Anyone own physical Gold? | Metals Mine

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Anyone own physical Gold?

  • #1
  • First Post: Jun 2, 2019 8:57pm Jun 2, 2019 8:57pm
Hello Friends and welcome to the new "Metals Mine" Forum. I'm going to assume that many of you browsing here are experienced Gold traders and as traders have positions in markets of varying lengths (of time) and different goals for your trading positions. However I would like to know if any of you actually own physical gold and if you do, what your purpose is for holding it?

I actually do own physical Gold. I did this to start building a "store of value" apart from cash markets or "paper" assets. I would like to categorically state that I am NOT an "end of world-er" but do feel that a basic store of value is important when trying to build wealth. I consider precious metals, a "hard" asset, just as I would land or real estate. I believe that keeping a certain portion of your net worth in some kind of "hard" asset is the true measure of longer term wealth. Here is why?

All markets that we normally trade, stock markets, commodities, FX, bonds, etc., are what I refer to as 'paper" markets. What we trade really doesn't exist except on paper. Unless you trade commodities futures and actually accept delivery of bushels of corn (for example), what we trade are simply electronic forms of paper contracts. (Or stocks, or bonds, etc). However, even the "money" we make (or lose) is also just numbers in a computer somewhere and unless you can translate those numbers to something fungible and durable, they are just numbers.

So what I am curious about is do any of you actually own "hard" assets such as, precious metals, (Gold, Silver, etc) or Real Estate, (commercial, rental, farming land or vacant land), Jewelry, Art, or even Energy in the form of investments in physical energy farms, like solar or wind farms?

If so what percent of your net worth is held in your hard assets? Why did you decide on this percent level? And if the big dive does come, how to you intend or plan on converting your hard assets back into cash (when/if needed?).

I look forward to hearing your answers
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  • #2
  • Jun 2, 2019 9:07pm Jun 2, 2019 9:07pm
By way of starting out, I will be happy to state, that I am currently using a 10-15% margin on hard assets (Gold). By this I mean that 10-15% of my total net worth is held as physical gold. Every Quarter I do a small accounting of all unencumbered assets and calculate their current net worth. I say "unencumbered" because I do not consider anything encumbered by debt to be an asset. A mortgage on any property is NOT an asset, to the contrary it is a liability. This may get a little grey when you talk about mortgaged commercial or rental property however as I don't own any I don't have to worry.

The point being that every 3 months add up the current value of all assets, and find the 10% mark. Then I look at the current price of Gold and apply that price to the current amount physically held. If that is less than 10% I buy an appropriate amount to bring the value of the "hard asset" to within this range of 10-15%. Likewise if the value of the asset is high (>15%) I will sell the appropriate amount and add that cash back into the "paper" assets to bring the entire net worth back in line.

Anyone else do anything like this?
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  • #3
  • Edited Jun 3, 2019 3:59pm Jun 2, 2019 9:26pm | Edited Jun 3, 2019 3:59pm
Hey DonPato,

Over the years I have amassed surplus of physical gold. Well actually it is a sock full of 1oz gold coins. It really did take years to collect it along with Silver coins, unfinished platinum a really cool piece of cobalt along with other rare earths. I also collect (as well as trade) currency, old and new. I do it just to collect it for posterity. If the world/dollar collapses, it is all useless. Gold, cash means nothing. Gasoline and other fuels, weapons and ammunition, medical supplies, fresh water/food and other necessities will trump anything else.

As for your question, I would say my hard assets are around 5% of my net worth with out real estate. I own some land outside the US that currently brings in a small amount. I lease it to a farmer. He takes care of the land and property and return I only charge him any fees/taxes I accrue plus a nominal fee. If I added its current value it would be about 20%.


- Ric
Be humble or get humbled
  • #4
  • Jun 2, 2019 9:31pm Jun 2, 2019 9:31pm
Quoting riclater211
Hey DonPato, Over the years I have amassed surplus of physical gold. Well actually it is a sock full of 1oz gold coins. It really did take years to collect it it along with Silver coins, unfinished platinum a really cool piece of cobalt along with other rare earths. I also collect (as well as trade) currency, old and new. - Ric
You sound like a collector. Is this a hobby (that has become profitable) or is it part of a wealth building strategy?
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  • #5
  • Jun 2, 2019 9:50pm Jun 2, 2019 9:50pm
Quoting DonPato
{quote} You sound like a collector. Is this a hobby (that has become profitable) or is it part of a wealth building strategy?
Hey Don,

Definitely the former. I always had a thing for collecting. I have cash and coins from 100+ countries and several eras. French Francs and German Deutschmark and Reichsmark. Some of them are worth a bit of money but I would never think of selling em.

- Ric
Be humble or get humbled
  • #6
  • Jun 2, 2019 10:46pm Jun 2, 2019 10:46pm
Quoting DonPato
The point being that every 3 months add up the current value of all assets, and find the 10% mark. Then I look at the current price of Gold and apply that price to the current amount physically held. If that is less than 10% I buy an appropriate amount to bring the value of the "hard asset" to within this range of 10-15%. Likewise if the value of the asset is high (>15%) I will sell the appropriate amount and add that cash back into the "paper" assets to bring the entire net worth back in line. Anyone else do anything like this?
Interesting strategy. While I agree that it's wise to have a certain amount of a portfolio in tangible assets, I don't have any strict guidelines I apply to my own. If I were to put it in percentage, it would probably be less than 10%. I own some gold and silver, along with a couple of diamonds that I'm holding on to.
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We must learn who is gold, and who is gold plated
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  • #7
  • Jun 2, 2019 10:56pm Jun 2, 2019 10:56pm
I own gold and silver coins. I bought them a long time ago for collection purposes, but truth be told I'm probably up 400% on them.

Owning some physical precious metals is a pretty good wealth preservation strategy. Long-term the worst you're going to do is match inflation. For wealth building though, cash flow generating assets are the way to go so that's where the majority of my assets are.

Real estate is nice that it offers you a hard asset that generates cash flow. It is still possible to buy rental property with a >10% cap rate, which is pretty incredible when you consider a 10y bond only pays 2.14%. Plus, if you do a 1031 exchange you can defer your capital gains indefinitely so real estate does offer some big advantages. The trade off is lower liquidity, higher commission, and more risk.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #8
  • Jun 3, 2019 8:58am Jun 3, 2019 8:58am
Quoting Ef5
... Plus, if you do a 1031 exchange you can defer your capital gains indefinitely so real estate does offer some big advantages. The trade off is lower liquidity, higher commission, and more risk.
Well said. I have done a couple of 1031 Exchanges (back when I thought myself a real estate mogul)...As you mentioned the liquidity becomes an issue when needed and if you wish to use that liquidity for something personal (apart from "business") the taxes all become do on the higher equity. Creating a cascading tax event on your personal taxes. Meaning, when the sale is final the equity is added to personal income which is then taxed at an extremely higher rate which then creates a far lower net profit (even though the Government in all its "wisdom" says you're "rich").

I was very disappointed when I finished the accounting. Lesson's learned:

  1. Governments tax. No matter where you are
  2. Taxes rates move in only one direction (higher). This is especially true if the Government is left leaning
  3. Therefore "Differed" tax = higher tax
  4. Paying taxes on gains as you go is unequivocally the lowest tax bracket there is.

Still I wonder. I have looked for this answer on line and cannot seem to find something definitive. I'm sure there is some "formula" for durable assets - to - liquid assets - to - portfolio assets. I'd really like to see one and try to adjust it to my circumstances.

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  • #9
  • Jun 3, 2019 9:09am Jun 3, 2019 9:09am
Quoting EventsTrader
Interesting strategy. While I agree that it's wise to have a certain amount of a portfolio in tangible assets, I don't have any strict guidelines I apply to my own. If I were to put it in percentage, it would probably be less than 10%. I own some gold and silver, along with a couple of diamonds that I'm holding on to.
Thank you for responding. I use the above "idea" to help keep some form of "balance" to total assets. My assets also include the house I live in because it too is unencumbered.

This has me buying gold when its relatively low(er) and selling it when its relatively high(er). Proceeds and profits go back into the liquid assets and the cycle starts over again...(hopefully a virtuous cycle).
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  • #10
  • Jun 3, 2019 9:22am Jun 3, 2019 9:22am
Quoting riclater211
.. Some of them are worth a bit of money but I would never think of selling em. - Ric
All hail the collector!! Whom for where it not for your activities...NOTHING would have value. It is the very idea of collecting and holding just for the sake of owning something rare, none of the current assets we hold or trade would be of any value.
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  • #11
  • Jun 3, 2019 10:24am Jun 3, 2019 10:24am
Quoting DonPato
{quote} All hail the collector!! Whom for where it not for your activities...NOTHING would have value. It is the very idea of collecting and holding just for the sake of owning something rare, none of the current assets we hold or trade would be of any value.
Agreed! Take a look at how crypto has reacted negatively to recent risk news and how gold has reacted. I like to trade and speculate on crypto, but the old yellow rock still seems to be king when the shit hits the fan. Gotta have something to hold on to when things go south.
  • #12
  • Jun 3, 2019 10:27am Jun 3, 2019 10:27am
Quoting DonPato
I am curious about is do any of you actually own "hard" assets such as, precious metals, (Gold, Silver, etc) or Real Estate, (commercial, rental, farming land or vacant land), Jewelry, Art, or even Energy in the form of investments in physical energy farms, like solar or wind farms?
I only own Gold 2.0 which is bitcoin.
  • #13
  • Jun 3, 2019 11:07am Jun 3, 2019 11:07am
Quoting bigtx
{quote} Agreed! Take a look at how crypto has reacted negatively to recent risk news and how gold has reacted. I like to trade and speculate on crypto, but the old yellow rock still seems to be king when the shit hits the fan. Gotta have something to hold on to when things go south.
The nice thing about Gold (and Silver for that matter) is that in all of human history neither of these commodities have been worth zero (0.00). Unfortunately I look at crypto in the same way as I do other "paper" assets. They all share the risk that one day they could go to zero...I understand that possibility is very remote, but that has NEVER happened with precious metals. It is something that I always consider when I evaluate net worth. Paper (stocks, bonds, currencies, cash) can all become worthless. However tangible assets, metals, land, even energy will not.

This is a big reason why I am searching for the "magic" ratio of tangible to "fungible". I'm considering that my current ratio of 10-15% may be a bit light.
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  • #14
  • Jun 3, 2019 11:10am Jun 3, 2019 11:10am
Quoting Elements
I only own Gold 2.0 which is bitcoin.
I've not heard of that...is it like a currency? BTC/XAU? or XAU/BTC? Or is it like the calculated pairs...USD/JPY-->EUR/USD-->EUR/JPY?
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  • #15
  • Jun 3, 2019 2:03pm Jun 3, 2019 2:03pm
Quoting DonPato
{quote} The nice thing about Gold (and Silver for that matter) is that in all of human history neither of these commodities have been worth zero (0.00). Unfortunately I look at crypto in the same way as I do other "paper" assets. They all share the risk that one day they could go to zero...I understand that possibility is very remote, but that has NEVER happened with precious metals. It is something that I always consider when I evaluate net worth. Paper (stocks, bonds, currencies, cash) can all become worthless. However tangible assets, metals,...
You are quite right right there I was posting a good quote in one of the other thread... Robert K said... "Gold will be here when cockroaches are dead"
And more to that... It is a RESERVE.. People that have PROFIt in mind... might negate it completely.. but it is about reserve... But also good for trading, very much so, specially with BUY and even greater if you plan to keep it anyway
I find this picture interesting...
Attached Image (click to enlarge)
Click to Enlarge Name: Inflation-Adj-Gold-Price.png Size: 29 KB

SOURCE: https://inflationdata.com/articles/2...ct-price-gold/

The chart varies but looking for the last 100years... and much more... it holded its value relatively well.. even the DD is not that big all things considering...
If we watch how many assets, business, even countries... went away.. but gold remained

The thing is.. in terms of PROFIT or PASSIVE income.. it might not be always be good, it depends when you buy it, but it is a relatively realiable assets that you know you could sell anytime to basicaly "survive" if you have too, or to buy yourselves some PIECE of mind etc... There are some that also argue that there is something more about gold in particular.. wealth attractor... I would not got that far since I can not prove it or anything.

I would say it is maybe best to have it in portfolio but forget about it or put it deep into your backmind... to not be temped to SELL it for some outstanding investment etc

There are very few things so damn SAFE.. I would say GOLD and LAND might be one of the best assets to have.. for RESERVES at least... But yeah, anything can be risky to own/have.
Can you afford to take that chance?
  • #16
  • Jun 3, 2019 2:08pm Jun 3, 2019 2:08pm
Quoting auricforecas
.. I would say GOLD and LAND might be one of the best assets to have.. for RESERVES at least...
Thank you for your comments. I agree. Would you know of or perhaps have heard of a particular percentage or ratio of these kinds of tangible assets to have so as to "anchor" your personal value? 10%...25%...more? Less?
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  • #17
  • Jun 3, 2019 2:36pm Jun 3, 2019 2:36pm
Quoting DonPato
{quote} Thank you for your comments. I agree. Would you know of or perhaps have heard of a particular percentage or ratio of these kinds of tangible assets to have so as to "anchor" your personal value? 10%...25%...more? Less?
I would say 10% for GOLD. It also depends of some other factors... For example if would be great if your GOLDen reserves could last you on BASIC expenses for example 1-5years... If can can last you 20years, that would really be golden. So yeah, for this to be true, the other component would have to be good... to have really LOW BASIC expenses in comparison.. or FIX costs. That goes for all classes more or less... So leaving within (basic) RESERVE/freedom or "FU" position - means but SPEND/(re)INVEST what is above that

Also it is important how old you are and how much money you have.. If you would have middle-class income/assets... then yeah 10% would be sufficient.
If you would have SUBSTANTIAL amount of money that you do not really need it but would like to keep it relatively safe (against TOTAL worthlessness - that can happen).. I would suggest up to 50%.

Also I mist say that I also like CASH. So GOLD, LAND and CASH (stocks, bonds etc.. much riskier - in my book)... Surprisingly not many people realise that CASH is very good in crisis... because of the deflation and also you are LIQUID, first to buy some good opportunities.. That is what Carl Icahn was trying to explain to people obsessed with returns.. That is it better to have 0% return.. BUT keep the ASSETS (money) than to have -30% return if the S... hits the fan... The quote is in the youtube clips somewhere, if you would really want to, I could look it up... it was from few years back.

But when the countries recover, after some shock of some sorts... stocks seems to offer massive potential
I think we are in uncertain period now so the above assets would be most valued in my book.

See purchasing power of dollar, see the great depression (1929- late 30s) era relative rise
Attached Image

SOURCE: http://observationsandnotes.blogspot...us-dollar.html
Can you afford to take that chance?
  • #18
  • Jun 3, 2019 3:18pm Jun 3, 2019 3:18pm
Quoting auricforecas
{quote} I would say 10% for GOLD. It also depends of some other factors... For example if would be great if your GOLDen reserves could last you on BASIC expenses for example 1-5years... ...
This is actually the most logical and sound advice I have heard in quite a long time...thank you!! I must say I'm bit bit short but it also allows me to do some adjustments to realize this objective. I think 1 year would work at least for a start. I have about 4 months right now...but again if as you say everything goes wrong...gold will rise and my expenses ARE very basic, with my domicile paid for. Small but perfectly adequate.
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  • #19
  • Jun 3, 2019 3:39pm Jun 3, 2019 3:39pm
Quoting Elements
{quote} I only own Gold 2.0 which is bitcoin.
I too have Bitcoin, again I got some for collection reasons. I bought 7 BTC in 2011 for about $30.00. In I sold 4 in 2017 for obvious reasons. I love collecting but I am no fool. Currently I have 2 digital coins in cold storage and the last one is a rare physical coin.

Despite its rise, I have no real faith in Crypto as a replacement for real cash. At least not yet. We can get into the reasons why if y'all want.

- Ric
Be humble or get humbled
  • #20
  • Jun 3, 2019 3:43pm Jun 3, 2019 3:43pm
Quoting riclater211
{quote} I too have Bitcoin, again I got some for collection reasons. I bought 7 BTC in 2011 for about $30.00. In I sold 4 in 2017 for obvious reasons. I love collecting but I am no fool. Currently I have 2 digital coins in cold storage and the last one is a rare physical coin. Despite its rise, I have no real faith in Crypto as a replacement for real cash. At least not yet. We can get into the reasons why if y'all want. - Ric
WOW...did not know that Bitcoin exists as a physical coin. Bravo...you collectors are the LAW!!
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