20 Feb 11
Originally posted by no1marauderNo, it does not answer the question.
Yes, things should be adjusted for inflation. When you adjust gold for inflation, its worth only slightly above half of what it was 30 years ago.
Does that answer your question i.e. What does the high in 1980 have to do with making it a worse investment?
Past performance does not guarantee future results. Economic conditions change.
20 Feb 11
Originally posted by telerionGet real.
Just about anything.
You didn't even rule out putting it under the mattress. If there is any amount of inflation the money would lose value just sitting there. Bond yields are so low they would probably lose to inflation as well, thanks to QE1 & 2.
Stock prices often rise to offset the falling dollar. That might explain why the stock market is going higher but adjusted for inflation it may not be gaining much value at all.
You had better hope the stock market keeps going up, otherwise precious metals will be the only safe place for your money. Since you have ruled that out, you will be at the mercy of inflation.
20 Feb 11
Originally posted by no1marauderI'm not disregarding the history. I just know things are much different than they were back then.
It seems rather imprudent to completely disregard 30 years of history when judging what investments are wise in the long term.
We had a trade surplus back then.
We had a lower debt to GDP ratio back then.
There was arguably less world instability back then.
There were not currency wars back then.
20 Feb 11
Originally posted by Metal BrainOnly the second reason is even true.
I'm not disregarding the history. I just know things are much different than they were back then.
We had a trade surplus back then.
We had a lower debt to GDP ratio back then.
There was arguably less world instability back then.
There were not currency wars back then.
The history says gold is a very poor investment and there are no long term trends that appear to change that. Betting on a total collapse of the present economic system seems a losing venture.
20 Feb 11
Originally posted by AThousandYoungYou got it.
The point of buying gold of course is not to make money but to avoid losing money via inflation.
That does not mean gold cannot become undervalued and overvalued. It could be possible to make profit from buying and selling at the right time, but essentially you are right.
20 Feb 11
1 edit
Originally posted by Metal BrainIf you're so paranoid about massive inflation (which clearly the market isn't if you care to look at long rates on Treasuries), then why don't you put your money in TIPS? At least TIPS has the advantage of paying interest. Plus it's price should lean against the wind for inflation expectations.
I just remembered that bonds have that opposite thing going on. Maybe yields are higher and returns are lower because of it. I forget how that works exactly.
20 Feb 11
Originally posted by no1marauderOnly the second reason is true?
Only the second reason is even true.
The history says gold is a very poor investment and there are no long term trends that appear to change that. Betting on a total collapse of the present economic system seems a losing venture.
You are mistaken. Only the third is arguable.
We had a trade surplus back then. It is a fact. Blow the dust off of your history book and take a look.
20 Feb 11
Originally posted by telerionI suppose our debt problems will solve themselves. Sure I think inflation is going higher. Why would anybody think otherwise? You must have a lot of faith in congress to reduce our debt levels. Look at the protests in Wisconsin. You are losing your mind.
If you're so paranoid about massive inflation (which clearly the market isn't if you care to look at long rates on Treasuries), then why don't you put your money in TIPS? At least TIPS has the advantage of paying interest. Plus it's price should lean against the wind for inflation expectations.
If you believe the inflation numbers you go ahead and put your money in TIPS. I will keep mine in gold and silver while you lose money.
21 Feb 11
Originally posted by Metal BrainThis really underscores another problem with your invest in gold argument. You clearly see it as a great long-term investment strategy. Gold is for gambling. It's fundamentals do not justify such large price swings. Gold supply grows very little, and demand from productive sources is also very small. The big movements in price come from certain investors running to it as a hedge against economic slowdowns and others who run to it to profit off of the first investors. Over a long horizon though gold gets smoked by the S&P, and, unlike treasuries, gold can hardly be called riskless (just look again at its fluctuations in real price).
I suppose our debt problems will solve themselves. Sure I think inflation is going higher. Why would anybody think otherwise? You must have a lot of faith in congress to reduce our debt levels. Look at the protests in Wisconsin. You are losing your mind.
If you believe the inflation numbers you go ahead and put your money in TIPS. I will keep mine in gold and silver while you lose money.
Again if you expect major inflation in the future (perhaps because of Congress's inability to deal with our debt over a reasonable time frame), an asset that compensates you for inflation (i.e., TIPS) would make a lot of sense. Plus, if enough other people begin to agree with you about the risks of inflation you'll see a a nice kick in the value of your investment.
21 Feb 11
Originally posted by telerionToo abstract.
If you're so paranoid about massive inflation (which clearly the market isn't if you care to look at long rates on Treasuries), then why don't you put your money in TIPS? At least TIPS has the advantage of paying interest. Plus it's price should lean against the wind for inflation expectations.
These people who are buying gold expect this nation's economy and/or government to collapse. They are planning to bunker down with physical goods that they can protect.
In that scenario, I'd buy cigarettes myself. Canned food. Liquor. Fuels. Weapons and bullets. They probably have that stuff too. But they want something more compact I think for large purchases in a barter economy.
Remember, a lot of these guys think they are John Galt figures who are planning to switch over to a new economic system backed by gold as a form of protest against the "looters". "The looters" run the government of course, so anything the government can control is out of the question.