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On December 12 2010 12:47 tx.zyclon wrote:Over the times gold has been worth much to many. Sifting through the internet on the price of an ounce of gold it has gone up consistently every year for atleast 50 years. Going from 20 dollars about 30 years ago to 1450ish in 2010. Many economists say that with the falling of the USD that gold may be worth up to 50,000 in a short while. If you guys had an extra 20,000 or even a 1,000 saved. Do you think it is a wise idea to invest in gold? Even if it doesn't go to 50,000 dollars, Even people 30 years ago who maybe spent 1000 dollars for 50 ounces of gold, can now trade it in for 70,000 dollars. ![[image loading]](http://img51.imageshack.us/img51/2170/goldalldataousd.png) Curious to hear your thoughts.
Gold prices might have increased but so has inflation. You have to take that into account.
Also, when we have this sort of economic crisis as of these times, gold values are shot to the sky.
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i invest in this all the time and get 600% than the average
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Sanya12364 Posts
On January 14 2011 01:41 M.U.L.E. wrote:
i invest in this all the time and get 600% than the average
Go mule! Go! Mine that golden ore! =)
In investment, there is a time and season for anything. It depends on the effort that the investor puts into understanding and analyzing the situation and a bit of luck. Congrats for the 600% more than the average. I don't quite know what that means, but good for you!
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I know this is in the general forum, but I clicked on this thinking this was a reference to high yield expansions.
I need to play less Starcraft :S
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On January 14 2011 01:36 TanGeng wrote:Show nested quote +On January 14 2011 00:50 purecarnagge wrote:
No, I just don't believe in investing in artifically inflated bubbles, when there are other inflation preservation hedges out there that have a much better 50 year track record than your precious last 7 years of gold.
do you even know about the 1980's and gold? There you go again. 1980 is a peak. Unless you are calling the market top AND demonstrate a similar scenario, pointing to market peak demonstrates nothing. Furthermore 1980 was preceded by the 1970's which saw gold run up from $35 to said $850. History also shows a 1974 peak price just under $200 prior to the 1975-1980 gold blow off. History also shows Volcker raising short term interest rates above 20% and shrinking money supply in 1980. But I doubt that, those two things mean anything to you. NOTHING you have written backs your ability to call a gold top. Your "12% mutual fund return" further undermines your credibility for judging the stock market and other kinds of investments. Stick to real estate.
The 1980's was severly involved with manipulation of the gold market. which lead to many peaks/valleys. 12% return is very viable long term goal for growth mutual funds, and if your hitting less than that on a consistent basis you have a very poor financial advisor or in some cases you just really suck at doing your own "research".
I have never claimed to be able to call a gold top. I have claimed there are better options available for capital preservation and inflation hedges. Real estate, and well balanced selection of mutual fund investments. These two options will outperform gold long term. History has shown this. The facts are indisputable. Buying gold at this point is one of the worst things you could do. Buy high to sell high?
Look at 1973 to 2003. 30 years, that is the return that you want on your money? Assuming a $90 purchase price in 1973 and in 2003 a sell price of 375. Your annual rate of return is .07%. Less than 1%.
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Sanya12364 Posts
On January 14 2011 07:19 purecarnagge wrote:
Look at 1973 to 2003. 30 years, that is the return that you want on your money? Assuming a $90 purchase price in 1973 and in 2003 a sell price of 375. Your annual rate of return is .07%. Less than 1%.
Still showing your ignorance of the market and a poor read of the market.
You really want to hypothetically speculate in something in 1973 and miss a good selling opportunity in 1980 or even 1981 when it was off 50%? Then you want the investor to gut through a secular bear market only to miss out on the biggest bull moves in 2 decades by selling in 2003? How about I assume YOU bought real estate in 2006 and sold in 2009?
At this point with fed funds rate is less than .25%. In 1980 and 1981, the fed funds rate fluctuated between 10% and 20%. That's 40-80 times higher short term borrowing costs in 1980. At this point, we're just getting into an economic recovery. In 1980, Volcker was trying to choke the life out of inflation and caused a hard recession.
If you want parallels, the current situation has more in common with 1975's $130 correction than 1980's $850 peak.
As for my own research, I got ~30% in 2005-2007. Got whacked for -40% in 2008 and then got ~60% and ~40% in 2009 and 2010 respectively. Good for ~20% on an annualized basis for my initial money. For all the analysis I've done, I would have done better entirely in gold. Mutual funds averaged at most 8% over that span. Again, if you think you can do 12% in mutual funds all the time, best of luck to you.
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On January 14 2011 00:50 purecarnagge wrote:
No, I just don't believe in investing in artifically inflated bubbles, when there are other inflation preservation hedges out there that have a much better 50 year track record than your precious last 7 years of gold.
do you even know about the 1980's and gold?
Ok tell me about these other 'inflation hedges' that have gone up 4000% since 1960
(35 x 4000% = $1400)
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On January 14 2011 09:06 iPlaY.NettleS wrote:Show nested quote +On January 14 2011 00:50 purecarnagge wrote:
No, I just don't believe in investing in artifically inflated bubbles, when there are other inflation preservation hedges out there that have a much better 50 year track record than your precious last 7 years of gold.
do you even know about the 1980's and gold? Ok tell me about these other 'inflation hedges' that have gone up 4000% since 1960 (35 x 4000% = $1400)
The dow jones industrial average for one.
http://redst8r.files.wordpress.com/2009/03/chart1-djia-vs-gold.jpg?w=450
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Sanya12364 Posts
On January 14 2011 09:06 iPlaY.NettleS wrote:
Ok tell me about these other 'inflation hedges' that have gone up 4000% since 1960
(35 x 4000% = $1400)
For inflation hedges with returns, I like the combination of consumer staples and sin, things like tobacco and beer.
Gold is more of a wealth preservation vehicle - very easy to buy and little maintenance and upkeep. Speculation and investment in precious metals requires more work and knowledge - work that you should put in and knowledge that you must acquire. If we're talking stupid, rash, or lazy, there is a more than enough things that you can do to get worse than nothing over decades and decades.
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Gold has outperformed DJIA in that time (560 x 4000% = 22,400)
When you find something that has gone up by more than 4000% in the past 50 years (IE outperformed GOLD) come back here
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If you haven't invested in some type of solid material like silver, gold, platinum then you need too. If any currency dies those will always be around. Why do you always see the commercial to buy your gold? Cause gold always will be a solid investment.
Silly people any type of raw material is a good investment.
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Sanya12364 Posts
On January 14 2011 10:24 Dr.Kill-Joy wrote:
If you haven't invested in some type of solid material like silver, gold, platinum then you need too. If any currency dies those will always be around. Why do you always see the commercial to buy your gold? Cause gold always will be a solid investment.
Silly people any type of raw material is a good investment.
I'd love to hear your rationale. I agree on buying some, but would advice caution and diligence.
A good read on the gold commercials as far as it pertains to Americans. There are other peoples buying heavily.
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On January 14 2011 10:19 iPlaY.NettleS wrote:Gold has outperformed DJIA in that time (560 x 4000% = 22,400) When you find something that has gone up by more than 4000% in the past 50 years (IE outperformed GOLD) come back here
Can you read the graph? Gold has clearly not outperformed the DJIA. There is no reason for gold to increase in value. In case you cannot read the graph, it indicates that 1000$ invested in gold in 1950, would be about 50,000$ in 2008. That same 1,000$ invested in the DJIA would be about 150,000$ in 2008, even more now that the market has recovered from the recession.
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On January 14 2011 11:38 InvalidID wrote:
Can you read the graph? Gold has clearly not outperformed the DJIA. There is no reason for gold to increase in value. In case you cannot read the graph, it indicates that 1000$ invested in gold in 1950, would be about 50,000$ in 2008. That same 1,000$ invested in the DJIA would be about 150,000$ in 2008, even more now that the market has recovered from the recession.
I said 50 years not 60 , stop moving the goalposts?
Gold went UP during the great depression unlike stocks so it is superior for either a deflationary depression or a hyperinflationary one.
Besides if you really wanted to be fair you should only start from 1971 since that is when they got rid of the gold standard.Try calculating stocks vs gold from 1971 onwards and tell me which has performed superior.
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On January 14 2011 12:52 iPlaY.NettleS wrote:Show nested quote +On January 14 2011 11:38 InvalidID wrote:
Can you read the graph? Gold has clearly not outperformed the DJIA. There is no reason for gold to increase in value. In case you cannot read the graph, it indicates that 1000$ invested in gold in 1950, would be about 50,000$ in 2008. That same 1,000$ invested in the DJIA would be about 150,000$ in 2008, even more now that the market has recovered from the recession. I said 50 years not 60 , stop moving the goalposts? Gold went UP during the great depression unlike stocks so it is superior for either a deflationary depression or a hyperinflationary one. Besides if you really wanted to be fair you should only start from 1971 since that is when they got rid of the gold standard.Try calculating stocks vs gold from 1971 onwards and tell me which has performed superior.
Ok.
http://upload.wikimedia.org/wikipedia/commons/e/e3/Gold_price_in_USD.png
This one is easier to read:
http://mahalanobis.twoday.net/stories/6386730/
In 2010 dollars, one ounce of gold was 200$ in 1970. The 2010 price was 1200$. The inflation adjusted return in the time period was 600%. If you want to include 2010 returns, you would have ~700%, with the 1% inflation rate of 2010.
In non inflation adjusted dollars: on December 31st, 2010 the price of gold was 1400$. The yearly average gold price in 1970 was 36.02, giving a return of 3886% over the time period.
From:
http://www.moneychimp.com/features/market_cagr.htm , this uses the S&P 500, but returns from the S&P 500 closely track the returns from the DJIA.
The non inflation adjusted return from the s&p 500 was 4900% from Jan 1 1970 to December 31 2010. The inflation adjusted return was 857%. Note that this includes automatic dividend re-investment which is a major portion of the long term growth of stock holdings.
It is also important to note that the price of gold is subject to large spikes throughout its history, before it re-normalizes, and we are in the midst of one.
If you want to look at 50 year numbers: S&P500: 9,200% from Jan 1 1960 to Dec 31 2009, non inflation adjusted. 1253% inflation adjusted. Gold: 3300% non inflation adjusted to 2010, ~500% inflation adjusted.
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Sanya12364 Posts
I don't see the long term historic performance as very instructive. You know gold as old fashioned "liquidity" will give up performance to stocks. It's enough to show that it isn't orders of magnitude away. A 20x performance difference would be a significant sign to stay away from it during growth periods. Otherwise it's still suitable as a timeless savings anchor for those unwilling to spend time monitoring stocks or investment. In additional, regular fixed dollar investment would be a better simulation of regular saving habits.
At this point in time, all that matters is the market and primary drivers of price moves.
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On January 14 2011 15:09 TanGeng wrote:
I don't see the long term historic performance as very instructive. You know gold as old fashioned "liquidity" will give up performance to stocks. It's enough to show that it isn't orders of magnitude away. A 20x performance difference would be a significant sign to stay away from it during growth periods. Otherwise it's still suitable as a timeless savings anchor for those unwilling to spend time monitoring stocks or investment. In additional, regular fixed dollar investment would be a better simulation of regular saving habits.
At this point in time, all that matters is the market and primary drivers of price moves.
You don't need to monitor an index fund. You literally just buy it and forget about it, assuming you are investing for the long term.
If you look at numbers from when gold was closer to its 10 year moving average, the difference is orders of magnitude, the current situation is that gold is way above its real worth(its real worth does not, and should not, over the long term, increase outside of scarcity).
What has changed to make gold worth 3 times more then 10 years ago? Geological reserves are not running out. It is not used in huge quantities for many industrial processes. It is pure speculation of the worst kind, the same sort of thing that got us into the real-estate bubble. Commodities investment is best left to institutional investors, who DO have the time to micromanage such things.
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On January 14 2011 13:35 InvalidID wrote:
If you want to look at 50 year numbers: S&P500: 9,200% from Jan 1 1960 to Dec 31 2009, non inflation adjusted. 1253% inflation adjusted. Gold: 3300% non inflation adjusted to 2010, ~500% inflation adjusted.
Well the DJIA is around 100 points higher now than what it was back in 1999 so unless there has been deflation (lol) since 2000 then i don't see how the DJIA has been such a great investment vs inflation?
If you think we are out of the economic storm and everything is just dandy again then go ahead and invest in stocks , personally i think the worst is yet to come economically.
I think we are headed for a massive spike in inflation , the only thing that will see the price of gold lower is what happened in 1980 , interest rates to 20%.I don't see that happening.
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On January 14 2011 15:16 InvalidID wrote:Show nested quote +On January 14 2011 15:09 TanGeng wrote:
I don't see the long term historic performance as very instructive. You know gold as old fashioned "liquidity" will give up performance to stocks. It's enough to show that it isn't orders of magnitude away. A 20x performance difference would be a significant sign to stay away from it during growth periods. Otherwise it's still suitable as a timeless savings anchor for those unwilling to spend time monitoring stocks or investment. In additional, regular fixed dollar investment would be a better simulation of regular saving habits.
At this point in time, all that matters is the market and primary drivers of price moves. What has changed to make gold worth 3 times more then 10 years ago? Geological reserves are not running out. It is not used in huge quantities for many industrial processes. It is pure speculation of the worst kind, the same sort of thing that got us into the real-estate bubble. Commodities investment is best left to institutional investors, who DO have the time to micromanage such things.
On the contrary, the amount of gold mined out each year is very minimal...
a 25m cube would hold all of the gold in the world
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Sanya12364 Posts
On January 14 2011 15:16 InvalidID wrote:
If you look at numbers from when gold was closer to its 10 year moving average, the difference is orders of magnitude, the current situation is that gold is way above its real worth(its real worth does not, and should not, over the long term, increase outside of scarcity).
What has changed to make gold worth 3 times more then 10 years ago? Geological reserves are not running out. It is not used in huge quantities for many industrial processes. It is pure speculation of the worst kind, the same sort of thing that got us into the real-estate bubble.
These bull moves are based on a secular bull market trend. What makes the current price less reasonable than the price 10 years prior except that now a large portion of the financial community can't understand it based off of jewelry demand? Is investment demand by Indians and Chinese and Asian central banks irrational? Is Indian lust for gold a temporary sickness that they'll get over in a year or two?
Again understanding the market is essential. If you don't understand the market, don't play as a speculator. It's as true for institutional investors as it is for the average individual. For the average unknowledgeable saver, gold is in a way the ultimate fear play, but having a consistent dose of fear is healthy. It keeps a savings program honest. A diversified and regularly rebalanced portfolio won't be world beaters, but it'll be steadier through thick and thin. Part of that diversification should be in gold. Such a portfolio would have caught a piece of the gold blow out in the 70s, the great treasury yields in the 80s, and the stock boom of the 90s, and it would have loaded up on gold for the most recent gold run-up.
The current gold market lacks all the irrational exuberance of the stock market bubble. It lacks the 24/7 coverage of the tech-comm era. It lacks the house-flipping industry of the real estate bubble. It has thousands of financial advisors calling a gold bubble or dissuading their clients from buying it, and the long term gold hoarders are cautious and wary of short term corrections. I don't like the gold $5000 prognosticators. I think they are ahead of themselves for their audience, mostly retail investors thinking short-term. But they're balanced out by gold 400 prognosticators.
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EPT![[image loading]](http://img51.imageshack.us/i/goldalldataousd.png/)
