Thanks for the advice. What is the best way to invest in gold? Through the stock market by buying shares in gold companies or actually buying gold?
If/when you buy gold coins or bullion, all you are doing is freezing the underlying value of your money. Pounds, dollars, Euros all lose value in the form of inflation and that may be running as high as 20% right now. The ONS can claim 10% with a straight face because they keep changing the basket of goods and services, conveniently forgetting that people change their purchases because of rising prices - the Sunday beef roast becomes the Sunday roast chicken - and so on.
NEVER buy shares in any company you do not understand. Do they own their IP? What is the level of receivables? Inventory? Debts? Have you read all the covenants on debts? Are the insiders buying or selling and at what price?
Gold/silver mines - have you studied the geology reports? Is Sprott Capital also investing? Has Rick Rule bought shares in that mine? Is it in a safe jurisdiction like Australia, Canada, or the US? What do their P&L and cash look like? Is the thing big enough to be a takeover target?
Never heard of coins of the realm. i'll look into it a little bit more as you've piqued my interest!!
Gold coins issued by The Royal Mint. Just remember that gold maintains its value. Fiat currencies always tend towards becoming worthless in the end.
Mines are more volatile than the precious metals they dig up and junior miners (mines yet to hit pay dirt) are a funky way to play a very long game - I own 12, but they are extremely speculative and really only something my grandchildren will benefit from, if at all! One of those things one buys and forgets for at least 10 years!
If you are itching to lose money, wait until the recession hits hard and is right at the bottom of 'The Valley of Despair' and then buy a tracker fund - probably that S&P-500 tracker. That way you know that your money is tied to the fortunes of the 500 best-managed companies in the US. Othe indexes are available.
One market I am watching closely is water - it will become a very valuable commodity because there is too much of it in some places and too little in others - so those companies that specialise in pumping water/sewage/oil, etc. will prosper. Important is to know what IP they own. Here, insider knowledge is everything. It's one thing to read the P&L and see a healthy balance sheet, it is quite another to talk to someone in R&D about a new submersible bearing or water management system they have developed.
It is important to remember that when the market tanks, good companies get sold off to cover positions in bad companies because of those pesky margin calls. So it's a case of waiting for the Big Recession again! In business, profits are made when you buy and realised when you sell.
