"You need to diversify your portfolio, fool!
Posted on 11/10/2008 6:44:44 AM PST by DJ Taylor
In July of 2002, it cost the equivalent of 1.3 grams of gold to fill up your gas tank (15 gal) or about $20 when priced in dollars.*
In July of 2008, it still cost only 1.3 grams of gold, but $61 when priced in dollars** - (305% more)!
If you priced other necessities in gold such as food, utilities, health care, etc, you would get similar results. It's because of “Inflation” (rising prices due to increase in money supply) and with the way the Fed is printing up hundreds of billions in new money to bail out Fannie Mae, Freddie Mac, AIG and all the big banks that caused the current mess (with the automakers next in line for a hand out), you needn’t be a genius to see that inflation will continue to increase in the future.
The truth is, the Fed is depreciating the value of your money with these insane inflationary policies. But you can protect yourself from the consequences of any future inflation by converting some of your dollars (unbacked, counterfeit paper money that is shrinking in value) into gold bullion coins (real money) that are increasing in value. If you’re a little short on savings you could substitute cheaper silver bullion coins for gold. Percentage wise they pretty much rise and fall in tandem.
*In July 2002 gas was $1.33/gal (nat’l avg), gold was $315/oz. **In July 2008 gas was $4.05/gal and gold was $938/oz. 1 troy ounce = 31.1 grams
I’m betting on deflation (i.e., a depression) given Obamanomics... Housing values are falling. Equities are falling. Oil prices have fallen. Other commodities have fallen... etc...
Once the debt crisis is done (1-2 years) - yes, we will have everything in place for Jimmy Carter inflation (20%)
Physical gold is getting hard to find right now. The best choice is certificates showing an ownership in gold, where the gold is in a vault somewhere.
However, gold is subject to the same swings as other investments and may be overpriced right now.
Last time I looked, day before yesterday, the price of gas was well under three dollars. Fifteen gallons of gas would cost under $45, not $60. Did the price of gold go down?
Generally speaking, I have no problem with the advice that some gold in the portfolio is a very good thing. The struggle I am having with this article is it appears to be blaming the FED for the inflation. The culprit is FISCAL policy, not MONETARY policy. The liberals in congress are the ones that are bankrupting America. The blame needs to be placed squarely on them.
There is nothing to spark economic expansion out there. I remember how lucky Clinton was, we were coming out of a recession and we had a technology boom. Now we have an economy heading into a deep recession, with greater federal regulations and taxes on the horizon. Where’s the reveival coming from?
Last time I looked, day before yesterday, the price of gas was well under three dollars. Fifteen gallons of gas would cost under $45, not $60. Did the price of gold go down?
As stated earlier, no problem with the general advice. Gold should make up a portion of a well rounded portfolio. However, one needs to take a look at history to see what does well in inflationary periods. Under Reagan, US stocks took off and more than overcame the inflation of the Carter era. In general, stocks do well against inflation.
Int'l stocks are more problematic. As the other currencies fall more than the US dollar, they will take more of a hit in the short term. In the longer term, Asian stocks will rebound very well -- they have less regulation in their economies.
Stay away from anything "backed by the full faith of the US government."
Nope, gold increasing even though gas is coming down.. These numbers can prove or disprove a theory on almost any day depending on swings in prices of either commodity. One thing these recommendations (especially those that call for a full switch to gold currency) never mention is the huge inflation in gold costs if demand skyrockets- something I’m sure they are betting on which is why they pimp it.
Buy Gold today - Have Obama confiscate it in the future for $35.00 per ounce. It’s been done before.
Then why not buy gas, or men’s suits, or whatever else is shown to be equivalent to x amount of gold?
It’s amazing how this works:
I have a precious yellow metal that holds it value like a charm, but I would be willing to part with this magic metal for some of that increasingly worthless green paper you have.
"You need to diversify your portfolio, fool!
Unless I can hold the gold in my hand, I’m not getting it anymore. I made money on an ETF (exchange traded fund called GLD last year and early this year).
My precious metal of choice during the next administration will be lead.
QUESTION: A listener says a lot of people are asking about gold investments. Is this a good idea?
ANSWER: It’s a bad idea to invest in gold. Everyone’s talking about it right now because gold is really high.
In the book, Stocks for the Long Run, Jeremy Siegel has a graph that shows what would have happened to a single dollar invested in gold, bonds and stocks since 1801.
He who has the gun can always get the gold.
As you say, the disease affecting our economy is FISCAL policy and inflation is just a symptom of the disease. Our recent election, from start to finish, has shown us we are incapable of curing the disease, and now some of us are looking for a way to inoculate ourselves in order that when the disease strikes us its effects will be less severe.
Has anyone read Crash Proof? I’m reading it now - curious to know what fellow Freepers think of it.
Well stated. I took my innoculation several years ago when I did several worst case scenarios as I developed a portfolio diversity program.
Apples and oranges. If I hold gold for 207 years, I’m probably in big trouble. What’s at issue here is not gold as an “investment”, but as a better store of value thatn the dollar during a period of currency devaluation. Look at gold during the final years of the Carter Administration for a parallel. The key is knowing to sell when the superspike occurs, and not hanging on for 207 years. ;)
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