Don't understand the fuss over gold

[Woodsman]

I remember back in 2002 or so getting a strong urge to buy gold and not to hold back. This was a very good time to do so, it later turned out.

I only invested around $700 or so. I was a little shy about going whole hog when it came to acting on hunches, so I only used a conservative amount of cash from some small savings I had on hand. This was back when gold was $350 per ounce or thereabouts. Today it's comfortably over $1000 per ounce.

In retrospect, it would have made sense to buy a lot more on credit. It was one of those times where had I been more trusting of instinct, I'd have benefited in the long run.

I hit some hard cash times personally several years later and sold it again. It was selling at the time for around $600 per ounce.

The funny thing about it: When buying and selling, I didn't know really how or where to go about it. I just did it through my local bank and they were easily able to place an order. It's a lot like the stock market for regular unschooled folks... The service charges for buying and selling were such that much of the profit I made was heavily eaten into by fees. It probably would have been a different story had I bought 20 ounces instead of 2. And even then, it was a lot of effort just to make a couple hundred bucks. I will say, however, that gold proved it could hold value over time outside of the banking system. I paid my rent and bills for a month on it.

It was an interesting experiment, one I'd do differently were I to travel back in time perhaps, but in terms of basic investment for profit within a stable society, it really doesn't mean much unless you already have a ton of capital to play with.

Having gold on hand, however, to soften the blow of hard economic times seems like a whole other activity.

Bearing in mind... I gather that when those times hit, you'd best not let anybody know you have gold. One of the governments, (Canadian or the USA, or both, I can't remember), declared during some period of hardship that privately owning gold was illegal and forcibly compelled citizens to hand over their precious metal in exchange for promissory notes of some kind.

The well-prepared it would seem can be easily labeled "hoarders" and find themselves socially justified by the masses and their leaderships. :)

 

[hlat]

If anyone here invests in gold, even if it's for modest, amateur purposes (like me), what quality of gold would be best to purchase?

For safety in preventing yourself from being ripped off, go in person into a coin store that sells gold or silver bullion coins. Buy with cash and walk out immediately with your gold or silver. If you want to be riskier, buy with a credit card from a very reputable online dealer such as APMEX and wait for shipping. It is a very bad idea to buy or sell through personal checks. Read up on Tulving if you want to see an example of a long established dealer going bankrupt and taking customers' money.

As for what to buy, sovereign bullion coins are the best bet, because of increased protections against counterfeiting official coins. Some of the most recognizable sovereign coins are the 1 ounce South African gold Krugerrand, 1 ounce American gold eagle or 1 ounce American silver eagle.

Storage should not be with any third party, and definitely should not be in a bank security box.

I have changed my recommendation for US residents. I think they should buy pre-1933 gold coins made by the US government. Those coins are the $20 Saint Gaudens gold coin (1908-1933, 0.9675 troy ounce gold each) and the $20 Liberty gold coin (1849-1907, 0.96 troy ounce gold each). Those coins are sold by the value of their gold content plus a mark up for profit. A reasonable mark up on these coins is around $55 to $75.

The reason for this recommendation is based on the previous gold confiscation. When the US government confiscated gold in 1933 with Executive Order 6102, one of the exceptions was for "gold coins having a recognized special value to collectors of rare and unusual coins". _http://www.presidency.ucsb.edu/ws/index.php?pid=14611

 

[nicklebleu]

Ant22,

If you consider buying gold I would definitely buy pure (99.99%) gold, as otherwise there will always be the problem of determining exactly what percentage your gold is in case you want to sell it (it's not very easy to do).

I am also not convinced that Ebay is the place to buy gold, for exactly the same reason. How are you going to know that the percentage advertised is accurate? If you buy gold from a reputable seller and you buy reputable coins or bullion, the purity of this is known to all parties (as it is stamped on the bullion).

The best gold bullion (most reputable) is PAMP - one of the major foundaries of gold in Switzerland (which produces 60% of all gold bullion worldwide).

In terms of coins - apart from the problem luc mentioned with appropriation of gold by the government - it's also best to buy a well-known coin, like the American Eagle or Krugerrand.

Last, but not least - silver. Probably even more undervalued than gold. Before the beginning of the 20th century, the gold to silver ratio was around 1:17 - which means that it took around 17 ounces of silver to buy an ounce of gold, and it was pretty much fixed. With all the financial shenanigans after that the ratio has risen - at times up to 1 : 100 - to over 1 : 50 at the moment.

So if you are thinking in investing into precious metals, I'd advise to balance your portfolio with silver. The advantage of silver is: cheaper, more industrial applications and less prone to faking (gold bullion can be gold plated tungsten bars - another reason why buying from Ebay might not be a good idea). The drawbacks are the inverse: it's less portable than gold.

Also you will need to get the physical stuff, and that obviously rises some other problems - storage. Banks of course will store that gold for you, at a price. But access to it will be determined by that bank. If you are in a pinch, you might not get access to it in a timely fashion. So you will need to store your gold somewhere, where it is safe from theft and destruction (housefire), but also easily accessible.

Hope that helps.

 

[Foxx]

So if you are thinking in investing into precious metals, I'd advise to balance your portfolio with silver. The advantage of silver is: cheaper, more industrial applications and less prone to faking (gold bullion can be gold plated tungsten bars - another reason why buying from Ebay might not be a good idea). The drawbacks are the inverse: it's less portable than gold.

I'd second this and say that another potential advantage of silver is that in the event of needing it for something like day to day bartering, it might be more useful as the value of silver is more in line with the value of day to day items vs the large value of gold.

 

[Jones]

For those that may not have the resources to buy gold or silver, but are perhaps in the right industries to collect adequate amounts of computer parts or electronics from non working devices, there are also heaps of youtube video's about recovering gold and silver from these devices. The processes use acids (Hydrochloric, Nitric and Malic), bleach and peroxide to precipitate the gold or silver out of the parts. As well as an oxy torch or Bunsen burner to melt the filtered gold and silver particles into individual nuggets. The gold is found in computer chips and circuit boards and the silver in the contacts of switches and relays. A fair collection is needed of parts to make it worth while though and it's not worth destroying a working device to collect them. One video I watched a fellow got 11 grams of gold out of 500 grams of the gold bearing parts of computer chips and circuit boards. The process took about 24 hours of soaking in acid baths and filtering and finally melting. May be worthwhile if you've got access to the right materials.

 

[Woodsman]

For those that may not have the resources to buy gold or silver, but are perhaps in the right industries to collect adequate amounts of computer parts or electronics from non working devices, there are also heaps of youtube video's about recovering gold and silver from these devices. The processes use acids (Hydrochloric, Nitric and Malic), bleach and peroxide to precipitate the gold or silver out of the parts. As well as an oxy torch or Bunsen burner to melt the filtered gold and silver particles into individual nuggets. The gold is found in computer chips and circuit boards and the silver in the contacts of switches and relays. A fair collection is needed of parts to make it worth while though and it's not worth destroying a working device to collect them. One video I watched a fellow got 11 grams of gold out of 500 grams of the gold bearing parts of computer chips and circuit boards. The process took about 24 hours of soaking in acid baths and filtering and finally melting. May be worthwhile if you've got access to the right materials.

I saw the same video. It looked very complicated and sensitive to small error margins.

In addiction, without masks and industrial ventilation, you're pretty much assured of melting your lungs.

I seem to recall his saying that the process was a no-sum-gain, done purely as an experiment; the cost of the various chemicals, not to mention the lab equipment, was easily as much or more than the value of the gold extracted.

 

[Woodsman]

For those that may not have the resources to buy gold or silver, but are perhaps in the right industries to collect adequate amounts of computer parts or electronics from non working devices, there are also heaps of youtube video's about recovering gold and silver from these devices. The processes use acids (Hydrochloric, Nitric and Malic), bleach and peroxide to precipitate the gold or silver out of the parts. As well as an oxy torch or Bunsen burner to melt the filtered gold and silver particles into individual nuggets. The gold is found in computer chips and circuit boards and the silver in the contacts of switches and relays. A fair collection is needed of parts to make it worth while though and it's not worth destroying a working device to collect them. One video I watched a fellow got 11 grams of gold out of 500 grams of the gold bearing parts of computer chips and circuit boards. The process took about 24 hours of soaking in acid baths and filtering and finally melting. May be worthwhile if you've got access to the right materials.

I saw the same video. It looked very complicated and sensitive to small error margins.

In addiction, without masks and industrial ventilation, you're pretty much assured of melting your lungs.

I seem to recall his saying that the process was a no-sum-gain, done purely as an experiment; the cost of the various chemicals, not to mention the lab equipment, was easily as much or more than the value of the gold extracted.

Ha ha. My subconscious typo management saw an opportunity there perhaps. Gold has the power to make people act in funny ways!

 

[Ant22]

Wow, thank you for your help everyone! It took me a while to get back to you as I wanted to look into the information you provided before replying.

Ant22,

If you consider buying gold I would definitely buy pure (99.99%) gold, as otherwise there will always be the problem of determining exactly what percentage your gold is in case you want to sell it (it's not very easy to do).

I am also not convinced that Ebay is the place to buy gold, for exactly the same reason. How are you going to know that the percentage advertised is accurate? If you buy gold from a reputable seller and you buy reputable coins or bullion, the purity of this is known to all parties (as it is stamped on the bullion).

The best gold bullion (most reputable) is PAMP - one of the major foundaries of gold in Switzerland (which produces 60% of all gold bullion worldwide).

In terms of coins - apart from the problem luc mentioned with appropriation of gold by the government - it's also best to buy a well-known coin, like the American Eagle or Krugerrand. (...)

I have changed my recommendation for US residents. I think they should buy pre-1933 gold coins made by the US government. Those coins are the $20 Saint Gaudens gold coin (1908-1933, 0.9675 troy ounce gold each) and the $20 Liberty gold coin (1849-1907, 0.96 troy ounce gold each). Those coins are sold by the value of their gold content plus a mark up for profit. A reasonable mark up on these coins is around $55 to $75.

The reason for this recommendation is based on the previous gold confiscation. When the US government confiscated gold in 1933 with Executive Order 6102, one of the exceptions was for "gold coins having a recognized special value to collectors of rare and unusual coins". _http://www.presidency.ucsb.edu/ws/index.php?pid=14611

Thanks nicklebleu and hlat, I looked into what you both said and I think I'll do PAMP gold bullion and coins. I'm based in the UK and American Eagle is hard to find (well, at least I found it hard) but South African Krugerrand is much easier to come by. Plus, there are European gold coins as well.

In the meantime I've gotten my head around the quality measures of gold bullion too, such as the certified assayer signature etc.

As for eBay, having thought about it quite a bit a lot of sellers have very good feedback but since gold bullion comes in a laminated packet it would be impossible to verify the quality of gold without breaking the seal - which immediately decreases the value of that gold. A gold bullion without the security / quality measures will cost around £37-40 when purchased from places like Bullion By Post. But all these stamps raise the price to £50-70.

So unless I break the seal I won't be able to verify (jewelry shops offer this service here) whether what I purchased is actually pure gold. I've found other places that sell gold bullion but they charge quite a lot for postage so I guess I'll save up and buy 3 grams at a time instead of 1.

Last, but not least - silver. Probably even more undervalued than gold. Before the beginning of the 20th century, the gold to silver ratio was around 1:17 - which means that it took around 17 ounces of silver to buy an ounce of gold, and it was pretty much fixed. With all the financial shenanigans after that the ratio has risen - at times up to 1 : 100 - to over 1 : 50 at the moment. (...)

So if you are thinking in investing into precious metals, I'd advise to balance your portfolio with silver. The advantage of silver is: cheaper, more industrial applications and less prone to faking (gold bullion can be gold plated tungsten bars - another reason why buying from Ebay might not be a good idea). The drawbacks are the inverse: it's less portable than gold.

I'd second this and say that another potential advantage of silver is that in the event of needing it for something like day to day bartering, it might be more useful as the value of silver is more in line with the value of day to day items vs the large value of gold.

Thank you for the info about silver nicklebleu and Foxx, it's really useful, especially the price ratios provided. I think I'll do just that: balance my gold collection with silver. I guess the same applies and coins would be the best bet?

Also you will need to get the physical stuff, and that obviously rises some other problems - storage. Banks of course will store that gold for you, at a price. But access to it will be determined by that bank. If you are in a pinch, you might not get access to it in a timely fashion. So you will need to store your gold somewhere, where it is safe from theft and destruction (housefire), but also easily accessible.

As for storage, I would not keep it at home or in a bank for sure. The amounts of gold and silver I am able to afford are very modest, we're talking about a gram here and there, and I've already worked out a safe place. :)

The reason I'm considering investing into precious metals is because the banking system cannot be trusted and I certainly wouldn't store something I may need to use when they failed - with them.

For those that may not have the resources to buy gold or silver, but are perhaps in the right industries to collect adequate amounts of computer parts or electronics from non working devices, there are also heaps of youtube video's about recovering gold and silver from these devices. The processes use acids (Hydrochloric, Nitric and Malic), bleach and peroxide to precipitate the gold or silver out of the parts. As well as an oxy torch or Bunsen burner to melt the filtered gold and silver particles into individual nuggets. The gold is found in computer chips and circuit boards and the silver in the contacts of switches and relays. A fair collection is needed of parts to make it worth while though and it's not worth destroying a working device to collect them. One video I watched a fellow got 11 grams of gold out of 500 grams of the gold bearing parts of computer chips and circuit boards. The process took about 24 hours of soaking in acid baths and filtering and finally melting. May be worthwhile if you've got access to the right materials.

I saw the same video. It looked very complicated and sensitive to small error margins.

In addiction, without masks and industrial ventilation, you're pretty much assured of melting your lungs.

I seem to recall his saying that the process was a no-sum-gain, done purely as an experiment; the cost of the various chemicals, not to mention the lab equipment, was easily as much or more than the value of the gold extracted.

Thank you Woodsman, I agree that it sounds like something worthwhile for someone who has access to the right materials. Well, I don't I'm afraid. I think you're right about the cost and effort exceeding the value of gold obtained this way. I happen to have some malic acid at home and it's definitely not a cheap product.

Thank you for sharing your experience with buying and selling gold too. It helps to hear a testimonial from someone who's done it as whenever I mention investing in gold I hear that it's expensive to buy but I would never get the same price if I wanted to sell it. Mostly from people who have no experience with any sort of investment. My aim is to not sell it anytime soon and I don't think it's possible to predict what the situation will be like in 10-20 years.

And I doubt we have that much time before the next economic mayhem: https://www.sott.net/article/353838-A-new-financial-crisis-has-already-arrived-In-Europe.

 

[Ant22]

Ant22,

If you consider buying gold I would definitely buy pure (99.99%) gold, as otherwise there will always be the problem of determining exactly what percentage your gold is in case you want to sell it (it's not very easy to do).

I am also not convinced that Ebay is the place to buy gold, for exactly the same reason. How are you going to know that the percentage advertised is accurate? If you buy gold from a reputable seller and you buy reputable coins or bullion, the purity of this is known to all parties (as it is stamped on the bullion).

The best gold bullion (most reputable) is PAMP - one of the major foundaries of gold in Switzerland (which produces 60% of all gold bullion worldwide). (...)

PAMP website provides a list of authorised retailers, both online and shops here: _http://www.pamp.com/wheretobuy

Thanks for providing the info guys. It really helped me narrow down my little research and saved me quite a bit of time too.

 

[Shinzenbi]

Fuss over gold can be explained very simply. Gold is the way to transport your savings through time. It's that simple. The first gold coins that were ever created are still valuable today. Gold is incorruptible. Silver may rust, precious stones may flake, but gold does not change. To my understanding, this is the major reason. I'm sure that many greeks and cypriots would have bought gold if they had known that they would be robbed of their money. You also have to be able to protect your "treasure".

Another reason why the PTB do not want us to buy gold is that when you buy gold, you get out of the financial system.

 

[nicklebleu]

I regard investing into preciosu metals as a hedging strategy. It's not about trading and short time profits, but preserving wealth over time, but with a twist: Gold prices have fluctuated wildly over time, both due to availability vs demand, but also due to manipulating the markets. So you need to offset that with other investments that most likely trend in the opposite way - or the other way round.

What a hedging strategy means is: You invest a smaller part of your total wealth (most ivestors would not go over 25% of total assets) into precious metals to offset any drop in other assets, but at the same time you are also prepared to sell your precious metals as a loss in the future (while hoping that your other assets have gone up). In the end it's a diversification strategy, not putting all your eggs into the same basket.

Another hedging strategy are cryptocurrencies. Problem is, there are currently over 600 of them around, with Bitcoin and Etherum being the two most popular. Nobody knows what the fate of these currencies will be, although the blockchain technology will most probably expand further. That is the reason why some investors propose to only buy a small amount of cryptocurrencies that you are able to totally write off - but with potentially a huge return, if these take off.

So in summary, a hedging strategy is a way of diversifying your portfolio in a way to spread investments a way where one instrument is likely to go up when another goes down. An example would be stock or cash/ currencies vs precious metals.

Not sure if that all makes sense.

 

[Ant22]

(...) So in summary, a hedging strategy is a way of diversifying your portfolio in a way to spread investments a way where one instrument is likely to go up when another goes down. An example would be stock or cash/ currencies vs precious metals.

Not sure if that all makes sense.

It makes a lot of sense nicklebleu, thank you :) My "portfolio" is a rather tiny one but I understand it may be safer to spread it across different types of assets.

In the meantime I found an authorised PAMP retailer that offers free secure delivery and also sells coins so I guess I now have all my ducks in a row now. This has been an exceptionally expensive month for me with lots of unexpected expenses popping up at once but I'm expecting next month to be easier on my wallet so I'll be able to get started.

 

[angelburst29]

Awhile ago, Hlat had mentioned something about saving pre-1974 dimes and quarters for their silver content. This method was easier on my budget.

This site was interesting, in that it gives the metal composition in coins and which years contained the most silver and when they were changed to a mixture of copper and nickel.

The site states: In 1932, George Washington's face debuted on the quarter, and at this time, the quarter comprised 100 percent silver. In 1965, cupro-nickel was required in coins; therefore, the composition changed to the today's mixture of copper and nickel, according to the U.S. Mint. Prior to 1964, dimes were composed of 90 percent silver, and the rest nickel

Problem is, trying to find a 1932 - 1960 quarter? I think, these coin-machines you see in every grocery store or bank were employed to sift through the old coins and take them out of circulation? Every once in awhile, I'll stop at a Laundromat and put a five dollar bill in the changer. Only once, I came across a 1950's quarter but I still try, now and then. It's easier to find a pre-1960 dime.

http://www.ehow.com/info_8133888_metal-composition-coins.html

 

[hlat]

Awhile ago, Hlat had mentioned something about saving pre-1974 dimes and quarters for their silver content. This method was easier on my budget.

This site was interesting, in that it gives the metal composition in coins and which years contained the most silver and when they were changed to a mixture of copper and nickel.

The site states: In 1932, George Washington's face debuted on the quarter, and at this time, the quarter comprised 100 percent silver. In 1965, cupro-nickel was required in coins; therefore, the composition changed to the today's mixture of copper and nickel, according to the U.S. Mint. Prior to 1964, dimes were composed of 90 percent silver, and the rest nickel

Problem is, trying to find a 1932 - 1960 quarter? I think, these coin-machines you see in every grocery store or bank were employed to sift through the old coins and take them out of circulation? Every once in awhile, I'll stop at a Laundromat and put a five dollar bill in the changer. Only once, I came across a 1950's quarter but I still try, now and then. It's easier to find a pre-1960 dime.

http://www.ehow.com/info_8133888_metal-composition-coins.html

Quarters, dimes, and half dollars with dates 1964 or older have been mostly hoarded away from general circulation and use. So it is luck to come across any of them in spare change. I might find one every few years.

For a person with no gold or silver and not a lot of money to spend on it, I like the idea of buying at melt value "antique" (meaning used) sterling silver silverware, forks, spoons, plates, and goblets. It might cost around $200-$300 and the result is eat with silver for the rest of your life.

 

[Nico]

There's also the antic treasure hunt with a metal detector, my uncle used to do that in my area (southern France) and I'm sure if you study the history of your region and go with your gut you can still find some.

I'm reading Pierre Jovanovic's book on the history of gold, and it gives a good point of view as to how the financial system is sucking gold stocks by hidden means. People that have the money often buy gold "promises" from their bank that are not actually stock physically. Better to not trust a bank if you want to stock your own gold you might be surprised to not be able to get it back when it's time.

In french :
_http://www.jovanovic.com/blog.htm (rate of silver and gold, with details on specific currencies)
_http://www.jovanovic.com/acheter-de-lor.htm