How to convince someone to switch to gold

[KevinR]

Hi I currently have half of this year's student loan along with some of my own money sitting in my bank account, and I want to switch it into gold, though my parents don't really think it is wise. Do you have anything I can show them that is legit (not a blog, and not from Ron Paul) enough to convince them to change their minds? Thanks.

 

[KMA-NWO]

it's your money, they don't need convincing.

it's like saying "i need you to convince my parents that going broke isn't a good idea"

 

[FreeMarketEconomy]

Hi I currently have half of this year's student loan along with some of my own money sitting in my bank account, and I want to switch it into gold, though my parents don't really think it is wise. Do you have anything I can show them that is legit (not a blog, and not from Ron Paul) enough to convince them to change their minds? Thanks.

If you have such a great idea then people would spend their hard earned money on your idea.

Its like if you had a great business idea. It is only a really good idea if people actually invest their hard earn money on it. If they don't then and are just all talk then there is probably isn't a good reason to take that risk.

With investing you shouldn't let your emotions control you, just because you heard a hot tip.

Gold doesn't really increase it's absolute value, it just stores value.

 

[KevinR]

Well my mom is a co-signer on the loan...and she says "The money we have in the bank is federally insured."...

 

[123tim]

Kevin,

This really isn't advice....it's more of a hypothetical question to consider:

When I was in your shoes (long ago) I burned through what money I had saved (through the previous summer) pretty fast. College was expensive - it seemed like every penny counted. By spring most of my money was gone.

What if you invested your money in PM's and the price dropped by 1/2 just when you needed the money the most?


This is just a question. I have no idea where Gold will go. It could double in price tomorrow and never come down. I definitely (My opinion) think that it will go up in the long run.....it's just a question of what it might do in the next few months of up and down cycles.

 

[Mahkato]

Precious metals are not liquid assets. That is, it's not very easy (under our current system) to trade an ounce of gold for a new computer, or an ounce of silver for 10 loaves of bread. PMs are primarily long-term savings vehicles as a hedge against inflation. The best argument to own PMs is to demonstrate that inflation will be considerably higher than the rate of return you're likely to get from a bank CD or on the stock market. It's not a very good idea to use loaned money to buy things. Go get a job, earn $100, and buy yourself a few ounces of silver instead of a few cases of beer.

 

[SevenEyedJeff]

I agree with Jonathon's assessment that a little silver might be a better idea, unless you have a LOT of wealth you want to convert to a long term store of value in gold. Anytime you feel the urge to buy beer or some trinket you don't need, stop at the coin shop instead and pick up a few ounces. That sounds like a good idea to me

 

[Josh_LA]

show them the prices

www.kitco.com

and say "can you afford to be wrong?"
What's the worst if I'm wrong in gold?
If they still can't even consider putting part of it in, I have nothing to say, other than, sorry.

 

[BCR_9er]

Gold and Silver have held their value for thoudsands of years! Paper only holds it's value only for a few years (the dollar is only worth 2.5 cents since the fed came in 1913). With the more coming bailouts, the dollar is going to shrink even more! Show them this video: http://www.youtube.com/watch?v=z6NfXk7Bvc8. Good luck!

 

[Kludge]

Errr, when do you plan on going to college?

If within a few months (and under $100,000), keep it in a bank. The populists seeking to be re-elected would never let your guaranteed money be so unsubtly stolen. It's incredibly unlikely that inflation will become extreme enough to be worth the risk. Speaking of risk, I know many people who own gold that check the price every single day (sometimes multiple times) because they are so fearful of a gold selloff. It also doesn't guarantee a return on the base investment. Keeping it in a bank guarantees you'll still have money when you go to withdraw and will have a tiny amount of gain too (less inflation).

If you won't be leaving for at least a year, only then should you consider converting your money to gold or silver, but remember that it isn't an investment and try not to worry yourself with the fluctuations in value of the metals... Honestly though, even then your money would probably be safer (though you'd lose some money to inflation) in a bank.

 

[Knighted]

As others have said, the price of gold could be anywhere next year or five years from now. It really depends on what your objectives are, which you haven't stated. If it's to keep the money safe from the bank pulling a disappearing act on it, it will be safe in an FDIC bank account. If it is short term money that will be spent in the next year or two, I would leave it with the bank. If your worry is hyperinflation over the next year or two, I wouldn't fear. The odds of that happening may exist, but they are low.

If it's money to be invested for the long run, stocks are simply the best option. Gold and silver may preserve against inflation over the long run, but they barely increase in value at all.

 

[fj45lvr]

Can you afford to "save" this money and not need it for living expenses??

If you can legitimately "save" then Gold could provide some insurance because it has a MUCH better chance to NEVER BE WORTHLESS (unlike fiat currency and financial paper securities).....however I wouldn't bet that it will give you a guaranteed positive increase in the money saved (there is a fellow at the Mises institute (North, I believe) who was bearish on Precious Metals in what he believes is a contraction of world economies which will reduce the demand because the people can't afford to pay higher prices (I have no idea if he is right or not.....but it may likely be more accurate to say that some other commodities would be more valuable in either case of deflation or inflation (but less convenient to "store" if you don't own property)....

Metals are really good for "portability" and will be desireable forever (unless they find a MASSIVE deposit somewhere)

 

[Zippyjuan]

Using borrowed money to invest in anything is not a good idea. You should have a few different levels of money- and not everybody will have all levels. First is enough money to pay your every day bills without borrowing. Second is to have enough to be able to pay all of your bills for at least six to eight months. This is to cover you if for some reason you no longer have any income. Both of these levels should be in safe, and easily accesable places like a bank account. Only after you have both of these should you move onto Level 3 which is money for investments which buying gold would be considered. Nothing always goes up- and anybody who has thought so has lost money. Level 3 is for money you do not necessarily want to but could afford to lose if the investment went bad.

If you had purchased gold in 1980, today- almost 30 years later- you would still have been better off just keeping that money in cash since the price of gold in dollars (not even considering inflation) is still lower than it was then. Gold was at $850 an ounce and some people were saying it could go to $1000 or even $2000. It did neither. It went down and stayed there until just recently. There is no guarantee that it will go higher in the future than it is is now. It could. But it could also go down. Can you afford to wait that long to get your money back? On a school loan- no way.

For a long term investment, metals can be fine, but you do not want to take the risk with the money you have right now. You need that for school.

 

[KevinR]

I'd advise leaving the school loan funds in the bank - they will either be perfectly fine - or it won't matter because if TSHTF you won't be going to school anyway.

I'm going to go with this. Though I'm going to look into trying to pay the school for next semester in advance if I can.