Sell stock to buy gold???

Question

Question - my brother wants to sell all his stock and cash in his 401K to buy gold. He's convinced this is a good decision in today's market. He's only 32. Wouldn't it be wiser to just ride out the storm and wait for the eventual rebound?

Answer 1

He might want to diversify a bit without putting all his eggs in one basket- even if the basket is gold.

He might want to consider gold coins , silver eagles ( 1 ounce silver coins ) and keep some in some relatively safe stocks such as GE,

P and G, Exxon, Microsoft and a few other blue chips, there are too many to list.

The only problem I see is that he is selling his stocks at a low point and gold and silver are at all time highs - figuratively.  But if you are going to buy metals....buy the actual metal, not the mining company.

Another thing, I might be wrong about this, but I believe that if you buy silver coins...that they appreciate at a higher percentage than the market value of  silver bullion.  So...if you buy an antique silver dollar... a Peace dollar or a Morgan dollar...it appreciates with the price of silver at a faster rate...and it appreciates every year it gets older.  Just buy the  best quality coin you can afford.  Just a thought.

But if he is 32 he can take some chances and still recover.  At least he is thinking about his investments and not allowing others to do it for him.

He might want to consult an adviser, but I think you can still cash in your 401 and invest it in gold, silver etc...without paying a penalty.  He is just investing his 401 in bullion etc... It is worth investigating.

EDIT

Another idea is for him to keep the stocks he has in his 401 and  just start investing in gold and silver coins on the side.

This way, he has his investments in stocks, he does not lose any money cashing it out early and he still has the gold he wants.

But...consider this...his employer probably  contributes to his 401k at work. Perhaps 50 cents for every dollar your brother invests. So....your brother gets a 50 percent return on his investment every month...tax free.  You wont get that with gold and silver.  Something to think about.

Answer 2

The market may come back in any moment so its better to be patient and wait for the right time

Answer 3

I think it is a good decision. Gold futures is where the action is now a days. Go ahead.

Answer 4

Will the stock market rebound? It is something the government has been saying will happen since 2002. Now they are agreeing that we are in a bit of a recession, and have been for the last few years. Many government officials are questioning if a depression is going to happen.

Price of gold always goes up. It never fails. It's far more sound than the american printed dollar, the value is declining greatly at this moment and they print up more that causes the value to lesson even more.

Financially, it is somewhat sound. Keeping gold in your home is a risk though. Keeping it at a bank is more secure, but if the bank fails? It's a security risk. Though, less than having your money wrapped up into stock.