grunff

Taking on debt may not be such a good idea if farm prices deflate, markets dry up, and money becomes more scarce.

You are right of course, but I guess it boils down to whether you believe we're going to see inflation or deflation.

Forgive me but unless you are paying for the farm with gold, why not borrow as much of the future junk currency as possible?

Oh I fully intend to leverage the hell out of this purchase - but it's a big farm, and I can only borrow so much!

Ah. In this case, you could let gold decide when it has to be...

I don't really want to put my life on hold in that way, have things I want to achieve. We've started down a path which leads us to a particular point. It's no set in stone, but it's a path we want to follow.

I think I'll sell in stages, maybe starting in a month or so, and see how its looking later in the year.

Does the Farm need to be purchased NOW?

 

I hope I am not faced with such a question and the decision that needs to be made now about selling gold.

It doesn't have to be, but that's what would work best for us.

Ignoring the tax question, averaging out, so to speak, spreads the risk, downside and upside, over the period up to September. It's really just like the other way round, if you wanted to buy. My gut feeling tells me that prices should be much higher by September (I wouldn't even be shocked if prices doubled), but betting your farm on it (literally) is short term speculation and something I generally wouldn't do.

This is what was at the back of my mind - we will see QE3 this year, which will push up the price quite a bit. How silly will I feel if it's at $2500 in Sep and I've already sold most of it.

But I guess my focus should be on achieving my main goal.

If you definitely need to be out of 70% of your position why not sell a little bit each month? I'd probably go for selling a definite amount of gold each month rather than selling for a definite amount of money each month. Thus, you probably won't be hitting the top between then and now, but you will also avoid the risk of having to sell at the bottom.

 

Obviously you could also look at seasonality factors, technical analysis and so on but selling gradually might be the most convenient option, especially if you sit on profits anyway.

That sounds like a very sensible plan! Thanks.

I have a question. Say you had a pile of gold accumulated over the past 5 years, and you know you need to sell 70% of it by Sep 2012. Not selling isn't an option - need the cash to buy a farm out in the hills (not in the UK I might add).

Would you sell now, or wait until summer?

All good points. I am not really hoping for an overshoot, as I don't intend to ever buy property in the UK again. I'm just an interested spectator.

But my gut feeling says that interest rates will have to rise eventually, which will trigger the last step drop (maybe 20%).

I would say it was generally agreed that prices were very cheap in 1996 (they certainly were where I was at the time). That graph would suggest we are within 10-20% of fair value. Flat nominal prices and inflation of a few % for a few years could make that a reality.

But the market always overshoots (that's how you end up with 'very cheap' in 1996).