This is my first post… yes, you care… you know you do.
Anyway, I’m not finding a ton of posts on buying gold. I understand that Mises folks appreciate gold as a standard, but are they uniformly in favor of owning physical gold?.. and to what extent??? (i.e. what percentage of one’s assets?)
Thanks,
BF
Probably, most hard-money lovers dedicate about 10-15% of their portfoilios to commodity money. What most others would keep in money markets or other cash vehicles. I invest about 30% of my mine. I also like to collect gold coins and have a small chest full of gold
I am also pretty new to Mises.org and the community so someone else will probably have a better answer than myself. I would say Yes that to the thought of many Mises members owning gold, silver, and other commodities since it is accepted widely with Austrians that precious metals are the only viable medium of exchange in the grand scheme of things. I know that investors such as Peter Schiff who is influenced greatly by Austrian thought and Jim Rogers are betting on gold, silver, oil, and other industrial and agricultural commodities. And I can say personally is that I am long on gold and silver (especially silver since it is undervalued still when compared to its historical ratio to gold). I would hold some physical metal as a core position. If you wish to go for a gold ETF or something then more power to you, but I would always hold a core position of physical metals no matter what. Some suspect that there is more paper gold out there floating around than there is actual metal to back it. If a hedge fund suspects this and demands delivery of actual gold then the price will go up like a rocket. I have not really researched this claim so I might be off base, but either way I would feel safer having physical possession of the metal. Just make sure you have a safe place to store it like a fire safe at home or a safe deposit box.
As far as what % of your assets should be in PM’s? That’s a personal decision really that no one can really put a definite number to, but I would say that the 10% that many if not most financial “experts” are recommending today would be the bare minimum. 10% in gold/silver in my opinion would be an ok amount ONLY if you also have other agricultural or industrial commodities in your portfolio that tend to act as inflation hedges.
By the way welcome to Mises!
Thanks for the welcome…and quick responses.
Philosophically, I’d love to have far more actual precious metals… actually owning a real “thing” is very attractive.
Rebuking paper money is really cool, too… like putting my “money” where my mouth is.
I think I’m right at 10% metal right now… would love to find an excuse to buy more.
The rest is pure fiat.
BF
The old proverb states, “The best time to plant a tree is twenty years ago. The second best time is now.” The same can be said about investing in gold. Our economy is terrible right now, which is why gold prices are so high. So I don’t know how much money you’d make. It depends on our debt. The people who bought it as a hedge around September 11 were the most intelligent for doing so then.
Just for the record – as I understand it, gold isn’t necessarily a sure-thing investment right now (at least in the short term). Robert Wenzel (www.economicpolicyjournal.com) has advised that gold prices could see a downturn in the near future, depending on future market developments.
I’m not trying to tell you what to do with your money, just thought I’d throw out a bit of caution.
"I think I’m right at 10% metal right now… would love to find an excuse to buy more. "
Here’s one. Diversification is BS!. Ask all those who diversified and lost 50% of their total asset value after the 08 crash. Don’t get me wrong, I’m not saying you put it all in one basket.
I prefer raw gold, personally.
I’m with you DD5 on diversification. Do you think investors like Jim Rogers who know how deep the dollar is in the crapper are “diversified” in the sense most main stream investment “experts” define diversification? Heck no!! He is diving head first into tangible assets like gold, silver, oil, sugar, wheat, etc…Or owns stock in companies that deal with the extraction/harvesting of those commodities. The non-commodity related stocks he is invested in are mostly Asian and Latin American.
I feel sorry for those people who just throw their money into an index fund and feel that they will safe for the long term. Perhaps their earnings will grow in nominal terms, but not real terms once the inflation factor is kicked in.
If anyone feels that they need to invest in dollar denominated assets I would at least recommend investing in something that provides good dividends so you can at least start getting some more immediate returns instead of having dollars parked in US stocks that will be stagnant for years and down right destructive with the inflation factor added in.
I’v also heard it suggested that Gold ma be the next ‘bubble economy’ in the making. I dont know how plausible this is, but the conditions are certainly similar to the housing market after the burst of the dot com bubble.
I have some gold coins I purchased before the crash, and some silver coins I inhereted from my grandfather. But I’m not certain how smart it would be to step into the market now.
I buy gold indices.
It might be in a bubble, but more like the tech bubble rather than the real estate bubble.
With real estate, there were buyers who had no money buying homes… artificially driving up prices.
There are excellent reasons to believe it (gold) could go way up or dive down.
Drives me nuts.
In the short term, I’d like it to drop big time.
Don’t want to “play” the market with indices. For me, precious metals are something that you can actually own. There is so much paper stuff going around (stocks, fiat, etc.), that it is nice to actually have a real thing… at least, with a portion of my money.
Actually I doubt the ‘gold bubble’ will grow economy wide the way the dot coms or housing bubble did. Mostly likely we’ll see something resembling the comic bubble of the early '90s.
And you’re right, the nice thing about commodities like precious metals is that they always retain some value by the nature of being commodities, while gold and silver might go way down in value its almost unthinkable that they’ll become totally worthless the way dot com stocks did.(or like I’m afraid the dollar might in the future).
Well, if the dollar becomes worthless or merely drops in value big time… the gold will (probably) explode in value (in terms of dollars).
SirThinkALot - What conditions make it similar to the housing bubble? I just don’t see the similarities, nor would I call it a bubble at all. People seem to be buying metals for the simple fact that they want to be protected, in the event of a fiat collapse.
What I mean is that gold has held(and even increased in value) while most other forms of investing are tanking, which has attracted speculators, encouraged by conservitive pundits and talk radio hosts. This was pretty much the same situation housing was in following the collapse of the dot coms.
The difference, and its an extremely significnant one, is that there hasnt been any major government action to encourage the purchase and sale of gold(and I doubt they will either), which is why I said I doubt it will grow economy wide.
And I also dont claim to know if the current ‘gold rush’ will prove to be a kind of speculative bubble. I’m simply saying that its possible. I’m certainly not giving investment advice, since I dont know much about speculative markets.
SirThinkALot - I think you hit it right on the head when you mention “any major government action to encourage the purchase.”