Gold and silver

[MiketheangrydrunkenCUfan]

I've got a buddy who is pretty convinced that gold, and, to a lesser extent, silver, are some of the best investments you can make. Anybody agree or disagree? I'm a complete novice when it comes to stocks & investments. Gold is out of my price range anyway, but I figure I could afford to pick up a couple ounces of silver every week or two. Is it worth it?

[poptart]

Both gold and silver are very wise buys, imo, Mike.

With all the paper "money" that has been printed, we are certain to see inflation in the not-too-distant future.
Paper will lose a LOT of it's value.

We'll see both gold and silver rise, and maybe a LOT.

If you don't want to hold the actual pieces of gold or silver, there are precious metals mutual funds you can buy.

However when the value of paper money decreases, the gains you've made in a given mutual fund prolly won't have gained enough to off-set the brutal reality of inflation, because you'll finally have to cash out of your fund and take the PAPER in hand.


Btw, not only are gold and silver good buys, but many commodities are wise buys as we head into the future.


jmo's

[poptart]

Btw, Mike, do a youtube search for Peter Schiff.

Watch a couple o' few of those videos to see where things are, and where they are headed.

[KC Scott]

Tart has a valid point on precious metals rising when inflation rises - however that's not the case now.
While interest rates are low money will keep flowing into businesses / stocks

Also Owning the metals rather than a mutual fund or ETF isn't advisable.
About the only way to do it is buy coins and those will fluctuate - their also not very practical as when you try and sell, you'll have to find a dealer willing to buy and give you a fair rate.

That fair rate will NEVER be at what the actual cost of the metal is at the time.

I do like the idea of commodities now - Oil in particular.

[Mikey]

Gold prices are at an all time high.

I'm no expert, but this chart looks a lot like the NASDAQ around, say the beginning of 2000. If you think it can keep going up like that, no matter what happens, you're nuts. Not too smart to buy at an all time high, even if you think it could keep going up, unless you have a solid plan to get out.



On the other hand, oil isn't near its all time high. The OL has some some inherited royalites. Not a lot but enough for pocket money. I'm hoping for at least $100 oil soon.

[poptart]

I wouldn't be surprised to see Gold make a bit of a pullback - 10, 15% or so.

But I am also expecting the markets to make a pullback, and not just 10 or 15%.

More like 40-50%.

Gold will continue upward, generally, because wise investors are dialed-in to the reality that inflation is coming.

It'll continue to be a popular buy.


jmo

[War Wagon]

Not too smart to buy at an all time high...

Yeah, but like the guy on TV hawking gold shares says:

"gold has never dropped to zero"

Great selling point, that.

[KC Scott]

Not too smart to buy at an all time high, even if you think it could keep going up, unless you have a solid plan to get out.

I was gonna comment on this, then forgot about it till I saw the quote.
This is a "popular" theory - right? - But in stocks it's actually an excellent time to buy.

Why?
Beacuse there are no sellers above you.

Think of it like this, a lot of people buy a stock, then it goes south.
Rather than cutting loses at a pre-determined level and moving on, they just hold it hoping it comes back (or maybe they have heard some story put out by the company that paints a rosy future picture)
In most cases they just want to "Get out even" and will sell close to their buy price.

This is known as resistance - beacuse there's supply overhead and everytime a stock gets near that point, the sellers start dumping.

Now a Stock hitting a new high, be it a 52 week, or even better a new all time high doesn't face that overhead supply. There's likely to be a lot less sellers as the stock keeps ascending. Yes, at sometime more people will be selling than buying and the price will drop - but you'll spot when this happens beacuse the price will start bogging down for a prolonged period new what will be the top. This also depends a lot on the time frame your looking at.

[Mikey]

Not too smart to buy at an all time high, even if you think it could keep going up, unless you have a solid plan to get out.

Now a Stock hitting a new high, be it a 52 week, or even better a new all time high doesn't face that overhead supply. There's likely to be a lot less sellers as the stock keeps ascending. Yes, at sometime more people will be selling than buying and the price will drop - but you'll spot when this happens beacuse the price will start bogging down for a prolonged period new what will be the top. This also depends a lot on the time frame your looking at.

And that would be the "solid plan for getting out".

[poptart]

From November 1, 2009 to July 18, 2010 (8+ months), Gold has gone from 1,100 to 1,190 - up 8.1%

The dow has gone from 9,700 to 10,100 - up 4.1%


I expect gold to gain on this 4% advantage over the dow through the remainder of this year - and very likely into next year, also.

I wouldn't be surprised, however, to see gold take a drop relatively soon.
I just think the dow will continue to drop (as it's done over the past 3 months) faster.

If you bought gold, hold it.

If you haven't bought yet, I'd hold cash right now instead.


jmo

[Trampis]

I'm going the opposite way Dave - I've been buying stocks and have about 60% of my positions now.
Expecting a bull run between now and Nov. at minimum going into the mid term elections.

I've got a couple of really nice Dividend plays - both are yeilding over 5% at my buy price - Bristol Meyers (BMY) and Altria (MO) - that's a whole lot better than 1% on cash.

Regarding Gold - Everything I read says a pullback, possibly significant.

Gold does best in an inflationary economy - and in spite of everything else wrong, that's NOT a problem right now.

1 for 2 on your predictions. Market did rally but so did gold and silver.

I think we might have a pullback in precious metals for Jan. Beyond that? Why not have gold hit 1500?

[poptart]

From November 1, 2009 to July 18, 2010 (8+ months), Gold has gone from 1,100 to 1,190 - up 8.1%

The dow has gone from 9,700 to 10,100 - up 4.1%


I expect gold to gain on this 4% advantage over the dow through the remainder of this year - and very likely into next year, also.

Gold is now at 1,379.50 - up 25.4% from the time of Mike's inquiry.
The dow is now at 11,671 - up 20.3% from the time of Mike's inquiry.


Yep, Scott made a good call on the markets rising through midterms - and they've gone up even more since then, but he was off on his call for Gold to have a pullback.
Hasn't really happened yet.

I've been right about Gold's advance but wrong about the markets tanking.
That hasn't happened ... yet.

:wink: