The price of gold is rising. Is investing in gold really that much of a scam?

[LLStarks]

I'm confused.

[gateley]

1. I'm guessing those who invested about $500 ago don't think it's a scam. nt

[matt819]

10. Here's the scam

People who call the beckian gold companies want to buy gold. That's it. Gold. Solid, 24 kt. If you have the cash, a gold bar would be nice. More reasonable, though, would be something along the lines of gold Kruggerands, where you pay for the value of the gold, probably plus a bit of a premium. After all, they are currency, and you are buying through a broker.

What the beckian gold companies do is talk you into buying old gold coins of no numismatic value, and you pay a premium equal to the value of the gold, or something thereabouts. So, if they sell you, let's say, a 1/8 oz gold coin, valued at around $175, you'll pay "commissions" of another $175. Thus, the value of gold would have to double before you'd be able to sell your gold at a profit.

[gateley]

14. Yeah, the scammer sellers - not the way to go. I feel for those who trust Glen Beck. nt

[WinkyDink]

68. When it falls, they will. How would paying worthless dollars for bread be worse than paying in gold?

[Art_from_Ark]

79. Maybe you should ask someone from Zimbabwe that question

since even 100 trillion Zimbabwe dollars at one time not too long ago was not enough to buy a loaf of bread.

[AlabamaLibrul]

2. Gold itself is not a scam - but the sellers thereof are rife with fraudsters

like Glenn Beck.

I don't pretend to be able to forecast a price movement - I am not your financial advisor, etc but I will say that gold is still off of inflation-adjusted all-time highs. It's up to you to decide if there's further upward price movement to be expected, and why.

[htuttle]

3. The scam in most gold investments is that you never get the gold

You get fake 'gold bonds' of some kind, or gold held in trust, etc... or you get a lousy rate for physically delivered gold.

[earthside]

4. No.

Investing in gold is no more a scam than playing the stock market.

If you pay attention to what is going on and use common economic sense you can increase the value of your investment ... but since no one knows the future, it is just as much a gamble as was buying GM stock three or four years ago.

[TwilightGardener]

5. I don't know if it's a scam. I do know that people way back when thought tulips

were the way to go. Now they're just bulbs. I don't really get the value of gold and other "precious" stuff.

[CreekDog]

6. gold coins, yes (and those are the ads you hear on the radio)

gold coins are not a way to invest in gold.

and even if investing in gold itself (not coins) is not a scam, what investment strategy do you have that makes it a wise use of your limited funds?

[Art_from_Ark]

9. Actually. some types of gold coins are the preferred medium

for small investors.

Lots of countries issue bullion coins that have a ready market, because the fineness (purity) and weight are guaranteed by the issuing government. And they also carry a face value, which although nominal, nonetheless adds to their appeal.

The problem with coins is with hypesters plugging older common gold coins, especially foreign gold coins, as being worth far more than their market value. For example, "This beautiful 1 ducat gold coin from Austria was made nearly 100 years ago but it is still in Mint condition! It is sure to become a treasured part of your gold portfolio! Hurry while supply lasts! Only $250 each!"

What they fail to mention though, is that while the coin may be dated 1915, it is actually a coin that has been restruck at a later date by the Austrian government and its value is only based on its bullion content, which is currently around $150. Similar things can be said of French "rooster" 20-franc pieces dated between 1908 and 1913, and some Spanish coins dated 1878, among others.

[petronius]

7. I've been a bit confused lately by some of the advertising: "The price of gold has

never been higher!! Time to buy!!! don't be left out!!!!" :shrug:

But I'd say that it's no more a scam than any other commodity, for those who know what they're doing, but the shiny sexy nature of it attracts a disproportionate number of dishonest players...

[AC_Mem]

11. I've been hearing them too

funny, they accept our worthless paper money and credit cards for this priceless gold.

[Art_from_Ark]

38. There's nothing funny about that

since the worthless paper has been decreed to be the country's legal tender, it, in one form or another, is what must be used in daily commerce, for all practical purposes.

[Statistical]

96. Actually there is something funny about it.

If gold is going to be worth MORE and dollars are going to be worth LESS tomorrow why would a gold company trade valuable (and increasing value) gold for worthless (and decreasing value) dollars?

Wouldn't the smartest thing be for Gold companies to simply stop advertising (nonstop on XM radio), sell the minimum amount of gold necessary to keep the lights on and security guards armed and then simply .... WAIT.

Gold is going to be worth more next month, year, decade right. Just wait until it is worth more. Why sell it is $1300 an ounce. Just wait and sell it at $5000 a ounce, or $20,000 an ounce or $1 billion an ounce.

[Art_from_Ark]

97. You do not seem to understand the concept of "dealers"

You are confusing dealers with long-term investors.
Dealers buy and sell, buy and sell, buy and sell. That's their livelihood. They do that to keep a constant money flow going, because they are dealers. They work on a spread, that is, always trying to buy lower than they sell. But they don't try to sit on their inventory like an investor might.

[Art_from_Ark]

112. Think of it this way

If a dealer, whose job is buying and selling bullion, buys a coin for $1000 and sells it for $1050, that is, at a 5% markup, he's made $50 or a 5% profit. If he uses his proceeds to buy a second coin for $1000 and sells that one for a 5% markup as well, that's a $100 profit, or a 10% return on his investment. Judging by the performance of gold since 2002, when the European central banks promised to stop manipulating gold prices, one could say that 10% might be a reasonable return for a year. But the dealer has already made that selling two coins in much less than a year. Now say he takes that money and buys a third coin for 4% more than what he paid for the first 2, that is, for $1040, since the gold price has risen in the meantime. But before he can sell it, the gold price has fallen from $1040 to $1010. The dealer still sells that coin for a 5% markup, or $1050.50, which is still netting him a profit. So even if the forecast is for a 10% increase in the gold price for that year, the dealer has already beaten that.

[Zanzobar]

113. Why not do that with bread, or cars, or steel?

Even gold miners have kids to feed.

[petronius]

93. It is weird, isn't it? Perhaps these dealers are just generous and caring people,

looking out for our well-being and long-term financial health? ;)

[hedgehog]

98. +1

[gmoney]

104. "Buy high, sell low... that's the way to riches!" (isn't it?)

Honestly, I'd say that if the economy collapses to the point where cash is worthless, gold will also be worthless, as it's value is also largely arbitrary, unless you're making fancy circuitry it doesn't have much intrinsic use apart from jewelry and a sort of social agreement that it's "precious."

Well, when the shit comes down, it's going to be more like Mad Max, where the negotiables will be food, gasoline, hand tools, warm clothing, ammunition, clean water, shelter, cigarettes, medicine, drugs, etc. I don't think shiny metal is going to trade very well, or if you're lucky, it will be like "OK, I'll trade that $1500 gold bar for a gallon of gasoline." Or even if you can pretend to get something close to it's value as gold, you're going to cut off "pieces of eight" to buy stuff?

Sorry, the value of gold is what society agrees it is, just like the value of paper money. One goes, the other goes. So if you're looking for gold as a survivalist asset, I'd say you'd be better off stocking up a reinforced underground bunker with non-perishable food, shotgun shells, water purification supplies, batteries or hand-crank lighting, seeds, farming implements, and a lot of books.

[Art_from_Ark]

106. Name one modern country where the paper currency collapsed

and gold became worthless (and I'm not talking about extreme cases like Nazi-controlled Polish ghettos, either). I don't think you can.

But I will give you three examples of the difference between worthless paper money and gold:

1946 Hungary-- Hungary experiences the one of the worst hyperinflations recorded in modern times-- It got so bad that people were literally throwing their paper "money" in the streets, since it had essentially become little more than Monopoly money.

http://4.bp.blogspot.com/_KNc2zuIDMKg/TP6gT0R847I/AAAAAAAAAHo/FTWdWleC6yQ/s1600/Hungarian+pengo+infaltion1946.jpg

But did gold become worthless? Hell, no. In fact, the old gold coins of Hungary (and other countries) were a much sought-after commodity.


1989 East Germany-- Before the collapse of the Communist government, East Germans who had been granted permission to emigrate to West Germany were throwing their East German paper marks out the train windows, because to them, that paper was worthless. Would they have been throwing gold out the window? No freakin' way.


2010 Zimbabwe-- Hyperinflation destroys the Zimbabwean dollar, rendering the intrinsic value of even the cheap copper-nickel alloy of a Zimbabwean 50 cent piece of 1980 more valuable than 1 trillion paper dollars. Do you honestly believe that gold was also as worthless as the 1 trillion paper dollars at that time?

[pa28]

8. If you do it Glen Beck style and invest in value added "collector coins" you'll get squeezed.

I have no expertise at all in numismatics so I go with silver and gold bullion from Apmex. It seems to be the most straightforward way.

[Art_from_Ark]

58. If you have no expertise in numismatics

then it is, indeed, wise to stay away from collector coins.

From my own perspective, though, I have been involved with coins since I was in grade school, and I prefer to look for numismatic coins that are being sold at bullion prices, to provide a little cushion if the spot price falls.

[Common Sense Party]

12. It's not a 'scam' per se...it's just a stupid investment decision.

It's like buying a house at the top of the real estate bubble, in 2006 or 2007. Or like buying a tech stock in late 1999 or early 2000. What goes up must come down eventually. Buying high and selling low is a stupid move.

Remember that there are plenty of people out there who are more than willing to let you make a bad investment decision, especially if they can profit from it.

[Lord Magus]

33. Exactly.

If you bought a bunch of gold a year ago, or better yet 10 years ago, this is the time to sell, not the time to buy.

[pipoman]

13. No scam

gold and silver and more recently platinum have, for the past few hundred years been the ultimate inflation hedge. The idea is that 1 oz of gold has the same buying power today as it did 100 years ago, or 10 years ago. So theoretically if a new car is 20k now and you go buy 20k worth of gold today, in 30 years you should be able to sell that 2011, 20k worth of gold at current price then and realize enough money to buy an equivalent car...or land, or groceries or what ever. So does that make gold a good investment? Not really because an investment is only as good as it's return is at beating inflation. Investors often keep gold holdings in a small percentage of their portfolio as a safety net. Others speculate on gold prices. If a year ago you had a gut feeling or other reason to believe gold would rise and bought some, you would be a winner in the game of investment speculation today because for this short time (1 year) the increase in the value of gold has definitely beat inflation.

I have been pretty interested in silver bullion recently myself. Silver has out performed gold over this last year (actually over the last several years IIRC). It is bulkier but there are many other factors which effect the value of silver. There are more industrial uses for silver. The relative cost of production of silver is higher than gold. IOW the cost of mining and extracting silver from ores is a much higher percentage of the overall value than with gold. Therefore the value of already refined silver will fluctuate with the cost of production energy and effort.

I believe that for gold, buying physical gold bullion in internationally respected form, American eagles, Krugerrands, Pandas etc. as close to spot price as possible is safest. Silver, 90% silver content pre-1964 US coins are trusted around the world. They are currently trading around 20x face value (one dime = $2) with Morgan and Peace dollars at around $25x face (higher silver content and desirability). These coins usually carry a slight premium over the spot melt price because of their trusted status.

What ever you do stay away from numismatic coins, coins valued for their collector value instead of their metal content. Numismatic investing/collecting is a whole other world of trouble if you don't understand it..and I don't.

[provis99]

26. if you bought 1 oz of gold 200 years ago, and still had it,

all you'd have is 1 oz of gold. So what have you gained?

Gold speculation is no different than currency speculation; you are trading on a commidity with little or no intrinsic value, but simply betting that someone down the future will pay you more than what you paid for it.

Well, they used to trade tulip futures, too...

[pipoman]

27. And that is why I said,

"So does that make gold a good investment? Not really because an investment is only as good as it's return is at beating inflation."

To answer your question, "What have you gained", you have a commodity which has kept up with inflation. If you put $20k in currency your dresser drawer today, it will not buy the same quality of car in 30 years as it would today. If you put $20 in gold at today's prices in your dresser drawer today, it should buy the same quality of car in 30 years as it would today. Gold is and has been a hedge against inflation and most life long investors and investment experts have some gold holdings for that purpose.

Gold has certainly had intrinsic value for centuries.

[provis99]

30. on the other hand.

If I had bought a Model T in 1905, put it in my garage and never used it, it would have appreciated in value more than gold has.

Gold has no intrinsic value; only value in exchange, like other currency commodities.

[pipoman]

36. And I am not seeing your point

if I bought a box of Freakies cereal in 1975 and kept it unopened it would have out performed gold too. I don't know what you disagree with in my previous posts aside from the intrinsic value, which I would bet most investors would also say gold has intrinsic value. What can you buy openly today at WalMart which will out perform gold in 35 years? Who knows, but you can bet something will.

If gold has no intrinsic value, nothing does. It has been valued as currency and commodity around the world for hundreds of years...in fact thousands of years. Gold jewelry has no intrinsic value as jewelry, the gold content on the other hand..

[Art_from_Ark]

78. Going by that line of reasoning

If you had bought a 1927-D $20 gold piece from the Denver Mint in 1927 (or even as late as 1932), and kept it in perfect condition, it would now be worth more than any other investment you could have possibly made for $20 in the ensuing years.

http://coins.ha.com/common/view_item.php?Sale_No=392&Lot_No=6697

[hunter]

85. If you'd bought gold in 1927 you'd be old or dead.

$20 in 1927 could've bought you some great memories.

Instead you carried the lifelong burden of a damned coin.

[Art_from_Ark]

87. My post was in response to another poster

who said that a Model T bought in 1905 and never driven would have a value today that would have outpaced gold.

[Art_from_Ark]

110. By the way, the Model T made its appearance in 1908

and cost $850, or 41.1 ounces of gold. At today's prices, that would be $53,000 worth of gold, if that was strictly bullion. US gold coins from that era are almost always worth more than their bullion value, though, sometimes much more, so that is a very low-ball figure.The cheapest combination of gold coins would probably be 42 $20 gold pieces and 1 $10 gold piece, which, if all are in average condition and there are no special dates, would be worth closer to $60,000 minimum. In contrast, from the web sites I've visited, it's difficult to find a price guide for a Model T from 1908 in perfect condition (if there is such an animal), and you would have to probably auction it off if you wanted to sell it and take whatever the highest bidder offered, minus whatever commissions.

[safeinOhio]

41. minus the up front 3% to 5%

premium and the 3% to 5% back door cost. Never sell to the local coin shop or jeweler. A good deal can be had with a google search for a company that will pay a premium on the back end, enough to cover shipping and insurance to mail the coins.

[pipoman]

50. I haven't sold since the 1980s...if I do I will remember that.

[safeinOhio]

66. try this

http://bullion.nwtmint.com/silver_bags.php

I've used them to buy and sell and have had great luck. Their site tells you what they pay and will pay you. If selling or buying they will lock in the spot price at the time you call.

[pipoman]

73. Thanks..

The sell price can be a little better in eBay if you are buying less than a full bag...like $100 face..I have been watching completed listings and some lots are selling for 19x to less than 21x face. They are certainly competitive on full bags. As for their buy price, it is competitive when you figure eBay fees, paypal fees and shipping/insurance.

[Art_from_Ark]

35. If you bought 1 ounce of gold 200 years ago

in the form of $20 face value of newly minted US $2.50, $5.00 and/or $10.00 gold pieces, they would be worth a fortune today. For example, eight US $2.50 gold pieces in mint condition dating from 1811 or before (none were actually made in 1811) can easily fetch more than a million dollars in the rare coin market.

As for gold having no intrinsic value, that is pure nonsense. Gold has always had intrinsic value since coinage was invented.

[lumberjack_jeff]

89. I'd buy more gold with the advances from my book; "How to live to be 100. Twice." n/t

[WinkyDink]

69. Sell gold or silver eventually for.....what, then? Worthless dollars? Or a loaf of bread?

[pipoman]

75. The same thing you may liquidate any asset for

living expenses, a vacation, or maybe to invest in some other investment. Dollars are not worthless, they just have a history of depreciation, silver and gold have a history of appreciation if only at a rate to keep up with inflation. So one would sell silver or gold bought with yesterday's dollars for today's dollars, while yesterday's dollars kept in your mattress will still be yesterday's dollars when you pull them out.

[eridani]

108. That makes no sense at all

The supply of value-added goods has increased by orders of magnitude over the last 100 years. Gold hasn't.

[Ozymanithrax]

15. I understand there are now stores in New York where you can buy gold...

and carry it out.

I have no idea what hteir markup is, but if you physically cary it out, at least you have it.

I don't have the money to buy an ounce of gold.

[pipoman]

22. There have always been stores in every major city to buy and sell gold...n/t

[Art_from_Ark]

37. Stores where you can buy gold and carry it out

have been around for ages. They are called "coin shops".

[Ozymanithrax]

88. The story I saw on the news was one where you could buy bars...

and you are correct about coin shops. Not that I've ever had the money to shop in such a place.

[Art_from_Ark]

91. I see what you're saying now

Bars, as in what size? Little one-ounce bars, or are we talking "Fort Knox-type" bars?

[Monk06]

16. Put 25% of your portfolio in gold, evenly divided between investment wafer, four nines pure coin

and a good exploration play.

Do not buy through coin sellers and private
mints like the Franklin. And stay away from
scrap gold scams. Old 10-14 carat gold jewellry
is useless from an investment standpoint.

The short rule is bullion always has a buyer.

Stick with Canadian Maple Leafs. Any bank in
the world that deals in gold will accept them.

[pipoman]

18. I forgot Maple Leafs..they are good

I have always found local coin dealers to be an OK source for gold and "junk silver" if they believe you know what you are doing. They usually sell slightly above spot. Ebay, if one is careful, can be OK too.

[Monk06]

25. There is a difference between trading in gold and investing. If you are investing deal only in

investment grade bullion wafer or coin. You can
make a good living buying scrap but that is not investing
it's trading on a small scale where you have to find a buyer.
Investment grade can be redeemed world wide at any bank that
excepts bullion grade physical gold.

Scrap? Well Ebay is not the best measure of the worth of
anything.

[pipoman]

28. I didn't say ebay was.

I said ebay can be a decent source for bullion or scrap (pre-1964 US silver coins with no numismatic value) silver, called scrap in the trade. There is a difference between "scrap" silver and gold. Gold is usually jewelery, silver scrap is often non-numismatic coins. Check completed auctions of pre-64 Kennedy half dollars, then run the numbers through a melt calculator. It is quite possible to buy pre-64 non-numismatic 90% silver coins or "scrap silver" on ebay for a small premium over melt value.

[Monk06]

31. I would love to see a link where you can buy bullion gold on eBay. You are aware that by definition

bullion is investor grade and can only be traded through
a licensed trader, usually a bank or private bullion trader?

Bullion is not scrap metal whether it is gold or silver.

By definition numismatic gold or silver coin is not investment
grade in the modern sense. It is a collectible subject to the
vagaries of the second market which is what you are talking about,
buying and selling old coin and jewelery for a premium above the melt
value.

Melt value in that sense is speculative because the cost of
actually melting and refining scrap gold and silver would be prohibitive.
In fact you would find few mints or refineries dealing in investment grade
gold willing to handle scrap gold or silver except on a fee as you go basis.

Which is not to say you can't make money dealing in scrap or non numismatic
gold. It's just that you are not talking about investment in bullion or
bullion grade coin. If your talking about gold and it isn't mine supply
or four nines pure than you are talking scrap which is prohibitively expensive
to valuate and re-refine.

[iamtechus]

39. You can buy 1 oz gold bars and larger silver bars

The prices follow the market pretty closely.

http://www.apmex.com/Category/502/Gold.aspx

http://www.cmegroup.com/trading/metals/precious/gold.html

[Art_from_Ark]

40. (Deleted message-- dupe)

[Art_from_Ark]

42. Bullion is traded all the time by non-licensed dealers

Where in the world did you get the idea that bullion could only be sold by licensed dealers? Bullion includes special coins minted for that purpose by the US and other governments. "Business strike" US bullion gold coins are released by the Mint through certain dealers, and that may be where you get your misconception, but once they enter the marketplace, anyone can buy and sell them.

[Monk06]

44. Drugs are traded by non licenced dealers anywhere in the world. Let me

repeat I am not talking about trading in bullion. I can
sell my neighbor an investment grade gold wafer or a
bullion coin for whatever he is willing to buy it for
and whatever I'm willing to sell it for. That is a gold
trade not an gold investment.

If you are buying physical gold in wafer or bullion coin
you are doing so as a hedge against the devaluation of other
assets in your portfolio such as currencies, securities
or physical assets like real estate.

If you are buying gold as a hedge you are investing not trading.

I hope that is clear. And if you are investing you take delivery
of physical gold at four nines pure from a reputable source if you
have any sense in your head.

[Art_from_Ark]

55. Here is what you wrote earlier

"You are aware that by definition bullion is investor grade and can only be traded through a licensed trader, usually a bank or private bullion trader?"

That statement, as it is worded, is wrong. You don't need a special license to buy and sell bullion. Most coin shops don't have licenses expressly for the purpose of buying and selling bullion coins, but can they do it nonetheless, legally and safely.

[Monk06]

86. I am not talking about buying gold from a coin or pawnshop. I am talking about the bullion trade

If you buy investment grade bullion in either physical
or in the form of certificates or derivatives you will
use a licensed trader if you have any sense at all.

And most countries require a license to import or trade
in gold securities or physical.

You can 'buy' anything from anybody but I am using trading
in a technical sense.

[Art_from_Ark]

95. "Investment grade bullion"

Bullion is basically physical coins and bars that have a known, easily verifiable weight and fineness and trade for a price that is based exclusively, or almost exclusively, on the amount of precious metal they contain. Thus, anything from Mexican 50 pesos to Australian Kangaroos to American Eagles to British sovereigns to Englehard or Credit Suisse bars can qualify as "investment grade gold bullion", and in the US no special license is needed to deal in these products.

If you buy derivatives, you do have to go through a licensed broker, but that is not "bullion trading" in the strictest sense since you really aren't getting any tangible bullion.

[Monk06]

100. Investment grade bullion is four nines pure period, whether wafer or coin

Coin as investment grade depends on it being four nines pure
plus being favoured by banks as freely exchangeable.

This is generally due to a coins reputation for availability and liquidity.
Not all investment grade coin is equal in terms of liquidity. Maple Leafs
for instance have a reputation for being accepted everywhere.

The 50 Peso coin? Never heard it mentioned by any of the bullion dealers
that I have interviewed.

So to repeat when I talk about investment grade coin I am referring to
99.9999 pure and to a lesser extent five nines, specifically the 99.99999
pure Maple Leaf that was struck in limited quantities.

[Art_from_Ark]

103. Bullion types

The bullion that is being discussed here is not really the kind that is favored by institutional investors, which is what you're describing. Institutional investors trading gold back and forth among each other might favor huge bars of "four 9's" or even "five 9's" (which is 99.999% pure, not 99.99999%, by the way), but out in the world of individual bullion investment, which is what we are discussing here, nobody really seems to care about the "five 9's" gimmick as an investment vehicle. Basically, any gold coin that is at least 90% pure can be considered bullion, if it has no numismatic value, although individual investors tend to gravitate toward common European gold (sovereigns, 20 francs, Austrian gold), Mexican gold (especially 10, 20, and 50 pesos), as well as the various coins that have been struck in recent years for the specific purpose of serving as bullion investments for individual investors (American Eagles and Buffalos, Canadian Maple Leafs, Australian Kangaroos (no one seems to remember the Nuggets), Chinese pandas, South African Krugerrands, Austrian Philharmonics, etc).

Here are some web sites that list typical coins and bars that are commonly bought and sold as bullion by individual investors. As you will notice, "50 pesos" is on each list .

http://www.tulving.com/goldbull.html#Pre%20Gold
http://onlygold.com/Coins/WeBuyAllDenominations_FullScreen.asp
http://taxfreegold.co.uk/olderbullioncoins.html

[pipoman]

45. I don't know what the rules are in Canada

but in the US I can buy and sell gold if I want to, I may not be able to buy direct but I know several relatively small coin dealers who I believe do buy direct. If I have 1000 gold maple leafs and want to sell them to my neighbor, there is no prohibition against that in the US.

http://cgi.ebay.com/TEN-2011-GEM-BU-CANADIAN-MAPLE-LEAF-1oz-GOLD-9999-/220716021244

Melt value of 90% US silver coins maintains because it is easier than refining mined silver. The premium over spot for certain gold and silver coins are due to their trusted status around the world. I don't disagree that scrap gold isn't investment grade. I also don't disagree that bullion is .999 pure and if I have referred to 90% silver as bullion it was an error..90% non numismatic silver is junk silver by every metal dealer's vocabulary I know. The value of 90% us coins has for as long as I can remember been tied to spot.

edit..my error, junk silver not scrap..

[Monk06]

47. For the third time in response I am not talking about gold trading. If I buy a Maple Leaf

and sell I will have to sell it several years later to
make a profit over the premium charged by the Canadian
Mint. That is a gold trade, simple retail. I can do that
by selling to my neighbor or a drunk in the bar.

If I am investing I am using that Maple Leaf as a store
of value against losses in other investments that I may
have whose value is more exposed to market valuation. By
that I mean stocks, currencies, bonds and other paper assets.

I am not making any of this up. I have interviewed the CEOs
of over 50 major gold companies, both exploration and mining
companies including Jamie Sokalsky of Barrick and Pierre Lassond
of Newmont.

I am talking about gold investment not garage sales or scrap dealing.

[pipoman]

51. You certainly wouldn't have to wait several years

to sell your maple leaf if, as gold has in this past year, increased 20% in one year. And since everyone pays the premium over spot for maple leafs, the premium follows the coin so it will be recouped if you sell the coin the next day just as it is on the ebay link I posted upthread.

[Monk06]

52. Several years was a guess based on gold prices a year or so ago when they were hammered down

to the mid $700 mark. The gold price is now relatively
high and unstable IMO due to speculation in the currency markets
fed by the effects of US govt debt.

At any rate your still talking about selling gold above spot
in the retail market that is trading not investment.

As a sidebar, I am beginning to think that Americans think
speculation and investment mean the same thing. Maybe that
is what is wrong with the US economy. You have become a nation
of short term speculators and have forgotten how to build over
the long term.

Just remember gold is strong only in proportion to the weakness
of the US$ which is manipulated daily. So $1342 oz gold could be
$1000 oz gold in six months. It has happened before.

As I said originally if you are investing, convert 25% of your
portfolio into gold, evenly split between bullion, bullion coin
and a good mining or exploration company and go long.

[Art_from_Ark]

61. A good mining/exploration company?

You mean, like Bre-X?

Exploration companies are called "juniors" in the trade. They are often very lightly traded, and more often than not, they don't produce much. Thus, for the uninitiated, investment in juniors is little more than speculation. And if a junior company hits a rich vein, they will often sell it to a bigger company ("major") that has the resources to develop it. So you really have to stay on your toes if you're invested in an exploration company.

[Monk06]

81. Please Bre-X was an obvious fraud. They were cooking their assays using the own lab

You have to use an independent assay lab now or the TSX will
de-list you. If you noticed up thread I have interviewed over
50 CEOs from junior mining companies as well as majors. Eighty
percent of the junior mining companies have their head offices
five blocks from my apartment. I was a mining journalist for
three years between 2003 and 2005. There is a wide variation
in the quality of junior mining companies based on their properties
and the experience of their management. Investing in Juniors is
speculative but it is not 'mere' speculation. You do have to know
a fair bit about mining and exploration to make money at it however.

[Art_from_Ark]

90. I qualified my statement with "for the uninitiated,,,"

"For the uninitiated, investing in a junior can be little more than speculation."

I am acquainted with juniors, and majors, and PDAC, and successes and failures in the mining business. A lot of juniors, even if they become listed on a stock exchange, never amount to much. And sometimes even if they do make a major find, the concession/property can be taken away by an unfriendly government, such as what has happened in some of the old Soviet republics and elsewhere in Asia. Investing in juniors is a tricky business.

[Monk06]

92. You are pretty safe if you invest in juniors in reliable jurisdictions and well established

mining regions like Nevada, Red Lake and others. I would
avoid Africa and China as well as the Stans.

[Art_from_Ark]

43. 90% non-numismatic US silver is not called "scrap" in the trade

It is called "junk" silver. "Scrap" refers to miscellaneous forms of silver such as jewelry or silverware that are not coins or investment bullion.

[pipoman]

46. You're right...my error...I guess it is getting too late.

[Art_from_Ark]

63. I hope I didn't sound "snarky" with that post

It's obvious that you have been involved with metals for a while :hi:

[pipoman]

76. Nope, no problem..

:hi:

[jallo]

17. I invested many many years ago

I don't think it is a scam. It was a GREAT investment.

I would NOT invest now, any more than I would buy into any bull market after that much appreciation. It's called "getting in late to the party".

[saged52]

20. my father-in-law invested many years ago, also

he is now selling his coins so he can pay my mil's nursing home bill...

[pipoman]

21. If one believes there will be further deterioation

of the world economy or even the US economy gold could still be a good investment. If the bottom drops out of the dollar tomorrow, I would rather have an ounce of gold at today's prices than $1368 in US currency.

[jallo]

23. I have no doubt it COULD be a good investment now

I just don't believe in buying the top. If I was DCA'ing, I wouldn't necessarily stop now, but to START now is poor risk/reward imo.

[pipoman]

29. Nobody believes in buying at the top

people are obviously not as certain we are at the top as you are, that is why the price continues to edge up....people are buying it and that would include more than just the casual investor who couldn't effect gold prices on their own collectively, there has to be some major positive speculation going on or the price would drop. If someone believes the price will rise based on...whatever...why does it matter if they start now or continue to buy?

[jallo]

48. I'm a contrarian. It suits me well as an investor

I wouldn't do it in real estate (I sold w/in 3 months of my local top, and refused to buy anything when CNBC, CNN etc. were featuring bull market stories every ten minues, when CNBC was interviewing former vegas strippers who were now real estate speculators. God help us.), I don't do it in stocks. I won't do it in commodities. 5+ yrs back, people weren't interested in gold. 10 yrs ago, even more so. Now, it's on the tip of everybody's tongue. Sorry. Suckers game. I'll daytrade the futures, but I don't INVEST in something that has gone that far, that fast. Never have, never will.

Staying away from overheated markets and being a contrarian has suited me. Remember, there's two sides to every trade. In the futures markets, which are zero sum (as opposed to equities, which aren't), that's especially true.

Why it matters is risk/reward. It's like poker. My edge is not winning a lot of hands. It's losing smaller when I lose and winning bigger when I win.

Unlike the institutions, as small investors and/or traders, we can be much more nimble.

A bull market can remain frothy longer than a stubborn countertrend trader can remain solvent. I'm well aware of that. I am not saying short the market. I am saying *I* stay away from the froth, at least when it comes to INVESTMENTs. For day, or even swing trades, that's not a problem. That's why god invented stop-loss orders, and options hedges.

[WinkyDink]

70. "It was a GREAT investment." Only if you sell it for a profit. Otherwise, it's a shiny pile.

[jallo]

99. I sold about 2/3. The rest I have a stop loss on

So, unless it drops about 85% overnight (while my stop loss can't get triggered), I think I'm ok!

:)

[WinkyDink]

102. My point: the SALE is why you made money.

Not that I don't wish in retrospect that my grandmother would've given me Krugerrands instead of cold cash! But then, I'm one of those "gold bug" types that just likes to look at it (as my jewelry "bureau" can attest). But buy gold now? Nope!

[lepus]

74. I agree with this also

I bought most of my silver starting out at 5$ an ounce. I quit buying at 10$

When a commodity is hitting record highs, I don't count that flapex over the hunt brothers as a real high, it is a good idea to look at it closely. Buy high,sell low is not the way to go.

[Mimosa]

19. Probably. But it's a good way to get rid of *dated* jewelry. n/t

[girl gone mad]

24. Once the government decided to take on the toxic debts of the failing banking cartels..

a rise in precious metals, especially gold, was assured.

this is sovereign currency revulsion. We could easily manage our debt and control the value of our fiat currency, but there is little evidence that our political leaders have the intelligence or the will to enact sound fiscal and monetary policy.

The precious metals market is prone to manipulations and the fees dealers collect can be astronomical. Shop around or buy from the mint.

If you are preparing for the apocalypse, coins are the best bet. Gold eagles and Canadian maple leafs are recognized and traded globally.

[Art_from_Ark]

54. You can't buy bullion direct from the Mint

The Mint releases bullion coins through select dealers. You can buy special edition/condition bullion coins from the Mint, but those usually have a high premium.

But the advice of "shop around" is good. The best thing to do is what the knowledgeable people do, which is to read a lot, especially in coin publications, since the coin publications (Coin World, Numismatic News, etc.) aren't selling metals (and thus can provide impartial information since they don't have a stake in selling you anything) but are nonetheless knowledgeable about precious metals.

[iamtechus]

32. It's easy to buy and sell gold and other precious metals

I recently looked into investing in gold and did a little research. A lot of people warn that gold mining stocks are a scam or at least very risky so I decided to stay away from that angle.

Buying and selling gold "bullion" appeared to be a pretty open and tranparent process so I bought a couple of 1 oz bars. I intend to hang onto them for a while to see what happens.

If you want to look into buying and selling precious metals, you could try the websites below.

Market prices: http://www.cmegroup.com/trading/metals/precious/gold.html

Retail prices: http://www.apmex.com/Category/502/Gold.aspx

The retail prices are a little over the market prices and that website keeps them updated.

[Odin2005]

34. What goes up must come down.

The vast majority of gold is held by governments. It just takes one government to sell a bunch of gold to cause the gold market to tank.

[old mark]

49. Gold in the form of actual metal is bought and sold by dealers. The selling price is higher than

the market value so the dealer makes a good profit.

The buying price is lower than the market value so the dealer makes a good profit.

Gold-like anything else-can be a good investment if you buy it extremely low and sell it extremely high. Buying ANY thing when the price is high is not a way to make any money at it. For the investor with maybe a few thousand dollars, it is a waste of time and money. Gold per oz. as of Friday Jan 7th 2011 was around $1300, and was DOWN a bit over $2/oz. Gold from maybe 10 years ago was around $600/oz...if you bought $1000 of gold and held it for 10 years, you could have made over 100% on your investment, but it would have taken 10 years to do it, with no access to your money in all that time.

Gold sellers for "investment" are now SELLING at well over the market value and PREDICTING future prices of $1900/oz...but there are no guarantees gold will ever go that high, and you would need to hold huge amounts of it to make any real money on it even if it did.

The best way to make money in gold is to be a dealer in it.


mark

[Art_from_Ark]

60. The closing price of gold on 1/7/11 was $1370

The price of gold 10 years ago was hovering in and out of $300 territory for 2000, and didn't get over $300 at all during 2001. So if you had bought gold bullion 10 years ago (January 2001) you would have more than quadrupled your investment (assuming you bought from a normal dealer and not some telemarketer).

[old mark]

65. Again, it would have been a great deal if you had bought enough, and if

you could afford to keep all that money out of circulation for 10 years...also depending on what you actually paid and what you could actually sell it for. It's not as easy as it looks-or as easy as they tell you when they are selling it.

mark

[Art_from_Ark]

67. I can understand your sentiment

You have to do your homework with precious metals, as with any investment. I always suggest starting by reading coin hobby publications like Coin World or Numismatic News since they don't deal directly with precious metals (so they're not trying to sell you anything) but provide a lot of insight into the PM markets.

If you stick with bullion coins, it actually is pretty easy to buy and sell them, once you learn the ropes. Most (but not all) coin shops deal in bullion. Some provide better spreads (difference between buy and sell prices) than others. So as another poster said, it would pay to shop around.

And no, you probably shouldn't invest in precious metals if you don't have much discretionary income.

Personally, I have viewed precious metals as a kind of long-term CD, where I don't collect any interest until the CD "matures"

[Hannah Bell]

53. why would you buy when prices are at historical highs unless you think

they're going to go higher still?

[Art_from_Ark]

56. Why buy any investment if you don't think it will go higher?

I remember when gold reached a "historical high" of $50, then $100, then $200, then it fell back and people were saying that gold had run its course. That was back in the '70s.

On the other hand, a few years ago I heard people saying to "buy GM" because it was well off its historical high.

[Hannah Bell]

57. yes, in the last big economic crisis. and it *had* run its course, until the next one, right?

so my understanding is that if people are buying gold now they expect things to get worse economically.

[Art_from_Ark]

59. That is a common reason individuals give

for buying gold (that is, that they expect things will get worse economically)

Since around December 31, 1974, when all restrictions on gold ownership were lifted in the US, the gold market had its ups and downs, but it really began to take off in 1979, in part because of the energy crisis of that year (coming just 5 years after the 73-74 crisis). So a lot of the attraction for gold died down when the energy crisis appeared to be on the road to resolution.

In the ensuing years, the price of gold was manipulated by central banks, particularly in Europe, which made a nasty habit out of discretely buying large amounts of gold when the price was low, and dumping it when the price reached a level to their liking. This went on until the euro was introduced in 2002 and the European central banks agreed to annual limits on their cumulative gold sales. It's no coincidence that the price of gold really started gaining upward momentum at around that time.

[Yavin4]

62. If You Don't Have Physical Possession of Gold, Then It's Worthless

Think about it.

People buy gold because they fear that currencies will collapse, and gold will be the only respected currency that holds it value.

So, let's run that scenario. Let's say that currencies do collapse. If that happens, then the entire world is thrusted into poverty. Imagine the complete chaos and disorder this would bring.

Now, do you think that the government, or whatever form replaces it, is going to let you calmly collect your gold from a third source, and let you use it for currency while everyone around you is starving?

[sendero]

64. I'll echo the sentiment..

... of the smart DUers who have already posted.

1) Forget "numismatic" (collectible) value, it fluctuates wildly.

2) If you want gold, get PHYSICAL POSSESSION, there have already recently been scams where banks who are "storing" your gold cannot/willnot produce it upon demand.

3) Maple Leafs, Pandas, Kruggerands, any well known form is good, you should pay a SMALL PREMIUM over the spot price.

My gold and silver are now worth 3+ times what I paid for them and frankly I don't think gold or silver are likely to drop much with the Fed printing money like there is no tomorrow. There are reputable people whose opinion I generally respect who disagree with me.

I see gold and silver not particularly as an "investment", more as a "hedge against disaster".

[Agent William]

71. I really to donate to DU again, because as I write this is

There is an advert for a gold company that is clearly.

But no, investment in gold is not a scam just so long as you're not swindled getting the gold in the first place. Usually scams involving gold are perpetrated by the middle man, I.e. Glenn Beck gold.

[RegieRocker]

72. Kids nothing but kids

Can you eat it? Wear it? Can you build a house with it? No! Then why would it be worth anything? Because you're dumb enough to fall for more bs. The only thing that gives anything value is us.

[Art_from_Ark]

80. Can you eat stocks? Bonds?

Society has progressed well past the stage where daily living was a constant struggle for the basics of food, clothing and shelter.
If you have gold, you can sell it to buy all that stuff. One ounce of gold has the equivalent value to get you a roof over your head, three meals a day and basic clothing for a month in most places in the USA.

[RegieRocker]

84. Covet your gold go ahead.

[WinkyDink]

101. Stocks and bonds are tied to the value of a corporation or a state. Gold's value is simply between

the seller and the buyer.

[Art_from_Ark]

105. Do you really believe that?

Are not the prices of stocks and bonds also determined between sellers and buyers?

For example, if you own stock in Small Cap A, which has an average trading volume of say, 100000 shares a day, and you want to liquidate your holdings, what are the chances you can liquidate 5000 shares at the bid price? If there is little action in that stock at that time, your broker might have to shop around for several buyers, who, seeing that the market is flat, will in all likelihood offer you less than the bid price, and maybe not for all 5000 shares. Thus, they might make one or more counter offers which are less that what you had hoped for. The price is thus determined between buyer and seller and is not necessarily based on what the company is actually "worth".

If you want to buy a 30-year Treasury bond, does the price remain constant? No, it doesn't, because its price is determined by buyers and sellers in the market and changes from day to day.

Gold is traded on a world market, and bullion dealers base their buy and sell prices on the world price (usually based on London or New York prices). Say you own a 1-ounce Maple and call XYZ Bullion Traders and ask them what their buy price is. They say "$1375" or whatever, based on a spot price of $1370, and you like that price, so you arrange to sell it to them at that price. As long as you get your gold coin to them within the time frame they prescribe, they will honor their price if they are a reputable company.

[JCMach1]

77. Buy some gold jewelry you like and wear it... At least that way if it crashes you have something!

[Zephie]

82. I think the best explanation of this I ever saw came from Cracked.com

surprisingly for a humor site they're pretty on the ball when it comes to calling out things like this. The article that addresses this is 6 Companies That Make Money Solving Problems They made Up. Gold sellers are number 5 on the list if you want to skip directly to the subject at hand, but the entire thing is worth a look.

Enjoy!

[Motown_Johnny]

83. Gold is not an investment, it is a hedge against inflation

[Statistical]

94. A cynical view on gold investing.

So gold will keep going up in value forever (kinda like housing) right?
Also paper money is worthless and will keep going down in vlaue right?

So why are gold sellers willing to trade their valuable (and like more valuable in the future) gold for worthless dollars (which are likely going to be more worthless in the future)?

One would think if gold is going to double over next 2 years wouldn't these companies just hang on to the gold and watch their wealth double?

[Dappleganger]

107. If the shit hits the fan, where will you sell it?

YOu can't eat it, shoot it, drink it or make sweet love to it...so it's really just speculative gambling.

[Rochester]

109. Buying high, hoping to sell higher...

...is how so many people got themselves into this mess and dragged the rest of us along for the ride.
Buy gold if you wish - but if you really fear we are headed for total collapse, invest in lead too!

[slackmaster]

111. It's not a scam at all. It's a personal choice, an investment that carries risk like most do.

I sold all of mine in March 2008 and don't plan to buy any unless the price gets back to what I regard as a sane level.