I'd like to invest in GOLD... advice please

[Wolfgirl]

I'd like to invest in GOLD, not BIG money, but a few thousand. I believe over the next couple of years is it going to rocket and provide a decent yield.

But whilst I know a few companies to trade shares with, I don't know about gold. Can someone advise a company please? cheers.

thanks. I went long GBP short Euro (for now0 given that i expect imminent housing data is more likley to outperform expectations. However, I will turn this position around when unemployment and GDP data is due as I see more downside.

As you both know, though, playing FX can be a mugs game but will justify myself another time.

PS I am only blurting out what I am up to in the spirit of mind share.

I have no idea what you've been talking about but it has been very interesting. I am shockingly uninformed in these matters ! Can you recommend a guide for dummies?

Not gold now. Oil or equities.

my vote is Oil for short, meium or long term. Equities for short and long term (not medium term) as i think things could look decidedly gloomy in the autumn.

As outlined above, gaining exposure to oil is achievable even with modest sums.

Halifax house data was +1.1pc for July compared to expectations of +0.6pc. Other good UK data coming through led to GBP strengtening againts the Euro. Glad that I closed my short GBP position and went long GBP instead (as mentioned above) as this has made me a little money.

Afternoon.... whoops errrr.... evening!

OK, so that's three votes for oil. But are you guys talking about backing it by the barrel, or investing in an individual stock. If individual stock, this one has been tipped as a stocking filler for med - long term...

Petrofac PFC.L}

or

[[http://morningstar.timesonline.co.uk/timesonline/timesonline.jsp? page=company-summary&companyId=5133 Times OnLine although this one is currently recommending a Neutral as opposed to Strong Buy}

In addition, here is a 'dummies' guide for us uneducated...

This Is Money

Please please please do your own research. This is a volotile game to be playing, not for the feint hearted

Times onLine

why not just spread bet on the oil price just as I outlined for gold above. Cheap and easy to access. Also you don't have to stock pick then so you get pure oil returns as opposed to watching your stock get discounted for some company specific issue.

You just need to understand a couple of sipmle concepts as outlined above with spreadbetting

Hi there TD.... yup... Im looking into it too. But it is very alien to me, so have to tread carefully to know exactly what Im doing. I have family here right now, so can barely think to breathe, let alone new financials products. LOL

yes, thread very very carefully. With spreadbetting the classic error is not realising that you have invested in say 20k worth of oil . This is because you can invest with say 10pc deposit. In that case if you use your 2k to buy 20k worth of oil exposure and the oil price drops 10pc then your 2k is wiped out.

I would suggest buying say 2k worth of oil with 1k deposit. YOu can always top up and put down the other 1k if the price falls 50pc in order to keep your position open.

Or if you are feeling more adventurous use 2k to buy 4k worth of oil exposure.

The as the price falls the broker protects him/herself by ensuriung that you have enough money to cover your loss. If you don't then they have to close the position and realise the loss.

So the key is understanding the operational aspect of:
1)what size position you are buying

2)How the stop loss mechanism works

take your time and work through it- happy to help if you/when necessary.

Which is wh

TDiddy, I note your interest in currencies. I have been trying to figure it out recently as I have some USD that I need to think about - whether to sell up and convert to GBP or hold off in expectation that GBP will lose value in near future.

Have been looking at site called dailyfx and it's interesting bcos their predictions about the USD seem a bit like the weather forecast of a bbq summer. It may be that I'm misreading - is there anything that you would recommend for beefing up on basic concepts and jargon for currency trading?

maggie i do have ideas which i will post tmmrw.

regards

appreciate it.

maggiethecat - Finishing up some work this morning but will post you some thoughts later this evening. Do u mind if i ask whether the amount is small: so hundreds orr several thousand. The only reason that I ask is that this affects whether you use something like an Etrade account.

Listening to Bloomberg Radio as I work. These analysts are never sure about things. They are talking about GBP being very undervalued against the dollar. It could make sense to convert (or hedge) some of your exposure to dollars. More later. They are talking 1.75 as the year end target.

What is for sure, you will continue to see volatility given uncertainty of markets.

thousands - was hoping that I would have come into this money earlier in the year when GBP was low but things didn't work out that way.

Wonder why they think sterling is undervalued given current economic circumstances, even relative to US?

Next time if you have a rough idea of how much you will receive, then it is possible to "fix" a future exchange rate by buying a "future" through Etrade. But a few technicalities. FX rates are driven by so many factors as you probably know. And the analysts ususally often get it wrong. As you know, the USD currency is often used as a safe haven, a little like gold and sometimes commodities. Well a recivery could lead to investors moving out of the dollar into riskier currencies and into equities etc.

Forecasting fx rates is like forecatsing the weather so what I will suggest is locking in fx rates. Not necessarily all in one go. The past does not tell the future but a little charting does no harm. Etrade, Bloomberg have the currency histories. So I would look outfor "badish" day and then do the first 20pc. Then another 20pc and so on.

If you have the cash you could instruct the bank to do it. Check, but I think Citibank might do it for you.

If you want something more instantaneous and ability to trade in and out then you could use a REPUTABLE internet broker. I use Etrade. IG Index is better known. I prefer the former as their bid-offer margin is tighter for futures which is what I would probably recommend. I will write more in full later. Each future represents 10k. If you take this approach you will need to deposit margin/collateral into your E-broker account. It will be protected by FSA compensation scheme but you will receive nil interest.

More later. But let me know if this is a no starter and I will abort or continue.

By the way, i am in similar situation; I will receive foreign currency payment at future date. I use the future to effectively lock in a future rate. However, when these contracts go "in the money", I sometimes realise the profit and then hope then re-enter when the rate moves in my favour again. I have more explaining to do if you are interested. It is a bit technical but can be simplified. Once you understand the concept then you need to look at the operational detail.

Kind of you T but most of that all went straight over my head. I'm curious about fixing a rate and I gather that I would have to put some money down to ensure that I could obtain a fixed rate. Don't understand how rate is determined tho. You'll see I'm very green but am concerned about the timing of conversion as I could lose quite a bit.

I might have over complicated. Essentially you buy a futures contract which will expire in, say, December but at today's fx rate. SO that means that are able to lock in to today's exchange rate, and apply that rate in December.

But - as you know, fx rates fluctuate. Now - your futures contract will have a value in its own right. For example, you could sell it before expiry. Depending on whether fx rates move in your favour or against you, the value of your futures contract will also fluctuate. (For example, if the contract was originally dealt when exchange rates were 1.50 and fx rates moved to 1.25 then the contract would be in loss. Similarly if fx rates moved to 1.75 then the contract would be in profit.

The idea is to offset the flucatuation in the value of your USD cash by buying fx future contracts. So if your USD cash appreciated in sterling value then your future contract would fall in value. If your USD cash fell in value, then your fx future contract would move into profit and offset the loss.

Due to fluctuations in value, Etrade would require a deposit from you. But that is an secondary point. First you must understand the idea of the future contract offsetting any changes in value of your USD cash.

Does that make sense?

Also consider the straight forward option just converting some of your cash to GBP now. Citibank accounts might be suitable for easy access and conversion. I haven't looked into it but you might be able to get an account that allows you to switch currency on line from Citibank.

There are different ways of hedging your bets. If you are not confident about forecasts, then you simply convert say 20pc of your cash soon. Then wait on a badish day and do another 20pc and so on. This way you are not making one big bet. And if fx rates move sharply against next month then you are not fully exposed, IYWIM. Once you have done the first say, 40pc, you might feel more patient about waiting for the fx rate to come back sharply in your favour.

Will continue when I have feedback about the last two posts. Will be outdoors today. catch you later.

Swedes and Wolfie- I am considering selling the FTSE today i.e. going short- betting on a fall sometime soon. What do you think?

Basically, i think that there is more downside risks from here in the short term but this is a speculative position I am taking. Job figures on Wednesday could disappoint which could cause a sell off.

But on the other hand Land Registry house price figures are out tomrrw i think. THis could beat expectations and cause a market rise so I might wait for after these figures and then sell. Job figures are out on Wednesday.

Some of the fog removed and it's making more sense. I Like the idea of converting a percentage and then sitting and waiting.
Do have Citi US account already. It's remarkable bcos in April I had checked rates wirh Citi, anticipating receipt of funds and I could have sold bought GBP for 1.50 US!!

The point you made about USD being safe haven - does that mean if US economy starts to recover then there will be flight from USD to equities?

Maggie- yes, even without a full recovery we sometimes see USD falling on good days as investors sell dollars to buy other currencies, equities etc.

The other (important) issue is what the central planners in China decide. China has vast reserves in USD. There is always a risk that rumours get out that they are decreasing their allocation to USD. I recall that there was a hint of that a couple months agao and the dollar weakened then.

Don't feel panickeed, but it is sensible from a risk management point of view to atleast convert some say between 20pc and 50pc. If there are no fixed fees then you could do 20pc tranches as you rates that you like. There is a reasonable amount of intra day volitility on Etrade and the real market. Even the best paid analysts can?t forecast with any satisfactory certainty given exogenous factors like central decisions made by Chinese authorities. So I xan only advise you on risk management. Also I have learnt not to dismiss your own gut feel about things and historical trends etc. But all in all, if the current rate isn?t too bad then convert some. If you had asked me, I would have said that 1.5 is a very good rate and that you should do between 25pc and 75pc at that rate. But never beat yourself up about the past by trading/investing. It is gone and making the right decision for the future is what matters. Many people freeze hoping that the clock will rewind and the market whilst the market continues to drift away from them.

Can I ask what the bid-offer rate offered by Citibank is. That is the rate that you can buy at versus the rate that you can sell at. Just trying to work out how competitive their margins are versus spreadbetting. I don't want to be intrusive but it helps form my views on what I would do in your position.