long term investment

lvader

The main catalyst for gold in the last decade has been a commodity bull run, not the credit/debt crisis although that has also helped. Bull runs eventually end for any asset class and a bear run starts. Gold bugs won't be able to switch when it happens because they don't have an exist strategy or a plan B.

DiggerUK

robmatic wrote: »

Make your mind up. Is gold an investment or a store of wealth?
It seems that the driver of the price is speculative demand at the moment. It's certainly not increasing in line with inflation and has the volatility of a risk asset.

I see gold as bridging both saving and investing. It can be turned in to any currency almost instantly, and because it appreciates over time can be classed as an investment that makes a return.

Some of the demand is without doubt speculative, but with most sales going for investment via coins, bars and jewelry, how exactly do you substantiate your claim.

As to your claim that it does not counter inflation, you must realise that inflation is the real value of cash in your pocket. Gold's price rises reflect currency debasement due to printy printy, gold has no more use now than it did when Nixon ended convertibility to US$ in the 1970's.
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DiggerUK

MrMalkin wrote: »

..... Does not compute.

Sooner or later the sovereign will drop.
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DiggerUK

lvader wrote: »

.....Gold bugs won't be able to switch when it happens because they don't have an exist strategy or a plan B.

Digger Mansions plan B.
Sell gold.
Who needs a plan C after that stroke of genius.
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MrMalkin

DiggerUK wrote: »

because it appreciates over time can be classed as an investment that makes a return.

Complete nonsense. Gold doesn't appreciate over time, it has close to 0% expected return which is less than cash saved at the prevailing interest rates. The vast majority of investment returns over time come from the income generated from an asset, not capital appreciation.

gadgetmind

DiggerUK wrote: »

(A) High risk strategy...by who's criteria?

All objective ones.

Best asset classes in last 30 years!!!

Only due to a recent lift. It's been a grim asset class much of the time.

Gold?...unproductive asset...

No yield.

now your defying gravity.

Sorry, did you mean "you're"?

gadgetmind

DiggerUK wrote: »

Digger Mansions plan B.
Sell gold.

Ah yes, the "Gordon Brown" exit strategy. Sweet.

lvader

You have said you will only sell gold as and when you need money when you retire. A 20% drop in a month or so is fairly normal so that will get ignored. At what point do you start to panic and sell? You could have lost half of your retirement fund before any signs of a true bear run start to appear.

DiggerUK

MrMalkin wrote: »

.... Gold doesn't appreciate over time, it has close to 0% expected return which is less than cash saved at the prevailing interest rates.....

March 7th 2007 £335.00 per ounce, today 5 years later and the price is £1065.00 per ounce.
In my book that means gold has appreciated.
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MrMalkin

DiggerUK wrote: »

In my book that means gold has appreciated.
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...and the several thousand years of 0% average returns before 2007 apparently don't count? Or the 20 years of falling gold prices from 1980-2000? A falling share price is cushioned by it's dividend payouts, a falling bond price is cushioned by its rising yield. A falling gold price is cushioned by nothing at all.

To quote one of my favourite books, 'gold is the corpse of value'.