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Slightly OT: 5% of your net worth in Gold?
Dave99B
Posts: 8,674 ✭✭✭✭✭
For many years I've read that having 5% (sometimes even up to 10%) of your net worth in gold is prudent. I've never really bought into this theory. It's hard to look into the future, but it seems way too high to me. I maintain more like 1-2%, mainly in S. African Kruggerands, just in case all goes to h*ll.
Any thoughts on this? Does 5% seem high to you? Too low?
Dave
Always looking for original, better date VF20-VF35 Barber quarters and halves, and a quality beer.
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If you are hesitant about having 5% of your net worth in gold, what percentage of your net worth would you consider to be "prudent" to have in high grade collectible coins?
I don't have any gold......don't ever plan to. Well, maybe some coins if I ever do a type set that includes them.
I just don't do bullion.
I'm with you at the 1-2% number for gold. You didn't mention silver, but I consider it on par as a store of value with gold and also stack a bit of it, maybe 2-3%. I have more in gold or silver than in the cars I drive though, as I don't see them as an investment.
Didn't somebody just put their best collectible coins on the market to meet some small debts?
You shouldn't be buying anything except groceries.
With ammo, alcohol and tobacco you can get whatever you need - who needs gold??
I probably have 10% or so of our net worth in gold, but it is mainly numismatic value. I don't really shoot for any particular percent, but it has been nice having them as something to fall back on just in case.
Net worth... interesting idea
I guess you are talking about the market value of assets after debts are deducted. If that's the case, I owe someone a lot of gold.
If gold is such a necessity why are the promoters selling it? The money in precious metals is made by creating turnover and taking a percentage of each transaction.
And the latest newsletter says ...
When people do figure "net worth", very few include the taxes potentially payable upon asset liquidation as a liability. That's a really important step to know where you stand.
And no, having ten percentum of your net worth in gold is NOT too much.
Don't buy all that aurem all at once, unless your know that we are on the cusp of War.
Nice try IRS. You ALMOST had me.
I consider 25% way too low.
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
Having 10% of your financial assets in physical gold at this point is probably prudent. Assuming that you have you financial house in order. (low or no debt). It's kind of like insurance that you hope you never need.
There is a lot of debt floating around in the world economy, who knows what could happen if the central banks ever lose control over that pile of debt, things could get pretty ugly in the markets and who knows how things would end up.
In the spring of 2009, i think we got a look over the edge of the cliff before the central banks pulled us back by putting trillions of dollars into the market buying up the crap assets. Maybe the next time things won't work out the same.
Just my opinion, YMMV
The only gold coins I own are heirlooms my grandmother hid from the Federal government in 1933. Have never bought a gold numismatic coin. Don't plan to do so in the future. Don't own any bars or bullion coins, and don't plan on changing that in the future, either.
"Seu cabra da peste,
"Sou Mangueira......."
105%
The % depends on the scale of NW. When NW is more than $10mil, u r need 10% or more.. lesser nw, the lesser the %.
This forum has lot of wealthy people that has discretionary spending in numismatics in the quarter mil+ range... those members might have a good chunk on bullion too.
BTW, when people are cautious about buying gold bullion, how do they risk buying 150 year old copper (melt $0.05) for several thousand dollars cased in a stickered plastic tomb?
if you are accumulating things for a complete economic or social collapse, then you should focus on things that other people will want. Gold, silver, gems, etc. offer nothing to feed, house and protect you and your family.
List the necessities, then consider which of them you can accumulate in sufficient quantity to meet your own needs and to barter for other things. I.e. do you live in a a small town near farms? Your list will differ from someone living in a city. [If you were in Florida and had saved a big box of electricity, what would you want in exchange for some?]
I agree. Somewhat. I say bullets, booze (whiskey), and beans. No joke. I'm doin' it. For all the little Hydrants. Except for the whiskey. That's mine. Unless of course someone has a toothache during Armageddon.
If your NW is 1 million dollars, then 5% is $50,000. That's less than 2 rolls of 1oz AGEs.
So, if you have been buying them, occasionally, then that may not be that much. I know there are more than a few forum folks who have that much, and more....
Like everything else, the value can change on a whim. Stocks go up and down. Cash is worth less and less. Gold/Silver go up and down. So, 5% may be 10% or may be 1%, with the same amount.
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
Silver is for schmucks.
If the SHTF in a big way, who's gonna think, "Oh my God, I've gotta trade my water for some gold!" The recent hurricanes are a tiny indication of SHTF and what people will want: WATER, FOOD, FUEL, MEDICAL & PERSONAL PROTECTION. Save yourself and save your family, but don't be fooled by the belief that the best way to do that is with a couple pounds of gold coins!
I want my wealth in cash.
Fully backed by bad mortgages and issued by a country so in debt that if it were an individual, it couldn't even get a used car loan.
5-10% is just silly.
That little is insignificant and only for radio "financial advisors" to blather.
Lots of ideas here.
If it gives my statement a little credibility, I am the senior partner of a financial advisory team of a major global investment company. The reason it is often suggested that a prudent person have a percentage of their assets in gold is correlation. The price movement of commodities (most especially gold) has a very low connection to that of stocks and bonds.
Stocks are wealth builders. In my opinion, it is best to hold a larger percentage in stocks of quality companies that pay solid and rising dividends. Notice I did not say highest dividends. Gold is an insurance policy to protect against short term price drops in those.
Any one who holds most of their investments in gold and /or silver is missing out on an increasing income stream that gold simply doesn't provide, while their nest egg grows over time.
Buy rare coins with the income produced by your investment portfolio.
My percent in gold is way higher than 5%, but the vast majority of that is in collector, not bullion gold.
Only own gold (or silver) if you are going to trade gold and silver. They are generally horrible long-term investments. They don't pay a dividend and, adjusted for inflation, they haven't really held value. If you look at gold in 1968 at $35 per ounce vs. gold today at $1300 per ounce, you are tempted to say: great investment. But, that is only a 7.5% annual increase. No better than most bonds and far worse than the stock market. And if you bought gold at any time after 1975...good luck.
This. To a millionaire $50K in gold should be chump change.
Well put.
Holding a stack of gold (and silver) is not for a temporary disaster (i.e. hurricane, tornado, earthquake).... Rather it is for a major collapse in either government or economics. Gold will never be worth nothing..(forget who said that originally)... Such a major national or world collapse will force people into a barter/survival mode... Gold, bullets, firearms, silver etc are material items that can be traded for necessities such as food, shelter, clothes etc.. Cash, as we use today, could quickly become worthless - depending on the type of disaster. Certainly holding gold/silver is not comparable to stocks in good times. Cheers, RickO
Well said, RickO.
Dave
I have about 5% in precious metals (gold, silver, platinum). 10% seems like too much, 2% seems like too little to matter.
For me, PMs provide diversification, countercyclicality, and insurance. Insurance against currency devaluation, instability, and who knows what else. But, "who knows what else" is kind of the point.
Honestly, in survival mode I'm not accepting gold in trade for anything. Bullets or beans. I don't need jewelry.
Those with a lot of bullets and beans will be accepting gold.... I guarantee it.....
Cheers, RickO
Depends actually.
In my area, and in parts of California, and a few other places, one can well be a millionaire, by networth, when one includes their house value, but still be pretty cash poor.
To those people, $50,000 isn't chump change.
Imagine having a place you have lived in for 20+ years, it is worth well over $1,000,000...maybe close to $2M, but you are either retired or have a "normal" paying job.....maybe not even 6 figures yearly.
Your taxes wouldn't be low, for the house. You may still have something of a mortgage. You have other bills.
You may be helping your kids through college.
Your actual take home pay may not be that great. Your bank account may not be great. $50k could be a lot. BUT, your networth, because you have lived there so long and it has appreciated so much, may be huge. Huge but not in your pocket until you finally sell (which, you may not have done because even if you sell and get a good amount of cash, to buy in the same area would be prohibitive to you).
Lot of people like that around me.
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
A healthy balance, like tithing.
``https://ebay.us/m/KxolR5
I hear you Bochiman. The brother of my wife's best girlfriend is living in a very small older house Massachusetts. The town says the property is worth something like half a million because there is an expensive condo across the street. He may have to move out before long because he's retired, living on social security and can't pay the property taxes.
I have 0.2% of my investable net worth in gold bullion.
The desire of gold is not for gold. It is for the means of freedom and benefit.
Ralph Waldo Emerson
Successful transactions with : MICHAELDIXON, Manorcourtman, Bochiman, bolivarshagnasty, AUandAG, onlyroosies, chumley, Weiss, jdimmick, BAJJERFAN, gene1978, TJM965, Smittys, GRANDAM, JTHawaii, mainejoe, softparade, derryb, Ricko
Bad transactions with : nobody to date
That too.
I could see keeping a small amount of gold in reserve for an emergency. Same as keeping some ammo and a first-aid kit in the closet, just in case.
Beyond that, I would only hold gold long term as a hedge against US dollars and other currencies. Since my net position in currencies is negative - as it is with many homeowners with mortgages - I have nothing to hedge, so no need for gold.
In fact, if I were more risk averse and less pessimistic about the fate of the US Dollar, I might keep a short position on gold to hedge against deflation. (Deflation would punish the value of my home and everything else I own, and make it more difficult to pay off my debts.)
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Here is an interesting chart the shows the Dow vs Gold ratio over the last 100 years. It hasn't spent too many years above the current ratio of aprox. 17. It does point out the extreme times of when you should have sold gold (Feb 1933 & Jan 1980) and bought stocks. Also when stocks were way overvalued (late 1920's, mid 1960's and late 1990's)
And hindsight is 20-20; foresight is much tougher.
At a younger age my foresight was 20-10 [not bad] and my hindsight was 20-400,
they are reversed now
Successful transactions with : MICHAELDIXON, Manorcourtman, Bochiman, bolivarshagnasty, AUandAG, onlyroosies, chumley, Weiss, jdimmick, BAJJERFAN, gene1978, TJM965, Smittys, GRANDAM, JTHawaii, mainejoe, softparade, derryb, Ricko
Bad transactions with : nobody to date
Once I thought I was wrong, but I was mistaken.
I would gladly return to stocks and bonds if the risk was compensated by the return.
IT IS NOT AT THE PRESENT TIME
Stocks are rising because there is NO worthwhile return available on less risky investments.
Gold is PURELY a "flight" asset. Worth considering with our country so overburdened with debt and the stock market being fed by automatic purchases to keep 401K ...managers.. employed.
Any return LESS than...... 7%..... is of no use for ANY risk factor.
The Fed has burnt all their ammo. People TRYING to compensate are taking unconscionable risks.
Well....okay.
Not for ME.
With P/Es in the 30's and up, I'd like to know ANY...fundamental justification for this pure ....speculation... that we are heading for great times.
Since 2008.... ALL ..."investment" has gotten....silly.
Place yourself on one of those isolated, flattened Caribbean islands. What do you need? What do you have to barter with others?
A one ounce AGE is pretty much useless in commerce unless it's converted to currency [devalued or not] . Fractional gold or 90% would be better for that.
Zis!
Potential protection, but is that all?
Think....Put yourself in a real situation.....Get past the conditioned emotions and catchphrases.
If you really want to save for a SHTF day they I would recommend the following.
Might be a bit harder to store as more room is needed but will appeal to everyone on earth:
1,000 rolls of toilet paper
300 lbs of brown rice
100 lbs of sugar
2 gallons of honey
etc etc
All the above can be traded for whatever you desire.
Staples are what people need. Just ask those in Venezuela right now. Or any island hit by Irma or Houston.
bob