401k and buying gold

[DEADn]

I have been noticing gold inching up and up and up which shows the dollar getting so much weaker. I hear commercials for buying gold but I don't quite understand the principle. To me it seems that you buy gold and have it as collectible. Maybe I am missing something in translation.

1) How does buying gold work. Is it an investment like a 401k or do you literally get gold coins?

2) I currently give 5% to my 401k with the company matchin 3%. With the uncertainty of the dollar I am wondering if I should put some of this money into gold since it is a bit more stable.

Any advice, opinions?

 

[Nssca]

Thats a good question, Id like to know myself.
I would prefer to have the gold I buy in hand instead of some piece of paper.

 

[bushwacker2.0]

I go by Dave Ramsey's advice on this. before you invest in anything else you should have 15% go to retirement. He states in his class that since the Roman Empire no fallen country has ever reverted back to gold currency. Invest in mutual funds instead. Go to his website for all his recommended steps for getting rid of debt and accumulating wealth. not sure on the rates but didnt take gold 30 years to see a 600 or 700 dollar increase. Good mutual fund 8% a year.

For what it is worth

 

[DEADn]

I go by Dave Ramsey's advice on this. before you invest in anything else you should have 15% go to retirement. He states in his class that since the Roman Empire no fallen country has ever reverted back to gold currency. Invest in mutual funds instead. Go to his website for all his recommended steps for getting rid of debt and accumulating wealth. not sure on the rates but didnt take gold 30 years to see a 600 or 700 dollar increase. Good mutual fund 8% a year.

For what it is worth

Sounds similiar to what a financial planner told my wife and I. I have all my stuff in company stock. It is a supermarket company in the Southeast and constantly outperforms the other grocery stores.

I don't have a problem with debt. Just have a mortgage and a home equity loan. Everything else is paid up.

According to your post, since the Roman Empire fell, and if America's currency falls then gold will have no value? Or it will not be accepted for currency? When I think about it, what would happen if you use gold to pay for something?

 

[bushwacker2.0]

If paper currency and the economy collapses would you trade in todays terms $1000 dollars worth of goods for a 1 ounce gold coin? If the economy is fine and you went to sell your gold coin would you expect to get the going price for an ounce of gold when you need the money now?

Say you bought a roll of 1 ounce gold coins with no markup at $1040 a piece. You would most likely have to or want to buy a safe. Until gold reaches a point that offsets the cost of the safe you will be in the hole what say $600. If you rent a safe deposit box at your bank, what are they 30 bucks a year?, the gold will need to go up in value that much a year to break even. If you already have a big safe great. Now you just need to wait for that slow steady climb on the value of gold.

I like gold. I cant afford it, but i do have a roll of silver coins. When i am a grandpa they will be good christmas gifts to give out to the grandkids every year. Coins are neat but i view them as a collection not an investment. With all this said if i had a wealth of paper money I would buy some. Something appealing about shinny gold coin.

 

[Coon]

I actually prefer silver more at this point. Both are expensive right now, I was hoping for it come come down a bit before purchasing.

 

[Nssca]

I go by Dave Ramsey's advice on this. before you invest in anything else you should have 15% go to retirement. He states in his class that since the Roman Empire no fallen country has ever reverted back to gold currency. Invest in mutual funds instead. Go to his website for all his recommended steps for getting rid of debt and accumulating wealth. not sure on the rates but didnt take gold 30 years to see a 600 or 700 dollar increase. Good mutual fund 8% a year.

For what it is worth

Those who advise you to invest in any thing but Gold have a vested interest to do so. Gold is the standard by which all world markets base their current currency value on. How could Gold not be the best investment? I would how ever not just invest in Gold but other things as well.

 

[PsyT]

no you don't actually get gold, haha. Back in the day we used to buy gold and trade them back and forth in exchange for large quantities of drugs ("legal" of course ). Its all on paper though. E-gold. Somebody has the gold...not you ever though

You just have an account that is linked to the gold.

 

[Big A]

It's your choice - you can either hold the certificates and a mint holds the gold bars for you or you can hold the bars yourself.
Gold bullion is very fluid. you can take it to any of the countless bullion banks all over the world and get cash on the spot. In most countries, it is exempt from customs' declarations - you can have 100kg in your luggage and you don't have to declare it when you cross borders - you have to declare any cash over $10k or any jewellery and diamonds are illegal to cross borders in most countries.
That is because countries want as much gold bullion within their borders, so they don't put any restrictions on it.

Gold bullion is a brilliant way to put your money in, to have your money more secure and in a lot of cases, more liquid than cash.

Real life example - a couple of years ago, I went to MX, picked up 26kg of certified bullion bars from one of the mines (I got it at half price), flew to LA. Customs in LA asked me what was in the luggage, I told them gold bullion bars, they opened, looked and said 'Make sure you don't get robbed!'. Got off the plane in Sydney - I dind't have to declare the bars (had an official letter from the Aust Customs dept and AUSTRAK stating that I dont' have to, just in case) went straight to a bullion bank close to the airport, who I called in advance to know that I was coming, gave them the bars at full market rate, they gave me the cash, and see you later.

 

[JuiceRoad.com]

The gold that government and people owns make currency stronger. Its a good thing but handling can be an issue.

 

[weight]

where do you get gold bars? and are yall mainly geting i assume 24k stuff? i dont see much jewely at 24k only 22k and lower?

 

[DEADn]

Is investing gold a much better investment than a 401k then? My 401k is in my company stock. It is a supermarket chain and a strong one at that. I have 5% a week going into it. With the value of the dollar unsteady an going down I am wondering if I should switch my investment over to gold and how it would work. I would have to make the transaction myself as opposed to having it automatically taken out of my check like it is now.

 

[Steve123]

Is investing gold a much better investment than a 401k then? My 401k is in my company stock. It is a supermarket chain and a strong one at that. I have 5% a week going into it. With the value of the dollar unsteady an going down I am wondering if I should switch my investment over to gold and how it would work. I would have to make the transaction myself as opposed to having it automatically taken out of my check like it is now.

401k plans are required to offer sufficient investment selections to properly diversify your assets. I never recommend that a worker have 100% in company stock. That is about the worst thing you can do. Look at the fund line up and diversify based on your age and other risk factors. PM me if you have questions. "Gold" is probably not an option in your 401k plan but you likely have other options available to properly diverisify away some of the risk factors that would drive you to invest in Gold...Namely the fall of the us dollar:

Gold is a commodity and there is only so much of it. The US dollar is a piece of paper and our treasury can make as many of them as they choose too. YOu know how you hear on the news that the Fed is lowering interest rates?? They do this by instructing the Treasury to print more money. Although the Fed is pretty much in a holding pattern for a while, monetarty policy, as it's called, is loose.... Which equals, generally, a weak dollar. The concept of buying Gold is simillar to buying anything in limited supply - nobody can dilute it by making more of it - e.g., Gold, Oil, Silver, etc. When and if Rates begin to climb and some measure of inflation becomes a factor, you'll probably see the run up in Gold reverse.

Gold is not a bad investment right now but most of it's run-up is probably priced in already - not that it doesn't have a room to grow. But most people in this business agree that we've probably seen the wort of the economy at this point. In your 401k plan, you probably have an international equity fund. That is another way to get similar diversification, albeit not the same by any means - i.e., the us gov has less influence on overseas companies. The company that I work for right now is recommending a much heavier weighting in international funds at this point... Food for thought.

Just my two cents.

 

[dwil]

Is investing gold a much better investment than a 401k then? My 401k is in my company stock. It is a supermarket chain and a strong one at that. I have 5% a week going into it. With the value of the dollar unsteady an going down I am wondering if I should switch my investment over to gold and how it would work. I would have to make the transaction myself as opposed to having it automatically taken out of my check like it is now.

If I were you, I would continue to contribute in to your 401k. Like Steve123 mentioned, the most important thing you can do in your 401k is diversify you investments. Never have all of your eggs in one basket.

If you don't know where to properly allocate what you're investing in, you can always have an advisor look it over for you to give you some good advice. You can PM me your options as well, and I'll let you know what I think.

I don't know enough about investing in gold to give you good advice, but it is trading relatively high right now (Up 19%) because most analysts are speculating the dollar will extend its slump (Dollar down 7.2%). To stop investing in your 401k and start investing in gold is going to be a little tricky for you to do yourself so make sure you consult with an FA before you make any decisions. I hope this can help you. PM me if you need anything

 

[Tyrone]

It's your choice - you can either hold the certificates and a mint holds the gold bars for you or you can hold the bars yourself.
Gold bullion is very fluid. you can take it to any of the countless bullion banks all over the world and get cash on the spot. In most countries, it is exempt from customs' declarations - you can have 100kg in your luggage and you don't have to declare it when you cross borders - you have to declare any cash over $10k or any jewellery and diamonds are illegal to cross borders in most countries.
That is because countries want as much gold bullion within their borders, so they don't put any restrictions on it.

Gold bullion is a brilliant way to put your money in, to have your money more secure and in a lot of cases, more liquid than cash.

Real life example - a couple of years ago, I went to MX, picked up 26kg of certified bullion bars from one of the mines (I got it at half price), flew to LA. Customs in LA asked me what was in the luggage, I told them gold bullion bars, they opened, looked and said 'Make sure you don't get robbed!'. Got off the plane in Sydney - I dind't have to declare the bars (had an official letter from the Aust Customs dept and AUSTRAK stating that I dont' have to, just in case) went straight to a bullion bank close to the airport, who I called in advance to know that I was coming, gave them the bars at full market rate, they gave me the cash, and see you later.

I know you're covered but next time let a bruther know...I'll do security or even just be your bitch if you want...Hell, I'll pay my way just to hang out with ya

 

[Steve123]

If I were you, I would continue to contribute in to your 401k. Like Steve123 mentioned, the most important thing you can do in your 401k is diversify you investments. Never have all of your eggs in one basket.

If you don't know where to properly allocate what you're investing in, you can always have an advisor look it over for you to give you some good advice. You can PM me your options as well, and I'll let you know what I think.

I don't know enough about investing in gold to give you good advice, but it is trading relatively high right now (Up 19%) because most analysts are speculating the dollar will extend its slump (Dollar down 7.2%). To stop investing in your 401k and start investing in gold is going to be a little tricky for you to do yourself so make sure you consult with an FA before you make any decisions. I hope this can help you. PM me if you need anything

Good advice here..

I would only add by clarifying the following:
When you decide to not invest in your 401k plan, you are loosing the tax advantage first; the company match, to the extent that it applies, second. Those two factors make it almost impossible to get the same overall return from any investment outside the plan. Let's say you are paying a combined tax (state and Federal of 20%) and the plan matches 3%. Do the math. Gold, or any investment for that matter, would have to go completely off the charts before you would even break even on a dollar:dollar basis. In short, it just ain't gonna happen bro! Not unless the US economy sinks into 3rd world status.

And... before anyone chimes in to say "just put the money in IRA instead". Yeah, you can but you will not get the Tax deduction if you are "covered" under another qualified plan, which this guy evidently is.

 

[TRYN2]

Gold fluctuates with inflation ... cycles like everything else. Look at a 17 year table...

Also, don't think the dollar would truly be really worthless. For the dollar to be truly worthless that would mean you walk into 7-11 and they won't take your $50 dollar bill for anything.


Not going to happen.


But, for those who think so ...


go ahead and rack up on metals, soup cans and potted meat and dig that bunker a little deeper for your new precious metals. Once you are down in there really good I will let you know what the sand feels like between my toes in the carribean as I spend my benji's that are worthless...

Focus your energy on earning and let our capital market system work. You can complaign all you want and speculate on the value ... or you could keep forward momentum and earn more money with your worthless money.

 

[MrStick]

You can also buy some ETF's like GLD which tracks the cost of gold or the ETF GLL which shorts gold. I feel like gold may have peaked recently. The ETF play is good because you can trade it during the day and do not have to worry about the actual coin/buillion.

 

[Acadian]

Been awhile since this thread has been active, but I'll take a stab at recessitating it because it is very interesting. A note about 401k's: do not invest in them any further than the company match UNLESS it is self-directed, which means stock options. Most of the time, 401K's offer only mutual funds, and the money that you save in taxation is but a fraction of the money that you will lose in expense fees if you are contributing pass the match. That 8% historic market return DOES NOT include mutual funds expense fees. Take that money, learn to value invest using "Rule #1" principles like Warren Buffett and Phil Town, and realize an average compounded rate of return of 15%+.

 

[Comp61]

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