Parking My Down Payment in Gold

mildly, first of all, you should realize that taking investment advice from an anonymous message board is NOT recommended. always do your own due diligence and make your own decision based on your own analysis.

having said that, that has been part of the action i have taken 2 yrs ago to protect myself. i resisted the urge to buy at the peak, and instead parked my downpayment cash in gold instead.

the key here is, everybody's situation is unique, so it all depends. how much additional cash do you own? how much in other less liquid assets? do you own paper Gold as in an ETF? or do you own deliverable paper Gold like a Comex future or something from the likes of BullionVault? or do you actually own the physical yellow metal and keep it either at a bank or in a safe at home?

also, what is your time horizon? can you stomach volatility (it was hard for me watching it drop to 700 only to bounce back to where we are now- you need strong hands).

these are all questions you should ask yourself and/or an investment advisor.

personally, i don't think you 'made' a mistake. especially with the part where you didn't buy an apartment.

You invested (and I use that word loosely) your down payment in a commodity?

No, the down payments was put into a currency- the currency of last resort.

A "currency" that no major economy uses anymore. A "currency" that can't buy you groceries. To think this is anything but a very risky commodities play is delusional. The historical gold swings are incredibly more wild than even the past 3 years of real estate.

Anyone who thinks gold is a risky commodity play has to be kidding, right? Gold is a currency, whether or not your grocery store accepts it.

FWIW, gold has outperformed the SPX by 109% since Jan 1 2006.

Apparently you and I have different definitions for the word "currency". We seem to also have a very different definition of risk - you're proudly explaining that it had a wild swing in price over a 3 year period. What part of that explains how non-risky it is?

TripleP- I am just warning you, do NOT get into a discussion with tech_guy regarding Gold and currency.

He just doesn't "get it", and you will just be wasting your time. Forget about it.

You can't argue that its currency (commonly accepted) and that its difficult to "get it" in the same breath. Well, you can, but you just sound silly. For the record, Warren Buffett, the most successful investor of all time, also doesn't "get it". If the most successful investor of all time doesn't "get it", it probably isn't a currency, now is it?

I don't buy in on the gold attraction. Unlike oil -- which people use -- gold has no intrinsic value. I own a lot of gold jewelry -- but it is not going to be in demand like food or oil.

Triple P )gold has outperformed teh S&P by 109% since 2006? So what -- oil was $144/barrell last summer -- not in the 30s -- just because it is up does nopt mean that it cannot go down...

It may become a "currency" yet :) Currency of last resort sounds like a proper definition to me. Gold will always have value, those paper notes can,have and do become as worthless as "the paper they're printed on". Of course we are talking about a total collapse of our economy. I think Bill Gross said something along the lines of; What once we thought of as impossible is suddenly possible. MMafia you may want to also own some pre 1964 silver coins you will be able to buy food and drink with those quite easily :)

Better that Gold...
Beans and Rice
that's the future...can't eat gold

we can all have differing opinions on it, but at the end of the day, we'll just be watching its price going up.

which in actuality is really just the value of the worthless paper notes in your wallets and in your savings and checking accounts going down.

listen people, it's called "stealth taxation".

Where are they going to get the money to pay for all these trillions of dollars to bail and stimulate everyone out?

They aren't gonna raise taxes. Noooooo... that's too obvious and too unpopular.

They'll do it through 'stealth taxation'.

They'll print more $$$, effectively making what you saved up worth less. In the end, same effect- your purchasing power and real asset valuations go down.

So how do you prevent them from stealthily stealing your money? Go into another currency. Swiss Franc? Japanese Yen? Perhaps, but they too are just worthless pieces of paper, and guess what? Those countries are going to do the same thing!

It's a global race to currency debasement and devaluation to bail the world out folks. The writing has never been more clear on the wall.

So where do you turn to? That's right- the currency which:

- has been around and is STILL around for over 4,000 years, proving itself as the longest lasting currency on record
- has a pretty finite supply and can't be created out of thin air
- is the only currency that has absolutely NO COUNTERPARTY risk or liabilities
- Central Banks themselves hold in their vaults as backup
- is accepted around the entire world and is extremely liquid

more and more people are slowly beginning to realize the farce the Central Banks and Gov'ts around the world have in the existing house of cards, paper-based financial system we have created.

that is driving the price of Gold up right now, even in the face of the current transient state of deflation. confidence is going away, and where is everyone turning to?

that's right- Gold. at around $940 /oz today.

wait till the inflation (a.k.a stealth taxation) part kicks in when the spinning tires meet the road and then see what happens to Gold in the near future.

just run a search on Gold on CNBC for example and see what Portfolio Managers, Investment Analysts, Market Technicians and Corporate CEOs have to say:

http://search.cnbc.com/main.do?target=video&keywords=gold

They all approach it with differing standpoint based on their background.

To me, Gold going up is about as certain as Manhattan Real Estate going down in the next year or two. Which is exactly why I've been discussing on this board for more than 2 years now to:

- NOT buy Manhattan real estate
- start accumulating Gold to preserve your wealth in the face of the coming crisis (key word being 'coming')

MMFia, I couldnt agree more with your assessment - my feeling is BAM is going to
start running the printing presses 24-7 next year.

regardless of one's views on the trajectory of gold prices, the last several months should demonstrate to anyone the riskiness of investing in any asset class. Oil dropped from $150 to the 30s in a matter of months. It would be shocking to see quite so large a decline in gold, but gold has been moving fairly quickly between the 700s and the 900s. It would suck to go look for your down payment and discover 20-25% of it has disappeared.

falcogold1: I'm also long soy :)

"regardless of one's views on the trajectory of gold prices, the last several months should demonstrate to anyone the riskiness of investing in any asset class"

which is why you want to look for a safe haven.

and currently, the market price action is telling you that it is Gold. the more risk averse, the greater the demand, hence the greater the price.

it normally tracks the opposite of the dollar. as the dollar gets stronger, Gold drops. as the dollar gets weaker, Gold gains.

recently, we had a very important inflection point from a fundamental analysis viewpoint. Gold began to to parallel the dollar's movements. they have been going up in tandem.

why you ask?

the answer is that all currencies are being debased, so the intense focus on derived exchange rates they have with each other makes people overlook the fact this does not paint the complete picture.

the relative strengths among currencies does not tell you what the absolute store of value they have is. they could all be going down together. the race to the bottom in currency debasement.

that means all, including the dollar, even though against its peers, it is near the top, is still losing value in an absolute sense.

how can we see this? in the price of Gold.

if you just look at the charts, Gold is at or near all time highs in most other currencies. it is rising while the dollar is also rising. this is due to fading confidence in the system.

MMFIa quite compelling points you make and I agree. Tacit curreny=monopoly money after all currencies are debased. Question, the counterpoint to your argument would be the dollar is the worlds reserve currency...........all prices based on dollar denominations so it will retain value?

MMafia, if currencies are all being debased, wouldn't you expect other commodity prices to rise as well? Your argument seems to assume that gold is somehow an intrinsic store of value, different from anything else. I'm not sure I understand what justifies that view.

Gold was at $1000 oz last March -- then FELL -- some rebound -- but harmed...