1. A retiree, with just enough savings for future needs, asked for my views about investing in a private studio apartment costing $800,000.
REPLY:
Do not spend too much money on a property. Try to find a cheaper one, or rent.
2. She then asked about investing in gold.
REPLY
Don't invest in gold. It is highly priced. There are people going around with gold investment scams.
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8 comments:
American Economist Roubini made a study trip to China, and talked to businessmen and Govt Officials, and made this comment:
"The path to least resistance is to go forward."
This means the Chinese are at their wits end, and they only could go on to expand their economy, at the same time try to tame it gingerly by increasing interest rate bit by bit, simply, the economy is too big to fail, like the huge American Financial Institutions, their own asset bubble that the Chinese are afraid to burst.
When the bubble burst, what would happen? Look at the billions poured into China by our listed company developers, and being so dependent on China, we will definitely be pulled under.
So, better put up with miserable bank deposit returns, and wait.
"Bai ren chen Jin".
Don't think Singapore would not suffer a certain degree of mortgage woes as experienced by the Americans of the recent financial chaos two half years ago.
Be the predator, not the prey.
With all due respect Mr Tan, please explain why you advise against buying gold and say that its "highly price"?
I am not referring to those gold investment scams but legitimate purchase of physical gold bullion from UOB bank and bullion dealers.
What would you suggest to hedge against hyperinflation?
Thanks.
While your advice regarding property investment is prudent, the other about gold is 'throwing the baby out with the bath water'. It is true that there are many gold-related investment scams around, however telling someone NOT to invest or save in humanity's proven store of wealth is equivalent to asking them to place their complete trust in depreciating fiat currencies. When gold was hovering at USD$1k, the same was said about it - "it is too highly priced"... look where it is at now. I could say the same about fiat currencies - "it is too highly valued"... for it is not the price of gold that is rising, but the value of fiat currencies that is depreciating. Chart gold to oil, wheat, corn and other commodities and you will see a trend. We've for too long anchored our perception of value to paper money. And paper money has for too long been the tool of corruption and abuse of the middle and working class. I wouldn't have adviced the retiree NOT to invest/save in gold, but rather gave her the complete picture about the various gold investment options and their related risks type (physical, etfs, gld and gold related stocks).
I advice naive investors to avoid investing in gold, as it is highly priced now (relative to the past) and is highly risky. It does not apply to the experts who know how to get in and out of such a type of investment. These experts do not need my views.
I also advice naive investors from trying to pick stocks, as they do not know what is the right price. They should invest in indexed funds and invest for the long term.
Gold as store of value is rubbish especailly at this point in time when it overly priced. I bet you won't.
Gold as long term investment is suicide..If you have invested in gold from 1980 your real return is NEGATIVE. Same go for other commodities. If you have invested in wheat since 1940 it is even worse.
Commodities both hard and soft as speculative i cannot argue. eg. you could make a pile if you KNEW the start of the gold rally in 2000.But at 2011? it is suicide.. you better donate your money to the poor.
Gold is highly price now relatively to the past, and so is everything else today, right down to the bowl of fish ball noodles we eat. As a matter of fact, I cannot think of anything that is cheaper today than it was 10-20 years ago
Gold is a wealth conservator, not wealth creator. Thus you are right Mr Tan to advise against "investing" in gold. It does not generate any returns hence it is technically not an "investment" per se.
The biggest purchaser of gold in the past 2 years is China and India govt. Almost all central bank has a hoarding of gold bullion in their vault. Why?
The price of gold has't really gone up. What you can buy with 1 ounce worth of gold 10 years ago, you would probably be able to buy the about the same amount of goods today.
But if you have converted that 1 ounce of gold to cash 10 yrs ago and keep them in a savings account, you would buy a lot less goods with that sum of cash today.
Gold is not for short term trading. Leave that to the professionals. For the man in the street, I would say "an ounce of gold in your hand is worth more than the equivalent of cash in the bank".
@zhummmeng, you use 1980 peak gold price to illustrate that it generate negative returns. In 1980 at approx US$800/oz, if inflation adjusted, today's equivalent is more than US$2000/oz, which can also mean current gold price is undervalue.
If buying gold at current level is suicidal, than the only logical thing to do is to short gold. I hope you don't miss this opportunity to short gold and make a killing (pun intended) for yourself.
:)
Not a good time to short.it is uncertain. wait for sign of plunge which is akan datang but don't know when.
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