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Gold Is Cheap. Inflation Is Coming. You Do the Math
Barrons ^ | 09-24-2018 | Andrew Bary

Posted on 10/01/2018 6:57:57 PM PDT by NRx

Gold has gotten a bad rap.

Long seen as the investment choice of the cranky and the fearful, the metal yields nothing; as Warren Buffett has said, it just “looks at you.”

This year has been especially lackluster for gold. Its price has slumped 8%, to about $1,200 an ounce, and is off more than 35% from its high of $1,900 in 2011. Adding insult to injury, Vanguard will soon rechristen the largest gold-oriented U.S. mutual fund and shift its focus away from the metal.

But this out-of-favor asset class now deserves a place in investment portfolios.

Compared with stocks and other financial assets, gold looks inexpensive. More important, inflation is starting to pick up in the U.S. and in much of the world as central banks shrink their enormous balance sheets. And gold has represented a good defense against inflation eroding the value of a stock or bond portfolio. Over time, it has held its value against the dollar. Gold was $20.67 an ounce 100 years ago and that bought a good men’s suit. At $1,200 an ounce, the same is true today.

“Gold is rare, and it’s hard to rapidly increase the supply of it,” says Keith Trauner, co-portfolio manager of the GoodHaven (ticker: GOODX) mutual fund, which holds Barrick Gold (ABX), a leading mining company. “People have historically viewed it as a hedge against government depreciation of local currency...”

“...Virtually every government in the world is trying to promote inflation partly because there is so much sovereign debt,” Trauner says. When there is so much debt, he contends, governments have three choices: default, restructure, or inflate the currency. “Politicians, when given the chance, will choose the latter.”

(Excerpt) Read more at barrons.com ...


TOPICS: Business/Economy; Canada; Front Page News; Mexico
KEYWORDS: andrewbary; baloney; barrons; boycotts; bozos; canada; churn; churnchurnchurn; churning; gold; goldbugs; idiocy; incometaxes; keithtrauner; mexico; nafta; nevertrump; nevertrumper; nevertrumpers; nonsense; ntsa; sanctions; tariffs; taxcutsandjobsact; taxreform; tcja; trade; trumpeconomy; usmca
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To: SomeCallMeTim
I've been there. Have you ever seen a Valenzuelan woman?


41 posted on 10/01/2018 7:50:47 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: Celerity

“Silver is how you buy food and gas in all trading economies.”

That’s right! Morgan or Peace cartwheels will always trade as coin of the realm.

Gold? I’m a big student of 1920’s German hyperinflation; relatives were sending my grandparents million mark notes & were begging for greenbacks. When they later went Nazi, Oma und Opa told them to bleep off. Anyway, Germans who held gold took a train to Switzerland & turned their gold into Swiss francs which they took back to Germany where anyone would accept them in payment which made inflation even worse.

We don’t have the luxury of a border country with a currency sounder than ours. Canadian dollars? Ha!

Keep some junk silver in reserve but invest the rest wisely, is my advice. Thank God for Pres. Trump, is my prayer.


42 posted on 10/01/2018 7:58:16 PM PDT by elcid1970 ("The Second Amendment is more important than Islam. Buy ammo.")
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To: NRx

Gold is gold.

Lead will get the necessary items every time.

Worth the weight is a reletave term...


43 posted on 10/01/2018 8:01:28 PM PDT by mabarker1 (Congress- the opposite of PROGRESS!!!)
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To: JonPreston
why isn’t gold & silver super valuable commodities in a country like Venezuela where the economy is in the crapper?

Betcha it is. If you had put some of your Bolivars into gold or silver any time before Feb., 2018, you would have preserved a lot of your wealth. The below chart represents the US dollar vs the Bolivar.

I doubt that kind of craziness would happen here, but I feel it is prudent to put 10% of your wealth in silver and gold IN YOUR POSSESSION.

44 posted on 10/01/2018 8:04:03 PM PDT by Oatka
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To: mabarker1

OK, enough of this. In this scenario you are going to kill everyone to get things you want? You want to dig a garden and need a new shovel and some seeds, so you are going to kill to get it? Really? How long before a posse is formed to hunt you down like an animal?


45 posted on 10/01/2018 8:04:18 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: Sgt_Schultze

BINGO !!!

9x19 will be easy to pick up.

SSSHHHHSSS did i say that?


46 posted on 10/01/2018 8:05:40 PM PDT by mabarker1 (Congress- the opposite of PROGRESS!!!)
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To: elcid1970

Junk Silver,,,
Hey Buddy, can you Spare a Dime?


47 posted on 10/01/2018 8:05:52 PM PDT by Big Red Badger (Despised by the Despicable!)
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To: Jonty30

No, did you take into account anything but the size of the debt?


48 posted on 10/01/2018 8:07:31 PM PDT by Moonman62 (Give a man a fish and he'll be a Democrat. Teach a man to fish and he'll be a responsible citizen.)
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To: All

If you think gold has been muted it can’t compare to how silver has been monkey-hammered for the past 40 years. Unlike Gold, Silver is more of a industrial commodity while Gold is mostly horded.

As we enter a new tech-age, silver will be in more demand for electronics, medicine, solar panels, anti-microbials and so forth. Used in small amounts it’s rarely (if ever) recycled. There will come a time when the surface deposits will be tapped out.

At Sub $15, silver is a steal. Any lower and the mining companies will go under.

Would like to know how much India, Russia, China and JP Morgan are hording.


49 posted on 10/01/2018 8:09:22 PM PDT by ak267
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To: Brilliant

Just remember the inflation we had in the 70s which was attributed to printing money to pay down the national debt. It could happen again.

...

I would think that such an imminent possibility would be indicated by the bond market.


50 posted on 10/01/2018 8:09:44 PM PDT by Moonman62 (Give a man a fish and he'll be a Democrat. Teach a man to fish and he'll be a responsible citizen.)
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To: Moonman62

Yeah, $21 trillion an a economy about $11 or $12 trillion.


51 posted on 10/01/2018 8:10:14 PM PDT by Jonty30 (What Islam and secularism have in common is that they are both death by cults.)
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To: central_va

I’ve been there too. But, it’s been about 10 years.

And yes, they are VERY beautiful. But, traveling there right now is just darn near impossible. We don’t allow our sales team to go there. Not even our Brazilian folks.


52 posted on 10/01/2018 8:13:58 PM PDT by SomeCallMeTim ( The best minds are not in government. If any were, business would hire them!it)
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To: Big Red Badger

Heard of that song all my life, only listened to it recently on youtube.

Described my grandfather to a T; immigrated then enlisted in 1917 as a 100% American, then went back to work as a coal miner/dynamite handler, lost his job, collected his bonus in 1935 & bought a house while getting his boiler operator license. When I came along they lived well & a visit to my grandparents’ was better than Disneyland.

Never forgot that the working class was decent, patriotic, and respectable. Their shrines were the church, the VFW, and the Eagles lodge, Aerie 1506.


53 posted on 10/01/2018 8:22:04 PM PDT by elcid1970 ("The Second Amendment is more important than Islam. Buy ammo.")
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To: NRx

When interest rates are close to zero there is no penalty for holding gold. Once rates rise enough to reward you for saving that will change.


54 posted on 10/01/2018 8:26:39 PM PDT by Pelham (California, how mass immigration transforms America into Obamaland)
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To: central_va
OK, enough of this. In this scenario you are going to kill everyone to get things you want? You want to dig a garden and need a new shovel and some seeds, so you are going to kill to get it? Really? How long before a posse is formed to hunt you down like an animal?

Who pissed in your Cornflakes? I know that it wasn’t Me.

WTF ??? I never said that. I’m going to let You Sleep off the Adult Beverage(s) that you consumed this Evening and you can get back to Me later.

Sweet Dreams 😜

What I said.

Gold is gold. Lead will get the necessary items every time. Worth the weight is a reletave term.

55 posted on 10/01/2018 8:32:04 PM PDT by mabarker1 (Congress- the opposite of PROGRESS!!!)
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To: NRx

Hi! I'm William Devine. I already own all the gold. You're too late, so piss off!

56 posted on 10/01/2018 8:32:07 PM PDT by Bommer (Help out 2ndDivisionVet and his wife - https://www.gofundme.com/married-recent-amputee)
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To: NRx

I’m not sure gold is cheap, but platinum is the same price today as its low of 10 years ago, and down 60% from its high. A lot of that has to do with other metals taking over platinum’s place in industry, but it’s still low, especially compared with its competitor, palladium, which is way high (manipulation?).


57 posted on 10/01/2018 8:33:06 PM PDT by VanShuyten ("...that all the donkeys were dead. I know nothing as to the fate of the less valuable animals.")
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To: SunkenCiv

“in the late 1960s the US’ federal deficit exceeded the value of the gov’t gold reserve, and there was no viable option apart from the US dropping the arbitrary fixed gold price”

It wasn’t the federal deficit. It was the number of dollars being held outside of the US that exceeded our gold reserves. We were caught in the Triffin Dilemma, which was a combination of the US dollar being the world’s reserve currency while the US was engaged in major foreign policy initiatives, civilian as well as military.

When the Bretton Woods Agreement was being set up Keynes had warned us not to make the dollar the world’s reserve currency, but to instead use the “Bancor”, something along the lines of Special Drawing Rights.


58 posted on 10/01/2018 8:44:09 PM PDT by Pelham (California, how mass immigration transforms America into Obamaland)
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To: NRx

It doesn’t hurt to have a little gold in your portfolio as insurance. Any funny business with China, the Middle East or oil prices and watch it jump.


59 posted on 10/01/2018 8:44:40 PM PDT by BipolarBob (#meToo Things have gotten so bad that Caitlyn Jenner has memories of Bruce touching her.)
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To: NRx

My younger son has been doing well on finding scrap silver and gold jewelry at thrift stores lately.

Last Saturday he paid $5 for $180 in gold and silver. He takes it a friendly coin shop that will scrap it for 20% and them swap him the balance in bullion or junk at spot.


60 posted on 10/01/2018 9:07:33 PM PDT by Rebelbase (Consensus isn't science.)
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