Economics Questions

Re: Thinking about converting my paper savings bonds into gold

Andrew — Wed, 25 Jun 2008 02:23:22 GMT

Because silver is used up by industry far more than gold, its supply is diminishing rapidly. I own 5 10oz bars and 50 1oz rounds myself

Re: Thinking about converting my paper savings bonds into gold

Biodemocracy — Tue, 24 Jun 2008 21:49:28 GMT

It's unfortunate that 1 oz. American Eagles only have a $1 US legal tender face value where today 1 oz. of pure .999 fine silver is trading for $16.67 US. Ridiculous if you ask me!

Re: Thinking about converting my paper savings bonds into gold

Steve1225 — Tue, 24 Jun 2008 21:10:31 GMT

I am going for a half ounce and a few 1/10 ounce american eagles

Re: Thinking about converting my paper savings bonds into gold

fsk — Tue, 24 Jun 2008 13:31:54 GMT

If you have savings bonds, you're earning a negative inflation-adjusted return. The bonds probably pay 2%-4%, while inflation is 20%-30%.

I'm considering the possibility that gold is a better investment than the stock market!

Recently, there have been VERY few years where a gold investment lost money, denominated in dollars. If you hold your gold for at least a few years, you're practically guaranteed to outperform bonds or a money market investment.

If you have only $600, that isn't enough to buy an ounce of gold. Have you considered silver? You can buy 1 ounce rounds or "junk silver" (pre-1960s US silver coins).

If you're really concerned about buying at a market maximum, perform "dollar cost averaging". Convert $300 to silver now, and another $300 a year from now.

I'd buy $600 in one ounce silver rounds, if I were you. You could try a local coin dealer, or try an Internet dealer. I haven't bought any metal yet.

Re: Thinking about converting my paper savings bonds into gold

jimmy — Tue, 24 Jun 2008 08:12:39 GMT

There's always a risk of this. However, as far as your "potential interest" is concerned: current real interest rates are negative (i.e. bond yeilds are below inflation) so I'm not sure what you're worried about. Would you rather have guaranteed losses?

In view of the fact that inflation is currently a problem, something like gold would seem like a logical choice. It's purpose in life and the whole reason people around the world used it as money for millenia is precisely that it cannot be easily inflated. It will hold it's value over the long haul (but will not attract interest).

Your other options, of course, are stocks (which could also be argued are at bubble price levels) and housing (bubble)? It looks like bubbles are everywhere to me... which sounds an aweful lot like inflation. Hang on, what's the hedge against inflation?

Thinking about converting my paper savings bonds into gold

Steve1225 — Tue, 24 Jun 2008 01:35:51 GMT

I have over $600 in paper U.S. savings bonds and I am thinking about cashing them in and buying gold coins. I have one question, is the price of gold increasing rapidly because it is a bubble? I don't want to cash in my bonds and have the price come crashing down and loose the potential interest that would have accumulated over the years, thanks.