to stay the course- why is selling gold low a good idea? i dont get that part.. so i am waiting until it goes back up so i can sell it for a little bit more than what i bought it for.
You're missing the point here.
That advice to not sell stocks when you panic is a statement to avoid market timing - to avoid making decisions based on market conditions. Selling stocks when they're falling, because you're panicking about the fact that they're losing value, is by definition market timing. Oftentimes people believe that they can somehow avoid the big drops and then buy back in at a low point to avoid large losses (and while of course a few people can get lucky and do this, the vast majority of people can not do this reliably).
However, you've decided that gold itself is a bad investment, not based on it's current price, but the fact that it's got no internal rate of return, and it's value is merely based on speculation (correct me if my assessment of your opinion of gold is incorrect). Selling now is not a decision to try to beat the market, it's actually a decision to try to get market returns (by buying a market index fund instead).
Or if you don't like that argument, we can try a different way:
You don't know how long it will take until the gold you bought comes back up to your original buy price. Suppose it takes 3 years, and in that time the gold gained 10% (I don't know what your original buy price is so I made something up). In the meantime, stocks have gone up 30%. Are you really better off waiting until your gold rises to it's original buy price?
Conversely, it could take 1 year, and in that time stocks have dropped 5% (while gold has still gained 10%). In this case, you were better off holding onto your gold.
The problem here is that you simply do not know how gold will perform relative to stocks. What you do know is that gold is a bad investment (again, if my assessment of your opinion on gold is wrong, correct me). Hence, you should sell your gold, regardless of your buy price.
Or if you don't like that argument either, I can try to rephrase my original argument.
Whatever price you bought gold for makes no damn difference. That money is lost. The money you have now is whatever your gold is worth now. You could sell it right now. If you did, would you rather buy back your gold, or buy stocks instead?
Or if you don't like that argument either....
You said you sold the gold that rendered you a profit. But that's nonsense. Gold is gold. It's all fungible. My bar of gold is worth just as much as your bar of gold (assuming they weigh the same). The same way that the $1 bill in my pocket is worth the same as a $1 in your pocket. So for you to say that you only sold the gold that netted you a profit is fallacious. You simply took a profit/loss distributed across all the gold you bought.
That was long winded. Oops.
