How does investing in gold work?

and this my friend is what happens when you leave the gold standard...gold outperforms all else

 

Gold's inflation adjusted history. Poor performance interspersed with occasional spikes:



Copper is another speculated mineral with historically poor performance marked by occasional peaks:



As a comparison the Dow inflation-adjusted has done quite well over time:

 

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let me ask you something.......if gold has not kept up with inflation as you stated...yet gold has gone up 53 fold since 1965 while the DOW is up only 12 fold...what does that say about stocks then?

if gold did not keep up with inflation and yet gold has outperformed the DOW on average 4 to 1 then stocks did much worse

 

the more I see this pesimism the more I know gold is going up....its when the dummies on this board start running to gold shops that I will begin to worry......you see...the dummies will always get it wrong...this is why they will die with lunchbox in hand LOL

 

You keep ignoring the fact that gold is in a spike currently and that for most of it's history its value has risen slower than inflation and that the Dow substantially outperforms gold over time.

 

This one statement on its own indicates how little knowledge you're basing your opinions on.

 

anytime before 1971 the dollar was on the gold standard so of course gold wont go up......why should it as the dollar was as good as gold.....this is why sound money is so important.....but look what happened since the US went off the gold standard.....gold up 53 fold and the dow up only 12 fold....sounds like solid evidence to me

what reagan did in the early 80's was just temporarily delay the inevitable! As inflation was in check so for about 20 years it was better to be in paper assets......but regardless....since nixon took america off the gold standard the best place to be for the last 45 years was gold...ignore that at your own financial risk

 

like I said....you obviously dont read my posts......and I am tired of repeating myself.....just click on my name and go back as many times I have said why gold is going up!

I probably mentioned at least 10 times if not more why gold is rising!

 

Investing in gold is like investing in Beanie Babies. It has value as long as other people think it has value. In a few months or a couple of years people with be piling out of gold and then you will be seeing headlines about the "Great Gold Bubble."

 

Stocks have something gold doesn't... earnings and dividends. If you reinvested your dividends back into stocks you would be up much more than 12 fold. Investing 101... Look into it.

Hit me back if you need more info.

 

You need to go back and look at that chart above again. From the 80's to 2001 gold's inflation-adjusted value dropped from a peak of $2281 to less than $400. Even today gold is only trading at $1900, still lower than the early 80's.

No investor with any knowledge whatsoever would call that a good investment - an asset that doesn't pay dividends and loses value over 30 years.

 

dividends are very low paying ( 5% or less) so then instead of 12 fold it might be 18 fold at best.....and I am not even including the tax that must be paid on those dividends. Still.....18 fold compared to 53 fold......its quite obvious still

 

its interesting how the only way the gold haters can make a point is if they start their calculations just after the last gold boom.......I am going much further than that.....way back to 1965.......and you get 4 times the return from gold than from paper assets!

And as I have said 10 times at least....the 80's and 90's was the era of paper assets.....but since 2001 that haas changed thanks to greenspan.

PS....its really annoying to always have to repeat myself......are you guys that clueless?

 

Interesting. As a non gold hater, I do see that gold in todays economy, and hwo it is trades is no more or less risky that any virtual digital traded investment. If you can short sale gold as you can with stocks it would be about the same, but stocks are still king of investment. Platnum is the king of metals as it will always do better than gold in the up and down markets.

I can see how gold would be a good investment if you got in at $400 per oz. But at record highs, buing into gold now is like buying real estate in the USA in 2006.

With the USA able to publish tons of cash and get away with it for the past 12 years, I have confidence in the USD and the Euro will continue to survive in todays global financial crisis.

Perhaps the gold and diamond hoarders will use gold to buy food and pay rent when the economy goes bad before the dollar does.

I understand some of the African countries, that also hoard gold, are seeking to modernize and improve their countries along with North Africa and the Arab world. This would be a great time for the African countries to use some of that gold and build. And it would be a great time for the UAE to take in some gold and help a brother out. It would make both countries stronger economically. That way the wealthy of the UAE can step out of Dubai and vacation in other parts of their land.

Good luck UAE I hope you do the right thing to expand.

 

do you wanna bet gold will be alot higher next summer than it is now?


Oh sure....at some point it will be time to bail out.....but that time is not now!

 

You just agreed with me.

 

how? you are saying its over priced now....its not.....and I know what to look for....just as I saw the top in tech and in housing......I am rarely off by more than a year!

 

If it's going to substantially drop, and it always does, then it's overpriced. It is as others have pointed out temporarily lifted by a buying spree.

Investments that drop by orders of magnitude like gold are not a good deal. The Dow chart I posted earlier shows stock in companies blow gold away as an investment that gains value over time. And pay dividends while they're doing it.

 

I will tell you what I told the others.....how come nobody is talking about the dollar and the bond bubble?

 

and what makes you think it will tumble back to 300 dollars like before? After the runup from 35 dollars to 800 dollars the lowest it went was 260 dollars....or some 8 times above the previous high! Since I think its going much higher then when it does finaly fall, it might fall from lets say 4,000 to perhaps 2,000.....and that assuming the dollar dont totally collapse....in this case it might not correct until much higher and even todays price will seem super cheap from now!

 

Because gold has no intrinsic value over and above it's production cost plus a reasonable profit. It will drop to that level, without a doubt. It always has. It will drop to that level because sophisticated investors (and we're talking the big boys here - whole countries) understand it is risky, has no intrinsic value, and no cash-flow. It is just about the worst long term investment going. So they'll get out once confidence in more secure and profitable investments improves.

Aside from speculating gold's only value is as a finished product - decorative, electronic components, architectural plating etc. It's value as a commodity is tacked to what large buyers will pay for it.

 

when it went up in the 70's from 35 dollars to about 800, did it ever go back to 35 dollars? Of course not because all it was is a reflection of the inflation of the 70's.....but then the ignorant Joe's came in the market towards the end pushing the price to rediculous levels.....this is what made it fall and the gain that was returned......up to 1979 it was still under 200.....and notice that it never went back to 200 again. So like now.....its still going up in an orderly way....eventually the dummies will jump in.....they always do....this is when the frenzy kicks in perhaps to 4,000, and this is the gain that will be given up....when that will happen I am not sure.....but in every boom...the dummies always come in towards the end!

and in case you didn't know....americans are still net sellers of gold!

 

ay yes....the " GOLD HAS NO INTRISICT VALUE" line....nody talks of the fact paper dollars have no value at all....only what governments tell them its worth...sure it trades in financial markets, but its all an illusion...this is why there is always the danger of a fiat currency going to zero......not so with gold....paper money is strictly based on trust....once that trust goes you have nothing.

You know....I realize now what a good job the media did in convincing everybody that the status quo and that the US dollar is king has been engraved in every average Joe thats out there......too bad as it means the catastrophe is going to be that much more severe.

 

gold vs paper dollars


you can't eat gold......so can you eat paper dollars?

gold has no use except for jewelery......so what use does a piece of paper have?


dollar bills can be used to buy things.......gold is internationally accepted as money....you can go to any currency exchange office and they will accept a gold coin! I have seen this in Spain and italy......also here in canada!

 

Gold derives its value from several things as I see it. 3 primary reasons and I'm sure there any many other ones, but these are the top 3 in my mind.

1) As money
2) As jewelry
3) Industrial uses

3) Lets go in reverse order...Gold is used in electronics and car components due to its high conductivity and lack of oxidation (the latter part is huge in electronics that deal with air and water).

2) Gold has been used in jewelry for as long as people have recorded history

1) Gold has many great properties which made it an ideal money medium. Let's examine what those properties are - and maybe we'll understand why gold actually DOES have intrinsic value.

Divisible - gold can be easily split up in to smaller amounts to equate smaller amounts of value. This is incredibly important due to the vast array of potential trade between two parties. The ability to have smaller units of measure means our transactions can be more complex and more accurate.

Recognizable - Gold is very easy to identify - and with several simple tests you can test its purity and weight.

Durable - Due to the fact that gold does not oxidize it is preferred over other precious metals as it does not rust. Gold can lay at the bottom of the ocean for centuries and it will not lose its luster.

Rare - for a money to be successful it must be rare - meaning it cannot be inflated at will. This leads to the next property

Stable store of value - Since gold can only be dug out of the ground and there is a finite amount of it its rate of growth will be stunted and eventually capped. Paper/electronic currencies do not have this limitation which is why it is favorited by governments across the globe. The ability to tax their populations via inflation is a great way to finance budget deficits without raising more visible tax levels. Lenin is quoted as saying the best way to destroy Capitalism is to debauch the currency. You cannot debauch gold.

All of these properties and more have made gold the go-to currency for over 6,000 years of human history. Each time a "new" central authority attempted to use paper money to replace gold and silver as legal tender has ended in disaster. Paper money is not new not an evolved idea. It has the worst track record of nearly any human idea.

Understanding this - you will come to realize that we are simply repeating history (again) and you would be wise to own what history has deemed to be the best currency on the planet, Gold.