Your Questions About Investing In Gold

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Joseph asks…

What are the benefits of investing in gold?

Anyone investing in gold that can tell me the pros and cons?

financi4 answers:

Gold is a standard so that is a pro but it is an investment like anything else, it can go up and down, gold will never go out of business and when the dollar gets weaker the gold goes up. But just because the dollar is down doesn’t mean the price of gold is not over inflated.

Like any investment you need to be comfortable with what you are buying.

Getting the hot stock is not necessarily the best thing to invest in, looking at undervalued stocks can make you a healthy profit, especially if you are investing over the long term which is the smartest way to do it

David asks…

What kind of market am I investing in if I invest in Gold Savings?

What kind of market would I be investing in if I keep part of my wealth in gold. Is it the commodity market? But in commodity markets, people buy and sell Contracts. Therefore, I don’t think keeping part of my savings in gold is similar to investing in commodity market. Any ideas?

financi4 answers:

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Paul asks…

What are the risks of investing in gold and silver?

For those in the US fearing high levels of inflation, many are turning to commodities, especially gold and silver. Silver has been making some great gains overall in the past few years. I’m just wondering what the risks are of investing in precious metals, specifically gold and silver. Or are these considered one of the more riskless investment options?

financi4 answers:

Firstly investment in commodities have the risk / return profile compared to any other open market investment such as bonds / equities etc.

The value of a bond can also severely depreciate depending on credit rating risk , default risk , reinvestment risk , maturity risk etc

Focusing on your question the two metals gold and silver have very different investment characteristics. Gold is know to act like an “hedge” to inflation and a safe heaven during times of economic stress and hence has appreciated in value over the last two years.

Silver on the other hand has a lot of industrial uses and the performance of silver is highly correlated to economic activity of the globe. If there is a down turn in the global economy silver as an investment will bare the brunt and correct sharply and like wise if the economy is growing it will appreciate sharply. There is a lot of speculative interest in sliver when compared to gold and hence it is considered a more risky asset.

If you ask me , please do not invest into a commodity with an aim to benefit out of its appreciation in value. There are multiple factors such as interest rate , demand, geo -political issues , government policy etc that a average investor will not be able to quantify and more often then lot loose out on.

John asks…

How can I get started investing in physical gold and silver?

I’m 15 and would like to start investing in gold and silver because the dollar seems to keep going down and down and I think it would be wise to get started now. I have a couple of silver dollars from 1803 but I would like to get gold and silver bullion coins and when I have enough money start buying the bars. I do not wish to buy online so would going to different coin shops be ok??
Thank You=]

financi4 answers:

Buying from coin dealers, is a good way to go. That’s where I buy my Krugerrands. Tho I buy my Morgan silver dollars from ebay. It’s hard to make much money buying the physical metals. Each coin dealer has to mark these up to make any money. And then when you sell them back, they buy at a discount.

Gold & silver is not a very good investment, since they pay no dividends, or interest. What your doing here is speculating, that the precious metals will continue to go up. Personally I think the metals are in a bubble here.

I’ve made much more money on my mutual funds, than I’ve ever made on my Kruggerands, and Morgan’s.

Ken asks…

What can you tell me about UTMA and investing in gold, silver, aluminum, and oil?

I understand the UTMA regulations prohibit minors from directly owning equities. Do these same restrictions apply to gold, silver, oil, aluminum, steel, etc.? If not, what would you suggest to invest in, and is this strategy better than investing in such other means as mutual funds, bonds, or money market accounts? Thanks!

financi4 answers:

I’m not sure I understand your statement “UTMA regulations prohibit minors from directly owning equities”. A UTMA account CAN own stocks. I suppose that technically the minor doesn’t own the stock since it’s the account’s “trustee” (normally a parent or guardian) that has legal responsibility for the account, but the account is for the benefit of the minor and can legally only be used for things that benefit the minor (e.g. College tuition, summer camp, etc.) so for all practical purposes it’s the same thing.

I don’t know of any rules that prohibit ownership of things like gold and silver, though I suppose it’s possible. I’ve never read the UTMA rules word for word and have never invested in commodities in my kids’ UTMA accounts.

I personally would question the wisdom of buying into things like that now anyway. Nearly all commodities have risen dramatically in price over the last year or two. While a certain amount of that is basic supply/demand, I think a lot of it is speculation (i.e. People looking to make a quick buck buying into the latest fad investment). We’ve seen what happened with tech stocks about 7 years ago and real estate over the past couple years. I think there’s a good chance that the same thing (a price collapse) could happen in the commodities that have run so far up in price. As soon as there’s a period of declines, I suspect that many of the speculators will bail out driving prices down even more. I personally think commodities are a high risk investment at this point.

As for what the best thing to invest in, that will vary depending on how soon the money is needed, risk tolerance, etc. Over long periods of time, however, stocks have historically provided the highest returns of any asset class, so that’s my preferred investment for long-term gains.

Charles asks…

Need more information on Chinese Gold Investing?

I have been a non-professional investor for almost two decades and have been hearing good things about China Mineral Company recently. I am interested in investing in gold, and am especially interested in China Mineral Company because of the location and the success of their first fiscal year. In addition, I was told that they have a unique partnership with the Chinese Government involving “exclusive mineral rights.” Does anyone know anything about this? Do you know when China Mineral will open up shares to non-Chinese citizens?

financi4 answers:

I recommend looking at this BBC Newsnight video:

Donald asks…

How do I start investing in Gold?

Hello I live in U.S.A Georgia, and I would like to start investing in Gold… Is there a way I can?

financi4 answers:

I wouldn’t buy gold directly. Try using an ETF. Much easier way to invest in gold. Trades like a stock.

“GLD” is the popular favorite.

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