If Gold is such a GREAT investment then why are all these companies wanting to sell me theirs?

[Logical]

I called three of them and they said they actually owned the gold, they are not brokers between buyers and sellers.

So I asked them "If you are sure Gold is going to increase in value then why are you selling the gold you own?"

Total silence and then a bunch of BS from them about helping people get into gold.

What a scam.

[Fumesucker]

1. If stocks are such a GREAT investment, then why are all these companies wanting to sell me theirs?

Don't get me wrong, I'm not a goldbug (although I have a relative who is pretty close to one) but your argument works for a lot of other "investments" besides gold.

You get any "investment" from someone else and the argument is implicit, if it's such a great investment then why did they sell it in the first place?

[DJ13]

3. +1 Good point

[FreeJoe]

17. Selling isn't always done by bears

Most companies sell stock for a variety of reasons. Usually, it is because they need additional capital. They make the decision that if they sell a certain percentage of the ownership of the company, they can use the proceeds to make the remaining portion that they still own worth more.

In other cases, owners do it to "cash out". They may still want to keep some or even most of the company, but they want to lock in some of the value. If virtually all of your net worth is tied up in a single company, you may still feel great about the company but want to sell off a portion to diversify your holdings.

Finally, some growth companies like to sell some shares to establish a value on the remaining holdings. That allows them to use those retained shares as "money" for purchasing other companies.

I've never been in a situation where I've owned a stake in a private company going private, so I really don't have personal experience with it. I have had many situations where I've held stock in companies that I was very bullish about, but sold some or all of my shares for portfolio balance reasons. A good example is the company that I currently work for. I think the stock is a great buy. When some of my stock grants vest soon, I'm going to sell them anyway. It isn't because I don't think the company will do well. It is because I already have so much tied up with the company (my job, unvested stock and options, my pension, and even my annual bonuses) that I don't think holding the stock is prudent from a risk management perspective.

[Fumesucker]

18. That was kind of my point..

Things are more complicated than a simplistic analysis reveals, that's true in the case of stocks as you show so well and it's also true in the case of gold.

Basically I always figure that if someone is trying really hard to sell me something it's not all that good a deal to start with, real bargains seldom come knocking on your door, you usually have to go and seek them out.

[TheWraith]

2. Yep, they're a scam.

Gold is only as good an investment as any commodity is, really. It's value is just as arbitrary and imaginary as paper money, even though it's been built up as this ultimate hedge, more than a little driven by people who imagine some kind of collapse of society and that afterwards they'll be rich because they've got gold. The reality of that is that if there's still a government, your bank account will remain intact, and if there isn't, your gold will be worth a lot less than if you'd invested that same amount of money into canned goods, ammunition, and tools.

Of course with those companies, the scam is usually to try and sell people gold COINS at vastly inflated prices, rather than straight gold bullion.

[global1]

4. I Never Bought Into Gold Because I Question Its Liquidity......

This is the question I have of those people that buy gold coins and squirrel them away.

If the dollar tanks and gold is as good as gold - how do you use it to buy something? How do you get change back from a purchase. I know I must sound really naive here - but I really don't understand investing in gold.

[Fumesucker]

6. There's plenty of illiquid investments..

Real estate is a prime example.

How do you get change back when you make a purchase using real estate as your currency?

Disclaimer, I don't own any gold (or much of anything else really at this juncture).

[global1]

11. Usually Real Estate Is A Long Term Investment....

I don't see Real Estate as a very liquid investment. Gold. however, seems to be a little different.

A couple of my friends invested in gold coins. They take possession of the coins and stash them away in their safety deposit box. Their fear is that the dollar will tank and they would have gold coins that would hold their value or appreciate even more.

I asked them what are they going to do with the gold coins if the dollar tanks. They could buy something and use a gold coin for the transaction - but how would the seller make change for them. I don't think that a lot of people will have gold coins and any transactions - in my mind - would be difficult. Gold is usually sold by weight and weight would determine its value. Are we going to go back to gold rush days where we'll trade in gold dust or melt the gold down?

Neither one of them could give me an answer.

Even if you had purchased gold and someone else was holding it for you - if the dollar tanks and you call them up and say you want to cash in - what do you get?

Again - unless I'm naive - I just don't understand gold.

[Art_from_Ark]

13. Your friends don't sound like very sophisticated investors

Anyone who has seriously been involved with gold for any length of time knows that you don't try to use gold coins in day-to-day transactions. There will always be paper money, and that's what people will still accept, even during time of high inflation. The problem with paper money is that it can be made in unlimited amounts, which tends to erode its value over time. I've seen that happen during my lifetime with all currencies I have been familiar with. Other countries (such as Mexico, Serbia, Brazil, Argentina, Chile, etc., etc.) have seen far worse inflation than the US has, and people in those countries who bought gold came out much better than those who tried to retain confidence in their country's paper. When they had to cash in some gold (or silver) to pay for something, they would sell it to a dealer at the going rate in the local currency for that day, or maybe sell it for hard foreign currency.

[Fumesucker]

14. You buy tanked dollars with the gold..

If by "tanked" you mean "devalued", that's implying the intrinsic value of gold will remain the same hence it will be worth that many more devalued (against what?) dollars.

That's what you use for everyday transactions, the devalued dollars you purchase with your invested gold.

[Mopar151]

5. The smartest finance man I ever met said it best:

"You don't want to buy investments when they are expensive!" I hadda roll over a 401K quick, and he was explaining why I should change my investment mix. My REIT's had about topped out, and he told me a mutual fund of utility stocks was a good move - right after Enron had bankrupted PG&E and others, and the funds would be buying undervalued stocks.
He was right on the money, and my investments did well as long as I had 'em. The 401k is long gone, sadly, on account of the shellacking we all took in the last decade.
The gold bugs are trying to sell stuff that's expensive - it's simple, really. That's how bubble economics works. And the "spread" between buy and sell is too big on gold, in any sort of quantity us mortals can deal in.

[bemildred]

7. "Sell High".

You, of course, would be buying high, which is not the idea.

[Art_from_Ark]

8. Speaking as someone who has been involved with gold since 1968...

You have basically three types of players in the gold market--

1) Investors, who are in it for the long haul.

2) Speculators, who are in it for a quick buck.

3) Dealers, who make their living buying and selling gold and other precious metals.

If I am a dealer, I can't sit on my inventory, even if I think it will be worth 15% more within a year. I have to keep moving it in order to generate cash flow. I have to pay bills, including rent and maybe wages, so I have to take some profit for myself so that I can live and keep being a dealer. I buy and sell at a spread-- that is, my sell price will always be higher than my buy price. It shouldn't be so difficult to understand, since that is how it is with all dealers, including retail merchants.

On the other hand, if, as an investor, I can see a return on my investment that beats bank rates (and these days, that's not hard to do), then I am happy. For reference, gold is up roughly 25% from this time last year.

[Fumesucker]

9. I thought this was interesting, a ten year chart..

I don't pay any attention to gold myself and didn't realize how steadily it has risen.



Your explanation was well put, thanks for sharing your experience.

[Motown_Johnny]

10. Have you seen the "we buy gold" places ?

They buy way under market value then sell to dealers at market value who sell to you at way above market value.

The more they can turn the more they make.

With the economy so bad people are desperate and selling valuable items for next to nothing. Their profit margin is big enough that sitting on it and waiting for it to increase in value doesn't make any sense.

[Art_from_Ark]

12. You have to know who to buy from and who to sell to

Like any investment, you can't just jump into it head first-- you have to do your homework. Don't ever sell to a "We buy gold" place. Instead, before you buy anything, buy or subscribe to publications like Coin World or Numismatic News (weekly numismatic publications), and join online forums like Collectors Universe or Coin Talk to get a true feel for the market, and to learn how others who have been in gold for years if not decades buy and sell it.

[ciaoant1]

15. Modern serfdom for the workers, endless money-printing and gold as the ultimate anti-investment

Here's a good read on the subject:
http://whataboutmarx.blogspot.com/2012/02/modern-serfdom-for-workers-and-gold-as.html

[former9thward]

16. Gold has gone up for 11 straight years.

It is still going up this year. It is the only asset class where that is true. If you don't want to be part of that increase so be it. It is your money to lose. The price of gold increases because both the U.S. and the EU are trying to print money to get out of debt. That makes the value of the dollar worth less every year and the price of gold increases as a result because it is measured in dollars.

[Initech]

19. What's worse is Cash-4-Gold places are popping up everywhere.