I wrote all this a while ago, but I thought I'd post it here in the hope that it will help anyone just starting to think about buying gold/silver.


If you want to buy some but have the company you buy it from look after it for you, then the options are:

http://www.goldmoney.com/
Gold Money (James Turk):
Gold = 3.39% over £6k, Silver = 5.25% for <£6k, 4.99% for more.
There is no storage fee for gold in the London vault; only a monthly account fee. A storage fee of 0.24% per annum (2 basis points per month) is charged for gold stored in the Zurich vault, with a minimum fee of 0.1 grams of gold per month.
If you own silver, a storage fee is deducted monthly from the amount of silver in your account. The fee is 0.99% per annum (0.0825% per month), with a minimum fee of 0.2 ounces of silver per month.

http://www.bullionvault.com/
Bullion Vault is cheaper, but don't do silver. Has a more complicated system, but is more flexible.
Charges: http://www.bullionvault.com/help/QuickStart.html (from 2.06% over 2 years)

Another option is The Perth Mint Australia.
http://www.perthmint.com.au/ig_metals.aspx
They do various options. And will store for you and do delivery later if you wish.
Depending on which country you are in, you may need to go through one of the listed brokers in your country.

http://www.newzealandmint.com/



If you want to purchase gold and have it delivered:

In the UK

http://www.atsbullion.com/
In the UK, give these guys a call - I have used them and they are VERY professional and very competitive on pricing for 1 oz bullion coins - you can order over the phone with a debit card and they mail them to you discreetly and insured!!!!

Baird and Co
Prices of coins: http://www.goldline.co.uk/bullionCoinsPage.page

Coin Invest Direct
http://www.coininvestdirect.com/main.php
Prices in GBP: http://www.coininvestdirect.com/main.php?a...rate=pound_rate

Tax Free Gold
http://www.taxfreegold.co.uk/

In NZ

If you are in NZ, I think the best option is:
http://www.newzealandmint.com/
The best option is 24ct gold kiwi coins. No GST, and they charge from 6.5% downwards depending on quantity. But the good thing is they buy them back at the spot price.
So coins work out cheaper than bars, and if you have to use them, more saleable than bars.
http://www.newzealandmint.com
Tel. 0800 696 468 (0800 NZ MINT)


Pensions
Yes you can put pension money into gold.
Here is one example for the UK:

Gold SIPP - Gold Pension
http://www.goldmoney.com/en/gold-sipp.html



IMO if you want to do more trading in gold, then consider ETFs
But, IMO these are not the safe haven that having allocated physical gold is.
You will need to check the prospectus carefully to see what you are actually buying.
Here are some examples:
http://www.etfsecurities.com/en/updates/do..._Fact_sheet.pdf


Reading
IMO you should only invest in what you understand. So inform yourself before doing anything.

For daily information from an experienced gold expert.
http://www.jsmineset.com/

FUNDAMENTAL REASONS TO OWN GOLD
BY: JOHN EMBRY, CHIEF INVESTMENT STRATEGIST OF SPROTT ASSET MANAGEMENT INC. &
SPROTT GOLD AND PRECIOUS MINERALS FUND.
http://www.sprott.com/pdf/reasons_to_own_gold.pdf

This is a very long but very informative read about gold.
http://www.gata.org/files/RedburnPartnersG..._11-12-2007.pdf

Gold Is Money - Deal with It! - Remarks by Robert K. Landis to the Association of Mining Analysts, London, England, October 2, 2003
http://www.goldensextant.com/LandisAMA.html

For daily news and great articles:
http://www.marketoracle.co.uk/Topic3.html

http://www.dollarcollapse.com/

For a good background read, and good info on BV (unfortunately BV Watch has closed. You may be able to find cached versions)
Bullion Vault Watch - discusses the different ways to sown gold, including whether Bullion Vault is safe, including charts of how much gold they have.
http://bullionvaultwatch.blogspot.com/
This article: http://bullionvaultwatch.blogspot.com/2008...vault-safe.html
Found from this iTulip thread: http://www.itulip.com/forums/showthread.php?t=3143

You can get the latest prices from:

http://www.bullionvault.com/gold-price-chart.do


From: http://www.kitco.com/market/bp_charts.html

Neat multi-currency chart
http://www.kitco.com/gold_currency/charts.htm?gbp


From http://www.kitco.com/images/live/gold.gif

And Silver in US$:

From: http://www.kitco.com/images/live/silver.gif


At the moment 1x 1oz coin costs around £460 or NZ$1200.
So it's possible to invest say 10 or 20% of your liquid portfolio in gold, how ever much money you have.

IMO think about buying gold like buying another currency. There is an exchange rate between all the paper currencies and gold. That's why the price of gold fluctuates relative to the paper currencies.
Gold is a currency that cannot be printed, and pays no interest.

Also, please remember the price goes up and down. Even during a gold bull market, there will be large fluctuations in the price. IMO buy and hold, and ignore the dips in between.

Why buy gold, and is now a good time?

Firstly, things go in cycles. No single investment category, whether it be houses, stock, antiques or gold are a good or the best investment all the time.
The easiest way to see what is the best investment at any one time is to look back in history and see what you should have bought LOL.
Hindsight works 100%

I think the first thing to understand is that all the currencies of the world are paper money. They are not backed by real assets. If you collected all the money in the world each year, you'd find each year there was more money.
Imagine if you were playing Monopoly and rather than playing with a fixed stack of notes, the banker handed out a few notes to everyone each day. What would happen to the price of the houses on the board? With everyone having more notes to play with, the prices would rise.

That is inflation of the amount of money creating price inflation.

In order to try and save the US, the Fed is handing out more and more money. Just like they did last time, and the time before that. So what you ask, that's just the US?
Well, the currencies of the world are linked, and the other central banks are forced to do the same.

So, you say the price of gold is at an all time high. Why has it gone up? Because the paper currencies of the world have gone down in value. You need more of the stuff to buy stiff now.
So yes, gold is at an all time high.
But that doesn't take any account of inflation!
That would be like saying "15 Melrose Place was £82,500 in 1980, and it has just topped that price today". You would be stunned if house prices were the same today as they were in 1980.
But that is what has happened to the gold price.

What you need to do is work out what the gold price would be today if it had simply gone up with inflation. The fiddles official ones or the real inflation
In real terms, the price of gold is way way below the previous peak. It is still at the "15 Melrose Place 1980" price.

Why should the price of gold go up?
Because unlike every other currency in the world (they are all paper fiat currencies as described above), gold is the only currency that cannot be 'printed'. There is a very limited amount of it.
It is a perfect currency because it does not burn, does not rust, can be divided, combined. It lasts. And it is rare.
The fact is, every time there is fear of a currency collapse, or fear of a stock market collapse, or fear of a global economic collapse, people flee to the one historical safe haven. And that is gold.
So any debate about "gold being a relic" etc is irrelevant. People do just flee to the safe haven that is gold.

Because there is a very limited quantity of gold in the world, and the amount coming from mines is very small compared with the amount already mined, even a small flight to safety creates a huge price increase. Likewise of course, if people leave gold when things become 'safe' the price can also fall a lot.

So how much gold should you buy?
Ultimately that is up to you.
But if you are seeking a safe haven, then you can do some simple sums to work out what % of your liquid portfolio makes sense being in gold.
Your liquid portfolio is the amount of 'cash' you have. So it excludes money put into a house.

Suppose you put 10% into gold. And suppose all the global currencies fail. The value of that gold will rocket upwards. Your 10% gold may well be worth at least as much as your entire lost money.

But what about if just your currency drops significantly ?
The US$ is dropping because the interest rates are being cut. And chances are will be cut again and again in an attempt to save the US economy.
The GBP is also dropping. Same problems, but behind the US.
In a less severe economic situation how would your 10% do?
Well, as the GBP or US$ falls, the price of gold in those currencies will rise.
Even the rising Yen will probably do less well than gold, for exactly the same reasons. An increase in the amount of paper money, making things more expensive.

If not gold what?
Exactly.
What else can you buy when currencies are falling in value? You could buy tins of baked beans etc. But they cost more to store and they go off.
That is why gold is such a good safe haven. It is small and doesn't perish. That makes it cheap to store. And it is easy to trade. The whole world trades gold.

Rather than looking at the gold price in pounds or US$ ignoring inflation, try looking at the price adjusted for inflation.

The inflation adjusted price is the purple line. It doesn't look so high now does it



There is a lot written about gold, so you don't need to take my word for it. And you shouldn't.
As I said, you need to inform yourself, and make up your own mind.

If things turn bad, or really bad, then gold will rocket. 100% guaranteed.
The worst thing for gold is if the world economy is doing really well, and everyone is happily piling their money into one of the fiat currency booms, like stock, housing, tulips or carbon credits.

Low interest rates and high inflation are very very good for gold.

What tends to happen is that people are very happy and invested in whatever is the current boom.
Houses in the US, UK, NZ etc have been one of those booms.

When things start to turn, people start to feel uneasy. The "worry level" is quite low. I have tested this elsewhere, and it is still relatively low.
With that level of worry, a small number of people decide " a bit of gold wouldn't do any harm".
The price of gold rises a little.

Then more bad news arrives, and the worry level rises. Those who have some gold think"Hmm, the price has gone up, but I'm worried enough to pay that for a bit more". Others start to get worried enough to buy for the first time.
The price of gold rises a little.

This continues as the news gets worse and worse.
On the way, good news comes out. The price retreats some as people sell and take profits or no longer think they need so much gold, and fear the price will fall.
But, the next bit of bad news pushes demand back up, and the price rises.

You cannot win this game. Your options are:
1. Buy no gold. And watch as the price rises, fretting that you have no safe haven.
2. Buy some, and continue buying as the price rises. You end up paying more and missing some of the gains, but maybe you don't make such a big mistake if things suddenly turn out rosy.
3. You buy all the gold you can right at the start. You make the most, but risk the most too, because you only know how things will turn out later. The first signs of bad news could be wrong.


Another point is this. It's nearly always a bad idea to put all your eggs in one basket.
That normally applies to buying stocks or putting money in a bank. You spread it around. If one fails, you don't lose the lot.
But that also applies to currencies and categories of investment.
If you have all your cash in pounds, then you are gambling on that one currency. Likewise NZ$, US$ etc.
You could view gold as an alternate currency which behaves in the inverse to the paper currencies. As such it is a good way to diversify.

Feel free to ask questions. I will try and answer any, or provide links to support what I say.
Good luck.

PS It is better to panic first, than be the last one fleeing

Should I put all my cash into gold then? I could make a fortune

I doubt many informed people would suggest putting that great a percentage into gold.
Whatever potential gain you have convinced yourself you can make, don't do it.
Nothing is a sure bet. Nothing.

The idea of having say 10% in gold is this.
If the price collapses completely, to zero (rather unlikely), then you lose 10% of your money.
On the other hand, if you lose the 90% in a global financial collapse, the 10% will save you, and be worth at least what you had.
You can view it as an insurance policy, which might well may out a bonus if you get the timing right.

And now does seem to be one of those once in a century times.

I haven't mentioned selling yet.
Firstly, I would not recommend getting scared at every price drop. You have to think of this as a long-term investment. And that means years not days/weeks.
Like you buy a years insurance for your house.

Secondly, when the price has gone up, and things are starting to look safer, sell some. Enough so that if the price drops back, you are still in profit. That way after you've sold enough, you can't lose with the rest if it becomes worthless.
Don't try and hang on for the very top price and maximum gain. You won't make it.
Don't be greedy.

I wouldn't be posting this if I wasn't personally very concerned about the state of the worlds banks and the prospects for the world economy. I have probably read a lot more than most people, simply because I've made the time for it, and so I am probably ahead of the curve on the worry level.
If I am wrong, then with 10% gold, you won't have much to complain about.
But, if I am right, I might just have given you the incentive to safe guard your future.
In which case, I'll happily receive 1x 24ct gold coin in thanks LOL

This isn't strictly about gold, but is a very good example of what creates fear, and a flight to a safe haven.
I'm almost speechless when I look at this chart:



US - Bank Reserves Go Negative
http://globaleconomicanalysis.blogspot.com...o-negative.html



Next months data will be here:

http://www.federalreserve.gov/releases/h3/Current/

US Net Free or Borrowed Reserves of Depository Institutions
http://research.stlouisfed.org/fred2/data/NFORBRES.txt

This article covers things quite well for the current state of things:

The Time For Gold Is Now!
http://www.marketoracle.co.uk/Article3529.html



And this chart shows predictions for the price of gold for various "flights to gold".
You can see what might happen if just 1% of US household finance went into gold.

This is where that chart comes from:

There's Just Not Enough Gold; Modeling A Dollar Flight To Gold
http://www.kitco.com/ind/Dillon/jan172008.html

Cartel Manipulation

If you invest in gold, you really need to understand how the market works, and how the price is manipulated by central banks.

This is one place to read about it: http://www.gata.org/

And that means the price has been held artificially low so that the inflation of money isn't so noticeable. The big and interesting question is "can they keep the price low, or will they run out of gold or the ability to hold it down?"
There are some signs that they are starting to fail. Like the price rising and the withdrawal of sale of gold coins from the US Mint.

Anyway, here's an article on manipulation etc:

Half of gold in central banks gone?
Watchdog: 'We want to expose and stop the manipulation'
http://www.worldnetdaily.com/news/article....RTICLE_ID=59935


By the way, if you think gold is an historic relic, and people are stupid to even contemplate buying some, ask yourself this. Why do governments hold gold ?
If you can explain that, please do

See also this thread on here:

Manipulation in the Gold/Silver Market
http://www.greenenergyinvestors.com/index.php?showtopic=3214

How Do We Know that Central Banks Rig the Gold Market? They Told Us. - by Chris Powell
http://www.gata.org/node/4237



So, when buying, if you are lucky, buy in the dips caused by intervention. Take advantage of it if you can.

Reg Howe - Current MPEG Commentary - Gold Derivatives: Hitting the IceBerg
http://www.gata.org/node/4240



You see, gold is not such a relic is it.

I think this more or less completes the information on the manipulation of the gold price, and explains very well how the gold market works.

Whiskey & Gunpowder Special Report: Gold Carry Trade
The Real Story Behind the True Gold Bull Market
http://www.whiskeyandgunpowder.com/Report/goldcarry.html

Jim thinks a greater % of gold is OK ?(



He is probably right in today's climate.

I think this is an excellent article, and covers many questions on why holding gold is a good idea.
Including the old inflation/deflation debate.

This website is exceptional.

A must read

Contrarian Investors’ Journal
http://cij.inspiriting.com/

It covers economic matters, and gold, with many excellent articles.
It certainly stand out from the crowd.

Why should you invest in gold?
http://cij.inspiriting.com/?page_id=296

Should you hold gold or cash in times of deflation?
http://cij.inspiriting.com/?p=275

I think it would be good if we can keep this thread as a beginners guide ie something which answers most of the common questions someone new to the idea would ask.

If you have any suggestions for content, please post it, and I'll edit it into the starting posts,
(it would be good if this was a Wiki....but alas).

WORTH a look: especially for Beginners

MarketClub's animated Gold technical lecture
http://broadcast.ino.com/education/gold_cl..._pattern/?we711

"The market really wants to move higher... $1,020, possibly higher"

- Adam Hewson

Hi Steve,

You have mentioned lots of quality reading and research on gold, what are your thoughts on Silver? I'm more leveraged in silver than gold, I guess the attraction is that if silver is much cheaper than gold there is more room for it to maneuver on a breakout. At least I hope silver will shadow golds gains whatever happens.

The dual usage of silver in both industrial and jewelery is a plus, the way I understand it is that silver has some unique properties that could prove useful for future technology too, such as replacing platinum in catalytic converters (http://www.reuters.com/article/rbssIndustr...T26231020080423). I think Goldfinger brought this Catalyst subject up before, but something turned out to be a bit of a damp squib about it.. need to find the post.

I've read some posters speak of silvers use in Solar panel construction, however I have not been able to find out much about this via my own googling.


In regards to the supply of freshly mined silver, this old article suggests that new silver is often a by-product of mining other metals, and therefore is it is quite difficult to increase the mining output. Although with the recent general rise in commodities, I guess people will be doing a lot more mining for anything that comes out.


If market manipulation applies to the price of gold, should it not also apply to the price of silver too? I would imagine that silver would be a much tamer beast to control than the gold bull. If the SHTF and both metals are unleashed, perhaps silver would have more lost ground to catch up on.

Just some of my random thoughts on the matter, not very well researched at all, but fun to think about! If would be extremley interested in your and others thoughts on the matter.

Edit: I've re-read the silver thread, alot of good stuff in there! Im still interested in your thoughts as just a quick summary of how you see the current silver position

Hi.
Please don't assume just because I write a lot that I'm any sort of expert.
I started off with mainly gold, with a very small percentage of silver "as a bit of a gamble". Since then I've learnt more about silver, and:
1. Feel comfortable with the volatility ie I'm happy to see it drop 20% knowing I won't panic and sell at the bottom. The recent drop being a good example
2. Feel that silver has great prospects, and so have a much larger percentage in silver now.

Because I'm not keen on selling gold or silver at what look like overbought prices, I am now using a strategy which involved simply changing the gold/silver ratio. So when the price drops, I load up on silver, and when the price starts looking like it will drop, I'll swap most if not all the silver for gold.
That way I hope to take the escalator up on silver and the stairs down on gold
It seems to me a mid-way point between buy and hold and trading in and out which I don't feel at all comfortable with (that FIAT currency and all )

I think the market manipulation is slightly different in gold & silver, from what I've read. They seem to talk about naked shorts in silver which I don't think they suggest in gold.

The fact I posted all my writing on gold and forgot about silver I think says something. Silver if an oft forgotten metal. And I still tend to look at gold first.

OK, here comes some things I've written before on silver:

SILVER

(This was written some time ago)

Silver is more volatile. So bigger gains, but to avoid suicide, IMO only part of your PM holdings.
Also, the public attention is on gold, and I've read that silver lags gold because the attention starts on gold, and then when that's gone up, people look for a cheaper alternative. And that's when silver really rockets.
I've also read an article which suggests silver is now less owned, and maybe due a comeback.
The potential is HUGE. So IMO worth a punt of say 10% to 20% of your PM portfolio.


Deep Into The Danger Zone
By: Theodore Butler & Israel Friedman
http://news.silverseek.com/TedButler/1203445598.php


Please sit down before reading these numbers.

Gold Breaks New Record - Public Waking Up!
http://www.marketoracle.co.uk/Article3775.html



That silver prediction sounds completely outrageous.
Silver is currently ~$18/oz. $600/oz is 33x more !!!
So $10,000 would become........................................... $330,000


Why the silver price is set to soar
http://www.moneyweek.com/file/28810/why-th...et-to-soar.html

Demand Building for Gold and Silver as Currency of Legal Tender for Merchant Services
http://www.marketoracle.co.uk/Article3833.html


This might be one of the definitive articles. It certainly covers a lot of the main points.

This article covers the long-term gold/silver ratio.
And the use and supply of silver.
It was written in 2003.

THE GOLD/SILVER RATIO STRATEGY
& THE CASE FOR SILVER
Franklin Sanders
http://www.gold-eagle.com/editorials_03/sanders030703.html







That's not a misprint. 90c (yes cents) to $50 (dollars).







This chart shows the gold/silver ratio. The mean is 31.32.





This article suggests silver is VERY undervalued compared with gold.
Just check out the per capita amount of silver in the 2nd table !

The Real Gold/Silver Ratio Part II
By: Theodore Butler
From 2006.
http://news.silverseek.com/TedButler/1161705933.php

I'll try reproducing it here:









This is a great chart:



This is a 600 year graph of silver prices and silver/gold ratio from 1344 to 1998 as shown in 1998 dollars.

from: http://goldinfo.net/silver600.html


The Real Deal
By: Theodore Butler
26 February, 2008
http://news.silverseek.com/TedButler/1204056208.php

Warnings about not buying REAL ALLOCATED silver. Silver you know exists, and is owned by you.

All In

By: Theodore Butler and Israel Friedman
24 March, 2008
http://news.silverseek.com/TedButler/1206378069.php




And I'll emphasis this bit:

Again, for manipulation see this thread:

Manipulation in the Gold/Silver Market
http://www.greenenergyinvestors.com/index.php?showtopic=3214

Perfect for me, only just getting to grips with buying the physical stuff, other than in a shop

thanks for taking the time Steve

Riggers

No worries Riggers
I think it could be a lot better, but I don't really have time right now.
Maybe it'll get better as new things come up.

One obvious thing (which I know very little about) would be a simple guide to buying coins. Where, what, etc etc
If anyone wants to write one

Great thread Steve.

I hold a small amount in the ASX listed GOLD BULLION SECURITIES LIMITED (GOL) fund. I presume this is classed as an ETF. They hold reserves to match investor funds so would seem safe although I am considering using the Perth Mint next time.

http://www.asx.com.au/asx/research/Company...roup=NO#details

I know a little bit about coins so I have given it a go http://www.greenenergyinvestors.com/index....ost&p=49117

This is a superb thread, Steve.

Loving your work here Steve, You're a most helpful chap.

I'm glad my efforts are liked. I worry about posting too much. I don't want to be too 'in your face' on here and annoy anyone. Thanks for your kind words.

------------------

I think this thread is useful for anyone new to gold/silver investment:

URGENT I need to help my parents!
http://www.greenenergyinvestors.com/index.php?showtopic=3829

FAQ - And our answers to them

I've just had this question on another forum.
I thought I'd try and collect all such questions, and any answers people post (whether on here or where ever):
Did I get anything wrong ? Or miss anything ?

--------------------------------




I'll try my best. I apologise, I think this may end up a little long......

"Why is demand 16% lower than this time last year?":

OK, when I read that my first question was "where is that number from?" I think you answer that later. More later.

"Why has the price of gold remained relatively low in the past year when compared to successive falls and considering the weakness of the USD?":

Now the answer to this depends upon your world view. There are two. I suggest a read of this:

Gold Is Money - Deal with It!
http://www.goldensextant.com/LandisAMA.html

which explains this as follows:

If you accept the "gold is money" view, then you may also accept the "manipulation of the gold market" views, which will then adequately answer your question. A combination of "They knocked the price down", and natural market movements.
Put simply, gold is in competition with fiat money. One is in limited supply, and has a very long track record, the other, based on nothing but faith, has a track record of less than a century in its current faith-only state.

Loss of faith in fiat money would lead to a loss in the one thing that is required to sustain it. Gold, and any hard asset, is the enemy of the fiat money system.


"Considering most people agree that many financial institutions and households are heavily in debt, who will be the buyers of gold?"

Those with fiat money. Make no mistake, there is a lot of fiat money in the world. A growing amount every year. Buying gold is not limited to the very rich. That is the great thing about it. Unlike fiat money it gives the owner rather more freedom. A gold coin in your pocket cannot be eroded in value by a central bank creating more gold. Unlike fiat money.
Anyone with spare money from their income can choose between putting it into the banking system (the fiat money system), or buying a small amount of gold/silver. With silver at ~US$20/oz, the ability to buy a few silver coins is open to most.

By the way, if you object to the idea that there is a lot of fiat money in the world, ask yourself this. Where does money come from? Google "fractional reserve banking" for a clue
A lot of debt means a lot of money, somewhere.

OK, now onto the fun bit.

"As an indication of the public's interest in gold now, following are the figures published by the U.S. Mint showing the amount of gold sold by the U.S. Mint in the form of "American Eagle" coins bullion sales (in no. of ounces)".

This made me laugh.
Of all the sources of information on the demand for gold, that was the very worst choice.
What they have published is not the demand for gold, but instead the supply of gold from the US Mint.
They are the same I hear you say !!!!
No, they are not. They are only the same if the supply is unlimited, and allowed to match the demand.
Try Googling something like "coin shortages us mint".
The US Mint for some period removed gold coins from sale
Of course the sales were down, they would not sell them !

Now instead, try looking at the numbers for gold from various other more free suppliers.
Try the amount of gold/silver stored by Gold Money.
The amount stored by Bullion Vault.
The amount owned by the gold ETFs

You will find a HUGE demand.

Here is one chart as an example:



An interesting question is "if demand has been so high, why has the price dropped so much?" Answer that one without using manipulation in the answer


I hope that answers your questions OK.
Feel free to ask more. I will try and answer them.
Steve

This is a "god send" for newbies Steve, great thread - just wish you'd done it a few months earlier.
--------------

ETFs

Anyway, cbs7 brought some alternative ETF's to our attention in another thread

I'd like to mention the closed end fund of Central Fund of Canada (CEF) is another option, (approx. 50/50 G&S by value) bought like any other stock quoted on AMEX or TSE. Note: It often trades a few percentage points above NAV, I believe this may be owing to the more favourable tax treatment it has over ETF's for US citizens DYOR. Oddly enough I believe it actually gets a "thumbs up" as a credible fund in James Turk's latest book. I hope he's right, I'm in as part of my diversification strategy. Nearly 100% gold, how's that for diversification "diversification is only for those that don't know what they are investing in" Warren Buffet (or something like that).

I hope you are right. It still feels less than perfect to me.
I hope you don't mind, but I'm going to make your post into the ETF info post, by adding a large header.

PS As you may tell, I am trying to keep this thread as short as possible, with the maximum concentration of information.

You mean you would doubt the great James Turk?



No, actually I guessed you would lift it and put it in your OP with your ETF contribution, no probs either way, what's best for the customer I say

No !!!!!
I meant this thread

I thought not, but I had my doubts since you must get a lot of blood rush to the head being upside down and all that

The two links no longer work - do you have updated ones?
ABB

Bummer

The best I can do right now is:
http://www.google.co.nz/search?hl=en&c...tch&spell=1

This cached version as an example.
http://www.google.co.nz/url?sa=t&ct=cl...Nf4tbN4UdEumzRQ

They seem to be fans, as did the folks at iTulip, which reassures me somewhat.
Thanks
ABB

Thanks Steve, found my way here from the interest.co.nz site - so yes I got your message. The post is very informative and I appreciate the direction as it is always a bit scarey when investing in unfamiliar territory. Aim to invest only enuf so i can buy the small heavily indebted nation in the south pacific that I miss so much. It needs saving from itself really and I think a couple of quid a week into the fund should do it.

Excellent

Welcome to the forum

I've just been checking Bernard's site and wondering whether you'd found my reply. Things do tend to disappear downwards quickly on there.

There is quit a bit on here. I hope you find it interesting.

There are a few others from NZ on here. Either living in NZ or Kiwis overseas.

(I'll remove that huge quote )

The History of Gold

There is a tendency to ignore history. We do so at our peril.
We also tend to think only recent history is relevant. This is misguided.

This is the history of gold:




Jewellery
4000 BC - A culture, centered in what is today Eastern Europe, begins to use gold to fashion decorative objects. The gold was probably mined in the Transylvanian Alps or the Mount Pangaion area in Thrace.

First Use As Money
1500 BC - The immense gold-bearing regions of Nubia make Egypt a wealthy nation, as gold becomes the recognized standard medium of exchange for international trade.
The Shekel, a coin originally weighing 11.3 grams of gold, becomes a standard unit of measure in the Middle East. It contained a naturally occurring alloy called electrum that was approximately two-thirds gold and one-third silver.

China
1091 BC - Little squares of gold are legalized in China as a form of money.

Great Britain
1066 AD - With the Norman conquest, a metallic currency standard is finally re-established in Great ritain with the introduction of a system of pounds, shillings, and pence. The pound is literally a pound of sterling silver.
1284 AD - Great Britain issues its first major gold coin, the Florin. This is followed shortly by the Noble, and later by the Angel, Crown, and Guinea.
1377 AD - Great Britain shifts to a monetary system based on gold and silver.

US
1787 AD - first U.S. gold coin is struck by Ephraim Brasher, a goldsmith.

Default
1971 AD - On August 15, U.S. terminates all gold sales or purchases, thereby ending conversion of foreign officially held dollars into gold.



References:

The History of Gold - National Mining Association
http://www.nma.org/pdf/gold/gold_history.pdf

I like the layout Steve, simple and informative. Here are a few more fact on the History of Coins that you may want to add in, it will also push you begining date to a bit earlier.

Sadly I find coins very interesting subject, still better than trains though and I don't have to wear a mac and stand in the rain

• 3100BC Sumerian writing describing exchange, deposits and loans, first recorded banking transactions between city states and countries using commodities including gold and silver
• 1800BC Eshnunna Law Code – Used to be in the Bagdad Museum describes 1 shekel of silver as being worth a bushel of grain
• 750BC Code of Hammurabi – A set of Babylonian banking laws
• 620 - 600BC Lydia - Oldest gold coin in existence - alloy of gold and silver – Can be seen in the British Museum – A very well researched argument as to why this is the first real coin can be found here http://rg.ancients.info/lion/article.html
• 221BC – Qin Dynasty Chinese coin standardisation
• 70BC – First Gold Staters produced in the UK
• 43AD – libra pondo - Latin – “a unit of measurement by weight “ now know as the pound, the original was measured as 240 silver denari
• 600AD – Production of gold and silver coin restarts under the Anglo-Saxons in the UK after the withdrawal of Rome in 410BC
• 830AD – Penny used as a name for a coin produced under Eanred there are still arguments over where the name penny originated as it appears in a number of old North Western languages

I would be a bit wary of the 1091BC reference for the gold coins as this claim is subject to a bit of controversy and even the Chinese government does not really recognise them, this does not mean that they did not have gold coins then but they are thought to come from the end of the dynasty rather than the beginning when shell, spade and knife money was being used. They are attributed to the Zhou dynasty which ran from 1122BC to 221BC see http://www.ebeijing.gov.cn/Elementals/eBei...ood/t962507.htm

Thanks for that
I fear I could become interested myself. Save me, save me

I think what would be interesting, and might make a good addition to that chart, is the history of pre-gold money.
One point I think I'd like to make is how various things were used, and how gold/silver became the best through trial and error.

Thanks to Steve and all for the great stuff

Questions from a UK Investors point of view:

I understand why if I was a US Citizen gold would make a good diversification away from the $ which is the worlds reserve currency and the US Gov has abused that position

BUT as gold is priced in $$ wont US hyperinflation counteract the gain?
- if anyone knows the answer to this would be interested.

Have you come accross any articles as to why Gold would benefit a UK investor?
- links greatly appreciated
- most stuff seems to be US investor related

If the shit really does hit the fan and all currencies go to pot, banks go belly up and lawlessness takes over....THEN Who actually guarantees that you will be able to get hold of /withdraw (phsically or otherwise) your gold held in goldmoney's vaults etc. Will goldmoney/goldbullion/whatever actually survive such a crash. If you have a gold bar at home better not advertise it or the local gangsta will come and take it from you.

SO I guess typing this I can partly answer my final question - a gold investment would be good if the financial systems crash or if there is a large drop in confidence. But might not be of much practical use in the event of a complete breakdown in society/the financial system?

Maybe only Russian Oligarch's know the answer !

SOME TECHNICAL INDICATORS
============

= 1/
TAKE A LOOK at the Long Term chart:

The Bull market in Gold is still intact.
Something like $800 is key support on the Monthly chart, then $650 maybe

I dont believe the dollar can go much higher. This ws driven by a concerted effort of CB's
in a summer market, and they may have spent their force by now, and will need to be careful
from here. A big bounceback in Gold would mark a very important low for Gold, and give
the Dollar bears a great chance to regroup.

In hindsight, the $850 had too many stops, and was too tempting a target for Gold Bears to miss, so they ran the stops there, and triggered a $30 selloff.



Today's sentiment feels more like a low than the complacency many had on Friday
(self included.) Another few days, could establish a nice low, filling that gap at GLD-$79/80




= 2/
This is what a bottom should look like:


The above is the Oil Holders etf (OIH) - includes shares of Oil Service companies.
It often leads Oil (USO), which has sometimes led Gold (GLD) also.

It made a low yesterday on light volume, and then rose on heavier volume.
That's a very positive sign, and now it looks set to break above that downtrend line.

If OIH opens higher on big volume, a bottom may be in place, and I think it is then likely
that a Gold bottom will come within a few days also.

Other charts: OIH vs. USO & GLD: st-10 days : lt-6 months

How much gold/silver should I buy as Insurance ?

I think we are talking about your liquid portfolio. You don't expect to lose your house. It's cash in the bank, shares etc, things that have counter-party risk, that need insurance against loss.

I don't think you can work this out accurately. For that you'd need to know the eventual price of them.

So lets use the physicists approach:

Options:

1. 0% - Hmmm, somehow I don't think that's going to work

2. 1% - Worst case you could lose 99%, so the price of gold/silver would have to go up by 100x to compensate you. Maybe possible, but unlikely.

3. 10% - Worst case you could lose 90%, so the price of gold/silver would have to go up by 10x to compensate you. Is such an increase likely? I think so, in which case this level of insurance is reasonable.

4. 100% - You don't have anything to insure !

So on the physicists scale, 10% seems about right.

The one danger you face is that of non-uniformity. ie only the bank you have your money is goes bust and leaves you with nothing. In such a situation, the price of gold/silver would not have to rise dramatically, and so a 10% insurance would be insufficient.
The implication is that the less gold/silver you have as insurance, the more diversified you need to be with your other holdings.

Sorry, not had time to answer before

I find it much easier to think about gold as another currency, with exchange rates with all the other fiat currencies. That way you can see that the price will fluctuate like any other currency dependent on demand.
So although most people quote the US$ price of gold, I think it's better to look at it in "your currency".
Yes, if the US$ drops massively against all the other currencies, those who moved out of US$ into another currency will see the most difference. And gold is one of them.

But take Yen. If the US$ drops, many people expect the Yen carry trade to reverse, and for the Yen to rise dramatically. In that case, maybe Yen and gold will rise roughly the same amount. If so, for those with Yen, maybe gold is not so good.

But of course, if all fiat currencies are being devalued, then gold will be the best performing of them all, but simply look better relative to the worst currencies

I used to ask the very same question you have raised. And since viewing things as above, I've found it much easier to think about.

Yes, the worse thing get, the more extreme the measures needed to protect yourself. Ultimately some very secret big holes, and plenty of guns and amo. Lets hope it doesn't get to that !!!!

Seasonality

Unlike slower moving markets like housing, the precious metals market is very volatile. That means it goes up fast, and down.

Success in precious metals therefore requires a great deal of knowledge. It's not the same as seeing a pretty house you like and buying it.

One critical aspect is seasonality. The price tends to follow a pattern through each year. Of course it is never quite predictable. That would make life too easy

So after the large drops recently, many less experienced people will be thinking of committing suicide, or worse still, selling their precious metals at a loss

Prices go up and they go down. A lot. That's the wonderful volatility for you. It makes it much more interesting. But what is important is the trend. You have to do your own research, and decide for yourself what you think the long-term trend is going to be. All the ups and downs are then just interesting noise on the way

This is such a great time. After the recent drops, there are so many interesting things to look at. Personally I find times like this much more fun than when the prices are just rocketing up. At such times it's like driving a fast car. It's fun, but it's not intellectually interesting.

So, to seasonality.



From:

July's Commodities Purge Offers Long-Term Opportunity
http://www.kitco.com/ind/Holmes/holmes_aug072008.html

and:


Thanks to id5 for that one


Notice how the end of the year tends to see large price increases, after the slow summer months.

Certainly very interesting times.
And potentially a fantastic opportunity for anyone with cash to safe guard.

Jim Sinclair started the year saying seasonality was not important this year. Obviously he was wrong on that one this time. But you never can tell. So IMO don't rely on seasonality, but don't dismiss it either.

Thanks Steve, appreciated

what follows here is someones concern with dealing with bullionvault. I think this is very informative and kudos to BV for responding.

Lemain - 16 Sep'08 - 12:28 - 47181 of 47253

Re BullionVault - can anyone show me, in BV's published information, that a gram of gold exists, at all times, in the allocated name of the client, for every gram of gold notionally in the client's account? It is implied, but the wording that I have seen is far from clear. Furthermore, can anyone show me where it states categorically that this gold is held in the vault chosen (London, NY or Zurich)? I may well be wrong - indeed I have no firm evidence to support my argument - but I suspect that much of BVs instantaneous gold is not actually in its vaults and allocated to a specific client.

I tried to get this sorted out on this thread, in public, with the CEO of BV over a year ago and those of you who listened will recall the discussion. No doubt the conversation is still on the thread and you can find it.

If some of BVs gold is paper gold then one hopes that the entire scheme is fully insured but the truth is that the gold market is unbelievably narcissistic - things will have to change and will change, for sure.

maximoney1 - 16 Sep'08 - 12:50 - 47182 of 47253

If 1 gram of b/v gold is 'paper gold' then it is blatant fraud. There whole structure is based around the 'storage of physical gold'....imo.

You do have the option to take physical delivery subject to fabrication costs to produce the smaller bars.

seems clear to me....,

Direct access to the very best prices

BullionVault.com changes all this. It enables people from all over the world to own professional market gold and keep it in any quantity in officially recognized bullion vaults in London (UK), New York (USA), or Zurich (Switzerland).
All BullionVault gold is held in Good Delivery form. So when you come to sell, your buyer is able to trust the purity and weight of your gold, which is guaranteed by BullionVault itself because we know that you never had the chance to corrupt it.
So the dealing spread is typically 0.4%, about one-tenth of the equivalent cost charged to private customers for gold coins and small bars.
You can buy just a small portion of a 400-ounce bar. You can trade on-line in increments as small as 1 gram - currently about $20.
BullionVault is not a unit trust / mutual. There is no 5% front end subscription load. When buying gold you pay a commission whose maximum rate is 0.8%, falling progressively when you invest above $30,000 to the spectacularly low rate of 0.02%.
Storage charges are down to wholesale rates of 0.12% pa ($4 per month minimum) with insurance included. That's less than a tenth of the storage fees charged by retail banks, and less than one-third the annual fees charged by typical exchange-traded gold funds (ETFs).
BullionVault customers also save money because they deal directly with each other, willing seller to willing buyer, by using our order board.
You make a further big saving at settlement time too. You don't have to arrange for expensive armoured courier bullion collections.
Your safety & security assured

For as long as you own it your gold remains your outright property, stored in specialist facilities reserved exclusively for BullionVault clients and run by accredited professional vault operators who are wholly independent of BullionVault. You choose the storage location :- London, New York or Zurich.
You are truly isolated from the systemic risks in the financial system. You have taken legal delivery of your gold and you own it directly in physical form. Unlike the huge majority of investment products no company's financial failure can deprive you of this gold. Lloyds, Via Mat and BullionVault could all fail - and your gold is still safely yours.
Each and every working day BullionVault publishes on the internet the complete register of all its gold owners - with each owner listed under a public nickname known only to themselves.
This register reconciles exactly to the official bar list published with it. The bar list is produced by the vault operator, independently of BullionVault. No other custody business in the world subjects its records to this continual, daily, public scrutiny.
BullionVault is also the only gold market in the world which stays open 24 hours a day, 7 days* a week.
Because you and all other BullionVault users have a right to sell whole bars directly onto the main market - one of the deepest capital markets in the world - you'll always find a buyer paying a fair price when you want to sell.
You even have the right to withdraw gold from the vault, although the huge majority of BullionVault users leave their gold right where it is. That way they continue to enjoy the benefits of owning Good Delivery gold which - remember - does not leave the professional vaulting circuit. (There may be additional fees, taxes and reporting obligations for bullion withdrawal.)
Any purchase you make is settled instantaneously - we checked the seller had sufficient gold in your chosen vault before it was sold to you. Any sale you make is settled instantaneously too - again we checked the buyer had deposited sufficient money before your gold was bought from you. BullionVault offers nobody credit, so nobody can let you down after you deal.
You can withdraw your money immediately after you sell. Your money will leave your BullionVault client account by the end of the next business day (London time). There is no minimum period for investing.
For your safety - and to obey international anti-money laundering laws - your money is sent straight back to your original funding bank account. Money transmissions to your original funding bank account are fast, safe and low-cost.**
And we make sure you can't make an expensive mistake either. You won't be able to buy more gold than you can pay for, or deal at a silly price. Firstly that's because the system eliminates all of these obvious user errors, but it's also because we invite you to phone us, and we'll talk you through your first deal one button at a time. We check that everything is exactly as you want it while you're still on the phone. You'll be amazed how simple it is.

Lemain - 16 Sep'08 - 13:53 - 47208 of 47254

maxi -

You can't own something "outright" is you are sharing it. You can't own 2, Arcacia Avenue, Bromley, Kent "outright" if 10,000 people also "own" part of it. At the very best, you own a share of something but nothing "outright". Furthermore, if someone is storing it then there is always a contingent liability for storage and insurance costs. For example, if the operating company has failed to pay the storage fees for ages then the storer will presumably reserve the right to charge the "owners" for the unpaid fees? This, to my mind, makes a nonsense of the puff that BV publish.

More worryingly, have you seen a copy of the Galmarley Limited (owners of BullionVault) full set of audited accounts? Who are the auditors? Were there any notes to the accounts? When I tried, I was told go get stuffed, or words to that effect.

adrianash - 16 Sep'08 - 16:54 - 47243 of 47254

RE: BullionVault

Dear Lemain,
If our service doesn't interest you, fine. But please beware of libelling us to other users of AdvFn.

Full accounts for Galmarley Ltd – trading solely as BullionVault – are audited by Albert Goodman. That information is published both on our website and in the audited accounts filed at Companies House (company number 4943684).

http://www.bullionvault.com/help/?FAQs/FAQs_safety.html
http://www.companieshouse.gov.uk/

It would cost you £1 to download a set of accounts; it's free to visit our site. Type "BullionVault accountants" into Google, in fact, and click on the very first result. You'll find that Albert Goodman, based in Taunton, also publish a thorough report about our Daily Audit on their own website – a space we could not possibly hope to control:

http://www.albertgoodman.co.uk/bullionvault/

This Daily Audit is unique in the custody business, and it's available free to all visitors. It shows that the quantity of allocated gold bullion held for our customers by ViaMat International – the privately-owned Swiss storage company we employ in London, New York and Zurich – matches the sum total of customer holdings down to the very last gram.

You can view and scrutinise this information without registering or logging in. Each customer's holding is listed against an anonymous "nickname" known only to themselves. Anyone can access the data, see how much a particular customer owns, and then check the sum totals against the Bar Lists issued to us by ViaMat.

http://www.bullionvault.com/audit.do

You'll also see any outstanding cash balances, held in the client account at Lloyds TSB and regularly valued above US$5 million. So, that's now details of our accountants...the privately-owned secure storage firm we use, based in Switzerland...and our sizeable corporate relationship with the UK's fifth-largest bank.

Oh, and we're now full members of the London Bullion Market Association (LBMA). Just last weekend we featured in the business section of the Sunday Times.

Sound like we're trying to hide anything from you or our customers?

Best wishes,

Adrian Ash
Research, BullionVault

A few months back on hpc, Adrian Ash countered potentially libellous statements about the company.

(Maybe it was coincidence that I came off moderation within an hour of his post.)