Liquidate entire portfolio until virus is over?

EdGasketTheSecond

port_of_spain said:

EdGasketTheSecond said:

Look at it this way then as you seem to find this difficult. Take the strongest fiat currency, the US dollar. In 1970, when the US dollar was still linked to gold, you could buy an ounce of gold for $35, now that same ounce of gold would cost you $1700 dollars. I can guarantee you will never be able to buy gold for $35 an ounce again. You cannot, however, guarantee me that it might not cost $10,000 to buy an ounce of gold in the future. Therefore gold is obviously a much better store of value than fiat currency.

Why are you still ignoring the interest you'd get by holding dollars over 50 years, which gives a completely different outcome?

Why are you still cherry-picking what was with hindsight a perfect year to buy gold?

"Why are you still cherry-picking what was with hindsight a perfect year to buy gold? " ....eh maybe because prior to that the dollar and gold were linked so the dollar was in part backed by gold. It is only appropriate therefore to see how gold compares with a fiat currency after the dollar became a pure fiat currency.

Do you have figures for cash returns on the dollar back to 1971?

Prism

EdGasketTheSecond said:

port_of_spain said:

EdGasketTheSecond said:

Look at it this way then as you seem to find this difficult. Take the strongest fiat currency, the US dollar. In 1970, when the US dollar was still linked to gold, you could buy an ounce of gold for $35, now that same ounce of gold would cost you $1700 dollars. I can guarantee you will never be able to buy gold for $35 an ounce again. You cannot, however, guarantee me that it might not cost $10,000 to buy an ounce of gold in the future. Therefore gold is obviously a much better store of value than fiat currency.

Why are you still ignoring the interest you'd get by holding dollars over 50 years, which gives a completely different outcome?

Why are you still cherry-picking what was with hindsight a perfect year to buy gold?

"Why are you still cherry-picking what was with hindsight a perfect year to buy gold? " ....eh maybe because prior to that the dollar and gold were linked so the dollar was in part backed by gold. It is only appropriate therefore to see how gold compares with a fiat currency after the dollar became a pure fiat currency.

Do you have figures for cash returns on the dollar back to 1971?

Its probably impossible to get that data based on savings interest rates. The 10yr US bond yield would give you around 2700% which turns that $35 into $980, which is obviously a worse performance than gold, although its been a much safer way of getting there. Of course worth pointing out that neither gold nor bonds get anywhere close to the gains that equities have seen over that same period. Maybe a nice blend of all is what was required

port_of_spain

EdGasketTheSecond said:

Why are you still ignoring the interest you'd get by holding dollars over 50 years, which gives a completely different outcome?

Why are you still cherry-picking what was with hindsight a perfect year to buy gold?

"Why are you still cherry-picking what was with hindsight a perfect year to buy gold? " ....eh maybe because prior to that the dollar and gold were linked so the dollar was in part backed by gold. It is only appropriate therefore to see how gold compares with a fiat currency after the dollar became a pure fiat currency.

Cherry-picking would still be misleading, even if that were true.

It isn't true, anyway. The exchange rate between gold and the dollar was changed multiple times during the gold standard era, so you can sensibly compare them in a long-range chart, though not from day to day.

EdGasketTheSecond said:

Do you have figures for cash returns on the dollar back to 1971?

No. So what? The point is that what you posted was very misleading.

It's a bit like if you posted a picture, saying "lol, this cow only has 1 leg!!!!!!!!!!!!111!!", and I pointed out that the other legs were out of the frame, and now you're asking if I have a picture of the other legs

Bravepants

Blimey! It seems this thread is experiencing a second peak!

Sailtheworld

EdGasketTheSecond said:

Sailtheworld said:

EdGasketTheSecond said:

Sure you have to get out when it is expensive relative to other assets. You can use a measure such as the Dow/Gold ratio for instance to see if it is expensive relative to stocks.

Now you've moved the goalposts to agree with me which is that it's a p**s poor hedge against inflation (at least for the last 100 years) but if you're good at trading it can be profitable - you don't say.

The dow / gold special god particle ratio is nonsense - if it was reliable then it would be priced in.

You twist things around to make difficulties where none exist.

Look at it this way then as you seem to find this difficult. Take the strongest fiat currency, the US dollar. In 1970, when the US dollar was still linked to gold, you could buy an ounce of gold for $35, now that same ounce of gold would cost you $1700 dollars. I can guarantee you will never be able to buy gold for $35 an ounce again. You cannot, however, guarantee me that it might not cost $10,000 to buy an ounce of gold in the future. Therefore gold is obviously a much better store of value than fiat currency.

No goalposts have been moved by me. I would rather hold gold long-term than any fiat currency for a store of value. As I hope also to increase my wealth I will sell gold if it looks expensive compared to some other asset I might believe to be cheap, be it a stock or real estate or a barrel of oil.

Can you understand that now?

I can't guarantee it might not cost $10,000 to buy an ounce of gold in the future but we both agree it's pretty much certain we'll never see $35 again. That doesn't really show gold is obviously a better store of value. It's a fallacious argument.

I've shown you that in the last 100 years fiat currency has performed better than gold in 69 of them. It's performed even worse in the last 50 years. Sure there are gains to be made by buying low and selling high but that's an added element of unreliability when you're looking for a store of wealth.

If I had the choice to buy $1 or $1 worth of gold to keep for 100 years then I'd take the gold but that's not the point. That's for family dynasties to worry about - not a short term reaction to a news event. Gold can't be traded reliably - the bull and bear markets in gold tend to be pretty sharp and very easy to buy high and sell low. 

This isn't an attack by the way. Go for it by all means but the element of trading skill required, past unreliability and volatility means it's probably a higher risk strategy than might be first thought.

kinger101

EdGasketTheSecond said:

Gold is a store of value; always has been, always will be. It cannot be created by governments. 

Technically, gold can be created from mercury or platinum using a nuclear reactor.  Governments can also find new gold reserves and dig it out of the ground.  Or use new techniques to recover it from low grade ores which were not previously economical to extract.  Sure, there's a finite amount of it on our planet (there are undoubtedly extra-terrestrial sources as well), but many things on our planet are finite.  If there's one element that may become scarce, it's probably helium. 

I should also add that helium is like kryptonite to the lizard people that are printing money as part of the global conspiracy, and that the assorted zombies, werewolves and other creatures from the underworld that will plague this Earth should their plan succeed are terrified of high-pitched voices.  

BananaRepublic

Bravepants said:

Blimey! It seems this thread is experiencing a second peak!

A dead dog bounce, dare I say.,

Username999

Bravepants said:

Blimey! It seems this thread is experiencing a second peak!

I never understood 'Twin Peaks'...

https://www.youtube.com/watch?v=h0YI_eHg3Aw

Thrugelmir

Underperformers may well turn into dead dogs before the crisis is over. 

Sailtheworld

At the three month anniversary of this thread I thought I'd see what the position would be of someone liquidating their entire portfolio and buying gold until the 'virus was over'.

Assuming VWRL is a proxy for a well diversified portfolio anyone selling up £100k worth at the start of March and buying gold would currently be sat on gold worth £111,910k. Anyone who just stuck with VWRL would be sat on VWRL shares worth £99,776. There was a dividend in March but both the liquidator and holder will have got that so it has been ignored.

Obviously the liquidator is taking far more risk and all the difference is from gold - as of today they can't buy back into the market at the same price they sold.

I'm sure the liquidator wasn't expecting to see markets at these levels when planning but so far so good.