Gold down almost $14.00 today???????

me ^ | 12/14/05 | me

[tmp02]

Has anyone heard anything?

[Moleman]

When was the Bilderberg meeting?

[GLDNGUN]

I just hope it makes it down to my next target buying price of $496. Then let the bulls run.

I'm looking at a price of $700 by 2007 and perhaps higher still after that.

[jjm2111]

---Confirms for me that Gold is still undervalued.

Or perhaps it's just a lousy investment.

[Barney Gumble]

GLDNGUN In my examples, I picked common everyday stocks...Exxon, Bud, and the indexes so if you just bought an S&P mutual fund. Notice I didn't include any tech stocks or whatnot. Although the price of gold in 1980 was the big high point, and a little unfair to use that price, I have a major distinctions. IT's been 25 years since gold peaked! 25 years after the March 2000 (when the DOW hit its peak), the Dow will be MUCH MUCH higher than 13000. Additionally, I picked another date, in 1990. Even the very very lowest point of the 1980s gold was at $300. SIMON SAYS WHAT You ALMOST make a convincing arguement, but there are 2 key details that are being ignored. Your chart begins in 1971 with the 2-tiered system, but in people weren't allowed to own gold until 1975, when it was already about $175/ oz. The second thing is you need to compile both timelines. If you bought gold in 1975 you have about 3 times your money today (not accounting for inflation). If you bought an S&P mutual fund in 1975, at about 90 and it's 1275, you'd have about 14 times your money.

[Barney Gumble]

GLDNGUN In my examples, I picked common everyday stocks and the indexes so if you just bought an S&P mutual fund. Notice I didn't include any tech stocks.

Although the price of gold in 1980 was the big high point, and a little unfair to use that price, I have a major distinctions. It's been 25 years since gold peaked! In 2025, 25 years after the March 2000 peak of the Dow, the Dow will be MUCH MUCH higher than its peak of 11722. Additionally, I picked another date, in 1990. Even the very very lowest point of the 1980s gold was at $300.

SIMON SAYS WHAT You ALMOST make a convincing arguement, but there are 2 key details that are being ignored:

Your chart begins in 1971 with the 2-tiered system, but in people weren't allowed to own gold until 1975, when it was already about $175/ oz.

The second thing is you need to compile both timelines. If you bought gold in 1975 you have about 3 times your money today (not accounting for inflation). If you bought an S&P mutual fund in 1975, at about 90 and it's 1275, you'd have about 14 times your money.

[simon says what]

You ALMOST make a convincing arguement

Gee... Thanks !

Your chart begins in 1971 with the 2-tiered system, but in people weren't allowed to own gold until 1975, when it was already about $175/ oz.

I have to admit I was not aware of this so I did a little research. President Ford signed the bill authorizing the private ownership of Gold on August 15, 1974. However, legal ownership aside, Gold still outperformed the S&P 500 by 2000% (20x) from 1971 to 1980. Non-US citizens and organizations were allowed to buy Gold and it drove the price up starting in 1971 when Richard Nixon closed the Gold Window. Gold is legal today for private citizens to own and profit from price appreciation.

The second thing is you need to compile both timelines.

Here is the chart of Gold and the S&P 500 going back to 1971. Based on price performance only, without dividends from any stocks re-invested, they are virtually even in performance. Gold was the superior investment from 1971 to roughly 1993 when dividends re-invested in the S&P 500 more than likely would have made up for its underperformance of Gold.

Gold = Green         S&P 500 = Blue

In 2025, 25 years after the March 2000 peak of the Dow, the Dow will be MUCH MUCH higher than its peak of 11722.

I agree by 2025 the DOW will be higher than 11722 but by how much ? And when will it move considerably higher than 11722 ? Will it be next year or 15 years from now? The chart below show the DOW going back to 1929 you can see that the DOW reached a long term peak in 1966 that it did not significantly exceed until 1984. It took 18 years to start a new bull market in the DOW following the previous peak.

[simon says what]

Or perhaps it's just a lousy investment.

I suppose if you consider nearly 100% price appreciation in the past 5 years lousy.

[GLDNGUN]

Yes, you are selective in the stocks, years, etc., you selected, just as a gold bug could pick 1999 and say "what has better returns since - gold or stocks?"

I am not anti-stocks. Not at all. There are indeed profits to be made if you know what you are doing or have someone advising you that knows what they are doing. I also believe gold can be a good investment and it's wise to have it as a part of a portfolio. And, no, I have no gold for sale.

You will never find me mocking stock investors or doing cartwheels when the stock market dips. That's why I can't understand the people who find so much joy when gold slides for a day, even though it doesn't profit them a nickle. Can you explain that?

[Barney Gumble]

I'm not doing cartwheels if gold dips, I just don't know why people invest in it and why it is so prominent on conservative websites and

I am hardly being selective when I compare the S&P 500 versus gold from 1975, when gold became publicly available until today. Again gold has gone up about 3x, versus 14 times for the S&P. Adjusting for inflation, especially the massive inflation under Carter, I'm not sure if you have much more money with gold?

[jjm2111]

It very well may have, but I've never known anyone to go really long on a commodity. Gold probably makes sense for short term commodity speculation or for people who make hedging bets for short term stock trading, but as a 20+ yr investment, gold is relatively poopy. In the past fiteen years, gold has been about flat while the S&P has returned 600%. Additionally gold has much more ups&downs than any of the broad stock indexes in any given year. Hence, useful for short term bets and hedging, not for long term investments.

[jjm2111]

"Do you mean to tell me that if you know WHAT stocks to buy and what stocks to not buy, and if you know WHEN to buy and WHEN to sell, that stocks are a good investment?"

A good stock investment is the Wilshire 5000 index fund which tracks the 5000 largest U.S. stocks, thereby capturing any company of any worth. You won't see the tremendous returns of say, betting on Microsoft, but you will see solid returns over 20 yrs.

[Barney Gumble]

---However, legal ownership aside, Gold still outperformed the S&P 500 by 2000% (20x) from 1971 to 1980.

You really can't count the price of gold when it wasn't legally available. It was $35/oz because it was a fixed mandated price under Bretton Woods. Market forces (from other countries) brought it up quickly to $175. Gold was only doing well when Jimmy Carter let inflation run up to 14% in the late 70s.

---chart of Gold and the S&P 500 going back to 1971. Based on price performance only,...they are virtually even

Again, analysing to 1971 isn't appropriate. Pick any date post 1975, compare it to today, and gold is losing every time. Gold may have short term gains, and may be a okay to have a few grand as "backup" but I wouldn't make it a primary investment. Maybe 2%.

---that the DOW reached a long term peak in 1966 that it did not significantly exceed until 1984.

Obviously no one can predict where the DOW will go, and your stat here is interesting, and it is interesting that those years are bookended by Lyndon Johnson and Carter! However again over the course 20+ years, i wouldn't put a lot of stock in gold.

[BluH2o]

Gold is a sucker's bet.

Yeah, see if you feel that way the day after a dirty bomb goes off in the center of a financial market such as Wall Street.

[jjm2111]

"Yeah, see if you feel that way the day after a dirty bomb goes off in the center of a financial market such as Wall Street."

Do you own your gold in coins or bouillon?

[BluH2o]

Do you own your gold in coins or bouillon?

Both ... in addition to having a sizeable amount of money in a precious metal fund.

[jjm2111]

"Both ... in addition to having a sizeable amount of money in a precious metal fund."

Coins, etc. would be fine currency in any sort of 'doomsday' scenario, but precious metal funds would suffer as bad as stocks in that very same scenario.

[simon says what]

You really can't count the price of gold when it wasn't legally available. It was $35/oz because it was a fixed mandated price under Bretton Woods. Market forces (from other countries) brought it up quickly to $175.

But Gold was legal for non-US citizens and businesses. They DID see price appreciation of 2000% (20x) from 1971 to 1980. Saying Gold wasn't legal for US citizens and therefore didn't appreciate is like saying guns are illegal in DC, therefore nobody gets shot there.

Again, analysing to 1971 isn't appropriate. Pick any date post 1975, compare it to today, and gold is losing every time.

Gold has appreciated more than the DOW going back the past 1,2,3,4,5,6,7, and 8 years.

[BluH2o]

... precious metal funds would suffer as bad as stocks in that very same scenario.

Not likely, we're talking tangibles here ... not banking, manufacturing, transportation, etc., these are precious metals ... not paper assets.

[Barney Gumble]

Saying Gold wasn't legal for US citizens and therefore didn't appreciate is like saying guns are illegal in DC, therefore nobody gets shot there

That analogy is way off. The price of gold was kept fixed and was artifically low. So market forces quickly brought it up to a trading level, but that trading level has increased relatively little since.

Gold has appreciated more than the DOW going back the past 1,2,3,4,5,6,7, and 8 years.

touché

Gold is a good bet if you can smell a recession coming or see inflation rising high, but for a long term retirement prospect, I'd shy away from it. Obviously we're going to have to agree to disagree. As with any investment, it's best to diversify.