Thursday 18 April 2024

Gold: a very traditional debating point

It's been a very long time since we last ran a thread on gold - it seems to be this one from 2015, when CU wrote: Gold hits a five year low; a positive message?

Well, turned out 2015 was not just a five-year low, it was a turning point, with gold on a rising trend thereafter,  There was a high in July 2020;  Russia's invasion of Ukraine didn't seem to register much; and the 2020 peak has been surpassed comfortably all this year.  Somebody will doubtless have a chart-based view: and I'd note that many key commodities seemed to have turned a corner just recently (certainly the energy-related ones I look at). 

Given that the gold market has many of the hallmarks** of a fair & easy place to invest and trade - deep liquidity; transparency; security (if you don't get suckered by the wrong platform) - the old discussion-points bear dusting off.  Do we have here the perfect hedge against Bad News?   That tends to be my way of looking at it.  Was 2015 a good year for news?  There's certainly a load of grim tidings circulating this year.  Of course, some folk view gold like others see Bitcoin - a market phenomenon with plenty of emotion & sentiment surrounding it, but nothing to take seriously.

What do we think?  Over to t'readership.



** sorry about that


Anonymous said...

Big driver of gold price is central bank purchases apparently. Probably because quite a lot of the central banks are wondering how safe their dollars or euros are if they support the wrong team.

dearieme said...

I saw some IHT-evasion advice the other day: get your dentist to give you lots of gold crowns and then tell your children to ensure that your teeth are extracted and handed over to them.

I think we might settle for some Jimmy O'goblins stored at the Royal Mint. (Unless someone can use personal experience to recommend a commercial storer/vaulter/safety deposit hirer.)

Anonymous said...

Dearieme, I suppose it is one way to ensure no one nicks your savings too!

Matt said...

Lots of liquidity in the paper form but as Anonymous said in the first post, it's only yours if you have physical possession.

If the SHTF and you want to put in a call on your paper gold, what chance of actually getting it?

Nick Drew said...

If you don't trust property law, the banking system etc, then where to put your gold is the least of your problems!

Personally - and I stress this: I'm not qualified to make recommendations, DYODD etc etc - I have used BullionVault. You own the stuff that's in your name, and it's in a vault. Physical only. Never had the slightest problem and never heard anything adverse.

Still, it ain't difficult to come up with doom-laden scenarios ... (they'd all be just as bad for any other fungible asset, of course, including under-the-bed). We've all lived through the financial crisis. Personally, the biggest hit I've ever taken was f*ck*n' Equitable Life, for which I blame f*ck*n Gordon Brown. But am I bitter ?

Personally I wouldn't go ETF - purely paper, and the risks are materially greater. There are hybrids that have intermediate risk profiles, too

Anonymous said...

Isn't there VAT on silver? What about platinum?

Anomalous Cowshed said...

Central bank buying? May be, may be not;

That's 2018, Sears, Walmart, Costco.

BlokeInBrum said...

I believe that the retail jewellery market is the normally the biggest driver worldwide of the gold price - with the Indian wedding season playing a big part of that.

However, central bank purchases have been rapidly increasing the last couple of years, with the majority being purchased by the Peoples Bank of China and next up, the National Bank of Poland!

Obviously lots of people are thinking that we're in for a loooong period of high inflation and uncertainty.

For retail investors, the attraction of gold is the peace of mind of having a physical thing which has had an historical track record of maintaining value.

I personally can't see the worth in buying gold only to take possession of a piece of paper saying that someone, somewhere, is keeping hold of it and will exchange for said piece of paper when you want.

eg. Look at the problems the Germans faced when they wanted to repatriate their gold from the Federal Reserve Bank in New York.

Matt said...

Physical gold isn't much use in the real world. It's too large a denomination in any quantity (a sovereign is getting on for £500) and most people will lack the capability to assay it.

Nick Drew said...

... most people will lack the capability to assay it

but in any big port-town souk, there will be a gold bazaar - and those guys certainly can assay it

the quantities on offer are mind blowing

Anonymous said...

Nick says "If you don't trust property law, the banking system etc, then where to put your gold is the least of your problems!"
Laws are made by man.
In 1933 FDR made ownership of gold illegal for the general public and kindly offered to buy it back at a price fixed by himself.
I hold my gold in Sovereigns as there is at present no CGT on coin of the realm. No doubt this could change.