Gold

[superfrank]

Somebody once paid me a due debt in silver, this was back when silver was $5 an ounce. I put it in a safe depost box in the bank. Time to get it out I think!

Keep it for a rainy day - paper gets very soggy in the wet!

[Euler]

You can always invest in hard assets, like property. At least they yield something and that is where their value is derived from. Gold and Silver doesn't yield anything, the only reason you would own it is because you think somebody would buy it from you at a higher price.

[superfrank]

But property has very high transaction costs, poor liquidity, maintenance costs, poor yields and is still way overpriced (IMHO).

[Ferru123]

Warren Buffett shuns gold as an investment - http://www.telegraph.co.uk/finance/mark ... tment.html

I like Charlie Munger's comment: "There's something peculiar about an asset that will really only go up if the world is going to hell."

Jeff

[Ferru123]

I wouldn't be going long at the moment, based on the current chart.

It looks like a classic reversal setup: a strongly trending upward market combined with a hammer doji.

If I were a contrarian trader, I'd put in an order to go short a couple of pips below today's low.

Jeff

[Photon]

The assumption that gold is bought purely for investment purpose is wrong. The main driver of demand of gold is jewellery which makes up c. 70% of demand. Continue steady demand, albeit slightly weakened by price increase, is exacerbated by investors looking for increasingly allusive yield since shares and property market has taken a bit of battering a late. Normally gold price was inversely related to oil price. Whenever oil price spiked upward gold price took a dive. However, that relationship is seem to have been broken down. People have seem to be predicting peak of gold price for at least 4 to 6 years now but have been proven to be wrong. I'm not advocating that the gold price would continue to rise ad infinitum but its more resilient than most people realise.

[superfrank]

The old Wall Street adage to always keep 10% of your wealth in gold and hope that it does not work remains wise.

[Euler]

Sell when people are greedy and buy when they are fearful and that makes me think that gold is a sell.

[Ferru123]

Are people not fearful of the economic situation though (which is presumably part of the reason why they're buying gold)?

BTW, I'm surprised you're not in Omaha this week, particularly given the rubbish racing we've been having!

Jeff

PS Shouldn't it be the other way around, ie prices of a stock or commodity rise when people think there's easy money to be made, and fall when they panic when they're long on an instrument that's falling in price?

Sell when people are greedy and buy when they are fearful and that makes me think that gold is a sell.

[Euler]

I'm always fearful of the economic situation but worrying about it hasn't made any positive difference to me in the last 40 years.