Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Gold Is Cheap. Inflation Is Coming. You Do the Math
Barrons ^ | 09-24-2018 | Andrew Bary

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 ...


TOPICS: Business/Economy; Canada; Front Page News; Mexico
KEYWORDS: andrewbary; baloney; barrons; boycotts; bozos; canada; churn; churnchurnchurn; churning; gold; goldbugs; idiocy; incometaxes; keithtrauner; mexico; nafta; nevertrump; nevertrumper; nevertrumpers; nonsense; ntsa; sanctions; tariffs; taxcutsandjobsact; taxreform; tcja; trade; trumpeconomy; usmca
Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-8081-95 last
To: Pollard

Regardless of which nutmeg was the source of that oft-cited erroneous statement, I tried and failed to point out that gold gyrates wildly, it hasn’t tracked neatly with inflation, it takes off in times of economic uncertainty fed by speculation, and it then collapses. This has happened time and again. I’m not against gold as a hedge against economic uncertainty, but encouraging naive people to treat it as a long term investment is folly that impoverishes a lot of people who can ill afford to lose the money.


81 posted on 10/02/2018 8:57:49 AM PDT by RegulatorCountry
[ Post Reply | Private Reply | To 78 | View Replies]

To: NRx

Silver is similar to gold. A pre 1965 quarter would buy a loaf of bread. That same quarter will buy a loaf of bread today.


82 posted on 10/02/2018 9:02:36 AM PDT by Georgia Girl 2 (The only purpose of a pistol is to fight yourr way back to the rifle you should never have dropped)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Celerity

[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.]


In most countries, the wages adjust. They don’t completely make up the difference and there is a fall in purchasing power, but they adjust. But that’s an average. In reality, workers getting wage income do fine. People on fixed incomes, not so much. If latter category are reasonably savvy, they invest their savings in foreign stock markets via index funds to preserve their purchasing power and get some dividend income.

Quoting from memory, Mexico has had 6 zeroes removed (I remember at least 3) from its currency in the past 50 years. https://en.wikipedia.org/wiki/Mexican_peso Do you ever hear of starvation in Mexico? In reality, Mexico has a roughly the same obesity rate as we do. https://en.wikipedia.org/wiki/List_of_countries_by_body_mass_index The reality of out-of-control inflation is much more prosaic than the typical Hollywood potboiler. Even in Zimbabwe, people are somehow eking out a living rather than starving or living a Mad Max script played for real. Last I remember $1 bought trillions of Zimbabwe dollars.


83 posted on 10/02/2018 10:39:02 AM PDT by Zhang Fei (They can have my pitbull when they pry his cold dead jaws off my ass.)
[ Post Reply | Private Reply | To 79 | View Replies]

To: NRx

Of course inflation’s coming. The Fed wouldn’t tighten the money supply significantly, despite the fact that the economy is booming like a cannon. So naturally, you will have inflation. I don’t know how Donald stopped the Fed from acting, and I don’t know if it’s a good thing or not. But this is what happens.


84 posted on 10/02/2018 10:40:47 AM PDT by Eleutheria5 (“If you are not prepared to use force to defend civilization, then be prepared to accept barbarism.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SkyPilot; All

RE: “15 years ago I said on FR that globalism was coming, and one of their goals was a one world currency.”

All, the new global currency is already here...
BIS & IMF approved Goldman Sachs new “stablecoin” USD Coin, ie:
US dollar world reserve currency replacement.

NEWS: In a milestone for the entire #crypto industry, Goldman Sachs Circle and CENTRE introduce USD Coin (#USDC), a fiat-backed stablecoin, with 30+ supporting companies

Introducing USD Coin
blog.circle.com

https://perc360.com/goldman-sachs-launches-us-dollar-coin-fedcoin-coinbase-to-become-the-crypto-regulatory-agency/

https://www.cnbc.com/2018/05/15/goldman-sachs-backed-start-up-circle-introducing-a-crypto-us-dollar.html?__source=sharebar|twitter&par=sharebar

And -
Biometric Global universal ID on track as well, see: ID2020.org (UN, Microsoft, Accenture consortium)

You’re gonna Love the convenience!


85 posted on 10/02/2018 12:21:06 PM PDT by MarchonDC09122009 (When is our next march on DC? When have we had enough?)
[ Post Reply | Private Reply | To 73 | View Replies]

To: Georgia Girl 2

Good point, but before you purchase the loaf of bread, you must first sell the pre-65 quarter dollar.


86 posted on 10/02/2018 1:44:10 PM PDT by servantboy777
[ Post Reply | Private Reply | To 82 | View Replies]

To: Zhang Fei

None of your examples make me feel good, nor do I think they really negate my position.

Also, fat doesn’t mean doing well.


87 posted on 10/02/2018 1:52:20 PM PDT by Celerity
[ Post Reply | Private Reply | To 83 | View Replies]

To: MarchonDC09122009; Roman_War_Criminal; SkyPilot; null and void

[Biometric Global universal ID on track as well, see: ID2020.org (UN, Microsoft, Accenture consortium)

You’re gonna Love the convenience!]

Yet the world thinks Revelation 13 and Revelation 14 aren’t coming. They’re going to walk right into it.

Cool technology. Very convenient. Saves time. Decreases identity theft. More accurate inventory.

And then, a global dictator who confirms the peace covenant dividing Israel for 7 years.....


88 posted on 10/02/2018 2:05:38 PM PDT by SaveFerris (Luke 17:28 ... as it was in the days of Lot; they did eat, they drank, they bought, they sold ......)
[ Post Reply | Private Reply | To 85 | View Replies]

To: Celerity

[None of your examples make me feel good, nor do I think they really negate my position.

Also, fat doesn’t mean doing well.]


These examples aren’t wonderful, but it’s hard to think of something even 1/10 as bad as the Mad Max dystopias Hollywood has conjured up, short of civil war. Mad Max is basically caveman wars fought with guns, crossbows and edged weapons, with psychopaths as tribal leaders. Even the collapse of the Western Roman Empire 1500 years ago was better than that.

Fat doesn’t mean they’re doing well by modern world middle income standards (Mexico is near the top 1/3 of countries, income-wise) https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita, but they are hugely better off than even 50 years ago. A fat person is taking in more calories than he needs. As recently as 50 years ago, that wasn’t a problem in Mexico. It’s certainly not a problem in Vietnam or Indonesia today, where the average person is reed-thin. And a recurring theme in dystopian fiction is the difficulty of getting enough food to eat.


89 posted on 10/02/2018 2:06:01 PM PDT by Zhang Fei (They can have my pitbull when they pry his cold dead jaws off my ass.)
[ Post Reply | Private Reply | To 87 | View Replies]

To: Bommer

He keeps flying his plane over me, clinking his gold coins and laughing.

Meanwhile, I’m on hold with Glenn Beck and Goldline right now.


90 posted on 10/02/2018 2:06:28 PM PDT by SaveFerris (Luke 17:28 ... as it was in the days of Lot; they did eat, they drank, they bought, they sold ......)
[ Post Reply | Private Reply | To 56 | View Replies]

To: servantboy777
Obviously I'm just talking about value. ☺
91 posted on 10/02/2018 2:32:50 PM PDT by Georgia Girl 2 (The only purpose of a pistol is to fight yourr way back to the rifle you should never have dropped)
[ Post Reply | Private Reply | To 86 | View Replies]

To: cherry

Keep em for a rainy day

imho


92 posted on 10/02/2018 7:01:01 PM PDT by ak267
[ Post Reply | Private Reply | To 76 | View Replies]

To: dynachrome

I buy silver eagles. They’re a pretty coin.


93 posted on 10/03/2018 10:33:55 AM PDT by freepertoo
[ Post Reply | Private Reply | To 5 | View Replies]

To: SaveFerris

I see FR really gives a crap about our warnings.

95% of them will walk right into Revelation 13 & 14 also, if they survive the first few seals.


94 posted on 10/04/2018 4:16:09 AM PDT by Roman_War_Criminal (Like Enoch, Noah, & Lot, the True Church will soon be removed & then destruction comes forth.)
[ Post Reply | Private Reply | To 88 | View Replies]

To: Roman_War_Criminal

I think March on DC sees it coming, in some way.

U.N., and a few tech companies. Really cool technology.

Really convenient for a world dictator some day....


95 posted on 10/04/2018 12:17:13 PM PDT by SaveFerris (Luke 17:28 ... as it was in the days of Lot; they did eat, they drank, they bought, they sold ......)
[ Post Reply | Private Reply | To 94 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-8081-95 last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson