Buying gold - is it a good idea nowadays?

[NickWeb]

So I am planning to buy some gold in 1-2 months time. Do you think it is a good idea to invest into gold? Why? Why not?

Thank you in advance for your ideas.

[Peterw]

Physical gold or spot/futures gold?

It's in a massive trend/bubble and there are 2 camps of people. 1 side keep buying iy and think it will go up past $2-3k/ounce and the other camp keep calling tops and prediciting a big crash which has yet to happen.

It's a safe haven and we're in very unsure times with Europe and the US. I'm buying on dips/retracements but not building up any long term positions. I do plan to own some physical gold in the near future as well when I've built up my equity a bit more.

[SnerpGoodWord]

It's definitely a bubble scenario. Net demand for jewelry (new jewelry minus melt) is about 800 tons per year and dropping. Industrial use is about 400-500 tons. Mine production is about 2200 tons per year. That means every year about 900 tons are buried in vaults in the ground. Central banks have been net gold sellers over the last 5-10 years, which means that more than 900 tons/year has been buried by private individuals.

Now, even the biggest gold bulls will admit that there's no inherent economic return to having gold buried in a hole in the ground unless you count some magpie-like enjoyment of hiding shiny objects. But that said, the behavior can continue for a VERY long time and the breaking point is very hard to predict and may be for very technical reasons. The last two silver bubbles were broken by changes in exchange policy - the Hunt manipulation bubble broke when NYMEX set up a delayed delivery schedule for their overbought front month contract. The 2011 silver bubble broke when CME increased the margin requirement on the SI contract. The late 70's gold bubble broke when the Fed floated the fed funds rate. All three events occurred on the weekend so stop loss orders would not have offered protection to those with long positions (a longstanding and excellent tradition in trading).

Point being, trading bubbles is hard. I wouldn't recommend that anyone do it.

[Peterw]

It's looking a bit wobbly today - let's see what happens when NY opens..

[Bradman]

I've been avoiding it lately, it's a crowded trade right now. However, when governments keep printing paper money to pay off debt, gold makes sense to own. Some say you should have some gold and hold it regardless of the current price because if gold goes down your other investments should go up and vice versa. It sure would have been nice to snag a few maple leafs a few years a go at $400-500 each

[Peterw]

I bought again today at $1863.

We could see a run up to $2k as it's getting closer and closer. at $1900 I will add another position, then $2k could see some large profit taking and a retracement before more of an upmove.

Kind of depends on the health of the rest of the economy at the moment which isn't good..

[Peterw]

Just bought another long position at 1900:

[Peterw]

Originally Posted by Peterw

I bought again today at $1863.

We could see a run up to $2k as it's getting closer and closer. at $1900 I will add another position, then $2k could see some large profit taking and a retracement before more of an upmove.

Kind of depends on the health of the rest of the economy at the moment which isn't good..

This is an example of how this business can still make very good money regardless of the state of the economy.

Is it "wrong" to profit from a bad economic environment?

Is the world economy going to do what it's going to do regardless?

[Peterw]

Originally Posted by Peterw

Just bought another long position at 1900:

Not going well..

Oh well, a dip to the downside will just be a better entry for the leg up to $2000.

On to the next one!

[Clint Cora]

I bought some gold/silver coins back during the winter and converted 10% of my investment portfolio into precious metals funds. Many of the metals gurus say that the price is still in for a climb for the next five to ten years given the failure of the world economies. However, it will be a rough ride. For me, I don't plan to buy more at this point as I'm in holding pattern.

[lycan]

Prices are always relative. It is not an issue of "will the price of X go up or down?", but "will the price of X relative to Y go up or down?". Currencies are not immune to this rule. If it is a good idea or not depends on your requirements, particularly your time-frame and your skills. If you are not going to use leverage, don't bother unless you are already a millionaire.