Investments in Gold and other precious metals

jon3001

meester wrote: »

Since the introduction of fiat money, holding gold been disastrous..

Introduction of fiat money by whom and when? Disastrous how?

Let's take 1971 as an example when Nixon dissolved the Bretton Woods system. Gold was selling at $35/toz. US CPI inflation has increased about 24.5 times since then which means gold would have to be priced around $850/toz to maintain parity.

Today gold is around $750/toz - a 21-fold increase. Hardly disastrous and probably outperformed various taxable savings accounts. And we've seen $850 and higher lately.

meester wrote: »

Gold DOESN'T keep pace with the increase in the money supply, and over the long term it WON'T maintain your relative wealth.

What is the basis for this historical analysis and prediction of the future?

Gold has had enduring supply and demand characteristics and is still being mined. It costs money to be mined and those costs are invertibly linked to inflations (mining materials, equipments, miners' wages, specialist talent e.g. geologists).

jon3001

meester wrote: »

Gold is rubbish.

So I'll ask the question again: why is a pile of pound coins so valuable?

If you tried to buy your shopping with scraps of copper and zinc they'd laugh at you. You'd probably won't want your pay to consist of that either.

But mint the same metals into pound coins and hey presto - suddenly they're valuable. People are willing to work hard to acquire them. Businesses will willingly offer their services and hand-over their goods for them.

These pound coins must be something pretty special.

1echidna

meester wrote: »

Hmm

Gold is rubbish.

Gold is rubbish
Cash is trash
Property is collapsing
Equities are low - perhaps if they seem the best of a bad lot and lots of people can be encouraged to put their money there (where's Dunstonh?) the worst may be over and they will rise? Or bonds?

richardlionheart

there is always antiques as an investment .!

Damien Hirst art work seems to go for ridiculous amounts !?

anyone ever see that funny episode of "Stella Street" when

the "Sliced in half cow" in a tank of formaldehyde was stolen from

Robert De niro's ,with disasterous results .



Ok ,therefore some old gold would be worth buying ,something very collectable , perhaps something from the Titanic maybe ?

hopefully the price would not sink too low

meester

jon3001 wrote: »

Gold has had enduring supply and demand characteristics and is still being mined. It costs money to be mined and those costs are invertibly linked to inflations (mining materials, equipments, miners' wages, specialist talent e.g. geologists).

But if you merely keep pace with inflation, in 50 years you would be poor, relative to everyone else. It isn't enough.

jon3001

meester wrote: »

But if you merely keep pace with inflation, in 50 years you would be poor, relative to everyone else. It isn't enough.

What is everyone else doing with their money? How much is enough?

Keeping up with inflation is basically the return many savers are getting in taxable accounts. The comparison I'm making is on that basis. I thought we were comparing gold with fiat money?

Sure - if you want to try for long-term real rates of return then you have to move money out of cash and precious metals and into riskier assets that generate a return, e.g.: stocks, rental property and commodity futures. That's why I say precious metals should only be 2.5-5% of your portfolio unless you're not pursuing a balanced strategy.