People that were saying not to buy gold at $1200 might be interested to see today's gold price of $1340.
I'm sure something similar was discussed back around 1980. IMHO, if you buy gold now, you're missing the whole "buy low, sell high" point. People are buying it based on "I heard the price is going up" even though their demand (greed) is all that's driving the price up. Pretty soon they're all going to ask "What is this really worth?" and the bottom is going to fall out.
If getting out of gold at $1300, into what would you trade? Federal Reserve Notes?
To put a finer point on my question, assuming you want out of FRNs, into what would you trade?
For those of you considering gold as an investment:
Is gold increasing relative to the dollar due to gold increasing in value (commodity markets), or the dollar weakening in value (currency markets)?
Also, they say gold is worth XXX per ounce (ask rate), but if you go to sell your gold, nearly all buyers are only giving you 80% of XXX per ounce (bid rate). There's a much larger discrepancy rate between the two than in other commodity markets. So why is gold a better investment than me buying grain, baseball cards, ammo, or a whole number of things?
Also, gold has an intrinsic value, which fiat money does not, but it still lacks utility (I can't go to Wal-Mart and buy food clothing and ammo by paying with bullion). Gold is really no safer than any currency would be, if you are comparing its value only to US dollars. You need to shop more globally and compare the price of gold in different currencies, then compare the exchange rates of the currencies, to see if you are getting a return on their investment. Saying gold went up from 1200 to 1340 per ounce in a few months doesn't mean much; I would not be buying it to "flip" in the short term, and there would be a slew of speculative stocks I could have purchased (Citi, Bank of America, Ford Motor Company) that would have made more than a 11.7% return in the last 24 months.
I suggest the gold speculators compare gold to bond and equity returns over the last 100 years and adjust for inflation, and see how well it compares. It doesn't.
Is gold increasing relative to the dollar due to gold increasing in value (commodity markets), or the dollar weakening in value (currency markets)?
Also, they say gold is worth XXX per ounce (ask rate), but if you go to sell your gold, nearly all buyers are only giving you 80% of XXX per ounce (bid rate). There's a much larger discrepancy rate between the two than in other commodity markets. So why is gold a better investment than me buying grain, baseball cards, ammo, or a whole number of things?
Also, gold has an intrinsic value, which fiat money does not, but it still lacks utility (I can't go to Wal-Mart and buy food clothing and ammo by paying with bullion). Gold is really no safer than any currency would be, if you are comparing its value only to US dollars. You need to shop more globally and compare the price of gold in different currencies, then compare the exchange rates of the currencies, to see if you are getting a return on their investment. Saying gold went up from 1200 to 1340 per ounce in a few months doesn't mean much; I would not be buying it to "flip" in the short term, and there would be a slew of speculative stocks I could have purchased (Citi, Bank of America, Ford Motor Company) that would have made more than a 11.7% return in the last 24 months.
I suggest the gold speculators compare gold to bond and equity returns over the last 100 years and adjust for inflation, and see how well it compares. It doesn't.
I just know that when China is finally forced to revalue the yuan, I'm going to be the Republican George Soros.
This is no way to make a quick buck, but for those of us who are collecting metals for long-term investments, it's not going to matter as much.
I'll grab an ounce today at $1,300 and if it falls and hovers around $1,000 for the next 5-10 years that's ok. I'm more worried about where it will be in 40 or more years when I might need to get rid of some to pay for my prescriptions or whatever. If gold becomes so abundant or worthless that my $1,300 ounce is worth $1.30 40 years from now, then I'll be happy I didn't throw all my beans into one pot, and hopefully some/all of my other investments will be strong enough to absorb some of the impact.
If you buy at an ask rate of $1300 an ounce, and assume that inflation rate of around 1.2% annually holds steady, you will need to sell at a bid rate of roughly $1360 per ounce in 4 years to BREAK EVEN. I expect the inflation rate to rise a fair amount, which means the return needs to be greater.
Carry the equation out for 5-10 years and see what you need to sell it for.
Carry the equation out for 5-10 years and see what you need to sell it for.
Put $50K in a real good safe in small bills, put $50K in Ammo in several real good safes, and put $50K in several weapons of choice. (whatever floats your boat), I would want all the kool toys, too so put 50K in class 3 stuff. ( that is only a couple FA's and several Suppressors ans SBR's). Another $50K in long term commodities and survival stuff. The rest... Hookers and Beer!! Or stupid $#'! like every playboy magazine since 1969.
You're using a fallacious argument against gold. Your concern applies to all investment vehicles, not just gold. I'll stipulate to the fact that FRNs (dollars) are being devalued (inflation). I see that as an argument to diversify into something else. ANYTHING in which you invest must increase in value to break even (assuming continued inflation). So, where's the smart money?
