'Green'Investor
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Posts posted by 'Green'Investor
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Thought this was apt considering the thread subtitle.
Yahoo giving mainstream advice (from their homepage) on how to "get in"
http://uk.biz.yahoo.com/02102009/389/know-...-gold-rush.html
Britain's gold rush is officially on. The adverts for companies which buy gold jewellery have crept beyond the satellite channels and onto terrestrial TV. They're also cropping up in national newspapers and magazines as all around are the sounds of drawers being emptied and jewellery boxes being plundered for a bob or two.But is this money-making opportunity really glittering or just for fools?
It helps to consider why gold plays such an important role in the economy, particularly when times are tough. Gold is seen as a 'safe' investment because - unlike currency - it has an intrinsic value. This encourages speculative buying of gold as investors diversify out of other riskier investments, particularly in a recession or banking crisis. It was a big favourite during the Second World War and also in the Great Depression because it held its value.
These days, gold is still giving many investors the Midas touch as it has risen in value for the past seven consecutive years and has broken the $1,000 per ounce barrier again more than one in the last year and remains at historically high levels. But it's worth noting that even if gold prices continue to rise, UK investors can still lose money if the currency markets don't move in their favour because gold is priced in dollars. As ever, it pays not to put all your eggs in one basket and to include gold in a diverse investment portfolio. More on that later.
Gold websites
It's not just serious buyers who are interested in gold. There are a growing number of companies encouraging us to sell gold jewellery and coins we already earn to make money. Most of them operate remotely and will send you a 'secure pouch' or pre-paid Royal Mail Special Delivery envelope so that you can send your gold to them. Postal strike aside, this is not the most risky element. The problems can arise if you do not know how the firm operates. Some will value your gold and come back with a quote but most will just send you a cheque or pay the money straight into your bank account if you have given the details. This makes it harder to turn down a bad offer and retrieve your jewellery. You may even feel that you cannot face the hassle of getting it back, which is something they rely on to some extent, I am sure.
The other risk is that you will not get the true value of your gold. Weight is not a useful guide in itself as 9ct gold does not have the purity of 24ct gold. One thing you won't see on all the annoying adverts is the price or 'flat rate' these firms pay for gold. This allows them to keep sellers in the dark. Just because the advert promises 'guaranteed sale'; 'best prices' or 'best rates' it does not mean you will get what you deserve.
Postal gold buying services are relatively new here but in the US where they have been around for longer, there are noises from consumer groups about rip-offs, where customers have discovered they received around a fifth of the market value of their gold.
When Radio Four's Money Box programme approached seven of these companies recently, it was offered between £4 to £6.65 per gram of 9ct gold; a wide range. It's not just the websites which vary though. When Trading Standards officers took a bracelet around six jewellery shops in London and were offered between £17 and £36 for it. Their advice is to get as many prices as you can before you sell. If you do send off your gold to a website then make sure you use one which will send a quote first.
Gold parties
Forget Ann Summers and Tupperware; the latest trend is hosting 'gold parties' at home. Another idea imported from the USA, these are run by companies like 'Ounces to Pounds' which pay hostesses commission. The idea is that you gather around a dozen pals with gold to sell - it may be unwanted or old jewellery - and you all have a few drinks while taking turns to get the items valued. if you decide to sell you get paid then and there. Ounces to Pounds says it is holding 80 parties a month, and its hostesses, who pick up 10% commission, "typically might earn £350 per party". The company also provides 'up to' £35 to cover the cost of wine and nibbles as an added incentive.
The Ounces to Pounds staff bring paraphernalia including scales, a gold testing machine (if it's magnetic it is not gold) and a carat-reader. Value is then calculated according to weight, using that day's fixed London gold price, which is £616 per troy ounce (31g) at the time of writing. If you're heading to one of these parties, just make sure you don't get so squiffy on the free wine that you accept any old price for your trinkets.
Buying gold
If you're keen to buy rather than sell there are several different approaches.
- The vending machine. One of the most novel ways to buy gold has to be the vending machines unveiled in Germany this summer. You can pick up one, five or ten grammes of gold from one of the 500 armour-plated machines which is linked to a computer updating the price every 15 minutes. The margins are lower than those offered by banks but fluctuate at about 20% higher than market prices. More exciting than salt 'n' vinegar crisps though.
- Bars and coins. Bullion coins are legal tender in the country of issue and their market value is determined by the value of their fine gold content, plus a premium that varies between dealers. These should not be confused with commemorative or numismatic (collectors’) coins, whose value depends on their rarity, design and finish rather than just their fine gold content. Small gold bars can be bought in a variety of sizes and weights up to 1kg. Like bullion coins, they contain a minimum 99.5pc gold. Bars are likely to carry less of a premium than coins. There are all sorts of added issues and costs to take account of with coins and bars. For starters you need safe storage and insurance. You need to be able to take them to a dealer to sell them and the transaction costs for some coins can be high. Of course if you want to liquidate part of your holdings then you cannot sell half a bar or coin.
- Allocated gold account. If you don't want to the responsibility of having gold coins and bars with you then a vault can hold them on your behalf. Of course you will pay for the privilege.
- Unallocated gold account. This is similar to the allocated account but as the name suggests, you own a quantity of gold held in a vault but not specific, numbered bars that belong to you. The vault can lend “your” gold so you do not normally pay for storage or insurance. There is a minimum initial investment requirement of £5,000 but remember if the custodian goes bust you are likely to lose your gold and become a creditor.
- Exchange-traded funds. These securities are traded on the stock market and you can buy and sell them in the same way as a share. Their prices tend to closely reflect the value of physical gold. You can benefit from flexibility and no storage or insurance costs but there are charges of typically 0.3% to 0.4% a year, from the value of the fund and you have to pay broker’s commission every time you trade.
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here's the counter argument
http://goldchat.blogspot.com/2009/07/multi...-in-silver.html
Either way, it's just another doubt to add to the list. Buy physical.
Perhaps we should start a thread along the same lines as Steve Netwriters recent "little project for all the goldbugs" thread i.e. Why PM ETF's are a good idea......anyone??
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Any comments?
GF re: why not to invest in ETF's, this may be of interest:
http://www.zerohedge.com/article/project-m...ted-silver-etfs
During our research into the inventory lists of the iShares SLV and London-based ETFS physical silver funds, we discovered multiple anomalies which cannot be easily dismissed. These included the presence of internal duplicates, rough internal duplicates, weight duplicates, statistical clustering, and cross-reference duplicates. Taken together, these anomalies are cause for concern, and we suggest that more capable teams conduct further research into these issues, as they effect price discovery within the precious metals market, as these ETF shares are being used for settlement and possibly pricesuppression on the COMEX.If these problems are caused by accounting errors, they are disturbing and perhaps profoundly incompetent, and we suggest both these funds should have their senior management replaced.
In our opinions, the only way for all of these anomalies to occur together as noted in this paper, is via systemic fraud or gross accounting error bordering on jaw-dropping incompetence.
And the original pdf on scribd http://www.scribd.com/doc/17750719/Silveretfs-1-PDF
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Charlie, just to say I enjoyed those 2 chapters and would definitely purchase this type of book, I find them very helpful for new ideas and also when they mirror thoughts of mine, it lets me know I'm in the right ball park with things!
Keep us posted, cheers.
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Thanks CG
Interesting graph, where does the red line projection come from?
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Dr B, is this going to be available through itunes soon?
Thanks, GI
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I can see a confluence of support at 845 give or take 5 or so from a purely technical perspective.
previous resistance (Nov 07 & Aug 08)
50% fib retracement (Oct 08 low > Feb 09 high)
200 sma support
add to the list above:
resistance turned to support from may 08
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I can see a confluence of support at 845 give or take 5 or so from a purely technical perspective.
previous resistance (Nov 07 & Aug 08)
50% fib retracement (Oct 08 low > Feb 09 high)
200 sma support
Guess we will find out soon enough...
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Goldline now have brittanias, krugs and sov's available.
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My two pence worth, keeping it simple, I would expect a bounce off the lower trend line at around $745-755 with an eventual retest of the upper trend line around 925?
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The really interesting bit (for me) is the caller (Bill from Tampa) just before Ed Young at 9 minutes.
Tom O'Brien talks about Great Basin (AMEX:GBN), a gold producer. Caller gets in at $1 something and Tom says it will get back to it's highs of $3.85 but it will take a few years.
Also comments about the madness of the gold market but is essentially saying hold tight and don't get scared out, at least that's how I took it.
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Increasing numbers of "out of stock" coins over at Bairds&Co.
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Hi, I started a thread on the investor education section, but Frizzers advised me to join this one, so apolgies about the double post (mods please delete my original thread if need be).
Let me ask my original question in a slightly different way:
If you wanted exposure to silver and you had to choose between either an ETF (e.g SLVR) or an ETC (e.g PHAG), which would you go for and why?
Is there any real benefit of one over the other or, as they are traded like shares, are they much of a muchness?
I realise the etf tracks an index and the etc tracks the spot price but other than that is there anything else i need to be aware of?
Many thanks.
GOLD
in Gold, FX, Stocks / Diaries & Blogs
Posted
The question is how long will it now last, if we are at that point. The graph suggests 12 months or so...will it be any different this time around? Does human nature change? Will the internet compress the time period of the speculative stage? If only we knew.