Comments on: The Selling of Gold

By: Choyster Cash

Choyster Cash — Thu, 15 Jan 2009 02:06:53 +0000

Iowa winters…that can do you in!!

By: Jen

Jen — Wed, 14 Jan 2009 19:34:13 +0000

National Geographic has a fascinating article about gold in this month’s issue–almost as devastating as their piece about diamonds several years back.

By: kz

kz — Wed, 14 Jan 2009 18:56:22 +0000

I am completely behind your statement here, Trent, BUT…please spend the time to read the articles to which you link to make sure they actually support your argument. For example, the article you linked from Reuters regarding the decline in umemployment claims contains the following:

“A Labor Department official said the timing of the year-end holidays and volatility in factors used to seasonal adjust the data was likely to blame for the large decline in initial weekly claims…the fact many staff at claims offices were likely away for the Christmas vacation may have depressed the number of applications for aid that were actually processed.” To me, that’s hardly a good sign we’re at the bottom.

It may be a small quibble, but it affects the quality of the work, in my opinion.

By: Carlos

Carlos — Wed, 14 Jan 2009 17:33:09 +0000

Gold is a horrible investment. The bid/ask spreads are pretty high, and, historically, gold *has not kept pace with inflation*. That’s right, owning gold has *cost* you money vs. having those same funds in many other vehicles – including bonds.

By: The Debt Guy

The Debt Guy — Wed, 14 Jan 2009 17:29:51 +0000

I listen to talk radio and I heard 3 separate commercials for gold. It’s getting pretty annoying between radio and TV.

By: KoryO

KoryO — Wed, 14 Jan 2009 15:46:36 +0000

I’m just happy that all the people who got left holding the bag back in the late 70’s during the last gold panic are finally getting their money back now.

Oops. Funny how these gold advertisements never mention *that* wonderful return on investment.

Don’t think it can’t happen again, guys. Problem is….I don’t know if I’m gonna be around another 30+/- years to see if I’ll get my “investment” back. And while someone mentioned diamonds, I can’t help but recall from my Russian history class that all they did for the Romanovs was deflect a few of the bullets in that basement in Ekaterinburg. They didn’t really help Jewish refugees fleeing from Hitler much, either.

In the meantime, I think I’ll invest in a few beer cans to wash down my chill pills. If you panic, you usually make a REALLY STUPID decision.

By: Goal Hunter

Goal Hunter — Wed, 14 Jan 2009 14:25:21 +0000

I don’t really understand the economics of gold even though you’ve told me above. I get the part about supply and demand, but I don’t know why people would buy gold in particular instead of any other scarce commodity, especially if they weren’t going to do anything with it except store it. And then who buys it later? Someone else who wants to store it? Eventually it has to get to someone who wants to do something with it like wear it or make a microship out of it or whatever, no?

By: the weakonomist

the weakonomist — Wed, 14 Jan 2009 14:17:04 +0000

I like the ones that tell you to sell your gold instead of the ads that want you to buy it. My favorite is the cheesy guy with the glasses offering a “safe, reliable transaction with satisfaction guraunteed!” Then they quote the customers and there’s the woman that says, “I sent in my engagement ring from my first marriage!” It’s so sad that so many people can relate to that.

By: Daniel Massicotte

Daniel Massicotte — Wed, 14 Jan 2009 13:46:55 +0000

You’re right, gold isn’t the end all (…), I think gold makes people think that just because they buy it they won’t have to come up with a new recession proof business plan.

By: To Young To Know

To Young To Know — Wed, 14 Jan 2009 13:15:45 +0000

Over Christmas, my mom was visiting from Florida. For some reason, the current gold drive came up in conversation. She told me that the last time she remembers such an effort to buy gold – it was caused by our govenment buying back hostages… Anyone able to give this any credit? She says I’m too young to remember (31).

By: Josiah

Josiah — Wed, 14 Jan 2009 12:39:26 +0000

only one word is needed here “inflation”

By: Itay

Itay — Wed, 14 Jan 2009 11:20:15 +0000

Gold is always an “investor”’s solid rock to hide under in times of financial turmoil, and was often considered a way to combat inflation. It’s value isn’t steadliy high just because of the hoarding phenomenon (that’s really over simplfiying it), but because it is a precious metal that has certain unique properties, with rare occurance on earth terrain.

I’ve read a book a few monthes ago that recommended several asset allocation strategies, for different types of investor. The author referred to gold as the sort of investment that should be considered in case “hell breaks loose”, but never should any person hold more than 2-3% of his/her networth in such a commodity. This actually makes sense, because unlike bonds and stocks – gold can get stolen, and is expensive to insure (roughly 0.5-5% of amount insured is paid annually. That’s alot for insurance.)

Last note – if you decide to invest in gold for hard times a small amount of your net worth, you could buy it in the form of official gold coins, mainly the Kruggerand, the English Soverign and the American Gold Dollar.

Just don’t be a gold nut.

By: Lisa

Lisa — Wed, 14 Jan 2009 08:34:27 +0000

Hi! I usually find I can agree about something you wrote, but no matter what articles you are reading or hearing: the economy isn’t getting better & unemployment isn’t down .
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102×3676338 80,000 a day applying for unemployment Ohio

Macy’s is closing 11 stores & laying off 1,000 people. http://consumerist.com/5126243/macys-closing-11-stores

Walgreen’s- http://www.upi.com/Business_News/2009/01/09/Walgreen_to_lay_off_1000/UPI-36951231525629/ laying off 1,0000

Unites States Postal Service–http://balleralert.ning.com/forum/topics/post-office-to-lay-off-40000

Locally here- The truck stop has shut down.The second one is talking about it. Factories are shutting all around us. Dominoe’s Pizza has a person stand outside in the cold with a sign to sell pizzas for $5.
The cities around us are going bankrupt.They don’t have money for school busing.The kindergardeners walk , if they live less than 2 miles from the school.Then having to walk past bunches of registered sex offenders homes , because sex offenders have to live farther from the school.It kind of defeats the purpose .This is walking on a major throughfare or in thr ditch, as there are no sidewalks. We have NEW school buildings, but NO BOOKS or chairs in some rooms. Day laborers can’t get work because there isn’t any. I had a job caring for an elderly lady , but she died last month. I went to apply for another home health aide job. The lady told me I could fill the application out , but she already has a stack of them in back & no jobs to fill. THe hospital in Columbus ,ohio is laying off people.I know people who have been laid off 3 times in last year from different factories.I don’t believe that the economy is ever going to get better. I really believe that we will see the downfall of the US. Locally here, there have been these places shut since last year:Goody’s, Steve& Barry’s, Office Depot and others.

Here are lay offs from this area:Longaberger Basket factory-784 & more since August,
Chrysler-Delaware plant -825 with another 100 in newark ,oHio.There are more too.
AS you can see I could write all day & never make it through the list of places that have either laid off or permanently shut down.PLease keep money at home with you to ber able too make it when things start rolling along even faster.I believe that God’s judgement is coming to America. I don’t believe that gold or money will do much good after next couple years. We have 4 1/2 pages of home foreclosures in this county every week for last 1 1/2 years & it’s not slowing down. The Columbus Dispatch Newspaper had it’s entire section E , nothing but deliquient property taxes about a month ago, a whole 22 single space small letters type pages.Are things that much better where you live? Maybe you could try to find an area of the country that has jobs & is doing well to post about. I’m sure lots of readers would be interested in getting some idea of where to look for work. Blessings, lisa

By: Oskar

Oskar — Wed, 14 Jan 2009 07:49:03 +0000

Isn’t this tru of most of the things we trade, e.g. with shares you have big long term owners who ‘hoard’ the company shares and hold them for long periods of time (normally 70-90% of the shares) the other 10-30% trade on the stock market, therefore we see large swings in price, however the real price of a company is dependent of what the main longterm owners are willing to sell for…which i think fluctuates less over time than the stock market…

Thanks for another good post!

By: Fred

Fred — Wed, 14 Jan 2009 06:49:04 +0000

When US10yTBonds pay a staggering 2.3%, this is a “return free risk” as Jim Grant would say…
In today’s environment, quickly shifting from just in time to just in case, owning free and clear unencumbered gold is an attractive proposition; maybe not as an investment, but definitely as insurance.

So the question not addressed by Trent, is not so much WHY to own gold, but HOW TO purchase it… and radio ads may not be a good option.

By: Borealis

Borealis — Wed, 14 Jan 2009 03:09:03 +0000

This is a no brainer.

If they are advertising on the radio, they want to sell, thus they don’t believe the price is going to rise.

By: surge152

surge152 — Wed, 14 Jan 2009 03:04:33 +0000

Thanks for the article. I completely agree. My concern is that historically gold has just barely kept pace with inflation, so if you put large chunks of your nest egg into gold, you’re likely to come out flat on an inflation-adjusted basis. As far as hoarding goes, for all the money that gets invested in gold during periods of economic weakness by sophisticated investors, you have a countering effect of masses of people that need the money and sell their gold to take advantage of the high prices. Lastly, if one were thinking about investing in gold, you could have bought it at around $600/oz. just three years ago, and at around $500/oz. just five years ago. I don’t know that buying near the high is a good strategy.

By: Jennifer

Jennifer — Wed, 14 Jan 2009 03:01:32 +0000

I have been watching this lately. I have contemplated selling some random pieces that really don’t mean anything to me and I never wear. but then I remember what my grandmother did for me and my sister when I was in high school. She took all her old jewelry and we spent an afternoon at a jewelers. She melted down her old jewelry and we each designed rings for ourselves. I still have it and it means so much to me. I think i will hang on to my old gold and do that for either my daughters or my granddaughters.

By: Chris

Chris — Wed, 14 Jan 2009 02:38:11 +0000

I agree with you. There has been a rush of gold sellers in the market these days. How much is just salesmanship I don’t know, it does somehow feel dodgy. Diversify your assets (inc gold, housing, cash) and spend time and money on what is most important, friends and family.

By: Daniel Peterson

Daniel Peterson — Wed, 14 Jan 2009 01:59:20 +0000

This article completely ignores the real reason you should be buying gold and other precious metals in today’s economy. The next crisis we face is a crisis of the American dollar. Our real problem is a dollar “bubble”, and it’s about to pop. The government is doing all of the wrong things to get us out of this, i.e., creating more money out of thin air. You should buy gold, and lots of it. Not because the intrinsic value will “increase” because of supply and demand, but because the value of the dollar will decrease. (also because of supply and demand)