Your Questions About How To Invest In Gold

Richard asks…

How risky is it, to invest in gold?

And do you think it’s better than putting money in a cd account?

John answers:

Investment on GOLD on long terms is a good idea.
Mostly Indian (conservative – majority believe in saving than spend) usually opt for investment in Gold.

CD account will not give you return on par with inflation – it is an aged (old) man’s available safe option.

Trading in Gold (commodities) always very risky. Now dollar is falling – Gold is shinning. Reverse cycle is not ruled out when America economy (largest economy) regain its strength (it will happen in 9 to 12 months time).

When crude price goes up, OPEC (countries) invest large amount in GOLD After winter season crude prices are likely to fall drastically, at that time, OPEC will release GOLD to meet their commitments (to balance – balance of trade) at that time (during SUMMER) the GOLD prices will hit and DOLLAR demand will raise.

Right time of investing in GOLD is SUMMER

right time of selling GOLD is during recession/WINTER, etc.,

please Analise COMMODITY market behavior (atleast 3 years history).

David asks…

How can one invest in gold other than in jewels?

Also please advise how to convert the existing jewels in to investment

John answers:

They are atleast two forms of gold purchase other than buying jewels ( i am speaking from India Pov and assuming that these purchases are for investment )

1. Gold bars either from Tanishq or other reputed shops ( do not buy from Banks as they cannot take the gold bars back) . The units are from 1 g, 2gm , 5 gm, 8 gm 10 gm, 20 gm, 50 gm 100 Grams.
These are gold bars that you need to buy and keep in safely lockers for protection.
2. GOld ETF. These can be brought online without the worry of security or lockers. No worry of purity or quality. The disadvantages of Gold ETF is they is a 2 % charges and not all Gold ETF buy 100 % gold so some percent of GOld ETF is in debt. Only Benchmark Gold ETF has 100% gold that is very close to the actual gold price.

Sharon asks…

Can someone explain to someone who doesn’t know the first thing about economics/stocks how to invest in gold?

I have been hearing this on the radio for about 5 years.

John answers:

The easy way is to buy an ETF that mimmics the price of gold exactly. It avoids all security issues of owning the bullion directly. The ticker is GLD.

Having said that, gold has been a historically bad investment. Today it is reaching all time highs, yes, but viewed in the long run, savings accounts would have done better than gold.

That you are interested at a time when it is reaching all time highs should serve as a warning… Enthusiasm is greatest just before a crash.

Sandra asks…

Hai i want to invest in gold-etf through online; i have demat account and net banking; how to start?

John answers:

Most investors are in the know that GOLD has recently been one of the commodities that has shown rapid levels of price increase. Can you provide some input as to some Market information that can be observed to have HIGH correlation to Gold prices and the underlying rationale of your argument ?
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“The wise are instructed by reason; ordinary minds by experience; the stupid, by necessity; and brutes by instinct.” – Cicero, Roman author and politician

Joseph asks…

When/why should someone (age 45) invest in Gold, and what % of invested assets?

How should one invest to protect themselves from the dollar losing value over the next several years?

John answers:

Gold is NOT an “investment”, and (adjusted for inflation) has held basically the same “buying power” (or actually declined very slightly) since the year 1550;

http://www.sharelynx.com/chartsfixed/600yeargold.gif

You do NOT need to own gold to protect yourself if (as the gold sellers warn you might happen) the “bottom falls out”….if the economy collapses, bullets & drinking water will be FAR more useful than lumps of yellow metal! But don’t worry about it anyway, it isn’t going to happen.

At 45, in the current “economic environment” you should hold mostly Growth stocks (preferably in a diversified fund) and perhaps 10-15% in cash to buy MORE stocks on pull-backs….the Baby-Boomers will start retiring soon, and (typically) they have not saved enough for retirement and tend to be ‘conservative investors’ buying bonds; when they realize the 3% return on their nest-egg isn’t enough to pay their bills, they will have no choice but to shift assets to stocks (probably mostly Dow components which they will perceive as “safest”) and there will be a consequent run up in the Dow.

Look VERY closely at the people recommending you “hold gold” and you will notice they all have something in common……gold they would like to SELL to YOU at today’s highly inflated price!

Best wishes!

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