Posted on 10/01/2018 6:57:57 PM PDT by NRx
Gold has gotten a bad rap.
Long seen as the investment choice of the cranky and the fearful, the metal yields nothing; as Warren Buffett has said, it just “looks at you.”
This year has been especially lackluster for gold. Its price has slumped 8%, to about $1,200 an ounce, and is off more than 35% from its high of $1,900 in 2011. Adding insult to injury, Vanguard will soon rechristen the largest gold-oriented U.S. mutual fund and shift its focus away from the metal.
But this out-of-favor asset class now deserves a place in investment portfolios.
Compared with stocks and other financial assets, gold looks inexpensive. More important, inflation is starting to pick up in the U.S. and in much of the world as central banks shrink their enormous balance sheets. And gold has represented a good defense against inflation eroding the value of a stock or bond portfolio. Over time, it has held its value against the dollar. Gold was $20.67 an ounce 100 years ago and that bought a good men’s suit. At $1,200 an ounce, the same is true today.
“Gold is rare, and it’s hard to rapidly increase the supply of it,” says Keith Trauner, co-portfolio manager of the GoodHaven (ticker: GOODX) mutual fund, which holds Barrick Gold (ABX), a leading mining company. “People have historically viewed it as a hedge against government depreciation of local currency...”
“...Virtually every government in the world is trying to promote inflation partly because there is so much sovereign debt,” Trauner says. When there is so much debt, he contends, governments have three choices: default, restructure, or inflate the currency. “Politicians, when given the chance, will choose the latter.”
(Excerpt) Read more at barrons.com ...
If gold was such a good investment the investors wouldn’t be trying to sell it.
+1
And when the silver gold price ratio eventually narrows back to a more normal level you can always flip some of your cheaply acquired silver for gold at a nice discount.
“They are however, warning that inflation is likely coming as a result of our out of control debt and that gold is at an attractive price right now.”
I know the idea of gold being an inflation hedge is conventional wisdom but if you look at historical gold prices during inflationary periods it’s been a loser.
10, maybe 15 years ago I was talking to a bank manager.
I was telling him there's going to be a world economic crash because the world was running on debt, everyone is in debt to each other, and the system can't continue.
He asked me when it was going to crash.
I said I don't know but it's inevitable.
I'm not predicting it will happen soon but I still believe the system of debt is unsustainable and will collapse at some point.
When? Who knows?
That has not been the case in developed countries that experienced high or severe inflation. The idea that society will just breakdown into lawless chaos has been a favorite theme of doomer porn, but history suggests it generally doesn’t happen. In the third world your mileage may vary.
+1
Gold, silver, name-the-commodity. Its market is manipulated.
In the age of derivatives, naked shorts, and microsecond trading, the laws of supply and demand NO LONGER APPLY.
The price is set in a arbitrary manner by someone(s) who are always one step ahead of you. There is NO PRICE DISCOVERY.
There is no way to win.
The globalistas have trounced American wages for decades. We are so far form recovering from that that wage inflation and ‘cost-push’ inflation is almost impossible. Deflation was more likely until Trump came along. Now workers are at least treading water.
Twice I lost money speculating in gold, and the third time was a charm because I made money (fiat currency?) on it.
Oh bull, gold and silver are both convenient wealth stores and will be used for barter. You read to many novels....
Pardon what is probably a really naive question but why isn’t gold & silver super valuable commodities in a country like Venezuela where the economy is in the crapper?
The right time to buy gold is when its price is going down and when its price is going up.
Judging by the ads
Gold rules in Venezuela. So does the US dollar. Even an ugly guy can get laid by a beautiful woman in Valenzuela for $5.00 US.
Thanks for the heads up. I just turned some BTC into junk silver. I have no idea what either will do, but I should probably diversify a little.
These metals are cheap(ish) compared to what they have been trading for in recent months. Gold @ 1193, compared to what, $1250? A 5% off sale does not exactly make me want to rush out to Macy’s. I own phys gold. I also own (lots more) phys silver and I really like the metals, but I have to view them as decidedly non-magical commodities. No more, no less. Commodities that do not go bad. If I were to tell you that you should stack up several tons of wheat in your garage for some sort of deflationary or inflationary collapse you’d look at me funny.
I am neither bull nor bear on metals at present and have not been for at least 5 years.
Although the Au/Ag ratio is very high now, I have also come to believe that this ratio is just flaming nonsense. Just giving my opinion. That ratio is gargantuanly influenced by the relative values of Au/Ag in various coinages down through history (very long history I acknowledge) but NO coinage other than specialty issues contains either metal, the currencies have been completely demetalized. Some view that as alarming; I respect that view but do not hold it.
I believe gold is selling for a nominal amount over its production cost kinda sorta around $1000 an ounce. But I worry about silver because the production cost of silver is....zero. ALL silver other than from Hecla comes as a byproduct of zinc & tin mining. It rides along as a freebie. There is no such thing as a silver mine other than Hecla and a few small mines in Mexico. I do not believe these mines have the ability to affect the market much, if at all. Now for sure, my “zero” number is wrong because a tin miner or a zinc miner expects some amount of silver to ride along and values it accordingly. And it costs about a buck to mash silver into a coin or round or bar. Again, this is just my opinion but I think silver goes lower. And I have had this exact discussion with two dozen silver weasels, all the way up to screaming matches, who have attempted to sell me silver at $26 and $22 and $18 over the last 4 or so years.
here is my issue with silver
one-third or so of industrial demand is
from solar cells
per cell silver.
1990 1 gram
today 100mg
soon 65mg
the trend is always down
there is always the danger that
copper or aluminum could be made workable
“Gold is rare, and it’s hard to rapidly increase the supply of it,” says Keith Trauner, co-portfolio manager of the GoodHaven (ticker: GOODX) mutual fund, which holds Barrick Gold (ABX), a leading mining company. “People have historically viewed it as a hedge against government depreciation of local currency... .Virtually every government in the world is trying to promote inflation partly because there is so much sovereign debt,” Trauner says. When there is so much debt, he contends, governments have three choices: default, restructure, or inflate the currency. “Politicians, when given the chance, will choose the latter.”
Bull****. The gold supply has doubled since approximately 1960; in the late 1960s the US' federal deficit exceeded the value of the gov't gold reserve, and there was no viable option apart from the US dropping the arbitrary fixed gold price (and this isn't just 'Civ saying this, it's the overwhelming view of real economists everywhere).
Letting the price float as a commodity on the marketplace didn't cause the US dollar or any other currency to collapse, and was the rational thing to do. The inflation monster of the 1970s was 100 percent caused by the OPEC embargo, which was political in origin.
Since early in the 21st century, OPEC has de facto priced crude based on keeping the price fixed vs the Euro (IOW, pricing superficially is done based on the US dollar, but taking the exchange rate into account). There has been decent stability in pricing since President Trump took office (and contrary to some of his tweets, learn to separate wheat from chaff, okay?) as the US' higher-cost crude sources, including improvements in non-primary methods of extraction increase overall worldwide supply.
The EU worries about percentage of member budgets that exceed receipts, obviously the US does not. That concern in the EU is mostly about keeping remaining conservatives/sensibles co-opted and partially satisfied, while turning the screws on everyone, a la 1984.
There's a fixed term to all US debt, which means, whether it seems likely or not, that all the existing debt will have been paid off 30 years from now. The TCJA has contributed to more employment, less unemployment, and larger tax receipts to the federal gov't (Laffer Curve stuff). Once the TCJA is made permanent and the Demagogic Party is kept out of power for a generation or so, there will be no going back. Still may require us to defend ourselves against the seditious left though. I suggest not leaving any of them alive after we've won.
Funny you should mention that. At least the dimes I just bought will always be worth a dime, although I spent about 7 cents a piece for them (considering the profit from the BTC purchase a couple years ago).
In SHTF situation, the true barter is what you can offer in terms of goods and services. People with carpentry skills will do well. Ditto those who can grow food or hunt. Especially those with medical skills.
If you are just some schmuck with a vault of gold, well good luck to you.
probably true.... but, who’s going to risk going there for a $5 lay?
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