The Gold Standard?

[Towncryr]

That is exactly my point. Stocks, bonds, and real estate do provide streams of income. Stocks beat gold over time. INCLUDING the recent gold bubble.

http://www.stocks-for-beginners.com/gold-market-price.html

Taking out the recent rise due to increased investor speculation and you will see that gold does horribly. Why is it when prices have been going higher and higher that people say it is time to buy? If you want to buy buy in the early 80s or 90s not now after you start to see the "buy gold" infomercials.

Other assets DO keep up with inflation and mostly surpass is. If the price of food inflates 5%/year you better believe that McDonald's prices will increase likewise, with their sales and profits following. Any business' sales revenue (accept for technology companies) will go up as the cost of things goes up.

Why is gold an inherently good store of value? You are counting on others to be willing to trade it with you. If society collapses the man with food and guns will survive. Try and eat gold.

Warren Buffet is not your typical investor but he is the most successful investor of our lifetime. He says gold is not a good investment and you would disagree with him. If he is such a great investor you can invest right along with him. A share is ~$80 and management expenses are nil.

As I heard Eric Sprott comment lately on Warren Buffet AND Bill Gates pubic comments dis'ing gold. Since gold outperformed BOTH Berkshire-Hathaway AND Microsoft over the last 12 years it appears they may be more than a little 'confused' about investing?

If you buy into this "Buffet is God" mentality please check this chart on the on the 14 year comparison between gold's performance and that of BH.

http://www.321gold.com/editorials/saville/saville061912.html

This is the type of investing 'genius' you want to follow?

If so, 'buenos suerte!'

TC

 

[Towncryr]

In my efforts to reform the thinking/conditioning of those of you still firmly in the Keynesian camp another alternative for growth and understanding.

Henry Ford once said, "the monetary system (NOT the economy) is the single most important subject ANY man can study." Now, Senor Ford was a pretty successful and innovative fellow. One might ride the coattails of his wisdom without having to learn the hard lessons the hard way.

This is a 47 minute animated video released several years ago by Canadian Paul Grignon. It is excellently produced and totally 'non political.' If some of you have taken the time to view The Secrets of Oz link I posted TWICE yesterday in this thread this is a very good follow up. Also, there are Spanish translations available if you will put "Money As Debt" in the favorite 'unnamed' search engine it will be on the list for some of our Argentine friends who are trying to figure out what is going on in their country as this is written.

Money As Debt: http://video.google.com/videoplay?docid=-2550156453790090544

But, at this stage of my 20 self education of this issue and the others that go hand in hand with this little fiat money power play I have learned, time and time again, "you can lead a horse to water but you can't make him THINK!"

TC

 

[nicoenarg]

(The following is not so much an economics related post. And please, I'm not even addressing the people here that brought up cooky conspiracy theories. I'm actually serious about this and have no time for childish theories and comments like "he has a picture with Lord Rothschild, OH MY GOD!!".)

So...uh, no one here who supports the gold standard fears global conflict because of it? I mean, the reality is that people's perception that gold is valuable is dependent on the fact that you can't easily produce it (and also that its shiny). Seeing that there's a limited supply of gold available, what guaratee is there that will avoid conflict.

So, who makes sure that one nation does not go after another to get the gold that the other nation's got (the UN? HAHAHAHAHA!!!). And what's the guarantee that gold will not be used as a weapon as oil was used in the 70s? These are real implications that seem to be getting brushed aside in our discussion about this need that people now feel to quickly go back into the arms of gold!

Some may suggest putting in a proper framework that would ensure no injustice occurs, but I would remind people that "frameworks" are crap if not run by honest people, and usually people turn ugly when given enough power to manipulate things as they wish.

You might save your "savings" in the long run but you might end up slaves of those who control the gold. And if you think the banks run your lives now, then you might be in for a very rude awakening when those that have gold also have control over your lives.

So my question is, how do we deal with these problems if we are to peg our futures to something that is perceived by masses as being valuable (gold, in and of itself is worth nothing)?

How do we stop our world from turning into a barbaric fuedal playground? If not on a national level, then on the world level?

If you're telling me "we'll worry about it when we need to", then how are you different than the people who took loans knowing they couldn't pay them back in the future, those who issued loans they knew they couldn't recover in the future and those who guaranteed these loans knowing that this was not going to go on forever? Everyone who puts off worrying about real problems in the future falls one way or another.

Anyway, to me it sounds like a moronic idea, especially because most obvious things seem to have not been considered.

Or I am completely misinformed, and I would ask for someone to kindly correct my mistakes (and don't send me youtube links, I know how to use the search feature).

 

[flurec]

As I heard Eric Sprott comment lately on Warren Buffet AND Bill Gates pubic comments dis'ing gold. Since gold outperformed BOTH Berkshire-Hathaway AND Microsoft over the last 12 years it appears they may be more than a little 'confused' about investing?

If you buy into this "Buffet is God" mentality please check this chart on the on the 14 year comparison between gold's performance and that of BH.


TC

Coincidentally or not you have picked as a starting reference point the approximate year where gold has been at its lowest price in over 30 years. That is like comparing Argentina's economic growth since the early 2000s to other countries economies and calling it, as Krugman says, "a miracle".

If we go back another 15 years or so to the early 80s we will see what a wonderful investment gold has been since the last time everyone was saying BUY GOLD.

1979
$306 / gold ounce
$320 / Berkshire Hathaway
$840 / Dow Jones Industrial Average

2012
$1,670 gold
$124,496 BRK
$12,888 DJ

$10,000 invested in 1979 would be worth today.

$54,575 Gold
$3,890,500 BRK
$153,431 DJ

In 1979 were you telling your friends and family that gold was a great investment??

Even if they just stuck it in a fund that tracked the Dow Jones they would have $153k. Gold $54,575.

I ran these numbers really quickly but if I made an error I guarantee the same order of return.

Investing for retirement involves 20+ years of return. The average investor could not beat the market over 20 years. With gold they would be way BEHIND. Randomly pick a 20 year period of time over the past 100 years and gold will lose, I suspect, 100% of the time. History is the judge.

 

[camberiu]

In 1979 were you telling your friends and family that gold was a great investment??

Even if they just stuck it in a fund that tracked the Dow Jones they would have $153k. Gold $54,575.

The amazing ability of predicting the past.....and cherry picking specific times and dates.

What if, in 1979, instead Berkshire you picked Kodak, PAN AM, Smith-Corona, Commodore Inc, ATARI Inc, TWA, Merry-Go-Round, Woolworth? How would your ROI look like then?

Also, what if your friend decided start investing in 2000 instead of 1979? How would than ROI of Gold vs. the Dow Jones would look like?

Yes, no one will become rich by buying gold. Buying gold is a wealth PRESERVATION strategy, not a wealth multiplication strategy.

If you are optimistic about the future. If you think the current economic foundations are solid, you have no issues with the current expansion of the money supply and think the value of the Dow will continue to grow exponentially for the forseeable future, then yes, Gold is certainly not for you.

I would never advise anyone who has that view of the world to buy gold. If you are like that, by all means, stay as far away from gold as you can.

 

[PhilipDT]

Not to mention since gold's price is vastly inflated due to the perception it has some quasi mystical value, it is pretty much the text book definition of a bubble and when that bubble bursts there are going to be some sad people holding the strings.

 

[PhilipDT]

Yes, no one will become rich by buying gold. Buying gold is a wealth PRESERVATION strategy, not a wealth multiplication strategy.

Kind of like the buying a house wealth preservation strategy.

 

[camberiu]

Kind of like the buying a house wealth preservation strategy.

There many differences, including the portability of gold and the fact that gold requires no maintenance/upkeep and it is not charged property taxes.

 

[redrum]

Coincidentally or not you have picked as a starting reference point the approximate year where gold has been at its lowest price in over 30 years. That is like comparing Argentina's economic growth since the early 2000s to other countries economies and calling it, as Krugman says, "a miracle

you are absolutely correct. it's all about timing and now is gold's time. if we were living under normal economic conditions then gold would be the last thing you'd want to own. however we are living in times of uncertainty, banking crises, sovereign debt crises, fraud(MF Global), money printing, inflation, wars abroad...etc.

times like this are when you want to own an asset that has zero counter party risk because you are more concerned about protecting what you have already earned. at only $1625 per ounce, gold is still a steal. there's no telling how high it can reach. you don't need to hold 100% of your assets in gold however you should have at least something, any amount is better than nothing at all.

during the short run, gold will fluctuate greatly as investors deleverage, pay margin calls and move out of the euro into the dollar. at some point, probably sooner than later, the dollar will suffer the same fate as the euro and other fiat currencies. when that happens, the only other currency to jump to will be gold and silver. why else do you think china and the world's central banks are making record gold purchases?

How China Is Covertly Taking Control Of The Global Gold Market (funny enough, the author of this article is Argentine)
http://www.forbes.com/sites/afontev...tly-taking-control-of-the-global-gold-market/

Central Banks Back to Buying Gold
http://blogs.wsj.com/economics/2012/06/11/central-banks-back-to-buying-gold/

Central bank gold buying at 40-year high
http://www.ft.com/intl/cms/s/0/c0025500-10ef-11e1-a95c-00144feabdc0.html#axzz1yGbcRD8Z

Central banks pounce on falling gold
http://www.ft.com/cms/s/0/4f9a6076-6f92-11e1-b3f9-00144feab49a.html#axzz1yGbcRD8Z

think about this, all nations and the big central banks are currently printing money like crazy. at some point, all it will take is for one nation to make a formal announcement that they will begin to partially back their currency with gold. it doesn't need to be backed 100%, just partial backing will due. then, all the investors are going to want to hold that currency because it will be deemed the safest.

and please, do not listen or do what warren buffet does. if you already own some shares of berkshire that's great. sure he's a genius investor who buys whole companies but he's in a totally different class because of his status as a crony capitalist and obama insider. he doesn't care about the little guy. he lobbied for and benefited the most from the TARP bailout money. he earns 100K per year because he gets paid the rest of his salary via dividends, which are taxed at a lower rate. he is disingenuous when he says that rich people should be taxed more because guys like him will NEVER pay more taxes. all he's doing is backing up his buddy obama. if he wanted to pay more taxes then stop talking and mail a check!

 

[flurec]

he's in a totally different class because of his status as a crony capitalist and obama insider. he doesn't care about the little guy. he lobbied for and benefited the most from the TARP bailout money. he earns 100K per year because he gets paid the rest of his salary via dividends, which are taxed at a lower rate. he is disingenuous

Berkshire Hathaway has never paid a dividend. Warren Buffet has proposed a higher tax rate for individuals such as himself. I believe they are referring to it as the "Buffet Rule" or something like that.

At any point in history there have been people who predict the end of the financial system. If we get to that point you cannot eat gold. Your neighbor will not trade you his potato for your gold. He will eat his potato.

The dollar is king. Ecuador, Zimbabwe, El Salvador, Russia, Argentina. The fact that the US can issue debt in the middle of an economic crisis and pay essential 0% interest speaks for itself. China keeps on accepting them in exchange for widgets...

What will you do with that gold you are holding to preserve your wealth? How will you determine its value?

I will give $10,000 to the first five people who thank my post if in 30 years from today's date gold has had a higher rate of return over the S&P 500 over those 30 years.

You can take it in US dollars or it's current rate in Argentinian pesos or gold or potatos.