Monday, July 4, 2011

Gold Has Always Been Expensive

At least to me.

I have been wanting to write on this thought but did not get around to it until today.  I have had a lot of time to think and write today...

EVERY SINGLE TIME I have bought gold, it has always seemed "expensive", even when the price was much lower.  Some of my gold I got when it was in the $300s...  I remember thinking especially hard about this some 12 - 15 years ago (+/-) when I paid $500 for an Eagle (I almost had "Buyer's Remorse"...).  $500!!!  EXPENSIVE!

And yet, each time, buying in small amounts over many years, it has never seemed cheap, not at all.  It always felt like I was shelling out a lot of dough for a shiny yellow coin or two.  Not long ago I bought two ounces more, and I sure did FEEL like paying over $3000 was a LOT for two shiny coins...

Or is that maybe the point?  That gold should be expensive...  And I do not mean to play word games here (eg, what does expensive MEAN?).

I know that psychology now enters the picture here, but does gold feel expensive to YOU when you buy it?  Has it ALWAYS felt that way?

I am very interested in your comments or emails on this!


  1. always feels expensive to me too bob.
    If you think about it for a while, you realise how few people actually own any gold. I imagine even those of us who do have some, do not have a lot.The average person lives paycheck to paycheck, so no metals.
    For myself, i didn't feel comfortable with gold, until i had enough that i did not really care anymore what the price is.Not that much, but I do not worry about missing out on covering my ass any more. No doubt the amount will differ for different people, I am not greedy.

  2. When we buy gold we forego spending the money on other products and services and choose to spend it on a small piece of metal that cannot be consumed nor give us the instantaneous gratification our modern society has conditioned us to want. In this sense it seems natural to me gold should feel expensive as it does not really fit in with the concept of modern society.

    Yet once we buy our first piece we inevitably want more!!! Mankind seems to have an inbuilt reverence for the metal. Ancient civilizations used to think of it as magical. Whether you agree with this view or not, you cannot deny the warm glow it gives off or the feeling you get when you hold it in your hand.

    I myself cannot find a better explanation for its ability to captivate man the world over for millennia; it is a substance like no other.

  3. Thanks for commenting guys! I pass along a personal anecdote:

    While at one of the coin shops buying an ounce or two, I had brought along our (then) teenaged daughter. The dealer happened to have a kilo bar of gold. Of course I had nowhere near enough money to buy (and I stick to Gold Eagles anyway). I asked him if we could just "check it out" (handle it). He passed it underneath the bulletproof glass. The kilo bar was heavy, but smaller than you would expect.

    But, the thing I noticed the most was the electric feeling from the bar... A unique experience!

    If I ever get really big dough, I can only imagine what buying and holding a 400 oz bar would be like...

  4. I am mostly into silver thus far, only going in for a token 1/10 oz of gold. For something that is about the size of a button, it set me back $165 or so, with the mark-up for such a small product. Yet, I regard it as the centerpiece of my collection, boldly proclaiming that here, if nowhere else in our economy built on debt and subterfuge, is a true and honest repository for wealth through the ages.

  5. funny Bob, at work the other day i was holding an 18kg bar,
    didnt mean much, just a big lump of metal.When I am in asia, I do love there gold ornaments though. They are so beautiful.

  6. personally I am waiting for the ratios to move back towards their historic norms and then will trade out of silver and into gold. I have some gold but so far the returns on my silver have been a godsend. I have a few 100oz perth mint bars that are the centerpieces of my collection. The gold never sees the light of day.

  7. I think you are correct on this assertion RM, I have not heard it anywhere else. It makes sense that it is the case as it remains relatively equally scarce over time. As time passes, we mine more and grow as a society, meaning total above-ground supply and potential demand both generally increase. Through all times it has been scarce and priced appropriately (in fiat) in my opinion.

  8. Or does Gold seem expensive and therefore not a good thing to buy, because we have been successfully educated to think this ?

    The message is subtle and continuous and anyone who thinks of gold's value in paper terms, has still not shaken off the way we are 'supposed to think'.

    I finally got it, when someone on ZH suggested ounces a month, put away for 'retirement' or times of no other income.

    Sweet and simple. Real money always going to buy the same amount of 'stuff', give or take ....

    Plus by only selling a few ounces a year you get to take advantage of any capital gains allowance.

    An ounce a month is my plan and at age 90, if I get there, I will remove myself from the queue for food.

    Just another carbon based aggregator (-;

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  10. i must admit that I dont have this mystical fascination for gold, though I do understand the wealth preservation aspect of holding it. If in fact this was produced by some cheap radioactive process in the future the value of this metal would plummet.
    I think the main reason why I hold no specific reverence to this metal is because I grew up in India and there is the default method of savings. Most people are so used to inflation that most all savings are converted to gold. Mostly into gold jewellery. The use of gold as jewellery is also to show off ones wealth which I dont particularly like seeing in society and as such invokes a negative bias in my mind. But if i could afford it I would still buy some gold coins.
    I am unable to edit my own comment. so had to delete and repost.


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