Is this the right time to buy gold ?
As clear as it is, we’re not far from a new crash, and my questions are :
- Should one invest in gold ? If so, isn’t gold controlled as well and may be confiscated (if held physically) or taxed ? If not, why not ?
- Is an IRA-account a good resolution ? (what do you think about Lear Capital ?)
- For some who can only save up to $ 400 a month, what do you suggest ?
Any other recommendations are welcome.
Thank you all =)
Some things that I've considered with my positioning, DYODD, results may vary, I'm not an investment advisor, etc.,
- I view PMs as a store of value more than an investment, although I would have an expectation of a dollar-denominated positive ROI. From a store of value perspective, it has some things going for it.
- very portable
- very recognizable
- somebody somewhere will always be willing to transact against it (barter/grey/black markets)
- won't go to zero, unlike like many pension funds
- the market and hence the price can be manipulated "in the paper" (as any commodity) but unlike federal reserve firestarter tissues, the underlying asset is actually…underlying.
- I don't see physical confiscation / house searches and such as realistic, however, there already exist, and will be more capital controls
- crossing an international border with 10k+ USD in value may trigger US customs problems, maybe even confiscation. Leaving the PRC with more than an ounce will definitely attract unwanted attention. I expect more of that sort of thing.
- gold already has a "collectables" tax rate of around 30-35% of gains associated with it, compare that with equities long-term cap gains tax and you can see it is already being punished. That includes bullion, not just fine jewelry and such. I expect if/when the price goes parabolic, that you will see the shiftless politicians of this world impose "windfall gains" taxes on top of that. Google up Daniel Ammerman for a discussion about that, he's good at describing that scenario
- I have a dim view of putting it in an IRA where it is readily observable by our feudal overlords…why would you want to take the most private store of value in existence and turn it into a public record?
- "war on cash" dynamic…if physical fiat becomes problematic for exchange of goods and services, what role does that leave for specie? I'm watching India closely to see an example of this playing out.
CM has recommended Hard Assets Alliance as a method of holding metal overseas without being bothered by FACTA…the company is US-domiciled although the product can be vaulted overseas. There could be a "window" between a clampdown of punitive taxation or confiscation in any form, and the regulating authorities targeting this "strange duck" that could be a way to take some gains without being hammered.
Many will recommend the meme "if you can't hold it you don't own it", usually referring to ETFs and such. The paper proxies can be great I suppose if you are a savvy trader or know tasty inside bits, but they really aren't a store of value, rather a claim on value owned by somebody else. Unless your real name is JP Morgan anyway.
APMEX seems to be pretty good as a vendor, but caveat emptor, there would be digital breadcrumbs. This means you would want to keep track of your basis (cost paid) for each item of lot of items purchased so the gains can be self-reported, taxed, and with correlating evidence on your vendor's servers' digital records.
The proverbial "LCS" (local coin store) can be a nontranparent option if you are not unparanoid. Unfortunately you have to DYODD because fakes certainly exist.
Not too long ago there was some sort of thing (that died) whereby any purchases over the course of a year in excess of 600$ would have been required to be reported to the IRS (I assume you're US resident) on a 1099, this would have made LCS purchases more visible. Right now as far as I know, they're not.
I think small denomination maple leafs are very clever because the premium (price to buy over spot price) is not too bad nor is the cost per unit, and they are 99.99+% pure, and therefore can be hammered into any shape you desire and painted plaid if any situation would dictate such obfuscation. If this was done, seniorage (sp) premium i.e., bullion recognizability would be compromised, but if such measures ever became necessary then the need would be dire anyway (and the value of the metal itself would assumedly have gone parabolic already).
I *really* should not have to say it because it ought to be obvious, but anything that comes out of my mouth or keyboard is my opinion, including my above comments.
I think when there is a crash, deflation comes in, gold will be depressed. $1200- $ 1100 is still too high.
Like someonse else said, I'm not an investment advisor, have no special knowledge of future events, and don't take responsibility for your decisions, but I'll tell you how I'd go about it.
Personally, I think trying to time the market is a fools game. Sometimes you get lucky, sometimes you don't, but looking at the big picture, is gold closer to the bottom than the top would be the first question I ask myself. My answer to that question is that it is closer to the bottom than the top. Could it go lower, sure it could go lower, is it going to drop much below $1,000 and you simultaneously be able to get physical gold at that price, I highly doubt it. Rickards seems to think $10,000 is fair value. Let's cut that in half and say $5,000 is fair (even though he's much smarter than me). So gold has an upside of roughly 400%, and if we are to assume $1,000/oz brings out every last buyer in China (who have real savings mind you), we've got about a 20% downside. But, as Adam pointed out in a recent post, losses hurt more than gains, so I'm assuming your concerned about losing money or are trying to make a quick buck trading in gold.
Another question I would ask myself is how much anxiety am I putting myself through trying to time the exact bottom for the price of gold. I like to avoid anxiety, so having some capital deployed in a diversified manner will save me some anxiety and I'll sleep better.
Next, do I have any gold exposure and I'm waiting for a crash to drop my last $50,000 on physical, or do I have no gold exposure at all, have all my currency in fiat, and am waiting to get into the market at the right time? The answer to that question for me personally is easy – if I have no exposure I start DCAing into the market at current prices, say a couple hundred ounces of silver or 1-2 oz of gold per month and start accumulating, saving the majority of my dry powder for the drop I may think is coming. If it never comes, I developed a position at reasonable prices over a time frame that I can be comfortable with.
Why gold? If one thinks that the market is going to crack, why not get into silver? Sure it's harder to store, transport, hide, etc., but if one thinks the global market crashes, like in big time crash and the markets seize for days to weeks, one might want to have some physical silver on hand for barter situations. I would personally start with silver accumulation to have several months worth of operating expenses in physical silver stored before I started moving money into gold, but that's just me. It makes sense to store most wealth in gold if you have lots of currency to convert, but that's up to you to decide. Also, silver to gold ratio is about 70:1, much higher than the historical mean pointing to a situation where silver catches up to gold to narrow the ratio and hence silver may outperform gold in the future.
Gold in an IRA – do you trust the government? That's how I answer that question. If I think the government will never come after my gold or my IRA, then sure. I'm not willing to take that bet, so I personally avoid it.
Personal preparations – You appear to be new to the site, as such, I would encourage you to make sure you have 6 months of stored food for your family and neighbors, drinking water for the family and pets for several days, stored blankets or sleeping bags for power outages if you live in a cold weather environment, first aid kits and knowledge on how to use them, communication devices in case communication goes out, etc. etc. before you start putting all your money into gold. There is an entire area of this site dedicated to resiliency that should be taken care of before you set your mind single handedly on wealth preservation.
as gold prices are growing up. i think it is best time to buy gold or invest in gold.
because from gold you will get more returns
Best to buy metals when they are low and spend the value when it's up.
“Whoever controls the volume of money in our country is absolute master of all industry and commerce…when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” Meaning the IMF/ FED did us in this time. – James Garfield, 20th President Of U.S. Assassinated 1881
in many of the countries ..this is the festival season and a great time for purchazing gold silver ornaments..
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