Safety in gold ?

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bcboy57
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Safety in gold ?

Post by bcboy57 » Fri Oct 14, 2016 2:49 am

A friend , 73 years ol, still working , asked me about real safe places to put his money. He asked about gold, which I do really know much about I do not own any gold or other commodities
What should I tell him about gold or where to read about safety at his age ?

Thanks in advance....... Doug

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Re: Safety in gold ?

Post by Valuethinker » Fri Oct 14, 2016 3:10 am

bcboy57 wrote:A friend , 73 years ol, still working , asked me about real safe places to put his money. He asked about gold, which I do really know much about I do not own any gold or other commodities
What should I tell him about gold or where to read about safety at his age ?

Thanks in advance....... Doug
His best bet is bank CDs, within the FDIC limits per individual per institution.

With the FDIC behind it, essentially he cannot lose money.

Otherwise a US government Short Term bond fund-- but his NAV could go down as well as up.

Pull up a graph showing price of gold since 1980. You will see huge volatility, and more losing years than winning (although overall it did go from $1000 ish down to $350 ish, then back up to $2000, now around $1500? (can't check this morning).

That is not a safe investment, plus he has to pay to store the gold and pay dealer's charges buying and selling. Also tax arrangements.

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Re: Safety in gold ?

Post by msk » Fri Oct 14, 2016 3:19 am

No. No. No. Gold is as safe as you can trust Soros to look after your interests. There has been no real reason why gold soared a couple of years ago and then collapsed, also for no good reason. It's going up now too. There is a very good reason why Bogleheads go the 3 etf route. Let him read up on that and skew things for his age.

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Re: Safety in gold ?

Post by Spirit Rider » Fri Oct 14, 2016 3:24 am

Gold is anything but safe. If you want to add gold as a very small diversifier fine, but...

Historically, gold has a standard deviation dramatically higher than bonds, exceeding that of even stocks.

Historically, gold has a real return (~1%) much lower than bonds.

The worst thing anyone can do is take a major stake. A bear market can be particularly brutal.

Every time I see some actor in a commercial promoting a Gold IRA, I feel like shooting my TV.

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Re: Safety in gold ?

Post by Stan Dup » Fri Oct 14, 2016 8:19 am

Valuethinker wrote: His best bet is bank CDs, within the FDIC limits per individual per institution.
With the FDIC behind it, essentially he cannot lose money.
+10 on this advice. Keep his money in an FDIC insured bank (or the equivalent for a credit union). If he has more than $250,000 in the bank, tell him to move the excess to another bank because that is the limit of insurance per institution.

If he complains about low interest rates than explain to him that he has to take more risk to get a (possibly) better return. Which I am sure he does not really want to do.
"The tyranny of compounding expenses is the eighth deadly sin." - George Sisti

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Re: Safety in gold ?

Post by Jack FFR1846 » Fri Oct 14, 2016 8:24 am

Say you bought gold 5 years ago for safety. Figure 1% cost to buy. An ounce cost $1675.

Now today, you want to sell to buy yourself a new car. Figure another 1% to sell. An ounce will bring in $1271.

The good news.....You owe no collectible gains tax! You can figure out the bad news.
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dbr
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Re: Safety in gold ?

Post by dbr » Fri Oct 14, 2016 9:01 am

CDs and other savings are not safe from inflation.

There is no simple solution to finding a "safe" place to put money.

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Re: Safety in gold ?

Post by soboggled » Fri Oct 14, 2016 9:33 am

dbr wrote:CDs and other savings are not safe from inflation.

There is no simple solution to finding a "safe" place to put money.
But that was not the question. Sure, nothing in this world is 100% safe but gold is not safe by any standard. At best it is either a gamble or a hedge against catastrophe and I would argue it won't do that very well. Nor is it complicated: The safest place is a bank checking account or very short term treasury bill.

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Re: Safety in gold ?

Post by dbr » Fri Oct 14, 2016 9:44 am

soboggled wrote:
dbr wrote:CDs and other savings are not safe from inflation.

There is no simple solution to finding a "safe" place to put money.
But that was not the question. Sure, nothing in this world is 100% safe but gold is not safe by any standard. At best it is either a gamble or a hedge against catastrophe and I would argue it won't do that very well. Nor is it complicated: The safest place is a bank checking account or very short term treasury bill.
Oh, I totally agree about the gold and the investments as far as it goes. So the answer is that gold is a bad idea. Perhaps the next step is for the original investor to be more explicit regarding his intentions and needs. Without that it is hard to say what the risk is. We see posts on the forum asking about what is "safe" and that doesn't always mean a lot if we don't know what the investor is trying to do.

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Re: Safety in gold ?

Post by JLed » Fri Oct 14, 2016 9:49 am

If the idea is simply principal protection and not overcoming inflation and earing an actual return, the answer is CD's at a banking institution as mentioned above. The $250,000 limit only applies to each account owner though....assuming the fellow is married he can have a solo account with $250,000, a solo account for his wife at $250,000, and a joint account at $250,000 for a total of $750,000 at a single bank. If you get kids or other relatives involved, that can increase the limits even more. Dad + kid 1 = another $250,000, etc.

You can't get much safer than that. But you will lose at least 1% a year in inflation as I haven't seen a CD better than 2% for 60 months or so.

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Re: Safety in gold ?

Post by nirm » Fri Oct 14, 2016 10:13 am

JLed wrote:If the idea is simply principal protection and not overcoming inflation and earing an actual return, the answer is CD's at a banking institution as mentioned above. The $250,000 limit only applies to each account owner though....assuming the fellow is married he can have a solo account with $250,000, a solo account for his wife at $250,000, and a joint account at $250,000 for a total of $750,000 at a single bank. If you get kids or other relatives involved, that can increase the limits even more. Dad + kid 1 = another $250,000, etc.

You can't get much safer than that. But you will lose at least 1% a year in inflation as I haven't seen a CD better than 2% for 60 months or so.
If 250K is the FDIC limit, wouldn't earning interest on $250K put you over the limit? I would think you'd want to invest just a little less than the insurance limit in each account so that your interest earnings are protected too.

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Re: Safety in gold ?

Post by JLed » Fri Oct 14, 2016 10:29 am

nirm wrote:
JLed wrote:If the idea is simply principal protection and not overcoming inflation and earing an actual return, the answer is CD's at a banking institution as mentioned above. The $250,000 limit only applies to each account owner though....assuming the fellow is married he can have a solo account with $250,000, a solo account for his wife at $250,000, and a joint account at $250,000 for a total of $750,000 at a single bank. If you get kids or other relatives involved, that can increase the limits even more. Dad + kid 1 = another $250,000, etc.

You can't get much safer than that. But you will lose at least 1% a year in inflation as I haven't seen a CD better than 2% for 60 months or so.
If 250K is the FDIC limit, wouldn't earning interest on $250K put you over the limit? I would think you'd want to invest just a little less than the insurance limit in each account so that your interest earnings are protected too.
That's correct, although with a CD things get a little murky. While you have a CD, the interest you earn isn't actually yours until the CD is redeemed...it is earned but not fully counted as the principal balance. I guess you could take a slightly less amount in each CD to be sure since I don't know of a single customer who has lost money at an FDIC insured bank since the Great Depression. All depositors are made whole and another bank assumes the liabilities (deposit accounts) of the old bank upon the old bank's failure. My point was mainly to show that with a bit of creativity, you can actually shelter millions at a single bank but juggling the actual owners of the account.

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Re: Safety in gold ?

Post by dbr » Fri Oct 14, 2016 10:38 am

I still want to go back and find out what the original issue is with safety. When someone asks about gold what comes to mind are Armageddon scenarios such as political instability, bank crashes, massive devaluation of currency (or hyperinflation), default on the public debt, etc. Or, it could be the individual in question does not want to be victim of a stock market crash or the "impending burst of the bond bubble." If the concern is where to put money to support income over an extended period low interest CDs could be the worst answer. I wonder if people redeeming 5% CDs to get only 1% would have called a CD "safe"?

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Re: Safety in gold ?

Post by JLed » Fri Oct 14, 2016 10:44 am

dbr wrote:I still want to go back and find out what the original issue is with safety. When someone asks about gold what comes to mind are Armageddon scenarios such as political instability, bank crashes, massive devaluation of currency (or hyperinflation), default on the public debt, etc. Or, it could be the individual in question does not want to be victim of a stock market crash or the "impending burst of the bond bubble." If the concern is where to put money to support income over an extended period low interest CDs could be the worst answer. I wonder if people redeeming 5% CDs to get only 1% would have called a CD "safe"?

I agree. CD's are about the worst place to put any money outside of emergency funds. I know of a guy who liquidated all of his investments when the market tanked because "he didn't want to lose it all" and has refused to re-enter the market since. He literally cashed out at the bottom and still complains about how you can't trust the stock market since it hurt him so much. He did pay off all of his personal debt but keeps a few hundred thousand in cash that steadily loses value each year. He does own a small business that provides him with income, but he could be many times better off had he just stayed the course....the market has always come back after a downturn. Frankly, if things get so bad that the market is permanently wrecked, owning gold isn't going to help much. At that point it would be better to invest in canned food and guns/ammo! LOL

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Re: Safety in gold ?

Post by Engineer250 » Fri Oct 14, 2016 12:22 pm

JLed wrote:
dbr wrote:I still want to go back and find out what the original issue is with safety. When someone asks about gold what comes to mind are Armageddon scenarios such as political instability, bank crashes, massive devaluation of currency (or hyperinflation), default on the public debt, etc. Or, it could be the individual in question does not want to be victim of a stock market crash or the "impending burst of the bond bubble." If the concern is where to put money to support income over an extended period low interest CDs could be the worst answer. I wonder if people redeeming 5% CDs to get only 1% would have called a CD "safe"?

I agree. CD's are about the worst place to put any money outside of emergency funds. I know of a guy who liquidated all of his investments when the market tanked because "he didn't want to lose it all" and has refused to re-enter the market since. He literally cashed out at the bottom and still complains about how you can't trust the stock market since it hurt him so much. He did pay off all of his personal debt but keeps a few hundred thousand in cash that steadily loses value each year. He does own a small business that provides him with income, but he could be many times better off had he just stayed the course....the market has always come back after a downturn. Frankly, if things get so bad that the market is permanently wrecked, owning gold isn't going to help much. At that point it would be better to invest in canned food and guns/ammo! LOL
Your friends problems have nothing to do with CDs and everything to do with panicking and market timing. There's nothing wrong with CD as the right tool for the right job.

I agree with your last sentence, and that is what I frequently tell people who are investing in gold for a SHTF scenario.
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Re: Safety in gold ?

Post by LadyGeek » Sun Oct 16, 2016 4:21 pm

bcboy57 - You had a duplicate post, which I've removed. There was one reply, which is now merged in this thread.
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Re: Safety in gold ?

Post by Stonebr » Sun Oct 16, 2016 5:20 pm

I bought gold for safety in 1981-1983 and watched it go down in value for a couple of decades. It was safe, though. I kept it in a shoe box.
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Re: Safety in gold ?

Post by grabiner » Sun Oct 16, 2016 5:37 pm

The safest investments around are TIPS and I-Bonds. They are guaranteed by the US Government to track inflation. If you buy a $10,000 10-year TIPS, then you will have $10,000 worth of purchasing power in 2026 (plus the yield on the bond, which is currently 0.13%). You don't care about inflation; you'll get $12,190 if inflation is 2%, and $16,289 if inflation is 5%, but either one will buy as much in goods as $10,000 does today.

Commodities such as gold should rise in value with inflation, but they also rise and fall with the market; an ounce of gold or a barrel of oil could be worth half or twice as much next year as it is now.
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Re: Safety in gold ?

Post by gerntz » Sun Oct 16, 2016 5:59 pm

dbr wrote:I still want to go back and find out what the original issue is with safety. When someone asks about gold what comes to mind are Armageddon scenarios such as political instability, bank crashes, massive devaluation of currency (or hyperinflation), default on the public debt, etc. Or, it could be the individual in question does not want to be victim of a stock market crash or the "impending burst of the bond bubble." If the concern is where to put money to support income over an extended period low interest CDs could be the worst answer. I wonder if people redeeming 5% CDs to get only 1% would have called a CD "safe"?
Bravo! CD's protect against large losses & assure a steady slow loss of value over time. "Safe" is diversification. Gold is/can be part of that imo. As for massive devaluation of (fiat) currency, gold was $35/oz in 1971. Is that "massive"?

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Re: Safety in gold ?

Post by nisiprius » Sun Oct 16, 2016 7:18 pm

gerntz wrote:...CD's protect against large losses & assure a steady slow loss of value over time...
I don't think they do "assure a steady slow loss of value over time." I keep looking for data on this, but a) Treasury bills have kept slightly ahead of inflation over long periods of time, b) bank savings accounts have usually matched Treasury bills pretty closely, and c) bank CD's have always exceeded bank savings accounts. I think, assuming reasonable shopping, that bank CDs probably have had a positive real return. Anybody know? Do you, yourself, have data showing that CDs have not kept up with inflation?
Last edited by nisiprius on Sun Oct 16, 2016 7:53 pm, edited 1 time in total.
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Re: Safety in gold ?

Post by soboggled » Sun Oct 16, 2016 7:29 pm

gerntz wrote:
dbr wrote:I still want to go back and find out what the original issue is with safety. When someone asks about gold what comes to mind are Armageddon scenarios such as political instability, bank crashes, massive devaluation of currency (or hyperinflation), default on the public debt, etc. Or, it could be the individual in question does not want to be victim of a stock market crash or the "impending burst of the bond bubble." If the concern is where to put money to support income over an extended period low interest CDs could be the worst answer. I wonder if people redeeming 5% CDs to get only 1% would have called a CD "safe"?
Bravo! CD's protect against large losses & assure a steady slow loss of value over time. "Safe" is diversification. Gold is/can be part of that imo. As for massive devaluation of (fiat) currency, gold was $35/oz in 1971. Is that "massive"?
Who is better off: Those who bought gold in 2012 at $1700 and can now get $1200 or those who bought those 5% CDs you talk about? Furthermore, 1971 is cherry picking since that is when the US went to fiat money, which led some to conclude that money would quickly lose all value and we would be forced back on the gold standard. Gold is gambling that such superstition will prevail indefinitely. Fixed income instruments have historically assured a steady non-volatile return more or less keeping pace with inflation. Laddering CDs is a reasonable way to assure income and reduce volatility. If you want to buy commodities, buy the general commodities market rather than just the gold sector. If you want to protect against devaluation, the safest investment is TIPs. If you don't trust the US government to honor its debt, the safest investments are international. All are far less volatile than gold. Gold will protect you against nothing other than the inability to make your own jewelry.

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Re: Safety in gold ?

Post by soboggled » Sun Oct 16, 2016 7:36 pm

nisiprius wrote:
gerntz wrote:...CD's protect against large losses & assure a steady slow loss of value over time...
I don't think they do "assure a steady slow loss of value over time." I keep looking for data on this, but a) Treasury bills have kept slightly ahead of inflation over long periods of time, b) bank savings accounts have usually matched Treasury bills pretty closely, and c) bank CD's have always exceed bank savings accounts. I think, assuming reasonable shopping, that bank CDs probably have had a positive real return. Anybody know? Do you, yourself, have data showing that CDs have not kept up with inflation?
So much for superstitions:
http://www.freeby50.com/2011/08/histori ... es-vs.html

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Re: Safety in gold ?

Post by nisiprius » Sun Oct 16, 2016 7:46 pm

Great find, soboggled! Oddly enough, while you were digging that up, I was doing a quick reality check myself, but what you found was much more complete. What you said was a little ambiguous, so let me clarify:

Image
In 10 out of 44 years the real rate of return was negative. The worst year was 1979 when the real return was -2.78% and the best year was 1982 when the real return was 9.40%. During that time inflation was very high. From 1967 to 2010 the average real return is 1.91% and the median annual real rate of return is 2.17%.

Bottom Line : Over the long run then I think its fairly reasonable to expect CDs to return about 2% over inflation.
This is very significant because the CODI is based on the return of 3 month CDs. Five years CDs would do better.

What I found generally confirms this as far as it goes.

I found an historical CD rate chart at bankrate.com... only from 1984 to 2015, though.

I was too lazy to read off all the numbers and copy them into a spreadsheet, but I took a spreadsheet I already have with annual inflation data in it and made a plot. I then superimposed the two in a graphics program and adjusted the scaling until the scales of the two charts coincided.

CD rates exceeded inflation from 1984 through about 2002 (18 years), by amounts on the order of several percent. They were in the same ballpark for 2002-2010, and since then have have fallen behind by maybe 1% for the 6-month and 1-year, while 5-year CDs fell behind but only slightly.

Image
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Re: Safety in gold ?

Post by dbr » Sun Oct 16, 2016 7:59 pm

CDs are risky if the investor needs more return to meet his objectives than is offered by CDs. It is a case of choosing certain failure against various odds of failure that might be very small. An example is that one way to construct a failed retirement is to try to withdraw at too high rate from too conservative a portfolio. You can go from an expectation of 50% or more failure to under 5% expectation of failure by being sure to hold some stocks. It is still a question that the individual in the OP has probably not really thought about what he wants the money for and therefore what constitutes safe. I still think the motivation really is the advantage of holding gold when the US defaults on its debts. The reasonableness of having such a fear is a different discussion from how to manage such a fear.

It is also possible that there is much less here than meets the eye, that buying gold was just a passing thought, and that in practical reality CDs are just the thing.

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Re: Safety in gold ?

Post by OnTrack » Sun Oct 16, 2016 8:30 pm

JLed wrote:If the idea is simply principal protection and not overcoming inflation and earing an actual return, the answer is CD's at a banking institution as mentioned above. The $250,000 limit only applies to each account owner though....assuming the fellow is married he can have a solo account with $250,000, a solo account for his wife at $250,000, and a joint account at $250,000 for a total of $750,000 at a single bank. If you get kids or other relatives involved, that can increase the limits even more. Dad + kid 1 = another $250,000, etc.

You can't get much safer than that. But you will lose at least 1% a year in inflation as I haven't seen a CD better than 2% for 60 months or so.
Good point that a married couple (or any two or more people) can get more than $250,000 FDIC insurance at the same bank. One correction though. A joint account with 2 names would have $500,000 FDIC insurance, not just $250,000.

Also note, if each spouse also has an IRA at the same bank, those would also each be covered with $250,000 FDIC insurance. So, with 2 individual, 2 IRAs and a joint account, the limit overall is 1,500,000. Revocable trusts can add more insurance. Of course, each account needs to stay within its own limit. One problem is that when one spouse dies, the surviving spouse would lose the FDIC insurance that was attributed the his or her spouse.

https://www.fdic.gov/edie/fdic_info.html#10

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Re: Safety in gold ?

Post by Karamatsu » Sun Oct 16, 2016 9:32 pm

I think what makes shiny metal seem safe is just that it is physical and so does not depend on the honestly or good will of those on Wall Street or in Washington. It's not like the infamous Monty Python house of cards that only remains standing because people believe in it. So in that sense it does possess a certain safety that stocks and bonds (especially now that these have no physical embodiment) lack, though of course that only applies to physical gold. A gold ETF is nothing but another "investment" industry trojan horse, created to suck money out of your pocket and into theirs.

But as a core financial investment (as opposed to an allocation as a correlation-breaking diversifier), history seems to show that physical gold is pretty much a sucker bet, and on top of that you have the horrible tax treatment. I imagine that land would be a better choice in both good times and bad, though granted, it doesn't have the virtue of portability, But my relatives lived through real-world SHTF times: war, famine, men with weapons roaming the streets. What kept them alive wasn't gold, ammo, or shares of Berkshire-Hathaway. It was the second-oldest profession: farming, because when it really does hit the fan, everybody has to eat, but not everybody knows how to grow food efficiently.

Also it's worth nothing that gold really isn't that portable, since in times of stress governments have a habit of prohibiting import/export and/or charging high customs duties.

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Re: Safety in gold ?

Post by gerntz » Mon Oct 17, 2016 7:39 am

Karamatsu wrote:I think what makes shiny metal seem safe is just that it is physical and so does not depend on the honestly or good will of those on Wall Street or in Washington. .... A gold ETF is nothing but another "investment" industry trojan horse, created to suck money out of your pocket and into theirs.

But as a core financial investment (as opposed to an allocation as a correlation-breaking diversifier), history seems to show that physical gold is pretty much a sucker bet, and on top of that you have the horrible tax treatment. ....

Also it's worth nothing that gold really isn't that portable, since in times of stress governments have a habit of prohibiting import/export and/or charging high customs duties.
Lots of opinion with no facts. That's fine.

As for tax treatment, it's treated equal or better than ordinary income while not tax-advantaged as LTCG & dividends.

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Re: Safety in gold ?

Post by gerntz » Mon Oct 17, 2016 7:52 am

soboggled wrote:
gerntz wrote:
dbr wrote:I still want to go back and find out what the original issue is with safety. When someone asks about gold what comes to mind are Armageddon scenarios such as political instability, bank crashes, massive devaluation of currency (or hyperinflation), default on the public debt, etc. Or, it could be the individual in question does not want to be victim of a stock market crash or the "impending burst of the bond bubble." If the concern is where to put money to support income over an extended period low interest CDs could be the worst answer. I wonder if people redeeming 5% CDs to get only 1% would have called a CD "safe"?
Bravo! CD's protect against large losses & assure a steady slow loss of value over time. "Safe" is diversification. Gold is/can be part of that imo. As for massive devaluation of (fiat) currency, gold was $35/oz in 1971. Is that "massive"?
Who is better off: Those who bought gold in 2012 at $1700 and can now get $1200 or those who bought those 5% CDs you talk about? Furthermore, 1971 is cherry picking since that is when the US went to fiat money, which led some to conclude that money would quickly lose all value and we would be forced back on the gold standard. Gold is gambling that such superstition will prevail indefinitely. Fixed income instruments have historically assured a steady non-volatile return more or less keeping pace with inflation. Laddering CDs is a reasonable way to assure income and reduce volatility. If you want to buy commodities, buy the general commodities market rather than just the gold sector. If you want to protect against devaluation, the safest investment is TIPs. If you don't trust the US government to honor its debt, the safest investments are international. All are far less volatile than gold. Gold will protect you against nothing other than the inability to make your own jewelry.
Why cherry-pick 2012? I mean why would anyone have bought all their gold at that one time? Why not ladder gold purchases as people do CD's? 1971 is the first time the US let the dollar float (sink, actually) freely to gold, so it's not cherry-picked. If people over-reacted in 1971, I'd say there's been time enough to get over that. I mean if what you say is true, gold would be $35 today. I continue to contend gold is not a commodity but a currency. Telling me that another time doesn't change my view. Agree CD's reduce volatility. But with fiat currencies depreciating pretty much constantly, not much comfort to me. Superstition? LOL. I have significant international holdings also.

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Re: Safety in gold ?

Post by soboggled » Mon Oct 17, 2016 11:32 am

gerntz wrote:
soboggled wrote:
gerntz wrote:
dbr wrote:I still want to go back and find out what the original issue is with safety. When someone asks about gold what comes to mind are Armageddon scenarios such as political instability, bank crashes, massive devaluation of currency (or hyperinflation), default on the public debt, etc. Or, it could be the individual in question does not want to be victim of a stock market crash or the "impending burst of the bond bubble." If the concern is where to put money to support income over an extended period low interest CDs could be the worst answer. I wonder if people redeeming 5% CDs to get only 1% would have called a CD "safe"?
Bravo! CD's protect against large losses & assure a steady slow loss of value over time. "Safe" is diversification. Gold is/can be part of that imo. As for massive devaluation of (fiat) currency, gold was $35/oz in 1971. Is that "massive"?
Who is better off: Those who bought gold in 2012 at $1700 and can now get $1200 or those who bought those 5% CDs you talk about? Furthermore, 1971 is cherry picking since that is when the US went to fiat money, which led some to conclude that money would quickly lose all value and we would be forced back on the gold standard. Gold is gambling that such superstition will prevail indefinitely. Fixed income instruments have historically assured a steady non-volatile return more or less keeping pace with inflation. Laddering CDs is a reasonable way to assure income and reduce volatility. If you want to buy commodities, buy the general commodities market rather than just the gold sector. If you want to protect against devaluation, the safest investment is TIPs. If you don't trust the US government to honor its debt, the safest investments are international. All are far less volatile than gold. Gold will protect you against nothing other than the inability to make your own jewelry.
Why cherry-pick 2012? I mean why would anyone have bought all their gold at that one time? Why not ladder gold purchases as people do CD's? 1971 is the first time the US let the dollar float (sink, actually) freely to gold, so it's not cherry-picked. If people over-reacted in 1971, I'd say there's been time enough to get over that. I mean if what you say is true, gold would be $35 today. I continue to contend gold is not a commodity but a currency. Telling me that another time doesn't change my view. Agree CD's reduce volatility. But with fiat currencies depreciating pretty much constantly, not much comfort to me. Superstition? LOL. I have significant international holdings also.
When fiat currencies all collapse and the US becomes Zimbabwe, you can find that comfort you seek in your $1200/ounce earrings.

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Tyler9000
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Re: Safety in gold ?

Post by Tyler9000 » Mon Oct 17, 2016 12:44 pm

bcboy57 wrote:A friend , 73 years ol, still working , asked me about real safe places to put his money. He asked about gold, which I do really know much about I do not own any gold or other commodities
What should I tell him about gold or where to read about safety at his age ?

Thanks in advance....... Doug
I recommend your friend read about the Permanent Portfolio. The Rowland & Lawson book is particularly good and includes lots of information about how to get the most out of gold in a portfolio.

Gold on its own isn't a portfolio savior, but in the right proportions in a well-constructed asset allocation it can play an important role in minimizing downside risk.
Last edited by Tyler9000 on Mon Oct 17, 2016 8:44 pm, edited 2 times in total.

alfaspider
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Re: Safety in gold ?

Post by alfaspider » Mon Oct 17, 2016 12:52 pm

soboggled wrote: When fiat currencies all collapse and the US becomes Zimbabwe, you can find that comfort you seek in your $1200/ounce earrings.
If that happens, your portfolio performance will be the least of your worries. Things would be very bad no matter how much "money" you had. Hope you are well armed, because actually attempting to spend that gold would be a dicey proposition in a Mad Max post-apocalyptic universe.

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Re: Safety in gold ?

Post by LadyGeek » Mon Oct 17, 2016 3:26 pm

Gold is a highly contentious subject which won't be resolved here. Fiat currency and the pending world collapse are off-topic. As a reminder, see: Unacceptable Topics
Non-actionable (Trolling) Topics

If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
  • US or world economic, political, tax, health care and climate policies
  • conspiracy theories of any type
  • discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.
Let's stay focused on helping the OP.
bcboy57 wrote:A friend , 73 years ol, still working , asked me about real safe places to put his money. He asked about gold, which I do really know much about I do not own any gold or other commodities
What should I tell him about gold or where to read about safety at his age ?

Thanks in advance....... Doug
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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njboater74
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Re: Safety in gold ?

Post by njboater74 » Mon Oct 17, 2016 3:50 pm

bcboy57 wrote:A friend , 73 years ol, still working , asked me about real safe places to put his money. He asked about gold, which I do really know much about I do not own any gold or other commodities
What should I tell him about gold or where to read about safety at his age ?

Thanks in advance....... Doug
As you can see, some people have strong opinions about whether Gold can provide some stability to their portfolio.

By itself though, Gold is highly volatile and its price fluctuates dramatically based on different market conditions. Even the most ardent gold advocates would not disagree with that.

CD's and Treasury Bonds are the safest places to put money, but that doesn't necessarily mean it's the best for your friend. A mix of CD's, Treasury Bonds and Stocks could still be considered relatively 'safe' depending on your perspective. What's your friend looking to accomplish?

Gold, by itself, isn't safe. Gold is the one who knocks.
When the mob and the press and the whole world tell you to move, your job is to plant yourself like a tree beside the river of truth and tell the whole world - 'No, YOU move'--Captain America, Boglehead

kauailover
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Re: Safety in gold ?

Post by kauailover » Mon Oct 17, 2016 8:37 pm

Invest in Gold? Geez, it's kinda like investing in Beanie Babies. Forget it.

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Alexa9
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Re: Safety in gold ?

Post by Alexa9 » Mon Oct 17, 2016 8:47 pm

Gold might as well be fool's gold to me. Same with diamonds. Never understood the fascination with it other than it backed the dollar way back when. Much better off with a savings account, CD, iBond, or short term bond fund for more security. If you want material things that hold or rise in their value, well good luck. If the market crashes, who is to say gold will stay high? I won't want gold anyways, I will want canned soup.

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Re: Safety in gold ?

Post by sawhorse » Mon Oct 17, 2016 10:55 pm

There's another current thread on this. There are a lot of safety problems with gold in the literal sense. The amount of corruption and crime in the gold market rivals that of the illegal drug market. If he's 72 and hasn't had experience with gold, he is a prime target for a scam and could be risking his safety if he's not careful about not revealing the fact that he has gold and storing it in a safe place away from home.

I don't have the same haughty contempt for gold that I've occasionally seen on this board. It can literally be worth your life in extreme situations such as in Vietnam during the war when a ticket out was paid with gold, or in my mother's country when everything collapsed and gold was the currency of bribes.

But for an American investor, there is no way I can recommend gold due to the amount of fraud, corruption, and crime in the gold market.

jacko
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Re: Safety in gold ?

Post by jacko » Wed Oct 19, 2016 8:31 pm

Tell your friend to park all in Vanguard Wellesley® Income Fund Admiral™ Shares (vwiax) and call it a day.
bcboy57 wrote:A friend , 73 years ol, still working , asked me about real safe places to put his money. He asked about gold, which I do really know much about I do not own any gold or other commodities
What should I tell him about gold or where to read about safety at his age ?

Thanks in advance....... Doug

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Re: Safety in gold ?

Post by 209south » Wed Oct 19, 2016 8:53 pm

For the OP the question is what does 'real safe' mean to you or your friend? If 'real safe' means the ability of a 73 year-old US-based investor to meet his US$-based spending needs over the remaining 10-30 years of his lifetime, then gold is likely sub-optimal and CDs and other options might be superior. For me, a mid-50s investor with a portfolio likely exceeding my lifetime spending requirements, then the core issue of 'real safe' relates to the value of my overall portfolio, which ultimately is heavily driven by the value of the US dollar. Like gerntz, I see gold as a currency, and an important diversifier against my substantial exposure to the US economy, government and currency valuation. Without any reference to politics, I hope it is obvious to all that have multi-generational wealth that to bet it all on any one nation/government/currency is foolhardy.

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