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 you chart Barron’s forecasting ability, you would do well to act opposite their advice.
The relative movement of gold v platinum has been pretty remarkable. Pt is about $370 cheaper than gold. That is...dumbfounding. Pt is solidly ten times as rare as gold. This condition has existed for some number of years, I don’t mean to say this is anything sudden. And palladium is only about $150 cheaper than gold. I am sure that 95% of this effect has been the ability of auto makers to use what was once cheaper Pd instead what used to be more expensive Pt in cat converters. These metals have more or less swapped market prices. I think I bought some Pd for about $680 about ten years ago. Sold it breakevenish. I’m just saying, historically, the relative prices of these metals is quite an anomaly.
Too bad about your cornflakes.
“In SHTF time, neither precious metal is of much use. “
Nobody but a moron would run around after a crash of the economy, paying their way, and buying necessities with gold. But once you have your needs stockpiled away, it would be very enjoyable to have a way to preserve wealth for the day when we emerge from the crash. During the SHTF your gold should really never see the light of day. It is for emerging on the other end in nice shape.
Gold has been a very good store of value.
I think a lot of people go broke speculating on silver, and I think gold as well.
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Nobody at F.R. has ever lost a cent on gold.
Just ask them.
“but if you look at historical gold prices during inflationary periods it’s been a loser.”
Not really. If you were a Weimar German, a Zimbabwean, etc, and had gold coins at the beginning, you would be very happy after the inflation ends.
It costs the holder of gold at least the market rate of interest to hold it.
If gold prices are falling there is no inflation.
“There are actually people out there that think you can slap a bar of gold on the counter for a gallon of milk and expect change!”
The gold gold is for after a couple of years passes, and SHTF is over. And now you would like to be somewhere reasonably close financially to where you were before.
It should remain hidden throughout the “STHF”. But nice straw man.
[That said, Did this place turn into SHTFplan.com while I wasn’t looking ? The lucrative “prepper industry” has been telling us the dollar is collapsing in 24 hours for the past literally 18 years.]
IMO, silver is cheap, and getting cheaper, because it is being de-monetized, and soon will only be good for its industrial uses.
Gold/silver ratio of 82:1? This ratio will only increase.
Silver, as money, is kaput. IMO.
[Just remember the inflation we had in the 70s which was attributed to printing money to pay down the national debt. It could happen again.]
Hey, that’s Alan Greenspan’s plan. If only I were joking.....
15 years ago I said on FR that globalism was coming, and one of their goals was a one world currency. I got some hard pushback here from some posters, especially one who said he was a financial manager. We still don’t have the one world currency, but we will someday.
Barron is a liberal rag...they can’t get out of their own way to think straight due to their hatred...most of what they say never comes true. Every writer there has their radio stuck on NPR and they breathlessly wait Sunday mornings for their NYTimes.
Well....gold has not been used much in industry ......in the past...not like silver.....But 2 days ago there....was an article..suggesting gold the only applicable material for...long term 3d printing error identification...and that article.....is appears to have Vanished.....I cant find it....will post if I do....
I’ve got about 100 sunshine mines silver bullion coins...1oz....is it a good time to dump them?..
The Bolivar example makes complete sense to me in respect to gold & silver being a store of wealth, but doesn’t it depend on at least one nation, (US) in the example, maintaining a strong economy? With a global SHTF scenario, where would one go to redeem PMs? That said I do have more than a few silver and gold eagles stashed away in my vault.
“””extolling the virtues of gold as an investment, why it always tracks the price of a good men’s suit”””
That was Glenn Beck on his fox show. He was talking about the creation of fed reserve and how a 1 ounce piece of gold, $20 in the late 1800s would buy you a really nice suit and that an ounce of gold, worth close to $2000 when his show was on, would still buy you a really nice suit but the $20 might get you a thrift store suit.
Moral of the story, getting off of gold and into fed res notes created inflation.
The US dollar is collapsing, and has been the moment we took it off the gold standard.
Without Chinese labor in 90% of our products, the prices become too high for any american to purchase anything. Ask an American to pay $7000 for an iPhone.
We’ve been collapsed for sometime now. It’s just not “hyperinflation”. There is a lot of room between those two points on the chart.
IMO, Gold and silver are understood in all languages, and even in that scenario, people would revert to barter. There would always be those who set themselves up as bankers, so some kinds of deals would be struck.
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