Buy Gold now to hedge against uncertainty? (noob asking for your help)

Z

ZeroStack

New Member
I've been thinking whether to invest into gold to diversify risk. Global stock markets are all over the place and commodity prices don't appear to make much sense anymore. I have read 1001 articles on precious metal and whether to buy into it or not. I understand everyone has got a different opinion on it & there's no clearcut answer.

My perspective isn't so much that of an investor keen for yield but concern over paper money losing its value. If I bought now and saw oz rates fluctuate +/- $100 in the near term, I could live with that. Obviously gold is quite expensive compared to 10 years ago and I wonder how much room it still has to move up.

Do you think now is a good time to get into gold for someone who has no stack?
Have you bought / sold recently yourself?

What is the likelihood of a gold price drop below the US$1000 mark (or further) in the near future?

Cheers
ZeroStack :)
 
To my mind, the change of losing money investing in gold , at the moment, is less than other investments.
 
ZeroStack said:
I've been thinking whether to invest into gold to diversify risk. Global stock markets are all over the place and commodity prices don't appear to make much sense anymore. I have read 1001 articles on precious metal and whether to buy into it or not. I understand everyone has got a different opinion on it & there's no clearcut answer.
My perspective isn't so much that of an investor keen for yield but concern over paper money losing its value. If I bought now and saw oz rates fluctuate +/- $100 in the near term, I could live with that. Obviously gold is quite expensive compared to 10 years ago and I wonder how much room it still has to move up.
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When you are an Aussie the choice is either to put savings into USD, or to put it into metals (gold is a safer bet than silver) which basically tracks the USD+/- whatever the price of gold does. As keeping money in AUD seems to be losing bet right now.

Practically every pundit is saying the USD is the safest place to be with cash for the short/medium term future, and that all other currencies (included the AUD) will continue to drop in comparison.

Do you think now is a good time to get into gold for someone who has no stack?
Have you bought / sold recently yourself?
What is the likelihood of a gold price drop below the US$1000 mark (or further) in the near future?
Click to expand...

I think the odds are quite low.
The downside risk of gold is probably quite low, because for aussies any drop in gold is likely to be offset by a drop in the AUD anyway. So it's most likely at worst your saving are going to go sideways, with a not insignificant upside potential.
Personally I'm buying more unallocated gold right now.
 
Unallocated means bullion stored in a vault? What are the chances of withdrawing your gold physically in case of a market crash?

Looking at bullion dealers around Sydney, are there any that I should look at / stay clear of for purchase of physical PM?
 
ZeroStack said:
Unallocated means bullion stored in a vault? What are the chances of withdrawing your gold physically in case of a market crash?
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Yes, unallocated is technically bullion stored in vault, but you don't own it, just the rights to a part of it on the companies books.
Allocated means the metal is owned by you under your name, they are simply storing it for you (and they charge you a yearly fee to do so), that metal is not on the company books. So if the company goes bust, you should get your physical metal, unless they stole it and skipped the country or something.
Unallocated technically carries a higher risk than pool or allocated metal, because unallocated means the metal you are buying, whilst is usually backed by physical metal the company owns (you'd be a fool if it wasn't), that metal is on the books on the company. So if the company fails, you become just another creditor who may or may not get their money back.
With allocated, you can chose to walk into the vault and withdraw your bars at any time.
With unallocated you can chose at any time to covert your unallocated to physical and take possession, and they will charge you a baring fee. It ridiculously unlikely that any market crash or financial armageddon would be so sudden that you didn't have to time convert your unallocated into physical and take it, or sell it instaly and put the cash back into your account.

The risk in unallocated, particularly from the Perth Mint is borderline zero IMO. A lot of people like to talk up the risk, but if you pick the right one, it's no problem. I think there has only been one case ever of a company operating an unallocated program fraudulently and people losing their money.

A "market crash" ( presume you mean stock market crash) would mean nothing, you can still buy and sell your unallocated metal provided the unallocated company is still solvent.
Perth Mint have the best explanation on the risks:
https://www.perthmint.com/storage/help/faq-storage-options.html
 
If you're worried about fiat collapse then I wouldn't touch unallocated with a barge pole personally. If it's "paper gold" you're after I'd rather buy shares in a gold ETF or a gold miner.

I went on a pilgrimage to Sydney last year and went to these places :-

https://www.kjc-gold-silver-bullion.com.au/

http://www.jaggardsbullion.com.au/

http://www.goldtrex.com.au/

https://www.abcbullion.com.au/

All within walking distance of each other. I thought KJC had the best "shop" and possibly the best range and stock levels. ABC was ok - very secure though I wasn't that impressed with the range and stock levels. Jaggards is probably more suited to numismatic coins rather than raw bullion. Goldtrex I picked up a nice purchase there but they looked more like a hole-in-the-wall office cubicle and were probably the least impressive. They struck me as more gold "traders" rather than a storefront.

Also, you will need full 100 points of ID if your purchase at any one place is over $5K. Take a fake moustache or a friend with you if you want to buy more than that at any 1 place :cool:
 
BuggedOut said:
If you're worried about fiat collapse then I wouldn't touch unallocated with a barge pole personally. If it's "paper gold" you're after I'd rather buy shares in a gold ETF or a gold miner.
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I think there is a much higher risk of the gold miner going bust due to many reasons (e.g. poorly managed, market forced, unforseen issues etc), or an ETF becoming untradable for some reason, than someone like the Perth Mints unallocated program (government backed, them being a gold producer etc) going belly up. I think I'll stick with my unallocated. Although I do have some gold shares too.

Take a look at the QAU gold EFT volumes, it does not instil a lot of confidence that I could sell these in hurry at a reasonable price if a crisis happens.
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Try ASX code GOLD. It typically has a buy/sell spread of around 0.1% difference. Parcels of 1000 for GOLD ETF are typical and they are worth about $15K each, which is decent. The market makers will usually replace those parcels if they get bought up (I'd expect the MMs are basically arbitragers/traders)

Also look up ASX code PMGOLD if you like - that is the Perth Mint ETF.

I've got nothing against Perth Mint, I'm a pretty big fan in essence, it's just that shares are what I know and I can manage it all through the one platform and I'm comfortable with the speed of transaction and the liquidity. Just personal preference I guess.
 
I thought ID was required to reduce money laundering; what are the implications of there being a sales record with my name on it?

Has anyone come across counterfeit gold at a bullion dealer or is this likely to be above board..?
 
Yes, the ID requirement is part of the KYC (Know Your Customer) regulations to prevent criminal activity. But at the moment it's only required for purchases over $5K

Maybe I'm just the paranoid type, but I wasn't comfortable with the shops employees knowing who I am and where they might be able to find me. Then there is also the government and confiscation argument too I suppose (which I won't go into since it is frequently debunked).
 
ZeroStack said:
Has anyone come across counterfeit gold at a bullion dealer or is this likely to be above board..?
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If they are an authorised dealer for that brand, the risk is practically zero buying that brand.
Buying from say ABC or Perth Mint who are also the manufacturer of course carries zero risk.
 
BuggedOut said:
Also look up ASX code PMGOLD if you like - that is the Perth Mint ETF.
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Didn't know they had one, thanks.
But given that they have their own (excellent) depositary program, is there any benefit to buying PMGOLD instead?
 
You're welcome.

I don't really know enough about the depositary program to make a factual comparison. For me it's familiarity, being able to use 1 platform and (possibly?) speed of transaction and liquidity. Maybe even lower fees / transactional costs? Perhaps someone else (like Bron?) could give a comparison a crack.
 
BuggedOut said:
I don't really know enough about the depositary program to make a factual comparison. For me it's familiarity, being able to use 1 platform and (possibly?) speed of transaction and liquidity. Maybe even lower fees / transactional costs? Perhaps someone else (like Bron?) could give a comparison a crack.
Click to expand...

+1 for Bron comparison.
 
ZeroStack said:
I've been thinking whether to invest into gold to diversify risk. Global stock markets are all over the place and commodity prices don't appear to make much sense anymore. I have read 1001 articles on precious metal and whether to buy into it or not. I understand everyone has got a different opinion on it & there's no clearcut answer.

My perspective isn't so much that of an investor keen for yield but concern over paper money losing its value. If I bought now and saw oz rates fluctuate +/- $100 in the near term, I could live with that. Obviously gold is quite expensive compared to 10 years ago and I wonder how much room it still has to move up.

Do you think now is a good time to get into gold for someone who has no stack?
Have you bought / sold recently yourself?

What is the likelihood of a gold price drop below the US$1000 mark (or further) in the near future?

Cheers
ZeroStack :)
Click to expand...


Every investment come with risk and return. the currency you hold, gold and silver, share, property and so on

Know you your investment objective, risk profile and financial ability are important before any decision.

Find investment which best suit you.
 
With a downturn in the ASX and those pumpers and shills of bullion derivatives during uncertain times is questionable. What are they backed by ? A pledge or a promise ? You have some big decisions to make my friend.
 
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