Is gold a safe haven in this economic climate? As everyone knows the economy is not doing well. So, is gold a safe haven? Gold is now trading nearly 1650.00 an ounce and has risen for the last ten...

Is gold a safe haven in this economic climate?

As everyone knows the economy is not doing well. So, is gold a safe haven? Gold is now trading nearly 1650.00 an ounce and has risen for the last ten years or so. Can gold go higher in this economic climate of uncertainly? I believe so, especially if the government prints more money.

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boblawrence | (Level 1) Associate Educator

Posted on

I disagree with the first part of number 5's response...that Gold has no true value. That is not true.  Gold is a very valuable natural resource, and is used as a basic material in many industries, and, of course in dentistry and the manufacture of jewelry.  And it has an innate attractiveness.  There is no comparison between rolling around in a pile of paper money versus viewing and handling a safe full of gold bars.

I agree with 5 in recommending paying for and maintaining your house.

Also, at risk of sounding trite, I think you should diversify.  It would be a huge risk to put 100% of your savings into Gold. Gold is higher now than it has ever been.  But I remember when it was $500.00 an ounce when I bought Krugerands for my safe deposit box. It could easily go down to that level over a period of 5 or 10 years, and you would have lost more than half your investment.  You should seek the advice of a family friend who is wealthy and not a stock broker...perhaps someone who works at a bank.

boblawrence's profile pic

boblawrence | (Level 1) Associate Educator

Posted on

I disagree with the first part of number 5's response...that Gold has no true values. That is not true.  Gold is a very valuable natural resource, and is used as a basic material in many industries, and, of course in dentistry and the manufacture of jewelry.  And it has an innate attractiveness.  There is no comparison between rolling around in a pile of paper money versus viewing and handling a safe full of gold bars.

I agree with 5 in recommending paying for and maintaining your house.

Also, at risk of sounding trite, I think you should diversify.  It would be a huge risk to put 100% of your savings into Gold. Gold is higher now than it has ever been.  But I remember when it was $500.00 an ounce when I bought Krugerands for my safe deposit box. It could easily go down to that level over a period of 5 or 10 years, and you would have lost more than half your investment.  You should seek the advice of a family friend who is wealthy and not a stock broker...perhaps someone who works at a bank.

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pacorz | High School Teacher | (Level 3) Educator

Posted on

This discussion had me thinking all night. After some processing time, I have come up with another suggestion, spurred by National Public Radio's recent report on the baby boomer generation's erroneous belief that they will be healthy after they retire.

Your health has a huge impact on your finances as well as on your quality of life. Formulas that help people calculate how much money they will need to have for retirement use estimates of longevity, but almost never account for health decline during that lifespan. The National Institute on Aging's study, among others, indicates that those who are in good health will do considerably better financially.

So, bottom line, it's not just an aphorism; good health really is more valuable than gold. Making the effort now to improve your health and make the lifestyle changes that will protect you from long-term debilitating conditions is a genuine investment that will pay off financially no matter what happens.

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vangoghfan | College Teacher | (Level 2) Educator Emeritus

Posted on

The argument that has always impressed me most in favor of owning some gold is that it has never (so far as I know) been worthless in recorded history.  This unfortunately has not been the case with some government currencies, such as the Germany currency following World War I. Even if the present value of gold were cut in half, it would still possess some value.  Whether this will always be true of the dollar remains to be seen!  :-)  For whatever reasons, people always seem to have been fascinated by gold and have tended to value it.

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stolperia | (Level 1) Educator Emeritus

Posted on

The whole process of investing and hoping for a profitable return on investment is based on situations that go against your quest for an easy, foolproof investment. As previous posts have said, the best investment for you is the investment that allows you to preserve the value of whatever you choose to accumulate. That means you could use gold as your safe haven, but you could also invest in land, energy production, health care services, or any number of other possibilities.

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pacorz | High School Teacher | (Level 3) Educator

Posted on

I like what #5 has to say. I think that the only protection from a crash is sensible planning. Most Americans have bought into the idea of a golden, no-work retirement, a concept that was invented just after World War II; it may be time to recognize that the myth has run its course.

Land would be a sensible investment. Land that is forested offers the flexibility of selling the lumber and holding the land. In dry areas of the country, land that has good water on it or under it is going to be very valuable in the future. The only sensible way to work gold now that the prices are so far out of control is to learn how to gather it from nature, which is possible in a number of areas in the US. There's a stream near my home where gold panners can almost always get some gold dust or a few flakes; this summer that stream has been a very busy place!

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litteacher8 | High School Teacher | (Level 3) Distinguished Educator

Posted on

I'd argue that there are no safe havens.  Gold's advantage is that it is a physical thing that will always have worth, unlike a stock or even paper money.  American dollars kept in a mattress are probably safer than gold.  They won't gain value, but they won't lose it either- unless you are robbed.

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belarafon | High School Teacher | (Level 2) Educator Emeritus

Posted on

There is a misconception regarding gold and its price. Gold is only worth what we assign it in numbers; those numbers have no value except what we assign them here. The problem is that gold is not rising in value; the dollar is falling in value, so you need more dollars to buy the same ounce of gold. I think if you are trying to spend your money to protect yourself against inflation and a possible dollar crash, you should be prioritizing useful products instead of a yellow metal that serves no real purpose. Buy beans, rice, and a water purification system, pay off your debts, and make sure your house is maintained. If the dollar rebounds, your gold will become "worth less," even though it hasn't really changed, so you're better off using your dollars to protect yourself against the possibility of a valueless currency.

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literaturenerd | High School Teacher | (Level 2) Educator Emeritus

Posted on

I agree with both other posters. At some point, everything reaches its high point. Eventually, after this, it will either stay or fall. Hopefully, it will stay given the push buys and sellers have depended upon over the years.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

I agree with brettd here.  At this point, gold does not seem like the thing to be buying.  I do not think gold will go much higher because its prices are so inflated as is.  It seems very likely to me that you would end up with assets that are not likely to appreciate a lot in the long term.

If things go bad for a while, your gold will hold value better than a stock portfolio would.  But you had better sell at the high point (and you had better recognize where that point is) because I would bet that gold will go down once we get out of this rough patch.

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brettd | High School Teacher | (Level 2) Educator Emeritus

Posted on

Depends what you are seeking safe haven from.  Gold, silver and platinum are often included as part of an investment portfolio as a hedge against inflation (10% of the total portfolio is sometimes a suggested number).  So if your main goal is to protect against an economic crash, then buying some is perhaps an option and consulting with an investment broker might be wise.

But you mention the possibility of gold going higher in price depending on government monetary policies and the state of the economy, which suggests to me that you see it as an investment opportunity.  While it may very well go higher in the coming years, the rapid rise in the value of gold seems a speculative bubble much like housing or the .com bubbles of years past.  That is to say, it doesn't seem sustainable, and to invest large sums with prices already at a premium might be risky.  But once again, evaluate what your goals are in investing in precious metals before you make your risk assessment, and consult an investment professional as opposed to history teachers like myself on eNotes.

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thisuserhasmadeabadusername | Student, Grade 10 | (Level 1) Valedictorian

Posted on

Gold is NOT a safe heaven, yet actually fuelled by inflation of the ever-falling dollar.

 

If the dollar miraculously rebounds, the heavy-duty gold investors will face a VERY big problem.

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