Who ever said that holding on to cash was a good idea? There are other investments. Even a few that do better than gold
Who's preening now?
Posted on 12/07/2005 10:10:37 AM PST by DebtAndDelusion
The price of gold passed $500 an ounce last week, its highest level since the late 1980s. This is either an ominous development—or it isn't...
If you'd lived a century ago, gold would have been the basis of your money. Great Britain dominated the global gold standard; its currency, the pound, was freely convertible into gold...
On April 5, 1933, President Franklin D. Roosevelt ordered Americans to surrender their gold coin; the country effectively went on a paper-money standard...
Higher demand collides with constricted supplies; wham, prices rise...
Gold is an unending mystery, because its value lies less in what it does for us (it is not like sugar, copper or oil) and more in what it symbolizes. It is almost as unfathomable as the human drama itself.
(Excerpt) Read more at msnbc.msn.com ...
Within that range gold holds a store of value -- insuring wealth -- unlike any other. The west seems to continue selling gold, while China, Asia and Islamic entities buy it. True, there are some pretty wild conspiracy theories floating around out there about the price manipulation of gold -- but that is always the case when uncertainty arises and people can't get straight answers from those in charge.
M-3 in March for example. No more reporting, no elected leaders mentioning it.
The uninitiated think those holding gold like seeing the price go up. Heck, that just makes it more expensive to acquire more gold.
Then again if the price of gold rises slower than the fall of the dollar I guess it still makes it cheaper. Gold is going to the moon.
HG
And since you just registered the other day, I'll bet that you are selling it, too.
"M-3 in March for example. No more reporting, no elected leaders mentioning it."
Agreed. An important development. There goes the last published statistic covering "money market" activity.
What is most interesting about the current "money and credit" situation is that it seems as if all the central bankers are in collusion. This is the first time all of the world's currencies have lost value concurrently and equally to my knowledge.
Customary here for those starting a thread to stick around and respond to the posts.
All I need to know about Newsweek's expertise in gold market sentiment was in their July 19, 1999 issue: "Gold Is Losing Its Glitter". They were tsk-tsking that "last week...gold hit $256, its lowest mark in more than 20 years." They rang the Sell bell at the bottom of a twenty-year bear market almost to the day and dollar.
Thanks for the tip. This cyber age and Internet posting all a bit new to this old timer. A lot of etiquette to acquire.
For the Blood gentleman, heck no I'm not selling gold. Gotta save that for the day the dollar goes into the tank in a big way. This run-up is disturbing because the ounce of gold I could buy for 460 a few months ago costs a lot more today.
Don't know your age or your situation and frankly it's none of my business. But a lot of older folks, retired and on a pension, live on a fixed amount of dollars each month.
When the value of those dollars fall it hurts.
Thank you again Iris, I can see this Internet is going to be a lot of fun.
HG
"the evidence of increasing inflation is thin. True, oil temporarily made it worse. But excluding erratic food and energy prices, inflation has remained at about 2.5 percent since early 2004. Perhaps gold buyers glimpse dangers not apparent in the statistics."
LOL, this passes for economic analysis at Newsweak. If you don't eat, heat or drive there is no inflation. Plus M3 going stealth in March '06. Maybe Gold buyers aren't so dumb after all.
LOL. His only other post here on FR was ... you guessed it... about gold.
gold bug ping, lol
Gold has no more inherent value than anything else -- the laws of supply and demand apply to it as much as they do to currency.
If you'd kept that ounce of gold since 1900, you'd have lost a lot of money. (1) You'd have had zero positive return on your investment. (2) You'd have lost money in storage, transaction and authenticating fees, and you'd have had capital tied down in gold that you could have spent on better investments (securities, real estate, etc.).
Maybe if they're in a bank account, but not if they're invested in securities -- stocks are inherently inflation resistant. Moreover, if you're on a fixed income, by definition you need an income -- something securities can provide. Gold has zero yield.
Gold is not held for returns, it's for protecting what you have. It's insurance against currency debasement by disreputable governments like the U.S. since FDR.
Except over the long term, you always lose money in gold.
It's insurance against currency debasement by disreputable governments like the U.S. since FDR.
Stocks are better insurance in an inflationary climate, plus they actually yield returns.
Don't worry about anti-gold posters. They are simply bitter that they didn't buy in 1999. And, boy, do they hate to be reminded of the price of gold now. ;-)
The reason, IMO that it is rising in price now is the "feeding frenzy".....a speculation driven price rise. Maybe it continue, maybe not. There is no increased industrial demand that I know of that would drive gold prices higher.
If I had a bunch of gold right now, I would take my money and run.
I think there are going to be a lot of sorry people who "get in" at the top.
Silver is another story...governments all over the world are moving to practically ban the use of lead in solder. Guess what takes the place of some of the lead...yyyyeeeessssss.....silver.
"over the long term, you always lose money in gold"
Please explain exalted wise one.
Now Mr Kaker you say if you had held that ounce of gold since 1900 you would have lost a lot of money. I don't know how I've made it all these years but I know you are wrong on that account.
As you know 1900 was the year the US went on the gold standard until FDR made his thievery in 1933. That year they would have given you a nice 20 dollar gold certificate for your ounce of gold - and vice versa. You could trade the certificate for gold at the bank -- it was redeemable.
Now today that 20 dollar gold certifacte has some collector value -- I guess. I mean surely people collect such things. (I know in my youth there were still a bunch of the old timers holding the Confederate war bonds as souveniers.) But that ounce of gold goes for about 517 today.
And probably more tomorrow. In 1900 the right decision might have been to keep that ounce of gold and let the government keep their piece of paper.
When I was young a lot of people talked about gold. They just didn't have an Internet and do it with a computer.
I imagine sooner or later we will see what happens. Always turns out that way.
HG
Witness all the threads on FR designed to chum the waters.
Gold goes up. and gold goes down.....Its like any other commodity...you gotta watch close.
Turning $20 in gold in 1900 into $517 in gold in 2005 only requires a 3.14% annual rate of return. I know of a few investments that have done better since 1900.
Does it alway protect your wealth?
The gold in the coffe can under my bed has cost me nothing to store.
Carrying cost. Opportunity cost. What did you lose in interest or dividends on the money you spent on gold?
Chum for chums.
Nice screename.... title of an unpublished Jane Austen novel perhaps?
Absent a fiat currency collapse does gold always protect your wealth?
When you can't trade your paper interest and dividends for food, I'll still be living high on the hog with my gold.
When I can't trade my interest and dividends for food, no one will be living high on the hog.
"When you can't trade your paper interest and dividends for food, I'll still be living high on the hog with my gold."
Until someone trades you a copper-jacketed piece of lead for your gold, and everything else you have, of course.
Because it won't, as you've conceded, appreciate in value and you have to pay storage, transaction, authentication, etc. fees to hold it.
That's easy to say in hindsight. Tell us, what will do better than gold over the next 100 years?
The Mogambo Guru answered that very point in his latest column:
*******************************************************
- To show you the absolute intellectual impoverishment of the people who are teaching our children and/or writing our newspapers, let's turn to an article sent to me by alert reader JC, entitled "Precious Metal's Elusive Value," and written by Andrew Cassel, who is a columnist for the Philadelphia Inquirer. He quotes Jeremy Siegel, who is a professor at Wharton. Mr. Cassel quotes this, ummm, ""professor," who is so smug in his arrogance that he dismisses gold, "If you bought $100 worth of gold in 1802, Siegel says, your inflation-adjusted return would be about 30 percent. That is, you'd have a mere $130 in purchasing power after more than 200 years."
This is exactly the damned point of the stuff, you preening halfwit! Gold preserves purchasing power! Hahaha! What a buffoon! What the lackluster professor Siegel did not mention is that if you had saved a $100 in fiat cash, even as late as 1913, then your loss in buying power would have been over 96%! Hahaha! So, what do you want in your future? Depreciated and stupid fiat money, where you end up broke and bitter, or gold, where you end up where you started in terms of buying power, or (as now) ahead of the game and making big, big money on gold's rising price? Hahaha!
A diversified stock portfolio. Don't forget to reinvest those dividends!!
Turning $20 into $500 over 105 years is an absolutely terrible return. According to the Consumer Price Index, $20 in 1900 is thanks to inflation worth $443.11 today. So you have to subtract $443.11 from your actual earnings.
So it looks like, because of the recent gold bump, you'd have made a grant total of $50, which comes to about $.50/year.
But you actually wouldn't have. Because of course you would have needed to have paid someone to have stored that gold for you for 105 years --- and that would have easily eaten up the difference (and probably then some). And if you stored it yourself? Eventually,you'd need to pay someone to authenticate that that gold of yours is actually pure gold.
So you've probably lost a bit of money when everything is factored in, and that's not including the opportunity cost. Because if you'd continuously invested the $20 in, say, blue chips or real estate, you'd have made a spectacular return on your investment, instead of locking it up in gold.
How about none of the above? Holding cash under your matress is as bad an idea as holding gold for a long period. That's why the Good Lord created securities. Even a standard interest bearing account would have saved you money.
Bonds.
Who ever said that holding on to cash was a good idea? There are other investments. Even a few that do better than gold
Who's preening now?
I can't read the x-axis on that graph.
So buy Euros, Yuan and Yen and keep your bases covered. Anyway, why can't gold become worthless? Why is it anymore immune to the laws of supply and demand than anything else?
The gold in the coffe can under my bed has cost me nothing to store.
But it will if you ever decide to sell it, because you'll have to pay someone to authenticate it.
I'd also have lost money on fees paid on those securities etc.
Yes but you would have been able to afford it, given that the return are much higher. If you had invested $20 in the stock market in 1900 and reinvested the dividends, you'd have tens, if not hundreds of thousands of dollars now.
Gold is not for investors. Its for those who want to insure that they will have purchasing power in emergencies.
That's legitimate. However treasury bills, real estate, and even pork bellies are probably more secure and more likely to be convertible.
Years running from 1801 to 2001. Each tick is 10 years.
Thanks ... now that I know, I can read it. The blips in the stock market appear more or less where one would expect them to.
twenty five years ago, 100 ounces of gold would buy you a nice 4 bedroom house.
today, 100 ounces of gold would buy you about one-fourth of that house.
Now if you had gotten an ounce of Rhodium in 1801, not only would you be wealthier (~$3k/oz.), but you could have named it after yourself, as it wasn't discovered until 1803.
Rhodium is essential to the manufacture of Beebers, hence it's ability to retain value.
And the really disturbing part is that you could have brought that ounce back in 1981 for $891.
And the really disturbing part is that you could have brought that ounce back in 1981 for $891.
That probably explains why gold is worth half as much as it was worth 25 years ago.
Many other posters have already refuted your foolish nonsense. Ditto to all of them.
If one had the foresight to time the gold market perfectly and buy at the lowest point in 1999, then they would have earned a 100% return on their investment or approximately 16.5% return, minus the high super high transaction fees and commissions. BFD. Most people can't time the market with perfection and therefore their returns are generally a lot less than the best case scenerio that the gold hucksters project. Very few gold hucksters will tell you, for example, that if you had brought gold on December 21, 1980 and sold today you would have lost nearly 45% of your investment, plus the high commissions and transaction fees.
Meanwhile, the S & P 500 and the DJIA has returned an average of something like 10.3% since the inception of those indexes back in the 1920's. Yep, gold is a really great investment and hedge against inflation.
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