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Is it wise to store your assets in gold bars?
My former wacko friend Stefan stored a great deal of his assets and wealth not in the bank nor in stocks, but in the form of gold bars. An extreme pessimist and doomsayer, he believed that the US economy was doomed to collapse as well as the value of the dollar, so he stores a great deal of his wealth in gold bars, which he claims maintains higher value and stronger stability than the dollar. As he says this, there is a glow on his face as though heâ€™s found a secret formula that everyone else is too stupid to realize. Gold, he says, is the ultimate permanent stable form of money, which never loses its value.
Plus, he believes that the Federal government can steal the money in your bank anytime it wants to and that the safety of your bank balance was an illusion, whereas they canâ€™t steal his gold bars, which he stores in some chests in a secret location that no one but him knows about. He says he put them in an area that is 100 percent impossible to find. (Though I think that with his weak will, anyone who captures him and tortures him like they do in the movies could easily extrapolate that information from him)
So I was wondering, is he right or wrong? And to what degree?
I asked a New York stockbroker friend about this who is very good in his trade, and he said that this reasoning was flawed, and that gold fluctuates just like the dollar does. The only time that gold yields a higher value, he maintains, is during recessionary periods.
What do you all think?
I think someone would be better off investing their money in a high-yield money market account, which is just a fancy name for a savings account with high interest, that limits how often you can withdraw money.
These have fixed interest and pretty much zero risk. Generally, you can get these with 5.5% APY, so if you have $100,000 invested it pays $5,500 per year, if you have $10,000 invested it pays $550 etc.
Also, I think you can get a Certificate of Deposit that pay 5.9% APY, but you're not allowed to withdraw any money until the end of the 12 month term.
WOWZERS!! You're a real fountain of financial sophistication, ain't ya?? 5.9% per year is just totally awesome, dude!! Let's take a closer look at that fantastic financial recommendation, retardo....
Imagine you are in the 28% tax bracket, which means you'll have to declare the incredible 5.9% on your tax return. This basically means that you've lost 28% of that pathetic $5900 per year. You would think we'd be done by now, right???
Nope, dip-f***ing dunk, not yet!!! We must now take a look at.........INFLATION! We'll use the Consumer Price Index as a general guideline. Let's imagine the annual Inflation Rate is running at a very politically acceptable rate of 3%. Simply put, you've just had $3000 shwacked off of that $5900 per year.
Putting it all together as follows: TAXES @28%($2800) PLUS the Consumer Price Index of 3%($3000) leaves us with a NET Annual return of a paltry $100 per year. Way to go, moron!!!!!
Jam your idiotic financial advice up your ass.........
OJ Simpson got away with murder, but he couldn't outrun KARMA.................
Actually, I've been reading up on gold investing and it doesn't sound like such a bad idea. But, obviously there is some risk involved.
I_PatriaTexefor_efl, first off, I want to thank you for not resorting to childish name calling, that really displays your maturity.
Second, taxes? inflation? Who said anything about investing in US currency? Who said anything about being subject to US taxes? Who said anything about living in the US? And I only used the dollar as an example, obviously, the Euro or virtually anything else would be a much smarter investment than the failing dollar.
Anyway, about your attitude; you need to go back to 1st grade were you can learn respect for other people. You're not gonna draw me into that trap of name calling and shouting slander. You need to find something to do with your time, stop trolling on the internet. I'm not going to read or respond to anymore of your posts until you stop with the name calling (wow, now I sound like your first grade teacher), and hopefully you'll be banned within the next few days.
-Some guy who's better than you
http://en.wikipedia.org/wiki/Ad_hominem attacks do so much to get your point accross, don'tcha know.
Yeah, Thanks just so much.
As I have said before, Gold has been a historical store of value for thousands of years. Hell, even an ounce of Gold can get you BOTH a good suit and a good meal.
I have lived outside of the U.S. for nearly 11 years and have less than no desire at all to return. In fact, NONE of my funds are in the U.S.!! You make a fine point on the Incredible Shrinking Dollar, which just fell through the 1.4 level VS the Euro.
You could say I also know a thing or two about investing outside the U.S.A!
OJ Simpson got away with murder, but he couldn't outrun KARMA.................
I'd say that if someone is asking abt gold NOW, the ship has flown. The Big Boys have long ago made their move. Buying high & selling low - not so good. I'd recommend gold coins, like Canadian, or small denominations of gold bullion. About the only use I see for gold is if you want to turn your assets into something portable like to cross borders, for instance. After all, $1M worth of gold WILL fit in a breadbox, but weigh 90Lbs or so. Gold CANNOT be counterfeited because of the high specific gravity of 19 or so.
The drawback is that it is of limited value when everyone around you is subsistence living and hence has little use for gold.
30 year gold price history chart:
30 year gold vs. silver history chart:
http://www.blanchardonline.com/beru/gol ... _75_06.php
Yes, precious metal prices do go up and down like stocks.
I believe in a well diversified portfolio. Your assets should be held in a mix of real estate, mutual funds (stock/bond funds), cash (including money market accounts), foreign currency deposits, and 1-2% of your assets in precious metals (gold preferred). If you're financially savvy you can invest in stocks and bonds directly. Or, you can hire a financial adviser to assist you on asset allocations.
I don't recommend keeping the majority of your savings in gold, but you should have a little bit (1%-2%) anyway. Just visit your local coin dealer and buy some Canadian Maple Leaf or American Eagle coins. If you cannot afford gold, you can start with silver.
You should also keep part of your cash reserve in foreign currency. Many banks such as HSBC offers foreign currency accounts. If you don't have enough $ to qualify for minimum deposit requirements, you can still go to your local currency exchange to purchase foreign currency and keep it in your safety deposit box.
I am really starting to see the value of this. When the film and video game industries started moving to Canada, I remember the US dollar was strong to the Canadian like 1 to 1.6 or something. Today they are pretty much an even 1 to 1.
“b***y is so strong that there are dudes willing to blow themselves up for the highly unlikely possibility of b***y in another dimension." -- Joe Rogan
All paper assets are headed down the toilet. Name one (1) paper asset that has held its value (aside from novelty/antique value) for over 100 years? How much will a 1907 US dollar buy you now, even if it were still legal tender? That's right -- less than one-twentieth of what it would have bought in 1907.
Canadian dollar? British Pound? Same story. Deutschmark/French Franc/Dutch Guilder... whoops! They don't exist any more!
A share certificate for the East India Company?
Next, name me one (1) piece of gold that is not as valuable now as it was 5,000 years ago.
The only money over 100 years old that is still worth anything (the ONLY money) was minted in silver or gold. And so will it be 100 years from now.
Just because you can't afford anything of value Winston doesn't mean these things aren't good to own! When you do actually earn some money, by all means keep it in dollar bills and Google share certificates. Just don't expect them to be worth much to your grandchildren.
I don't disagree that you should keep part of your assets in gold, but I don't think it should be the bulk of your holdings either.
Gold price has doubled (to the dollar) since 2000's, but if you had bought Google stock @ IPO for $100-$200/share in 2004, it's worth about $580/share today. You just need to be alert and sell when you should instead of "hold and pray".
Investments that generate interest will give you the power of compounding interest, while gold and other precious metals will not.
Another good investment, a favorite of mine, is real estate (RE). RE is one of very few areas where the bank is happy to give you hundreds of thousands of dollars in loans, for little or no collateral. With 5%-10% down payment you could finance 90%-95% of the purchase, rent the property out, and have your tenant pay your mortgage as you build your equity over 30 years. However now is beginning of RE down cycle and you should wait a few years before buying.
If you're conservative and am holding your savings in cash (CD/savings), there's nothing wrong with that either. When investor confidence is at lowest, it's when nobody wants to buy or bank is unwilling to make risky loans. This is when the stock or RE market is at bottom and cash is king, and that's also when you should start looking.