Better Buy Gold

dealer_wins

Sod the ounce of gold, I want some of what the OP is smoking

pop_gun

mike88 wrote: »

Gold is only up 18% in 5 years and up 2.31% in a year; it's down 0.81% over 6 months and down 0.89% today. It has fallen considerably since its peak of $1889.70 per oz in 2009.

Of course those who buy physical gold pay a premium above these prices so the gains will be less and the losses greater. And there is a risk of getting physical gold stolen and if you don't declare any significant holdings on your insurance policies you will not be covered. Gold is a volatile investment if indeed an investment at all.

Why has gold been used as money for thousands of years? Why were currencies backed by gold?

Is gold an investment or a storer of wealth?

If gold is of no consequence, why do central banks keep going into the futures and commodity markets to manipulate it's price?

jimjames

pop_gun wrote: »

I was watching an interview with the economist Jim Rickards and he said something very pertinent.

The interviewer (Simon Black): Jim, what you tell somebody who is looking at financial markets, looking at stocks, looking at share prices for example, in much of the western world, going up and hitting all time highs and so forth. And them thinking, I understand it's risky but it keeps going up and of course I'm tempted. I want to get in there and make some money. What would you say to someone sitting on a portfolio right now, who understands that there are some risks out there, but really feels they need to be out there, investing. What do you think is appropriate for them?

Jim Rickards: well, I would ask that investor how would they feel about losing 30% of their money. That's the history of the stock market.

You're not exactly being consistent.

On the one hand you say stock markets have been losing money since 1999, on the other they're hitting new highs?

Losing 30% is pretty standard, it was over 50% in 2008 but all back by 2010. Just because something can go down as well as up doesn't mean you should avoid it. By that standard you should avoid gold too.

How long has it taken gold to recover back to it's peak?

pop_gun

jimjames wrote: »

You're not exactly being consistent.

On the one hand you say stock markets have been losing money since 1999, on the other they're hitting new highs?

Losing 30% is pretty standard, it was over 50% in 2008 but all back by 2010. Just because something can go down as well as up doesn't mean you should avoid it. By that standard you should avoid gold too.

How long has it taken gold to recover back to it's peak?

Individual stocks and shares can hit all time highs, which they have, but the FTSE still hasn't recovered it's 1999 highs of 6930. In 2014 it's value was 6566.

http://swanlowpark.co.uk/ftseannual.jsp

Gold has always been thought of as money. It has intrinsic value as such. A stock or a share in a company could become worthless overnight. Gold's value will never reach zero.
Surely that's worth something

jimjames

pop_gun wrote: »

Individual stocks and shares can hit all time highs, which they have, but the FTSE still hasn't recovered it's 1999 highs of 6930. In 2014 it's value was 6566.

http://swanlowpark.co.uk/ftseannual.jsp

Gold has always been thought of as money. It has intrinsic value as such. A stock or a share in a company could become worthless overnight. Gold's value will never reach zero.
Surely that's worth something

You seem very fixated with the FTSE 100 and maybe your obsession with gold makes you miss the point that shares pay income. Even if you put all your money in the FTSE 100 on worst possible day you'd be around 70% up.

Not great but not a loss. Not as good as other indexes either, FTSE 250 would have turned £1000 into over £3000 in that time.

I also find your assertion that gold will never have zero value rather odd. There is no reason why it couldn't.

Equally an index could be zero but if you understand what that means then worrying about the value of your money or gold would be the least of your concerns. Having food and a gun would be more useful.

mike88

pop_gun wrote: »

Why were currencies backed by gold?

Is gold an investment or a storer of wealth?

The operative word here is "were". Are you really suggesting that the situation thousands of years ago is remotely comparable to today.

My view is that people buy gold for the wrong reason. Figures show it is not a hedge against inflation, doesn't help stabilise investment portfolios and is an investment which is very volatile. Even after the current currency problems with the euro following the Greek election yesterday did not cause the price of gold to rise; indeed the price fell and is down again today.

So why do people buy it especially physical gold with a price premium and the risks of theft or additional storage costs? Hypothetically, let's say all investments crash except gold. Do people hold sufficient gold to cash in in order to fund their lives. For most the sums held would probably be enough to last them for a few days.

dunstonh

Individual stocks and shares can hit all time highs, which they have, but the FTSE still hasn't recovered it's 1999 highs of 6930. In 2014 it's value was 6566.

all assets fluctuate in value. Including gold. Once again, you fail to consider dividends. You are also picking a low quality index. Either you are doing this because you dont know what you are talking about or you are doing it because you are biased and want to fool others.

Gold has always been thought of as money. It has intrinsic value as such. A stock or a share in a company could become worthless overnight. Gold's value will never reach zero.
Surely that's worth something

Gold's value has the potential to reach zero in much the same way shares could. it would require a very similar scenario.

Why has gold been used as money for thousands of years? Why were currencies backed by gold?

Why has gold not been used as money for many years?
Why are currencies no longer backed up by gold?

Is gold an investment or a storer of wealth?

As an investment, it does not generate any wealth or income. It doesnt protect wealth either. It is a volatile asset that tends to do well in certain parts of the economic cycle and worse in others.

The interviewer (Simon Black): Jim, what you tell somebody who is looking at financial markets, looking at stocks, looking at share prices for example, in much of the western world, going up and hitting all time highs and so forth. And them thinking, I understand it's risky but it keeps going up and of course I'm tempted. I want to get in there and make some money. What would you say to someone sitting on a portfolio right now, who understands that there are some risks out there, but really feels they need to be out there, investing. What do you think is appropriate for them?

Jim Rickards: well, I would ask that investor how would they feel about losing 30% of their money. That's the history of the stock market.

Assets fluctuate in value. Anyone investing on the stockmarket has to take losses into account and the person has to be prepared for a 30% loss as that will happen at some point. However, replace the word stockmarket with gold and you still have loss potential there too.

pop_gun

mike88 wrote: »

The operative word here is "were". Are you really suggesting that the situation thousands of years ago is remotely comparable to today.

My view is that people buy gold for the wrong reason. Figures show it is not a hedge against inflation, doesn't help stabilise investment portfolios and is an investment which is very volatile. Even after the current currency problems with the euro following the Greek election yesterday did not cause the price of gold to rise; indeed the price fell and is down again today.

So why do people buy it especially physical gold with a price premium and the risks of theft or additional storage costs? Hypothetically, let's say all investments crash except gold. Do people hold sufficient gold to cash in in order to fund their lives. For most the sums held would probably be enough to last them for a few days.

BIB
Don't be silly. The U.S. dollar was fully backed by gold as recently as 1970. The U.S. only came off the gold standard because they didn't have enough gold for the dollars in existence. America had printed too many dollars and foreign holders couldn't redeem their dollars for gold.

We know gold is scarce because countries like Germany have requested their gold be repatriated from the U.S. Only to be told it would take 7 years for the request to be completed.
We also know gold manipulation has been going on for decades. When Gordon Brown sold 400 tonnes of UK gold he announced it to the markets before hand. This resulted in the price of gold hitting a 20 year low. You and I wouldn't intentionally sell something hoping to get the least amount for it. But Gordon Brown did, and he did so to keep the price of gold from going up.
A high gold price reflects the inherent folly of a fiat monetary system.
It stands to reason if gold is scarce and has no viable alternative, then the price must rise. The fact is the fundamentals for gold are the same now as they were at it's peak in 2011. The only way the gold price should fall, is if the commodities market had been supplied with more gold a la Gordon Brown's 'get 'em cheap' gold sale. Real gold supply wasn't available, but paper gold in the form of ETFs were.
The amount of fake gold contracts could be increased and used to manipulate the real price of gold.

The stock market can't be relied upon when it allows things to be traded that don't actually exist.

pop_gun

jimjames wrote: »

You seem very fixated with the FTSE 100 and maybe your obsession with gold makes you miss the point that shares pay income. Even if you put all your money in the FTSE 100 on worst possible day you'd be around 70% up.

Not great but not a loss. Not as good as other indexes either, FTSE 250 would have turned £1000 into over £3000 in that time.

I also find your assertion that gold will never have zero value rather odd. There is no reason why it couldn't.

Equally an index could be zero but if you understand what that means then worrying about the value of your money or gold would be the least of your concerns. Having food and a gun would be more useful.

Isn't it at the company's discretion to pay a dividends in any fiscal year? You act like these company's will return a profit to pay a dividend to it's shareholders. Or if any profit wouldn't be used in some other capacity. For instance, paying off debt.

Your claim the FTSE would return 70% on it's worse trading day is supposing we all had a crystal ball and knew which stocks and shares would outperform the market on said day. If I had a crystal ball wouldn't it be better to get the winning lottery numbers?

JimJames, at what point in the whole of recorded history has gold become worthless? Are you trying to suggest it may become worthless? In what scenario do you envisage this coming about?

JJ, I think you've been out in the sun too long.

Nocto

pop_gun wrote: »

The stock market can't be relied upon when it allows things to be traded that don't actually exist.

Erm… You’re not Gollum are you?

We wants it, we needs it. Must have the precious. They stole it from us. Sneaky little hobbitses. Wicked, tricksy, false..!