Replies

Now Mr Kaker you say if you had held that ounce of gold since 1900 you would have lost a lot of money. I don't know how I've made it all these years but I know you are wrong on that account.

As you know 1900 was the year the US went on the gold standard until FDR made his thievery in 1933. That year they would have given you a nice 20 dollar gold certificate for your ounce of gold - and vice versa. You could trade the certificate for gold at the bank -- it was redeemable.

Now today that 20 dollar gold certifacte has some collector value -- I guess. I mean surely people collect such things. (I know in my youth there were still a bunch of the old timers holding the Confederate war bonds as souveniers.) But that ounce of gold goes for about 517 today.

And probably more tomorrow. In 1900 the right decision might have been to keep that ounce of gold and let the government keep their piece of paper.

When I was young a lot of people talked about gold. They just didn't have an Internet and do it with a computer.

I imagine sooner or later we will see what happens. Always turns out that way.

HG

Now Mr Kaker you say if you had held that ounce of gold since 1900 you would have lost a lot of money. I don't know how I've made it all these years but I know you are wrong on that account.

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.

Now Mr Kaker you say if you had held that ounce of gold since 1900 you would have lost a lot of money.

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.