question about buying gold

[mamamelia]

we've finally put aside money to buy gold coins/bullions... i would like at least an ounce in each kids name for this year (and build upon that as time goes by, ideally i'd like about 5 ounces in each child's name + silver and thier term deposits), but i don't know what denomination to buy the gold in.
currently 1/10 of an ounce coin is selling at $138 AUD and 1 ounce is selling a $1037AUD... now obviously it's cheaper and more value for money to buy the ounce coin but for easy splitting up purposes it would be more wise to buy ten of the 1/10th's.... i would be paying $340 more for that priviledge... that's like a 1/3 of an ounce extra that i could of had, had i paid the same amount and went with the ounce coin.

i don't know what to do?? hoping to purchase tomorrow so i need help fast.. i'm through with waiting for gold to go down more than what it already is at. the last time i thought about purchasing was when it was @ $560 USD an ounce... should of purchased then but was foolish... so the time is now.

anyway...

what would you deem more important? all coins are proofed, authentic legal tender etc... do you think it's more important to have gold in small denominations to be easily used should the need arise (like if paper money becomes worthless)... or should i go for value for money NOW and deal with the "breaking up the coin" issue later as the need arises?

wwyd?

[Paxjourney]

If it was me I'd want to have it in smaller coins. Also look at silver as a good option . Best of luck to ya.

[mamamelia]

thanks! that's what i was thinking too.. but dh just said "value for money" so i am a little conflicted. also considering silver but i'll be getting that in one ounce coins and not any smaller (i don't believe they make them in smaller denominations anyway and a $30 an ounce it's not really worthwhile to do so). dh said not to even bother with silver but i'd like some... which brings me to my other question.... how much is too much in terms of commodoties? i mean there is a limited supply, eventually it has to run out.... but how much do i really need to store away though? we can afford an ounce of gold a month but do i really need that much? at what point would you just stop buying?

[llamalluv]

You can buy gold in any denomination if you aren't set on buying physical coins.

[Caneel]

I know someone that does this very thing and they get the smaller denominations under the reasoning if they ever had to use the gold, it was better to have the smaller amounts to trade/spend than a big one ounce pieces.

[mamamelia]

thanks guys.... i will be buying physical coins... in australia we have never had a history of our govt seizing gold coins in times of economic depression but i would still feel very safe knowing i have them physically and not on paper.. the perth mint has a superb history but i am nonetheless paranoid. of course, we pay slightly more for this priviledge too (about $100 per ounce, but its included in the price i quoted below - plus the coins are proofed with the amount, the purity and are recognized as legal tender when all else fails).

ok i think i may buy the 1/10th coins after all.... off to make our first purchase!!! happy birthday to dd!!! this is her "private" birthday gift for '08 (cause she won't find out till she is 25)!

[JTA Mom]

The few people I know who live in places where paper money is worthless have found that using gold coins would make them MORE vulnerable. It screams out that you have money & planning. Also, few people will take that much gold as a trade since it could be "faked", and not many people would know the true value of it. So, in every day life, you'd lose more money.

However, they find that jewelry gold (esp. plain gold wedding bands) is much easier to use and that it provokes less attention. Also, everyone more or less "knows" the going price of a gold wedding band, so you will get what it is worth, if you kwim. Kinda easy to take off your wedding ring as payment for food and hand it to the clerk without raising eyebrows. Something a gold coin would totally not do.

Ami

[mamamelia]

thanks for that perspective... the coins i am buying are legal tender though and issued by our government? there is no mistaking it's weight or authenticity.
http://www.ausbullion.com.au/coins.html (gold bullion investor coins)

i'm confused as to how they won't be recognized as authentic?

i do worry about the being vulnerable bit due to having a fair amount of gold coins.. but even if we owned copious amounts of jewellery, wouldn't we have the same problem? i don't know... would love to discuss this more!
where do the people that you are talking about, live at?

[Herausgeber]

I think gold is pretty dang near a peak at the moment, and when this credit bubble finishes deflating, you're going to see many commodities -- especially gold, which is drawing a lot of speculation -- drop precipitously in price.

[llamalluv]

Originally Posted by mamamelia

thanks guys.... i will be buying physical coins... in australia we have never had a history of our govt seizing gold coins in times of economic depression but i would still feel very safe knowing i have them physically and not on paper.. the perth mint has a superb history but i am nonetheless paranoid. of course, we pay slightly more for this priviledge too (about $100 per ounce, but its included in the price i quoted below - plus the coins are proofed with the amount, the purity and are recognized as legal tender when all else fails).

ok i think i may buy the 1/10th coins after all.... off to make our first purchase!!! happy birthday to dd!!! this is her "private" birthday gift for '08 (cause she won't find out till she is 25)!

In an economic depression, you are better off having goods to trade (food, clothing, gas/oil, etc), and weapons to protect your cache of goods. If people are starving, it won't matter how much gold you have on hand - people can't eat gold.

[mamamelia]

thanks for the heads-up guys!! good point about stockpiling other goods! we're not allowed to bear arms in australia... stockpiling food is good but what do i stockpile and how much... it seems risky to me to be stockpiling food as its perishable and who is to know when the shit hits the fan. i keep thinking of the Y2K hysteria where people were stockpiling food for what turned out to be absolutely nothing in the end. i'd appreciate any help in this category. now i am not thinking complete doom and gloom where i'd have to line up to get a bag of flour, but at least some hard times and trading gold may come in handy (as some people tend to trade and save it for when the hard part is over)..

see, i thought the price of gold may go down... i'm a little confused... when money is pretty much only worth the paper its printed on, commodoties go up and vice versa... so what's a person to do? right now paper money is slowly becoming somewhat worthless.. our inflation right now is 4.2%. everyone keeps borrowing, borrowing, borrowing and i can't see the credit boom deflating. i SURE hope it does at things can only get worse if it continues. right now, i can only think of getting rid of any personal loans/CC debt which we intend to do very soon... we can't pay off a mortgage by then and we do want to own our own place (or be on the way) as rental prices here in my city (and all around the country actually) are INSANE due to many forclosures (we're having record rates) and several interest rate rises by the reserve bank. but i am worried about saving a load of money only to have paper money end up being worthless in the end.. i can't imagine having some 50K in the bank that took lots of hard work to save only to have it worth nothing. what is everyone's plan? in my mind commodoties seem like a safe way to go even if they turned out to be useless during the hard part.. economy always picks up and i can probably reclaim what i spent when things start to pick-up. would love to discuss this further.

[EFmom]

Originally Posted by Herausgeber

I think gold is pretty dang near a peak at the moment, and when this credit bubble finishes deflating, you're going to see many commodities -- especially gold, which is drawing a lot of speculation -- drop precipitously in price.

ITA. My FIL bought gold during the economic difficulties of the 70s, and took a bath on it.

[CameronsMama]

Originally Posted by mamamelia

thanks for that perspective... the coins i am buying are legal tender though and issued by our government? there is no mistaking it's weight or authenticity.
http://www.ausbullion.com.au/coins.html (gold bullion investor coins)

i'm confused as to how they won't be recognized as authentic?

i do worry about the being vulnerable bit due to having a fair amount of gold coins.. but even if we owned copious amounts of jewellery, wouldn't we have the same problem? i don't know... would love to discuss this more!
where do the people that you are talking about, live at?

Not necessarily- the thing is this: if you pull out coins, people see your coins and know you have money. If you take a ring off your finger and trade it for food, people think you are giving up a prized posession to feed your family. Next time you go to the store, you put another ring on your finger before you leave. WHen you take your "wedding" ring off, people think you are trading a prized posession to feed your family. See the pattern? If people see that you've bought coins, they will know you have planned ahead and likely have more. If you stock up on jewelry that can be worn to the market (or wherever) as if it were always yours, people will not automaticlly assume that you've been stockpiling jewelry, since jewelry is normal thing to have while coins generally speaking are not.

[p1gg1e]

I look more into silver. coins are great. Not sure about for kids , because of them being played with.

We hide our coins and no way would they be found unless someone had days to find them LOL. so with our thrift store clothes and cr@ppy cars no one would think we have money...and we dont

[JTA Mom]

Originally Posted by mamamelia

thanks for that perspective... the coins i am buying are legal tender though and issued by our government? there is no mistaking it's weight or authenticity.
http://www.ausbullion.com.au/coins.html (gold bullion investor coins)

i'm confused as to how they won't be recognized as authentic?

i do worry about the being vulnerable bit due to having a fair amount of gold coins.. but even if we owned copious amounts of jewellery, wouldn't we have the same problem? i don't know... would love to discuss this more!
where do the people that you are talking about, live at?

When things get that bad, ANYTHING government stamped will look suspicious. Even back in the day when all people used were coins, people had ways of checking out the authenticity, which included weighing them. Also, people today aren't used to precious metal coins, so getting one will just not "sit" right with people, at least not for a while. And they aren't circulating enough that people are used to them and "know" what they look like & feel & stuff which will add to the anxiety. Don't get me wrong, they will take them, but only after heavily discounting their true worth.

As for the tons of jewelry, not really. Get "basic" stuff, like wedding bands or necklaces, something a lot of people can and do own. That way, each time you give one away, people think, like a previous poster said, that you are giving up a precious keepsake. That, and most people are comfortable with jewelry gold. It's not as pure as gold coins and it's something they've bought and sold before, kwim?

The most recent person I've talked to came from Argentina. He was a really good example because their crash is relatively recent and they were at a similar developmental (as far as technology, etc) level as we are. After their economy crashed in 2000 (I think, it was around that time), paper money pretty much became worthless, especially as time went on due to inflation. Apart from that, a lot of other things are going wrong, which I won't bore you with (PM if interested though, just don't want to write everything out, lol). The jist of what he said is that pretty much the shady people took over, mostly gangsters. These guys are used to dealing with jewelry, but gold coins would mark one as too different. Same reason he didn't wear anything expensive either. The key is to blend in.

Also, what a previous poster said about commodities is right on. I wouldn't stockpile food though. Things like toiletries are excellent bargaining tools. I remember reading an academic article about how lipstick during WWII was really scarce but how it was a treasured "indulgence." I think things like toothpaste, deodorant, etc are things that are more shelf stable and ones that will be more highly prized as a piece of "past normality." Also, things that will be desperately needed, like warm blankets for winter, etc are things people will use to bargain with before resorting to gold.

There's more, but Ds is demanding I feed him, lol.

Ami

[*MamaJen*]

Are you sure you want to be investing in commodities right now?
http://www.financialpost.com/story.html?id=780545
Also, there are a lot of reasons why investing in gold in case of national emergency isn't the most sensible move.

[MeepyCat]

I'm not a big fan of gold as an investment in case of national crisis either.

I can't imagine trading for gold in the event of such a crisis - I don't need gold, I don't know anyone who uses it for anything practical. It's pretty stuff, but it doesn't feed us or keep us warm. Is there some investment you could make that would increase your self-sufficiency instead?

[*MamaJen*]

Originally Posted by mamamelia

right now, i can only think of getting rid of any personal loans/CC debt which we intend to do very soon...

Do this before you invest in commodities.

[mamamelia]

thanks again! this has been very enlightening... i have just skimmed through the responses due to time constraints but yes we will definitely be getting rid of CC/personal debt before investing in more of anything (whether it's money going to the term deposit etc). we don't owe too much, so thankfully we will be ok.... just the mortgage really but i can't see us getting rid of that any time soon...

will write more later...