May i know why paper gold is not a safe haven ?

And why paper gold is for short/mid term investment, whereas physical gold for long term ?

Just curious why is that so....

if the bank dat issues the paper gold go busted, d paper is nothing more than toilet paper. n its not insured by pidm... but then again.. sg bank looks safe to me.. not sure about others

physical gold has a higher buying selling difference price, if used for short term investment, rugi a bit. of course investment, go for instituitions offering better benefits.
physical gold can keep. regardless of which bank go bust, also can be sold else where.

This post has been edited by whyee: Jun 5 2012, 02:56 PM

if it is properly hedge then its OK provided the exchange pay them then its OK.
problem is they 1 2 make more $ and do not the hedging and when market move rapidly then kena caught and pass back the lost to you.

Ok understood. Thanks for the clarification.

Yes, you are cautioning the safety of the investment parked with a financial institution, which may go bust. I agree the risk is always there. In the 80s many Koperasi caused people lose a lot of money.

This post has been edited by EddyLB: Jun 5 2012, 03:45 PM

now im wondering should i cash out.. n earn rm8/gm... n wait for another dip n buy in.... headache headache

If think of the price, paper gold is cheaper. In addition, physical gold we have to think about where to store. And it could be stolen. When the bank is about to go bust, we faster go withdraw in physical gold form.

Come to think about it, the risk of holding paper gold is roughly like investing in share market. You put money with the company for a share certificate. If the company goes bust, the share certificate (now in digital form) is also a piece of waste paper.

I think paper gold overall has more advantage over physical gold

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Added on June 5, 2012, 3:57 pmI am buying more. I think the price will go up further. Just my opinion......

This post has been edited by EddyLB: Jun 5 2012, 03:57 PM

coz u see it like a share market... not commodity/hedge against inflation. btw, it cant hedge against inflation

he who makes and run away
lives to make another day!

Gold hedge against inflation?

Gold price was USD300-500 for almost 20 years while a cup of tea rise from Rm0.20 to RM1.00 in this period of time.

Physical gold price and paper gold pricing is the same.
If paper gold is not being defaulted, they are both the same.
If one said paper gold can't hedge against inflation, so does physical.

Paper gold can convert to physical gold. So to me, there is no difference. Paper gold save me a lot of trouble for keeping it safely. And it is cheaper too

If we talk about inflation, I dont think gold is a good hedge against inflation. Look at the US$ price over the years :

1975 US$150+
1980 US$600+
1985 US$300+
1990 US$300+
1995 US$300+
2000 US$200+
2005 US$400+
2010 US$1200+
2011 US$1500+ (highest US$1900+)

http://www.nma.org/pdf/gold/his_gold_prices.pdf

It goes up and down. If you bought in the early 80s and sell in the 90s, you actually lose a lot of money ! Only in recent years, gold made a lot of gains

I treat gold as a high risk investment. I think property is more of an investment hedge against inflation. Malaysia property prices steadily goes up with some minor adjustment along the way. It has not come down drastically before (yet ? )

money as in money does get devalued as time goes (do u feel dat ur buying power is weaken, like 1000 bucks now and 1000 bucks 20 years ago? huge devaluation rite?) but gold does not... in fact it gets more exp

You shouldn't think of it that way.
Because when you say that, you're saying money weakens against other items only but not gold because gold price increase.

the value of Money changes a lot. But when you calculate it, it's still always based on Gold value and you can ratio that number to anything else. Such as Oil, food, and other currencies.


inflation rate is always different in different countries. So there's nothing in the world which can actually hedge againts inflation except for the item itself.

Example, say if you buy gold to hedge againts inflation in Malaysia, your friendly mamak raises the price of drinks by 10 cents each due to less subsidy in sugar, but your gold price could drop because business in US and Europe might be booming. So in this case, the hedge might have work in US but not in Malaysia.



This post has been edited by n305er: Jun 5 2012, 04:48 PM

it was based on gold value, but now no longer jor

Gold does not?

Gold was USD 500 in the 80, now USD 1600.
But a cup of tea that cost RM0.30, now RM1.20
A bowl of mee, that cost RM0.50, now Rm4.00

How to explain this.

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Added on June 5, 2012, 5:03 pmA 500 FD in 80's after 30 plus year compunded, also become around 1600

This post has been edited by cherroy: Jun 5 2012, 05:03 PM

oh my cherroy.... i mean money gets devalued n not gold, of course gold does not get devalued, based on ur example given!

Money devalued?

A FD 500 also become 1600 after 30+ years, same gain with gold price!

Based on my example given is to point that gold can be a poor hedge against inflation.
Unless one bought gold in the early 2000, or prior before gold surged from USD300 level, after "hibernating for 20+ years.

mmm so u mean dat if msia is in bad shape but US and Europe are doin well, then gold is cheaper coz we "salvage" their gold when they sell their gold for some other things eh..

provided ringgit is still strong, which i highly doubt when malaysian economic growth is weaker than US n Europe. just my rebuttal... gagaga

I was only giving an example where politics can affect the inflation rate. The same can also happen the other way round when Malaysia is doing good while US is not doing so well.

It's not a salvage. But it's a comparison between price of goods and price of gold, both can be bought and sold in money. And when you say money, you also must take into account which money. US$ or MYR$ or Euro? etc. And also, when you say price of goods, it must also reflect from where you buy if from. From US, milk might be cheap but sugar is expensive. In malaysia, it might be the other way round.

But when it comes to gold, it is a raw material. Price of raw material is stable across all borders.

So I'm just saying, hedging gold against inflation is not right at all

ok, ur correct coz u take the average gain of FD.. FD gain was good... but now...

gold appreciation was bad before usd300lvl n now it shot up like mad.

still i prefer to hoard base metal instead of gold, but i got no space for them lol

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Added on June 5, 2012, 5:19 pmwhy is it hedging against inflation is not right... when u cant magically get few tons of gold instantly, but u can print trillions of dollars n cash in a short time

This post has been edited by endau02: Jun 5 2012, 05:19 PM