Who ever said that holding on to cash was a good idea? There are other investments. Even a few that do better than gold
Who's preening now?
Posted on 12/07/2005 10:10:37 AM PST by DebtAndDelusion
The price of gold passed $500 an ounce last week, its highest level since the late 1980s. This is either an ominous development—or it isn't...
If you'd lived a century ago, gold would have been the basis of your money. Great Britain dominated the global gold standard; its currency, the pound, was freely convertible into gold...
On April 5, 1933, President Franklin D. Roosevelt ordered Americans to surrender their gold coin; the country effectively went on a paper-money standard...
Higher demand collides with constricted supplies; wham, prices rise...
Gold is an unending mystery, because its value lies less in what it does for us (it is not like sugar, copper or oil) and more in what it symbolizes. It is almost as unfathomable as the human drama itself.
(Excerpt) Read more at msnbc.msn.com ...
Witness all the threads on FR designed to chum the waters.
Gold goes up. and gold goes down.....Its like any other commodity...you gotta watch close.
Turning $20 in gold in 1900 into $517 in gold in 2005 only requires a 3.14% annual rate of return. I know of a few investments that have done better since 1900.
Does it alway protect your wealth?
The gold in the coffe can under my bed has cost me nothing to store.
Carrying cost. Opportunity cost. What did you lose in interest or dividends on the money you spent on gold?
Chum for chums.
Nice screename.... title of an unpublished Jane Austen novel perhaps?
Absent a fiat currency collapse does gold always protect your wealth?
When you can't trade your paper interest and dividends for food, I'll still be living high on the hog with my gold.
When I can't trade my interest and dividends for food, no one will be living high on the hog.
"When you can't trade your paper interest and dividends for food, I'll still be living high on the hog with my gold."
Until someone trades you a copper-jacketed piece of lead for your gold, and everything else you have, of course.
Because it won't, as you've conceded, appreciate in value and you have to pay storage, transaction, authentication, etc. fees to hold it.
That's easy to say in hindsight. Tell us, what will do better than gold over the next 100 years?
The Mogambo Guru answered that very point in his latest column:
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- To show you the absolute intellectual impoverishment of the people who are teaching our children and/or writing our newspapers, let's turn to an article sent to me by alert reader JC, entitled "Precious Metal's Elusive Value," and written by Andrew Cassel, who is a columnist for the Philadelphia Inquirer. He quotes Jeremy Siegel, who is a professor at Wharton. Mr. Cassel quotes this, ummm, ""professor," who is so smug in his arrogance that he dismisses gold, "If you bought $100 worth of gold in 1802, Siegel says, your inflation-adjusted return would be about 30 percent. That is, you'd have a mere $130 in purchasing power after more than 200 years."
This is exactly the damned point of the stuff, you preening halfwit! Gold preserves purchasing power! Hahaha! What a buffoon! What the lackluster professor Siegel did not mention is that if you had saved a $100 in fiat cash, even as late as 1913, then your loss in buying power would have been over 96%! Hahaha! So, what do you want in your future? Depreciated and stupid fiat money, where you end up broke and bitter, or gold, where you end up where you started in terms of buying power, or (as now) ahead of the game and making big, big money on gold's rising price? Hahaha!
A diversified stock portfolio. Don't forget to reinvest those dividends!!
Turning $20 into $500 over 105 years is an absolutely terrible return. According to the Consumer Price Index, $20 in 1900 is thanks to inflation worth $443.11 today. So you have to subtract $443.11 from your actual earnings.
So it looks like, because of the recent gold bump, you'd have made a grant total of $50, which comes to about $.50/year.
But you actually wouldn't have. Because of course you would have needed to have paid someone to have stored that gold for you for 105 years --- and that would have easily eaten up the difference (and probably then some). And if you stored it yourself? Eventually,you'd need to pay someone to authenticate that that gold of yours is actually pure gold.
So you've probably lost a bit of money when everything is factored in, and that's not including the opportunity cost. Because if you'd continuously invested the $20 in, say, blue chips or real estate, you'd have made a spectacular return on your investment, instead of locking it up in gold.
How about none of the above? Holding cash under your matress is as bad an idea as holding gold for a long period. That's why the Good Lord created securities. Even a standard interest bearing account would have saved you money.
Bonds.
Who ever said that holding on to cash was a good idea? There are other investments. Even a few that do better than gold
Who's preening now?
I can't read the x-axis on that graph.
So buy Euros, Yuan and Yen and keep your bases covered. Anyway, why can't gold become worthless? Why is it anymore immune to the laws of supply and demand than anything else?
The gold in the coffe can under my bed has cost me nothing to store.
But it will if you ever decide to sell it, because you'll have to pay someone to authenticate it.
I'd also have lost money on fees paid on those securities etc.
Yes but you would have been able to afford it, given that the return are much higher. If you had invested $20 in the stock market in 1900 and reinvested the dividends, you'd have tens, if not hundreds of thousands of dollars now.
Gold is not for investors. Its for those who want to insure that they will have purchasing power in emergencies.
That's legitimate. However treasury bills, real estate, and even pork bellies are probably more secure and more likely to be convertible.
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