# When Investing in Gold... **URL:** \ **Category:** Factual Questions\ **Created:** [August 9, 2011, 11:45am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065 "2011-08-09T11:45:24Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Jinx](https://avatars.discourse-cdn.com/v4/letter/j/c6cbf5/32.png) [@Jinx](https://boards.straightdope.com/u/Jinx)\ **Post date:** [August 9, 2011, 11:45am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/1 "2011-08-09T11:45:24Z")
If I invest in gold, can I force those who hold the gold to pay up? Can I get gold bars in my grubby little hands? ---
**Author:** ![EvilTOJ](https://avatars.discourse-cdn.com/v4/letter/e/ee59a6/32.png) [@EvilTOJ](https://boards.straightdope.com/u/EvilTOJ)\ **Post date:** [August 9, 2011, 12:36pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/2 "2011-08-09T12:36:52Z")
When you “invest” in gold you’re actually just buying the actual gold to sell later at a (hopefully) higher price. So yes, you’ll get the gold in your mitts, but unless you have a lot of scratch it won’t be bars, but coins or other bullion. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 9, 2011, 12:56pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/3 "2011-08-09T12:56:21Z")
It depends on _how_ you invest in gold. If you buy gold mining stocks or a gold fund, of course you won’t seen any actual gold. But if you invest in gold coins or other bullion, then you can take it home. ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [August 9, 2011, 3:02pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/4 "2011-08-09T15:02:42Z")
You can walk into a coin shop in pretty much any medium-size city in the U.S. and walk out with either gold coins, or sometimes even a tiny little gold bar. ---
**Author:** ![appleciders](https://avatars.discourse-cdn.com/v4/letter/a/85f322/32.png) [@appleciders](https://boards.straightdope.com/u/appleciders)\ **Post date:** [August 9, 2011, 3:07pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/5 "2011-08-09T15:07:11Z")
You say “force” as though this will be difficult. It’s not; in many cases, you simply receive a hunk of gold, probably in coin form, and put it in a bank vault/hide it in your sock drawer/bury it in the backyard. The consensus around here is that purchasing gold right now is either brilliant or extremely foolish; the market price is extremely high right now and rising. It will probably continue to rise quickly for a while, then plummet as the bubble pops. How long that while is is a matter of great debate. Personally, I may invest in gold in the future but I will not right now. Unless you want gold in-hand because you want to hedge against a collapse of civilization, in which case market price is pretty irrelevant. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [August 10, 2011, 3:59am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/6 "2011-08-10T03:59:23Z")
If you’re buying gold as a hedge aginast the collapse of civilization, you’ll get more value from investing in lead. And in the tools to cast it into bullets, along with suitable supplies of gunpowder. Gold works \*until \*civilization collapses; not _after_. It seems a lot of people get this wrong every year. ---
**Author:** ![dtilque](https://avatars.discourse-cdn.com/v4/letter/d/d6d6ee/32.png) [@dtilque](https://boards.straightdope.com/u/dtilque)\ **Post date:** [August 10, 2011, 4:26am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/7 "2011-08-10T04:26:01Z")
> [@LSLGuy](#): > > If you’re buying gold as a hedge aginast the collapse of civilization, you’ll get more value from investing in lead. And in the tools to cast it into bullets, along with suitable supplies of gunpowder. Gold would actually make an excellent bullet. Even better than lead. ---
**Author:** ![voltaire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voltaire/32/313_2.png) [@voltaire](https://boards.straightdope.com/u/voltaire)\ **Post date:** [August 10, 2011, 4:30am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/8 "2011-08-10T04:30:09Z")
> [@appleciders](#): > > The consensus around here is that purchasing gold right now is either brilliant or extremely foolish; the market price is extremely high right now and rising. It will probably continue to rise quickly for a while, then plummet as the bubble pops. How long that while is is a matter of great debate. Just going by the amount of gold-related threads that are active around here, I would say that now is a _terrible_ time to buy. Crashes are almost always preceded by rush of new and inexperienced buyers. Whether it’s stocks, real-estate or tulips, it’s always the same story. It’s time to short gold. ---
**Author:** ![JSexton](https://avatars.discourse-cdn.com/v4/letter/j/96bed5/32.png) [@JSexton](https://boards.straightdope.com/u/JSexton)\ **Post date:** [August 10, 2011, 5:08am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/9 "2011-08-10T05:08:19Z")
> [@dtilque](#): > > Gold would actually make an excellent bullet. Even better than lead. Would it? Gold is heavier than lead (plus), but much softer (minus…maybe). You don’t mind your bullet expanding, dum-dum style, but you don’t want your bullet to just break apart on impact, either. This would actually be a great Mythbusters episode. ---
**Author:** ![dtilque](https://avatars.discourse-cdn.com/v4/letter/d/d6d6ee/32.png) [@dtilque](https://boards.straightdope.com/u/dtilque)\ **Post date:** [August 10, 2011, 10:02am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/10 "2011-08-10T10:02:04Z")
> [@JSexton](#): > > Would it? Gold is heavier than lead (plus), but much softer (minus…maybe). You don’t mind your bullet expanding, dum-dum style, but you don’t want your bullet to just break apart on impact, either. This would actually be a great Mythbusters episode. Well you might have to alloy it with copper or something to harden it a bit. That’s what they did with gold specie. Pure gold is too soft to last as a circulating coin. ---
**Author:** ![constanze](https://avatars.discourse-cdn.com/v4/letter/c/f9ae1b/32.png) [@constanze](https://boards.straightdope.com/u/constanze)\ **Post date:** [August 10, 2011, 12:47pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/11 "2011-08-10T12:47:43Z")
Dewey already pointed out the first question: _How do you invest_ in Gold - directly in coins or bars? - sure, you get something tangible, but with the problem of the price crashing in the near future - stocks in gold mines or similar: nothing tangible, but you should get small regular profit (unlike coins which you have to sell fully and keep safe in the meantime to make a possible profit off) the next questions you have (hopefully) asked yourself are: _who are you buying from?_ If you think about resorting to force to get your part of a contract bargain, it sounds you are dealing with non-reputable sellers. I would advise against that. Don’t buy in the street, don’t buy online, don’t buy from those little automatic dispensing machines (there’s a lot of manual work involved in packaging tiny little bars of 1 g each, so the prices in the machines are far too high compared to other forms of gold). The best way is to buy gold coins or bars at a reputable official bank, like Coins from countries. Then you know that the gold content is as declared. (There’s still the problem of how the gold is produced: a lot of it comes from child-slave labour in mines, or from pumping mercury into Amazon rivers, which poisons everything. The best way around that is buying old jewelery from a certified jeweler, which has the additional value of antiquity at least, even when the gold price falls again). _How and what for_ are you investing - as part of diversifying your investments?, after covering pension fond, savings account and the usual common stuff, you have 5 or 10% of investment volume you want to invest in gold. I’d recommend coins for the above reasons. because you believe civilization is about to fall and only gold, magic gold, will get you through the Mad Max wasteland afterwards? In that case, I’d recommend deep breaths, stocking up on canned food and establishing a network with your neighbours. If civilsation falls, nobody will be interested in gold. because you have heard that Gold is a good investment?, and believe you can make a killing, but you have no other type of investments? In that case, I’d recommend a pension fund and a saving account first. Gold is sugar on top, not basic form, of investment. And it’s the wrong time for starting gold, as has been said already. ---
**Author:** ![HMS\_Irruncible](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hms_irruncible/32/7394_2.png) [@HMS\_Irruncible](https://boards.straightdope.com/u/HMS_Irruncible)\ **Post date:** [August 10, 2011, 12:49pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/12 "2011-08-10T12:49:10Z")
> [@dtilque](#): > > Gold would actually make an excellent bullet. Even better than lead. True, but “The Man With The Golden Bullet” just sounds stupid. ---
**Author:** ![Jim\_s\_Son](https://avatars.discourse-cdn.com/v4/letter/j/e19adc/32.png) [@Jim\_s\_Son](https://boards.straightdope.com/u/Jim_s_Son)\ **Post date:** [August 10, 2011, 1:07pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/13 "2011-08-10T13:07:35Z")
While I think that gold will go down soon, in part because anything that goes up so quickly is due for profit-taking (i.e. go down). What I certainly don’t know is what it will be 5, 10 or 20 years down the road. When Alan Greenspan gave his famous “irrational exuberance” speech in December, 1996 the Dow Jones Industrials were around 6,400. Many people thought that after a 14 year mostly bull market, that stocks had reached their peak. But even now after all kinds of disasters, the Dow is at 11,200 meaning that if you had bought when Greenspan said it was overpriced, you would have made money. To ease your fears, the average investor could try dollar cost averaging–buy a little each month (or shift your asset allocation a little at a time). It wouldn’t hurt to have your portfolio reach 5-10% gold down the road. While gold has its uses in high inflation times and has been used in many societies over time, I was struck by something I saw several months ago on the Smart Money website. A writer was talking about how he was delayed by a corrupt customs official in an African country. What got him cleared? Not gold but a couple of bottles of whiskey. ---
**Author:** ![constanze](https://avatars.discourse-cdn.com/v4/letter/c/f9ae1b/32.png) [@constanze](https://boards.straightdope.com/u/constanze)\ **Post date:** [August 10, 2011, 3:23pm UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/14 "2011-08-10T15:23:40Z")
> [@Jim\_s\_Son](#): > > While gold has its uses in high inflation times and has been used in many societies over time, I was struck by something I saw several months ago on the Smart Money website. A writer was talking about how he was delayed by a corrupt customs official in an African country. What got him cleared? Not gold but a couple of bottles of whiskey. After WWII, cigarettes were the “money” of choice for everyday bartering in Germany. Jewelery, furs and other valuables saved from bombed households were only good for one-time barters with the farmers for big amounts. There’s one issue of the (humour) comic Colonel[Clifton](http://en.wikipedia.org/wiki/Clifton_%28comics%29), “A panther for the Colonel”, where the despot of a small nation comes to visit GB, and Clifton is assigned as his bodyguard. While there, a revolution back home topples the despot, Clifton is ordered to drop him, but out of stubbornness refuses. Several times during their escape, the (clueless) despot tries giving people who helped him a small bar of solid gold, only to be refused: one lorry driver says “For the ride I gave you, it’s too much; to buy my whole truck, it’s not enough”; the gardener’s daughter is more interested in chocolate; Clifton is doing it for his country and the Queen etc. So in case of emergency gold has limited use. ---
**Author:** ![dtilque](https://avatars.discourse-cdn.com/v4/letter/d/d6d6ee/32.png) [@dtilque](https://boards.straightdope.com/u/dtilque)\ **Post date:** [August 11, 2011, 4:10am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/15 "2011-08-11T04:10:36Z")
> [@Cosmic Relief](#): > > True, but “The Man With The Golden Bullet” just sounds stupid. No argument. But the silver bullet shtick worked pretty good for that Masked Man, so it’s just a matter of coming up with a clever name. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [August 11, 2011, 4:28am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/16 "2011-08-11T04:28:02Z")
Most gold that people buy is actually jsut a piece of paper backed by the fulll faith and credit of whatever company is “warehousing” the gold for you. Cracks me up these end of the worlders that are not getting physical gold. Their “gold” will be worth even less than a greenback when the zombie apocaplyse hits. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [August 11, 2011, 5:22am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/17 "2011-08-11T05:22:04Z")
> [@constanze](#): > > _who are you buying from?_ If you think about resorting to force to get your part of a contract bargain, it sounds you are dealing with non-reputable sellers. I would advise against that. Don’t buy in the street, don’t buy online, don’t buy from those little automatic dispensing machines (there’s a lot of manual work involved in packaging tiny little bars of 1 g each, so the prices in the machines are far too high compared to other forms of gold). I had not heard about the vending machines. Hilarious. > [@](#): > > The best way is to buy gold coins or bars at a reputable official bank, like Coins from countries. I’m guessing constanze wouldn’t fall for this, but others may need a heads up. Goldline will steer you away from bullion and towards gold coins, because the latter can have a 2x or 3x markup. OTOH, if you buy directly from the country, that might be different. But seriously gang, gold is a fringe investment. If you truly find it irresistible, I say buy an overpriced gram at one of those vending machines just to get it out of your system. Then think things through, [starting at this thread](http://boards.straightdope.com/sdmb/showthread.php?t=539805) or others. > [@Measure for Measure](#): > > For those interested in investing in gold… I’d recommend other investments. But if you’re really really adamant, you should at least read about its properties from someone other than a salesman or political commentator, right? Here’s a link: !PDF! : deepblue.lib.umich.edu/bitstream/2027.42/63919/1/fei\_fan\_2009.pdf ---
**Author:** ![constanze](https://avatars.discourse-cdn.com/v4/letter/c/f9ae1b/32.png) [@constanze](https://boards.straightdope.com/u/constanze)\ **Post date:** [August 11, 2011, 8:30am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/18 "2011-08-11T08:30:07Z")
> [@Measure\_for\_Measure](#): > > I had not heard about the vending machines. Hilarious. I just saw a short TV documentary about them and find them less hilarious than I’m appalled that the gold fever/ scare has reached such heights over here that crooks can prey on uninformed idiots. > [@](#): > > I’m guessing constanze wouldn’t fall for this, but others may need a heads up. Goldline will steer you away from bullion and towards gold coins, because the latter can have a 2x or 3x markup. OTOH, if you buy directly from the country, that might be different. You have a markup on coins like Maple Leaf or Gold Eagle when buying from a bank??? Must be a difference in banking laws… ---
**Author:** ![naita](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/naita/32/5862_2.png) [@naita](https://boards.straightdope.com/u/naita)\ **Post date:** [August 11, 2011, 8:37am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/19 "2011-08-11T08:37:24Z")
> [@dtilque](#): > > Gold would actually make an excellent bullet. Even better than lead. Ignoring the possible differences in suitability, if one future scenario is making bullets you can get a lot more lead than gold for a given investment. More bang for your buck, so to speak. Of course if you also want to store your wealth in a commodity, and aren’t banking on the collapse of civilization, you might have a storage problem with a big investment in lead. I suggest diversifying. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [August 11, 2011, 11:35am UTC](https://boards.straightdope.com/t/when-investing-in-gold/592065/20 "2011-08-11T11:35:57Z")
When investing in precious metals you have a few options: 1. Mining Companies - You get exposure to the metal, but mining company stocks do not always track the performance of the metal in a manner you would expect. 2. Precious Metal ETFs - These function like “shares” on the stock market, they are basically shares that represent ownership in a fund designed to track the price of gold. They do a fairly decent job of tracking the price of gold, however it doesn’t mean the fund actually holds gold only, it means it holds investments designed to _track the price of gold_, and that is a different thing. The advantage of an ETF is you can buy very small shares for $50-100 whereas with gold it can be difficult to get physical gold smaller than 1/4oz and that’s still over $400 these days. Note this, if the price of gold stays flat over time, these ETFs always lose money. That is because if the price of gold does not go up, then the costs the fund has managing the assets slowly erode the fund’s value, so these funds require gold to go up in price or you actually lose your investment. 1. Gold Deposits / Certificates - Basically you find a legitimate, trustworthy company that warrants you are buying the right to _specific pieces of physical gold_ that are stored in a hardened, insured facility. On the internet the deep-end Gold Bugs think these are the equivalent of funny money, but in reality if you do your research properly you can invest in these with a high degree of confidence. However it costs the company money to insure the gold and store the gold in that hardened facility. What this means is, just like the Gold ETF, if the price of gold were to stay flat you would lose money over time, because you have to pay a monthly fee for the storage of the gold. Typically the fee can be around 1% of your holdings. Gold certificates can also be unallocated, which means you are promised your gold when you ask to take delivery of it, but you are _not_ actually buying a certificate granting you ownership to a specific, numbered gold bar. This means the bank is not required to maintain enough gold to cover the deposits of everyone, and can use that float for its own purposes. (This is the same as banks and deposit accounts in currency, banks do not have enough money on hand if every single depositor withdrew at the same time.) This worries post-apocalyptic people because they imagine an immediate run on the bank would happen in the case of a catastrophe. Unallocated certificates are typically cheaper though in terms of your costs. Now, with any gold certificate worth buying you have the right to **take delivery** , this means that you can get your hands on your physical gold whenever you wish. Where some people get scared is they fear these banks issuing gold certificates are fraudulent etc. Some gold certificates are out there that are government backed, for example the Perth Mint of Australia issues gold certificates I would argue are very, very trustworthy. I believe some Swiss banks do as well. Note that with unallocated gold certificates, since you did not buy the rights to a specific numbered bar you may have to pay “fabrication” costs when you make a withdrawal. Meaning they are charging you the cost of “making” gold bars at the weight you are pulling out, since the bank has to pay a fee to a smelter or what have you to turn larger gold bars into small gold bars. 1. Direct Physical Investment - With this you just order gold and take delivery of it right away. You can buy from various local businesses as well, virtually any coin shop will have a sideline business (that is probably their primary business in fact) selling gold and silver coins to investors. Generally if you shop online try to shop around and find the price that gives you the closest price per ounce of gold to the spot price. If the spot price is $1800 it will simply not be possible to find say, a 1 oz gold coin for $1800. The people selling you the gold make money on top of the price of gold itself, that’s just how it is. Typically the larger the unit of gold you buy, the closer you come to the spot price. 1/25 oz gold coins may be had right now for $120 or so, but 1/25 oz of gold is only worth about $72 as of yesterday. A 1 oz gold coin you can get for around $1900, and the price of on 1 oz is around 1780 right now. That’s around a 6.7% markup on 1780. But the markup on that $72 1/25 oz coin is $48, around 66% which is a significant premium. Never buy “proof sets” or any gold coin that has collector’s value. You pay a premium over the price of gold for that. The collector’s proof sets come with nice little boxes and etc, you don’t want that. You just want coins. A local coin dealer will have some coins like this for you, and you should definitely check them out. Some online dealers have special programs where you just say “I want a 1 oz gold coin” and you don’t say _what kind_ that means you might get a 1 oz American Eagle, an Austria Philharmonic 1 oz, a Krugerrand, an Australian Mint coin etc. Essentially because you don’t care what the coin is, you can get it for a little closer to spot gold than you can by asking/buying specific issue. Gold bars in 1oz and larger sizes, as long as they aren’t collector’s items with special designs, tend to come closer to spot price than coins. The larger the bar, the closer to spot. [Next page](https://boards.straightdope.com/t/when-investing-in-gold/592065.md?page=2)