There is a song on the Christmas holiday television special, “
Rudolph the Red-Nosed Reindeer,” that has Sam the Snowman storyteller singing about “Silver and Gold” on the holiday trees. Who doesn’t like
gold? One of my favorite color combination’s for Christmas decorating is red and gold [blue and silver falls second for me].
I’ve been following financial news this year – who hasn’t? – and wondering what all the fuss is about investing in gold. I’ve said before that I’m not a financial whiz and certainly no expert in investing. So I read with interest one of Cliff Pletschet’s recent columns in which he answers some questions for me about gold. He wrote a column on December 9 in which he touched on a couple different topics, gold included. About gold he said, “Remember how I recently lamented that gold was not a good investment because of its price volatility, because it doesn’t pay dividends, and because timing is essential since you can make money only by selling before a drop in the price you paid?...”
In asking his questions he answered mine. Okay gold is a problem because:
- price volatility
- no dividends
- timing is key to the buying/selling for profit
But Cliff goes on to include these issues:
- “…storage facilities for gold bars and coins have been filled up. HSBC, owner of one of the largest gold vaults in the United States, has told retail clients to remove their small holdings from its lock-up to make room for lucrative institutional investors….”
- “…Internal Revenue Service has reminded gold owners that gold and silver are considered collectibles, not capital assets…When these assets are held for less than one year, gains are taxed as ordinary income.…”
Okay, so now my list of reasons to avoid gold as an investment is now:
- price volatility
- no dividends
- timing is key to the buying/selling for profit
- no place to store my minuscule horde
- it’ll be taxed just like a paycheck [if held less than a year - and if longer, according to Cliff's article, "...gains on the sale of gold and silver investments, including gold and silver-backed exchange-traded funds and gold and silver bullion and coins (except certain U.S.- issued coins) are taxed at the maximum rate of 28 percent when held for longer than a year...."
There are those reading this who will have their own list of reasons why gold makes a good investment but after doing a Google search I found it difficult to find someone who thinks so in a way I can understand. Dominic Frisby, whose December 1 article at MoneyWeek [dot com], kind of helps. He says in the article, “…Gold remains a great bet…” but then goes on to talk about rising and falling and shakeouts and patterns and corrections and throws in something cautionary about the Dubai credit crisis, “…If the fears stemming from these Dubai debt problems are real and we are on the cusp of another liquidity crisis, then I would expect gold to fall, at least at first. Despite the fact that gold is a safe haven during times of stress in the banking system, there is also a lot of hot and speculative money pushing gold higher….”
I admit to being confused. Is gold a good investment because its price is high and looking to stay high so that those who watch it very closely can sell if it looks like it’ll drop in price? Is it virtual gold? How much gold is actually out there for people to invest in? Bars? Coins? Jewelry? Do we keep our gold bars in the bank in a safe deposit box and hope that one day we’ll be able to sell it for more than we paid? – kind of like houses in California. Not good investments, houses in California.
I like reading Cliff Pletschet’s column for two reasons: one, his column appears in my local newspaper’s business section so I can read it over my breakfast with my cup of tea and second, he writes in a way I can understand – I’m not a financial person but he makes it understandable. Thanks Cliff. Well, there is a third reason, Cliff and his wife, Fran have a home-based business and produce a Personal Investment Educator newsletter. They say this about their business:
- “…[Personal Investment Educator] P.I.E. is a home-based business operated in Oakland, California by Cliff and Fran Pletschet. Their main goal is to encourage people to educate themselves so they can become independent investors and take charge of their money….”
I like to highlight home-based business as this is my niche.
Speaking of niches…it doesn’t matter if you have a home-based business or a large business, if you live in the Bay Area of California, bridge tolls are about to get financially crippling. Toll roads and bridges are nothing new and show up all over the country. We ran into toll roads last winter while vacationing in Southern California, traversing highways 241, 261, 133 and 73. Tolls can nickle and dime you to death it seems. Here in the Bay Area, a rise in tolls is going to hurt pocketbooks, both during the work week and the weekend. My husband and I live in the East Bay but occasionally travel to other areas which require crossing a bridge and we currently have to fork over $4.00 each time.
The best write-up about the possible raise in toll fees came in this morning’s paper on the Opinion Page – the Editorial, “Onerous toll hikes.” I like that word, onerous;’ it means burdensome. The online article has a different title, but the copy is the same. The most telling remark for me is this, “…The toll czars say they want to introduce Bay Area motorists to congestion pricing — how arrogant and dismissive that is to those who cannot alter their work hours. Many of these people are in lower-paying jobs and can ill afford to pay an extra $2 a day, or $500 a year, just to get to and from work…”
It’s not just those with 9-5 jobs who cannot change their hours, it’s the many folks who are solo-preneurs who must travel to visit clients and customers…and potential clients and customers. It’s the many folks who have home-based businesses who must travel to purchase supplies and make deliveries. Just like the little penguin Ramon in “Happy Feet” who says, “Lemme tell something to joo…” I say to whomever listens, California is a very difficult place to live on a budget. Housing costs are way too high. Grocery [food and sundries] prices have risen too high. Gasoline prices remain too high. It costs too much to get around. In this part of the world jobs are in one geographical location and housing in another…most people cannot afford to live near their employment so travel on the freeways and over bridges is necessary.
Yes, I’m complaining. On behalf of the truckers I’m complaining. “…The toll for a small three-axle truck would rise from $6 to $15. Large seven-axle semis would see their tolls rise from $13.50 to $35.…” [from the editorial]
And these increases would, of course, be passed on eventually to the consumer.
