A friend and I got to chatting about investments over lunch recently. After lamenting about the stock market, 401(k)s, and so forth, we talked a bit about precious metals. Like most people whom I've talked with about this subject — including myself, I suppose — we wish that we would have bought more $300 gold and $5 silver. As of today, gold is almost six times that, and silver is seven times that. Oh well: it's not ten years ago anymore.
But my friend has an interest in getting some gold. (Or at least that's the impression I got from him.)
How to maneuver out of being goldless
My friend cringed when I said that gold was now around $1,800/ounce. So there's a mental block to buying now. What's more, there's a mental barrier to buying regardless of which way it goes. If it goes higher, then it will seem foolish to buy: “If I'm not supposed to buy high, then I'm definitely not supposed to buy as it's moving even higher.” If it goes lower, it won't go low enough: “Just $50 lower and I'll buy. It's been that low before.”
As with any investment, once the financial barriers are gone — that is, you have enough money to buy if you want to — the only other barriers are mental. If left up, these barriers are paralyzing. Gary North has talked about a solution to break through the paralysis.
Before I talk about this, I assume that you want to buy gold, but are hesitating to pull the trigger. This isn't meant to convince you to buy gold if you don't want to. It's up to you to evaluate whether you're at that point or not. 🙂
Here the trick. Whatever the current spot price of gold is (basically its melt value) commit to buy some when it either goes up $50 per ounce, or goes down $50 ounce. It will do one or the other at some point. When it does, pull the trigger.
Once you have some gold in hand, you'll be glad you have it regardless of whether it went up or down. Here's how. If it went up, then you're no longer regretting not owning any, and you'll be glad you have some when it goes higher. (If it doesn't ever go higher again after you buy it, then you can come back to scold me. I don't expect to be scolded much.) If it goes lower, then you not only have the gold, but you also got it for $50/ounce less than when you made the commitment.
It's a win either way. Happy golding if you're on the fence! 😉
So, what will your friend do with his gold after he buys it?
My Dad was always worried about doomsday scenarios (he did after all live through the development of the nuclear bomb, WWII and the cold war!). He bought gold and silver to keep at home in case currency ever totally lost it’s values – so he could use it to buy basic necessities.
You may not know that at one point in Germany, people were taking wheelbarrows full of cash to the store to try to buy stuff – because the currency was so worthless!
I don’t own gold planning buy via gold ETF. Everybody around is predicting a gold bubble burst.
I wonder what would happen if after buying at $50 high, it goes down by more than $100 (just happened yesterday)?
I haven’t invested in gold myself, just never interested me. My friend’s father bought a bunch of gold coins 30 years ago though and held on to them. He made quite a nice profit when he sold them last year! -Sydney
Like investing in anything it’s always going to be a gamble. How long until the ceiling is reached, or on the other end, how far will it drop if there is indeed a “bubble”. Sometimes, wanting to own just isn’t a good enough reason to buy, just like any other purchase.
Gold and/or silver are best viewed as insurance against financial uncertainty. No matter how many times I urge my clients to take the long view, I still hear them make references to high prices in the “near” future. This , to me, is a Freudian slip. They are acting like speculators in stocks, forgetting that the price in the near future is irrelevant in the long view.
The only gold I have is my jewelry. It is not much. I don’t know that I can even afford to buy gold today. Or maybe, I can’t afford not to.
I don’t have much gold and never thought of investing. If I could afford it, I probably would buy some – keeping your ‘scolding’ incentive in the back of my mind!
I actually happened to buy some gold back in 2008 and it doubled in price.
However on your way to financial independence, particularly for young lads I would not advise to buy it.
Unless you feel very rich. You can hedge your welath by investing in metals but never earn on it.
Perhaps another way for your friend to own gold would be through buying shares of major gold companies, like Barrick or Newmont. Or silver, the “poor man’s gold”.
There is good reason to consider investing in gold. It can protect your wealth in the event of an economic collapse. Some people find it too uncomfortable to even consider the possibility. Those who can stomach it, there is plenty of cause for concern. Do your own research. If you can afford gold or silver, it is a good way to protect your wealth. If you can’t afford it, invest in personal debt freedom and self-sufficiency.
Physical Gold is a fantastic long term investment. If you look at the 10 year data on the historical gold price chart you will see the upward climb of physical gold bullion.
While gold stock are volatile, gold bullion has a steady long term climb as demand increases with limited supply.
https://www.cachemetals.com/charts/historical-gold