<p>A reasonable approach on gold would be to view it as insurance and some number under ten percent would take care of that issue. My perspective is that it’s something that you buy in case things go really bad. If things don’t go really bad, then you just pass your precious metals to your heirs. Hopefully they will never need it. No different from handing down furniture, clothes, a car, etc. But it is more compact and there is some level of universal value to the metal.</p>
<p>For speculation, you can look at the paper stuff. Stocks of gold miners, exploration companies, futures contracts, bullion shares, etc. They all have the problem of the liability of someone else but the paper stuff is liquid.</p>
<p>^^ I prefer stocks of miners myself … personal preference, since I know what drives their stock prices. It’s a mystery to me what drives bullion prices. For those who think gold looks a little pricey at present, here are a number of authorities who see $5000/oz gold ahead (besides our friends at Ft. Knox of course):</p>
<p>^ Doc - My gold-bug friends are certain that the authorities you reference are W-R-O-N-G !!! (It’s just really disappointing that these friends were born prescient … whereas you and I apparently were not.)</p>
<p>The authorities have to say that the price of commodities should be lower. Higher commodity prices are a sign that governments and central bankers are failing at their job. It can also stir unrest - would folks be happy with $5 gasoline this summer? That gold should be lower is mom and apple pie. They can’t say anything else. It’s like wanting a higher real-estate market and higher home-ownership rates.</p>
<p>What they think in private - well, that’s another matter. What they invest in in private, that’s interesting.</p>
<p>One can debate the merits of one authority over another and perhaps some here consider themselves investment authorities. My experience is that there is no such thing.</p>
<p>Some years back (in the 80s, I believe), I read that fashions in investments typically run in five to ten year cycles. Gold/silver was fashionable in the early 80s and is fashionable again; then we had collectibles (art, rugs, etc.); then we had stocks; then we had real estate; then we had bonds, and now gold is up again. Now, I’m not sure how valid this theory is, but thinking about investments as “what’s fashionable now?” has certainly saved me from some serious mistakes. (Think, for example, of when tulips were the fashionable investment in Holland… How’d that work out?)</p>
<p>The last time I bought silver was when silver was $8/ounce. Last time I bought gold was $412/ounce. I have the physical that I need and just trade the miners or bullion shares.</p>
<p>The more common approaches to buying silver are 1-ounce rounds, 1-ounce silver coins (US Eagles, Canadian Silver Maples, etc.), ten ounce bars, 100 ounce bars, tubes of ten or twenty ounces. Some folks like the 500 oz Treasury boxes - it’s a big, green plastic box with tubes of 20 oz US silver eagles. One other common approach is called junk silver - basically dimes and quarters from before 1964. I’ve purchased my silver from local dealers - it’s easy where I am as there are no sales taxes to pay. I’d generally recommend doing the same thing if you don’t have to pay extra for it. It supports your local coin dealer and you might want to sell it back there in the future.</p>
<p>There may be some accounting work that you have to do with the new healthcare law on reporting transactions. if they are over a certain amount. I know that buying one ounce of gold will trigger the reporting requirement. I don’t know if the buyer or the seller has to do it.</p>
<p>Silver tarnishes very easily. If you take a silver eagle or 100 oz bar and leave it out in the open, it will start tarnishing fairly quickly - best thing to do is to seal it in an airtight or near airtight container.</p>
<p>I do not know what premiums are like these days as I haven’t purchased it in a long time. In the old days, premiums weren’t bad. Sometimes it felt like there were negative premiums. I try to buy on dips or sharp corrections (this is anything in general) for long-term holds.</p>
<p>The cost of production of tulips is trivial though.</p>
<p>An ounce of gold represents the mining and refining of four tons of ore and that’s of ore with a good quantity of gold in it. The cost of an iPad or MacBook Pro represents millions of lines of software coding, work in electrical enginnering and interface design and the complexities of chip design. Pretty easy to justify costs of those electronic devices even as they will get cheaper and cheaper as technology improves to reduce development and production costs. I don’t think that you can say the same thing for mining gold.</p>
<p>Not fully understanding why Silver is so inexpensive than gold. </p>
<p>The recent ring I bought was 4x the silver content, $15. (I buy for the art and metal content a far second.) Last week, the grand Armory garage sale was advertising sterling rings for their silver content.</p>
<p>I told my coffee/bike partner who has substantial amount of a gold mutual fund to dollar- cost-average- out, when the stuff hits new highs. And if he likes the fund a lot then he should repurchase when the fund is lower. His problem is that he is a hoarder/value purchaser and refuses to let something go -for this gold fund, more than 25 years.</p>
<p>He also keeps raising his price targets. His current target is 25% above current pricing.</p>
<p>The gold to silver ratio has fluctuated between about 47 to 87.5 over the last three years (I don’t have a subscription account at stockcharts and that’s all I can see with their free access).</p>
<p>A look at Silver Wheaton’s cash costs across their mines shows costs around $3.98 per ounce. I think that Goldcorp’s costs are around $258/ounce for gold. So you have a production cost ratio of about 65 which is well within the range for the price ratio. I generally don’tlook at jewelry but the time I looked in the past told me that the markups on silver jewelry over the price of silver is truly ridiculous.</p>
<p>The picture on that page is bizarre. In general, you wouldn’t mix gold and silver coins in a bag as the silver could scratch the gold coins. $50,000? I think that a lot of hearts are going to be broken.</p>
<p>^^ On the other hand, should gold revert to the mean of the most favorable 10-year historical period … well that would require a 40% decline from current levels. </p>
<p>As I’ve stated previously, I really don’t have a horse in this race. But I do find it interesting how individuals respond to whatever investment happens to be doing well at the moment.</p>