Friday, October 7, 2011

Why is gold a bad investment right now.

A lot of people are buying gold because they are going up in price. But one day people will stop buying gold. Then the sellers won't have anyone to sell it to so they will have to lower the price. These people who bought gold might have to lower the price below what they paid for it to get it to sell. Which means they would be losing money.

If you really want to invest in gold I suggest this book:
Rich Dad's Advisors: Guide to Investing In Gold and Silver: Protect Your Financial Future


  1. And now... 'why gold is a fantastic investment right now' :

    About 2,500 tonnes of gold is mined every year.
    That may sound a lot, but if you split it between everyone in the world (6,000 million people) we would all get about 1/75 of an ounce per year - that's only about $21 worth (it’s a lump about the size and thickness of your little finger-nail).

    Financial advisors are now saying that people should put 10% of their savings into gold.
    But for many, many people, 10% of their savings is a lot more than $21.
    So there simply isn't enough gold to go round.

    Or put another way, at the moment only about 0.1% of people's savings is actually in gold – when people do actually try to put 10% of their savings into it, there will be *100 times as much money* being offered for the *same amount of gold* (because unlike shares or bonds, governments or businesses can't just print more gold).

    When lots of people want to buy the same thing, the price goes up. And up. And up.

  2. Well, remember when everyone was buying houses? Lots of people bought them because they were going up in price. Then people stopped buying houses. Suddenly people could not sell their house and had to lower the price below what they paid for it to get it to sell.

    Gold is the same way. Lots of people are buying gold because it is rising in value, but someday people will stop buying gold. Just like the houses they will have to lower the price of gold to be able to sell it. These people will have less money than what they started with, just like the people who bought the houses.

  3. Good theory ... in case of Gold the greed will not let people cease to pursue or purchase it...Gold had been traded for centuries and will continue in the future ... In my humble opinion we may see a little drop but not much .. the prices seems to have gone up through the history

  4. lest we forget when the US gov't seized all gold and artificially inflated the price

  5. Ahh, but unlike houses, which usually need a mortgage to purchase ( and Banks have to have money to lend) gold is easy to divide into smaller pieces and that means lots of people can buy a smaller piece. And when lots of people want something the price usually goes up.

    Also if someone buys a house using a banks money, the bank could ask for more interest because THEY have to pay more for other people to provide that money.

    When you own a piece of gold, nobody can change that. Though as has been stated the US government did once make it illegal to own it, and forced people to sell it to the state at fixed price. But I doubt the population would comply this time.

    Power to the people...

  6. Are you a frequent gambler that is a pro at winning? Are your combined gambling winnings greater than the combined losses? Are you a merchant that buys and sells precious metals as an on going business?
    If the answer to any of the above questions is NO then walk away if someone offers to sell you gold.
    The only time you should buy gold or silver jewelry with gems and jewels is for your own personal use.

  7. Two thoughts on this topic......
    1) People hold on to their beliefs about owning gold like they hold their opinions on abortion or capitol one ever changes their mind. Don't bother trying to change anyones mind about buying gold.
    2) Remove emotion about gold and look at the only thing that matters....price. It has gone from $250 to $1700 pe OZ in the past 10 years. Gold cycles last about 20 years on average. Nitwits have been calling a "top" or "bubble" daily for the past 10 years.

  8. When economies look shaky, people will always go for gold/silver as a reserve currency. You can't change hundreds of years of human nature.

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