Gold

[john kane]

I was considering putting this in the september general thread as it won't have much content in.

I think gold is a good option for heavy leveraging. Very few pundits are saying it will go back to $630, some are saying it will slowly rise, others saying over time it will rocket.

I'm planning with $10K to put $100 for every $1 movement, thus if it goes down to $608 so I lose my $10k, if it goes up to $808 i would of made $10k.

fwiw, my life bankroll is about $160k, most currently in savings, my only exposure to the market is a $10k emerging markets fund which i have set up to use my tax-free allowance.

My only concern is that if it went down to say $640, i'd be tempted to cut my losses, so maybe I should set a stop loss at $640.

I'll be doing it in my spreadbetting account, so any profit is tax free.

I understand the reasoning for buying gold stocks instead as a rise in the price of gold can therefore multiply the company profits, but i would rather go just for the gold spot price.

I know I have looked into a number of these type of unusual investments, some i've gone through with, others I haven't, but i'm pretty sure i'm going through with this.

just thought i'd post in case anyone had any thoughts on this, posting before has been very useful so i thought i'd do it again.

[kimchi]

[ QUOTE ]
Very few pundits are saying it will go back to $630, some are saying it will slowly rise, others saying over time it will rocket.


[/ QUOTE ]

This is why you should ignore financial journalism. You will just follow the pundit who reassures your own market biases.

[ QUOTE ]
My only concern is that if it went down to say $640, i'd be tempted to cut my losses, so maybe I should set a stop loss at $640.


[/ QUOTE ]

Your stops should be placed at a logical point in the market so that they meet your objectives. You should only think about your position size after considering your stops and market volitility.

[john kane]

thanks for the reply kimchi. i see what you mean about following the pundit(s) who push my bias. i guess the problem is since i am basically clueless on gold, i look for some articles regarding gold to get some idea. the sensible part of me says stick to playing online rather than looking at all this, but i'm interested in all this finance discussions tbh.


regarding the positions, i based the $640 on that i don't think it'll hit this low given the general trends and now that it's up at $710. if it did hit $640 then i guess i wouldnt want a long position anymore.

as for position size, i don't mind taking a $10k hit, so i've gone for that much. i dunno, i've spent now 2 months stuck without and growth in my finances i feel like spicing things up a bit.

thanks again for the reply, i'm going to deposit the money now and do the trade. should probably not check the gold price for 3 years and see what's happened (probably that it's at $1800 but it dropped to $639 at one point so i lost out on $110K or so...

edit: can't do it tonight, got to wait for a cashout to hit the debit card.

[rwesty]

I think it would be neat to have something like this.

http://cgi.ebay.com/Huge-Pamp-Suisse-10-...1QQcmdZViewItem

Would buying that be a good investment or just a waste of money? How can you tell if you're getting a decent price?

[gonebroke2]

John Kane,

If you implement that strategy you will lose your 10k real quick. The swings in gold will scare you out or the price will go down enough to wipe you out. And Kimchi is right, financial pundits are idiots. Do your own research, come to a conclusion, and place your bets.

If you do decide to gamble 10k in gold, I think you are much better off in the stocks as they provide the leverage you are looking for.

[kimchi]

[ QUOTE ]
I think it would be neat to have something like this.

http://cgi.ebay.com/Huge-Pamp-Suisse-10-...1QQcmdZViewItem

Would buying that be a good investment or just a waste of money? How can you tell if you're getting a decent price?

[/ QUOTE ]

You need to check the daily gold spot price. At the last glance it was trading around $705/tr.oz. This bar contains 10oz, which is $7050 worth of gold at today's price.

Bullion retailers factor in a premium which is typically a % over the spot price. This is why many bullion dealers quote their prices as premiums (fixed) rather than in a currency (fluctuates).

This bar is only suitable for large collections. If you want to buy some physical gold, then I'd suggest Britsh Sovereigns (conatain about 0.25 troyOZ), South African Krugerrands, American Eagles, or Canadian Maples (all 1 oz).

Coins' premiums are very similar to bars but they're just more widely recognised, guaranteed by the respective mints, and they look nicer.....

One last point - don't buy gold from ebay.....

[NoTalent]

Kimchi is correct--you are better off buying some coins. you want them to be recognized. If you are selling the bar you might have to get it certified or something.

The Krugerrands sell for the lowest premium over spot

[john kane]

[ QUOTE ]
John Kane,

If you implement that strategy you will lose your 10k real quick. The swings in gold will scare you out or the price will go down enough to wipe you out. And Kimchi is right, financial pundits are idiots. Do your own research, come to a conclusion, and place your bets.

If you do decide to gamble 10k in gold, I think you are much better off in the stocks as they provide the leverage you are looking for.

[/ QUOTE ]

I think my problem is I am not willing to do the research into stocks. This is becuase I know to be able to come to any decent analysis, I'd need to spend a lot of time on it, and I just don't have that time.

So thus I figured if I choose a commodity which should rise over the coming years and leverage it a lot then i should do well.

Looking at a graph of the prices since 2001, there has only been 1 fall of a bit over 20% after a huge run up in early 2006. Thus if I picked say $560 as a stop loss, and did instead $67 per $1 movement, isn't my risk to ruin very low in comparison to potential gains of effectively having $67K invested in gold.

i've just looked at the prices since 1975, looks interesting.

gonebroke (or anyone else as well) what would you say is a rough likelyhood of the price of gold dropping in the future to below $560?

I agree it would be hard when it's down at $620 not to cut my losses, but I would literally delete this $10k from my finances and treat it as a gamble.

Thanks for all the replies.

[APXG]

John,

I don't understand how a number like 640 in such a volatile commod would be at all significant for a long-term outlook. By stopping yourself out, you would be intentionally making an irrational decision.

[Moneyman314]

[ QUOTE ]
I'll be doing it in my spreadbetting account, so any profit is tax free.

[/ QUOTE ]

Perhaps you could elaborate on this...is this offshore? And if so, how is the reliability of withdrawals? Is this kinda like a poker site, except you trade futures contracts?

Jon