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.

GBP -selling off today on recession worries. more later

It's the lingua that I'm struggling to keep up with. So eg reading dailyfx and references to GBP pulling back - I assume that means sterling strengthening?
When you say GBP selling off today - does that mean GBP weakening?

Yes, Sterling weakened today on the back of recession worries.

EVening TD.... how did you get on today? So sorry, been hosting family for the week, and in addition we have been a house of sick folk. Family gone home tonight, with my husband driving my sick SIL from Bristol to Brighton she is so poorly, plus my son age 5 has had temp of 105 degs, and bashed his toe so severely it blew up size of rugby ball and got infected, which has not added to his mood.

Not been thinking about the markets since last week, and a lot can happen in a day let alone a week. Personally I think the FTSE will fall back a bit, mainly through nerves and small correcting. Banks are taking a small dip, but will keep climbing. Im doing to buy into Lloyds some more, and one other stock... Monitise. Small AIM telecoms company.

Im going to stick with what I know for a while until things settle this end. But am reading every word you write in the hope that your way of trading\investing teaches me something. I dont have confidence to do anything other than what I know for now.

You are brave trading futures.

Wolfg- sounds like you have more important things to worry about than the FTSE level. I hope that your family recovers. I was busy doing my real job and didn't get to sell the FTSE but it held up okay despite some bearish sentiment starting to seep in. I think that the house price data tomrrw is more likely to overshoot than undershoot expectations so I think that I will have a chance to sell either FTSE or GBP if they are lifted by house price data which is a key driver these days.

On Wednesday, I think that jobs data has a greater chance of being worse than expected so that could push the market the other way. We shall see.

The key difference between trading a future and buy a cash product like a share or a bond is that with a future it is easy to forget the real size of your exposure because uou don't need much upfront cash to trade the future. Otherwise, I think investing in the future is cheaper and often more accessible.

Just as you can lose money quickly with a small deposit on a house, similarly you can do the same on future due to the small deposit. The key difference is that with a house, you don't have an internet Etrade account to give you a minute by minute update of how much money you have lost or made. Instead with a house, you ignore your losses and say "my house hasn't fallen in value".

Also, if your future drops in value by 50pc, then etrade will ask you to increase your deposit to 50pc. Whereas with a house, the lending bank is not likely to ask you to increase your deposit once you have bought the house.

So you can say that a future is a mark to market asset wheras a house is not.

But with a future you can liquidate opportunitistically, with a house that is unlikely.

Just bought GBP sold EUR using Dec09 future. Looking for strong house figure today. Also A little bounce back from the sell off of Sterling yesterday.

TDiddy... is the FTSE drop pre-empting bank housing\other news tomorrow?

Im glad of the fall back so I get in my 'watchers'

Off to get DD from nursery, then have guests for supper. Have a good evening

sorry, not bank news, I meant to type 'bad' news DOH!

well i forgot to sell the FTSE as planned above . I did the opposite by buying the GBP against the EUR. Initially it went sharply against me and I considered limiting my loss. But intra day volatility is very high so I held on and had the opportunity to close out at a modest profit. But the way you can set up loss limit and profit limit on every position that you take so that don't have to spend time staring at your PC. Sometimes better that you don't look too often.

By the way the is some rationale/reason behind me playing around with FX: like maggiethecat, i have foreign currency asset to risk manage.

been thinking that a decent trade would be to buy 10k worth of oil futures, sell 10k worth of FTSE. That is I expect a bigger drop in FTSE than in oil price as markets start to cool. Just thought: i am not encouraging you to "spiv and speculate".

Hello all, can someone tell me about CFD's and more importantly... SIPPs? I buy individual shares, and sell when in profit, just wondering if a SIPP would be more beneficial.... except Im not sure what they are!!

Nope, no worries with explanations, just googled for simple explanation. Mmmm... SIPPS are for long term investments eh? pensions. CFDs - wouldnt you have to be a day trader or certainly someone with time to stare at a dealer screen all day?

Hi- CFDs are just another sort of derivative. Essentially these allow you to hedge or invest without (much) paying upfront cash. Very useful but The trouble with derivatives is that because no upfront cash is required; it is easy to loose track of how much risk you are taking especially if instrument is complex. Not such a big deal with a simple future or CFD but even the banks lost track of their CDO (complex derivative) exposures. Atleast, I think board memebers didn't have a clue especuially with complex derivatives that are not fungible.

I ventured out of hedging (risk reducing)territory and took a punt: sold GBP, bought USD via a future - I thought that pessism about the US Treasury not continuing its asset purchase scheme. This trade is doing nicely I am looking to close it out soon.

Dollar fall often accompanies stock market rise as people go out of safe haven: FTSE rose today. I want to sell FTSE at 4,800 ish as I think that uncertainty will continue to grow about the recovery.

maggiethecat - I think if you don't need the cash soon then being patient is key.... enough blogging.

Had a drink tonight with someone from our street tonight- he is a analyst type and used to trade. He actually questioned my use of internet broker asking me whether I am betting!! Isn't there an element of betting in all investing?

Hi TD, there was a good article in the Telegraph today saying that come the winter they expect things to head downward again.
Telegraph article It suggest we are in for a topsy turvy time ahead. That said your strategy selling at 4800 makes sense.
Are you looking at South East Asia at all? Seeems to be that is where alot of money is heading these days.

Thanks BGDad- I used to work at the same shop with the Uber Bear in the article a while back!! He was one of the original bears heading into the crunch and has done well out of it.

My analyst friend above was also talking about Asia. But he said a lot of the optimism is priced into the Asian markets already but definitely worth keeping an eye.

Paying off the mortgage isn't such a bad return these days :-) Seriously, hoarding cash and waiting for the drip sounds sensible. And if you are brave the selling ("going short")in advance of the fall is a decent hedge?

I am telling people that Asia seems to be where the money is if you go down the conventional route of investing. But I worry that so much money is going in that it is creating another bubble waiting to burst like the dot com bust a while back. It makes sense to put money in Asia but i feel nervous going with the herd!!

I agree. WOuld put some but keep some cash for "bottom fishing" later on

FTSE marches on an now at 4,777; closing in on 4,800. Decision time on selling it. What will be the trigger that pierces this mini bubble? Calling the top of a "bull" run is notoriously difficult.

TDiddy, I´ve disappeared on holiday but just found hotel internet.
I hear what you say about sitting tight - that has been my gut feeling to be honest perhaps due to the volatility that you´ve referred to before.
Now, how does QE work to affect sterling´s value?

maggiethecat - don't spoil your holiday with this stuff. Sterling strengthened last week but weakenend today partly due to Rightmove reporting sharp drop in asking prices for residential properties last month. GBPUSD fell back to 1.63 after being 1.67 last week but intra day vol. is quite high and a couple of cents diff in exchange rate can make a big difference if you have a reasonable USD balance! On Friday I reduced slightly my exposure but was still ?short sterling, long dollar?. [This just means that I sold the pound and bought the dollar.] Anyway, the fall today allowed to close my positions (reverse my futures contracts) at a nice little profit. I feel the need to defend what appears to be pure speculation but in fact like you I have real currency exposure that I am hedging.

There are a few different ways to hedge. For example you could have a static hedge where you just lock in a rate and leave it. Another approach is to to dynamically hedge in an attempt to take advantage of the volatility. I am attempting to do the latter approach. So I hedge, and when the hedge goes sufficiently into profit I close the contracts, take profit and wait for the rate to drift in my direction and then repeat.

The risk of the later approach is that the market runs away and you never get a satisfactory opportunity to repeat the hedge. However, dynamically hedging is better than not hedging at all.

Got to dash now..will get back on the QE thing that you asked about.

Enjoy the sunshine and the rest of the hols.

maggiethecat Can't recall the context in which I meantioned quantative easing (QE)- however, in theory QE (because of its inflationary impact) risks diluting the strength of a currency. However, not having a QE programme could risk a depression so you can argue either way and markets are fickle and often irrational.

The key is to ensure that you *remain solvent whilst market is seemingly irrational. If you don?t need your cash then you can wait and strike opportunistically. That is wait for bad days in the market to convert. The forthcoming British election might offer an opportunity, for example, as the market doesn?t like leadership uncertainty e.g. the recent Brown crisis was an opportunity to convert some as rates fell quite a bit then.

However, they didn?t fall as low as 1.50. So you might consider converting some (20pc) when next sterling falls but I wouldn?t necessarily wait for us to get back to 1.50. If you did some at say 1.60 for example then you might have the opportunity to reverse that at 1.70 at some point.

The amount of time and effort that you dedicate to actively managing your exposure will be related to how significant the amount is. If a change of rate from 1.60 to 1.65 causing significant difference to your converted amount then I would encourage you not to wait for the rate to get back to 1.50 to convert some. I would wait on a bad day currency in the UK and then do 20pc. And then keep and eye out: The rate improves drastically, you could do another 10 or 20pc. If the rate goes sharply the other way then you could reverse the hedge and realise ?your profit?. And then repeat.

In the above manner, I have built up a profit by going back and forth hedging and then unwinding when the hedge is ?in the money?. But you should note that I have had to sit there and watch my hedges go into loss making territory and just wait for then to come back into the money. So your entry level is important. Depending on your situation I can detail further.

Wolfgirl and BigGitDad - I sat on my hands and didn?t sell FTSE at 4,800 which is annoying like I was threatening to. A shame as this was a good call on Friday and I would have been in the money if I did. I am still predicting a more sombre market in autumn. And there is the risk that we have some market or political event that pierces this fragile return to stability.

Today's FT

China sell-off sparks move away from risk

smallwhitecat - Pound slides against dollar

sorry- i meant maggiethecat