What's the best way to take a position in gold?

[Riprorin]

I'd like to add some gold to my investment portfolio. I'd like to buy the metal versus mining shares. What's the best way to go about it?

 

[kranky]

The best way is to buy gold coins. The US Mint makes Gold American Eagle coins in four sizes from 1/10 oz up to 1 oz. The larger the coin, the less premium you pay over the current spot price. You should be able to buy 1 oz coins for a small % over the melt price, which is pretty good.

Check http://www.tulving.com for prices.

 

[FeathersMcGraw]

You might as well just put your money in a money market fund. All the stability of gold and none of the liquidity issues.

 

[Riprorin]

Thanks, Kranky. Do you know anything about CEF? It's traded on AMEX. I believe it's selling at a 5% premium. Think this is a good alternative to physically holding the metal?

Here's more info on CEF

Central Fund of Canada Limited operates as a specialized investment holding company, investing most of its assets in gold and silver bullion. The stated investment policy of the Company is to maintain a minimum of 90% of its net assets in gold and silver bullion, of which at least 85% must be in physical form. On October 31, 2002, 97.5% of Central Fund's net assets were invested in gold and silver bullion. The Company's bullion is stored on a fully segregated basis in the underground vaults of the Canadian Imperial Bank of Commerce, a bank in North America. The Company also holds a small portfolio of equity securities in gold and/or silver producers. The Central Group Alberta Ltd. furnishes administrative and consulting services to Central Fund.

What do you think about buying gold versus buying a short fund?

 

[Riprorin]

Originally posted by: kranky
The best way is to buy gold coins. The US Mint makes Gold American Eagle coins in four sizes from 1/10 oz up to 1 oz. The larger the coin, the less premium you pay over the current spot price. You should be able to buy 1 oz coins for a small % over the melt price, which is pretty good.

Check http://www.tulving.com for prices.

Once you buy, how do you sell it?

 

[FoBoT]

gold is a bad investment

don't do it

look at the return on gold for the past 22 years

if you bought at the highest point, around 1981, at over $800 per ounce, your investment today is worth $351.10 per ounce

great investment, you lost $450 per ounce PLUS the loss of inflation

bad bad investment, don't buy gold

 

[wyvrn]

That doesn't have anything to do with the here and now. Lots of recent gold investors are making money as it goes back up. I dunno if it will ever hit 800/ounce again, but like any other commodity I am sure you can make money with it. My wife and I were thinking about buying some US coins, we have an offer for $42 each but I am not sure if it's good or not. Have to do some research.

Originally posted by: FoBoT
gold is a bad investment

don't do it

look at the return on gold for the past 22 years

if you bought at the highest point, around 1981, at over $800 per ounce, your investment today is worth $351.10 per ounce

great investment, you lost $450 per ounce PLUS the loss of inflation

bad bad investment, don't buy gold

 

[oog]

Originally posted by: Riprorin
Thanks, Kranky. Do you know anything about CEF? It's traded on AMEX. I believe it's selling at a 5% premium. Think this is a good alternative to physically holding the metal?

Here's more info on CEF

Central Fund of Canada Limited operates as a specialized investment holding company, investing most of its assets in gold and silver bullion. The stated investment policy of the Company is to maintain a minimum of 90% of its net assets in gold and silver bullion, of which at least 85% must be in physical form. On October 31, 2002, 97.5% of Central Fund's net assets were invested in gold and silver bullion. The Company's bullion is stored on a fully segregated basis in the underground vaults of the Canadian Imperial Bank of Commerce, a bank in North America. The Company also holds a small portfolio of equity securities in gold and/or silver producers. The Central Group Alberta Ltd. furnishes administrative and consulting services to Central Fund.

What do you think about buying gold versus buying a short fund?

I'd at least look at the minimum investment and the management fees. Also see if there are any other fees. The fund will probably be more convenient to sell, but I don't think it'll match the price of gold very well. That 10% can account for a wide variation and there is no information on the allocation between gold and silver.

 

[conjur]

Originally posted by: FoBoT
gold is a bad investment

don't do it

look at the return on gold for the past 22 years

if you bought at the highest point, around 1981, at over $800 per ounce, your investment today is worth $351.10 per ounce

great investment, you lost $450 per ounce PLUS the loss of inflation

bad bad investment, don't buy gold

That was back about when I got my senior class ring. Sheesh!

Glad my grandparents helped out.

 

[Maverick]

become a pirate

 

[kranky]

I know many people prefer buying gold stocks instead of physical gold, but I don't know enough about them to do that.

How do you sell? You can sell them back to whomever you bought them from, or to just about any coin dealer. Coin dealers definitely follow the regulation that requires an IRS report to be filed for any transaction over $10,000 in cash, but if you are below the $10,000 limit they won't care if you pay in cash. And when you go to sell, you can make arrangements to be paid in cash as well if you do it in person.

Before buying, call and ask what they are paying for the coins you would be interested in buying. Then you'll know what it would cost you (as a percentage) when it's time to sell.