The Nasdaq has outperformed gold by 30%.
Yeah but the HUI Gold Stock Index has ouperformed the NASDAQ by 23%.
HUI Gold Stock Index = Green NASDAQ = Blue
Posted on 12/06/2005 11:25:43 PM PST by Capitalism2003
December 5, 2005
The market price for an ounce of gold rose to over $500 last week, a significant milestone for economists watching precious metals and commodities markets. The last time gold topped $500 was December 1987, in the wake of the “Black Monday” stock market collapse earlier that fall.
Gold prices historically rise when faith in paper currencies erodes, as investors seek the intrinsic value of gold to protect themselves from inflation. It’s interesting to note that while the U.S. dollar has regained some of its value relative to other paper currencies like the Euro, it continues to lose value relative to gold and other hard assets. This shows the folly of using one fiat currency to value another.
Gold is history’s oldest and most stable currency. Central bankers and politicians don’t want a gold-backed currency system, because it denies them the power to create money out of thin air. Governments by their very nature want to expand, whether to finance military intervention abroad or a welfare state at home. Expansion costs money, and politicians don’t want spending limited to the amounts they can tax or borrow. This is precisely why central banks now manage all of the world’s major currencies.
Yet while politicians favor central bank control of money, history and the laws of economics are on the side of gold. Even though central banks try to mask their inflationary policies and suppress the price of gold by surreptitiously selling it, the gold markets always cut through the smokescreen eventually. Rising gold prices like we see today historically signify trouble for paper currencies, and the dollar is no exception.
President Nixon finally severed the last tenuous links between the dollar and gold in 1971. Since 1971, the Federal Reserve and U.S. Treasury have employed a pure fiat money system, meaning government can create money whenever it decrees simply by printing more dollars. The "value" of each newly minted dollar is determined by the faith of the public, the money supply, and the financial markets. In other words, fiat dollars have no intrinsic value.
What does this mean for you and your family? Since your dollars have no intrinsic value, they are subject to currency market fluctuations and ruinous government policies, especially Fed inflationary policies. Every time new dollars are printed and the money supply increases, your income and savings are worth less. Even as you save for retirement, the Fed is working against you. Inflation is nothing more than government counterfeiting by the Fed printing presses.
You miss the point, or I do. If one is buying gold to compete with equities in the world as we know it now, I believe one is making a mistake. Stocks over the long run always outperform gold. If you are saying paper money is worthless today, that is also wrong as we use it every day.
Now if you are buying gold as insurance against a very different world, one where terrorists nuke a city or so, Israel and iran exchange weapons, perhaps oil hits $100 or more a barrel, or we have a real 1918 style Bird Flu pandemic and it lasts a while, then the world as we know it could be very different. Will folk trust paper? Will the government be shown to be incapable of protecting the citizens? Could a future liberal US government react with freedom limitiations and gun grabs?
In a new set of situations and realities, what would you rather have, a shoe box full of paper, or a pound or so of gold and a few score silver dollars?
I buy gold for the worst case scenario, not to churn it for more paper money. It is also why I only have a small bit of my assets in gold. What are the odds of a worse case situation? A good bit less than more of what we have today.
I buy with a desired limit in mind, then I plan to sit on it like I do my insurance policies.
I'll be here. Waiting. Waiting and cashing my dividend checks.
The Nasdaq has outperformed gold by 30%.
Yeah but the HUI Gold Stock Index has ouperformed the NASDAQ by 23%.
HUI Gold Stock Index = Green NASDAQ = Blue
Which is the storehouse of value to which goldbugs want to tie our currency? Gold? Or Gold stocks?
For a long time platinum and gold were about the same price. Now platinum has continued to move higher, with inflation I suppose, while gold has fallen relatively to about 1/2. Platinum has industrial use in this environmental age, so that may be why it has kept up with inflation. Gold has some use in electronics and paintings of saints, but it seems to be mainly for jewelry and some kind of hedge against the eventual collapse of civilization [got to wonder if even gold would make a stout enough wall against the starving, irradiated hordes]. Aside from the adage that one must have gold to make gold, there wouldn't be any particular need to keep gold around, but owning a gold mine would be not a bad idea.
I do not consider Gold to have sanctified storehouse qualities and I am not preaching to the masses for them to convert to my Gold beliefs. I belive Gold has been a good investment for the past several years and will remain so for another several years. I debate with you and others because I disagree with your attacks. The NASDAQ in 2000 and Gold in 1980 both went vertical and became extremely overvalued. The difference is Gold has been through a 25 year bear market/consolidation and the NASDAQ just started its bear market/consolidation 5 years ago.
And by the way, it only makes you look like more of a salesman, not less.
And you are remaining consistent with your name calling.
Hmmmm....
Why are you asking me this question? At what point did I say to you Gold and/or Gold Stocks should be tied to our currency? Seriously, do you have a point to make? What is with the gold bug, gold shill, gold salesman name calling ? Why don't you debate the responses? Gold and Gold stocks seems to be a pretty clear link to me. You know, like oil and oil stocks.... healthcare and healthcare stocks.
I'm just trying to determine if you're pitching gold or gold stocks.
I don't know why people want to make this so hard.
Whatever
Answer: Gold costs more to buy..
Last I checked he was on the Financial Services Committee.
The threat of jail means that once upon a time, people knew that the paper was good because they knew other people had to take it. Nowadays, virtually nobody would be insane enough to refuse cash (unless they thought it was counterfeit, in which case they are refusing it because they believe that it is not cash), because it's common knowledge that your US Dollars are good anywhere in the United States, and plenty of other places too.
From Gartman this morning:
THE PEOPLE'S DAILY SPEAKS
RATHER LOUDLY 'BOUT GOLD: There
are a few publications in China that really do speak on behalf
of the government in Beijing, but when The People's Daily
"speaks" we have come to understand that this is, for all
intents, the voice of Beijing. It is via The People's Daily that
the Communist Party floats trial policy balloons . It is via The
People's Daily that the leaders make their wishes know.
Thus, when The People's Daily speaks about gold, we listen.
It spoke last week and said, quite "loudly" that
It is only a question of time for Asian central
banks to follow and buy in gold: they hold 2.6
trillion US dollars in foreign exchange reserves,
and [are] able to change more of them into gold
as a hedge against US dollar falls.... Budget
deficits and debts in Europe, America and Japan...
meanslower growth rate and lower prices of
stock, bond and real estate as well as faster
increase of inflation -- a golden opportunity for
central banks to buy in gold.
Asian countries have good reasons to hold more
gold. Compared with developed countries, their
percentages of gold in foreign exchange reserves
are apparently small. As the World Gold Council
pointed out, Asian investors are the world largest
gold consumers, but gold only takes 1.1 percent in
China's official reserves, or 1.3 and 3.6 percent
in Japan and India respectively. A sharp contrast
is the American percentage of 63.8 percent, and
over 50 percent in Germany, France and Italy
respectively. Due to fluctuations of major
currencies, Asian countries may not choose to
change their US dollars into euros. Meanwhile,
they don't like holding too much dollars, so one
of the way outs is simply to have more gold.
By The People's Daily Online
We take exception to some of the conclusions arrived at by
the article, for indeed the US dollar is not weak, it is strong.
Further we are not certain that the printing of bank notes is
being done with the expressed purpose of devaluing various
currencies. We may argue with the percentages noted above;
however, on balance we think this article clearly supports our
thesis regarding the buying of gold by the reserve banks of
Asia and the developing world. With this thesis we shall
obviously not take issue; indeed, we think it wise."
How's that for formatting?
The only thing that needs to be added is the inertia effect on the price structure. This tends to moderate the effect of the outrageous Federal deficits--which end up being monetized--in the short run. Thus people do not immediately feel the effect of the inflation already present in the system.
For a discussion of these factors, see (Economics & Common Sense).
For some reason, there always seem to be some people who resent what Ron Paul has to say. But he is a totally principled man, who like that little boy in the Hans Christian Andersen fable, does not know how to lie, to go along with the crowd. If the Emperor is intellectually naked, we ought all to be willing to say so!
William Flax
Formatting is NG, but idea presented quite correct - Asian buying will push gold higher. Central Bank overhang is very unlikely to be a depressing factor, anymore. Hedging programs by producing miners have become less popular, also.
With about 60% of my not inconsiderable stock portfolio in five Canadian-listed gold and silver juniors, I look forward to the next few months, and maybe years. ;^)
Sneer at gold all you like - folks are paying up to acquire it, and the miners will finally reap some windfall benefits, after years of ugly markets.
The price of gold hit $250 in May, 1999. So your Nazdog buy in 1993 has no relevance. If you bought both gold and a basket of Nazdog stocks in May, 1999, you'd have doubled your money in gold. With Nazdog, you'd still be out money.
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