AP wire story today:
Gold, which investors traditionally buy when they want a safe investment, rose above $1,700 per ounce for the first time Monday. Its price remains below its 1980 record after adjusting for inflation.
Read more: http://www.seattlepi.com/national/article/U-S-stocks-tumble-1767183.php#ixzz1URwbsYFc
IN OTHER WORDS, in the LONG run the price of gold only paces inflation. So in the long run, the people who say gold is money are correct but those who say gold is a long term investment are wrong. If the AP story is correct, those who bought in 1980 are still behind the curve.
gold as money and investment
Discussion in 'Money Talk$' started by billwald, Aug 8, 2011.
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Weird thing about gold (and other precious metals and jewels) down through the ages, is that everyone wants them because everyone wants them, but at the end of the day, one cannot "eat" nor "plant" nor "produce" with any precious metal. Additionally, when any sovereign nation becomes strapped for gold, it simply goes out and recovers it from its people (or from another nation by act of war if its own people have none to confiscate).
We are just about at the place where the confiscation begins.
At that point, we join the majority of the human race down through history and eating becomes more important than gold. -
I have a significant amount of my investment portfolio in precious metals, I will cash them in when I get a huge stockpile. I call the pile my 401 C (Aluminum Cans ):laugh:
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Yeah, that is completely wrong. If someone would have bought Gold in the early 80's, at 650 dollars an ounce, they would have earned the equivalent of 3.5 percent annual yield; well above inflation, and WAY above your average CD rates.
However, if a person would have bought it at the average price, they would have gotten around a 6 percent annual yield: a VERY nice return on your investment. -
IF one had purchased it when it was that price, you would be right.
But why are people purchasing it when it is at an all time high? -
CD median APY since 1980 = 7.74%, more than gold.
Then again, the comparison is not sound financially, since Gold is a hedge against inflation, and CDs often are not good devices vs inflation. But that makes the point even further, doesn't it?
S&P Annualized ROI for same time? = around 12 percent. So your basic run of the mill Index fund would double or triple Gold's ROI.
Again, gold is not a bad hedge, but it's not the investment the late-night hucksters and bloggers make it out to be. I just read analyses of gold and metal funds that are underperforming in this economy. -
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If the dollar crashes, FOREX is not someplace I wanna be. So much debt is tied to us. Besides, this is all being disproven. Look at how people are flocking to Treasuries as safe-haven investments. People were selling gold a week and a half ago and gobbling up Treasuries.
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Don't forget that most people pay a 20% premium when buying?
If cash money is becoming worthless then else why do the gold sellers prefer my cash to their gold? -
InTheLight Well-Known MemberSite Supporter
Because gold investment firms are running radio commercials on right-wing talk radio stations day and night trying to find new investors to buy gold. They are quite Ponzi-like in their operations.
Because buying when the market is peaking and selling when it is bottoming out is human nature.
Never understood the allure of gold. It's dug out of a hole in the ground, melted down into bars and put back into a hole in the ground surrounded by guards. That's pretty inefficient and unproductive. -
I'd add this:
Because the naive - who cannot even answer simple economic or accounting questions or even understand the concept of compound interest for pete's sake- are suddenly Milton Friedman when it comes to waxing eloquent on the virtues of gold.
Of course, the all time low was once an all time high. People forget that, when the market loses 400 points, someone bought the stock everyone panicked and sold. But be that as it may, it doesn't change what InTheLight keenly observed. Well said.