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.
The DJIA is 17.64% higher then 1999, but that is not the entire returns from investing in the DJIA which includes the returns from dividends.
The current economic situation is irrelevant to long term investing, which is what you were talking about with 50 or 40 year returns.
Why do you think we are headed for a massive spike in inflation? What evidence do you have? Current inflation numbers are at record lows, and growth forcasts are healthy: http://www.thestreet.com/story/10973436/1/gold-prices-getting-slammed.html If you think you have better information then the institutional investors who price gold, the by all means speculate in it for the short term, but it is not a well performing long term investment.
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
The amount of gold mined is very low, but the amount mined is not decreasing.
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.
Sure, jewelry demand could explain some increase in the price of gold, but it is not enough to explain for the huge increase in price over the last few years, I have seen no evidence of commercial demand increasing that much. That was entirely speculation.
Why "should" any long term portfolio include gold? Over any 30 year period you can select a pure stock portfolio outperforms gold. It is not terrible to have some, but unless you are speculating with it in an efficient manner, you are just making less money then you could, with an equivalent level of risk.
Gold holds stable value in the short term. This widespread perception explains the recent price spike as those who by luck or craft escaped the financial meltdown looked to invest their cash somewhere safe. From my limited experience, gold has all the signs of a bubble (Following credited to Soros).
1. Recognition of a trend 2. The trend waivers but reasserts itself 3. Reinforced by rising expectations 4. Convictions develop The final steps lefts are for the realizations of excessive expectations, lowered expectations, and market plunge.
On January 15 2011 10:04 InvalidID wrote: Sure, jewelry demand could explain some increase in the price of gold, but it is not enough to explain for the huge increase in price over the last few years, I have seen no evidence of commercial demand increasing that much. That was entirely speculation.
It's not jewelry demand. Jewelry demand is what some analysts use to say that Gold should be $400 instead of where it is now. It not backwards looking domestic inflation where some analysts say that inflation doesn't justify the current price. Etc.
And automatic rebalancing of investment allocations is a technique for less savvy saver types that helps smooths out returns. It helps to have diversifications behave divergently in distinct parts of a cycle. It performs especially well when there is a lot of volatility among divergent investments. Gold in such a portfolio is to provide diversification.
here's the bottom line from the Bloomberg Businessweek article on gold(or was it Money?) I read just today- gold's profit margins are extremely slim and security it provides is deceitful- you are likely to lose big at the first sign of inflation.
On January 15 2011 10:21 TossFloss wrote: Gold holds stable value in the short term. This widespread perception explains the recent price spike as those who by luck or craft escaped the financial meltdown looked to invest their cash somewhere safe. From my limited experience, gold has all the signs of a bubble (Following credited to Soros).
1. Recognition of a trend 2. The trend waivers but reasserts itself 3. Reinforced by rising expectations 4. Convictions develop The final steps lefts are for the realizations of excessive expectations, lowered expectations, and market plunge.
so is soros saying not to invest in gold because its going to crash along with the rest of the world market? Is gold just another fad destined to fail? I am so confused on what to do to prepare for the inevitable "hyper-inflation"...any suggestions?
On January 15 2011 10:21 TossFloss wrote: Gold holds stable value in the short term. This widespread perception explains the recent price spike as those who by luck or craft escaped the financial meltdown looked to invest their cash somewhere safe. From my limited experience, gold has all the signs of a bubble (Following credited to Soros).
1. Recognition of a trend 2. The trend waivers but reasserts itself 3. Reinforced by rising expectations 4. Convictions develop The final steps lefts are for the realizations of excessive expectations, lowered expectations, and market plunge.
so is soros saying not to invest in gold because its going to crash along with the rest of the world market? Is gold just another fad destined to fail? I am so confused on what to do to prepare for the inevitable "hyper-inflation"...any suggestions?
Soros wrote a book entitled The Alchemy of Finance which analysis bubbles. (It's a hard read). Yes Soros has called gold a bubble. (http://uk.reuters.com/article/idUKTRE68E3PX20100915)/
There exists many books and websites for you to research investment topics. The governments of the modern economies try very hard to keep inflation under control. If hyper-inflation occurs then we are all in very very big trouble.
The DJIA is 17.64% higher then 1999, but that is not the entire returns from investing in the DJIA which includes the returns from dividends.
The current economic situation is irrelevant to long term investing, which is what you were talking about with 50 or 40 year returns.
Why do you think we are headed for a massive spike in inflation? What evidence do you have? Current inflation numbers are at record lows, and growth forcasts are healthy: http://www.thestreet.com/story/10973436/1/gold-prices-getting-slammed.html If you think you have better information then the institutional investors who price gold, the by all means speculate in it for the short term, but it is not a well performing long term investment.
Why "should" any long term portfolio include gold? Over any 30 year period you can select a pure stock portfolio outperforms gold. It is not terrible to have some, but unless you are speculating with it in an efficient manner, you are just making less money then you could, with an equivalent level of risk.
Well on Dec 23 1999 the DJIA was at 11405 and on Oct 08 2010 the DJIA was at 11,006. The DJIA has spent the last decade going sideways whilst inflation has rocketed.
Why do i think inflation will continue to increase? a little thing called US debt , which has increased by around 4 trillion in the past 4 years.Trade deficits of between 500-800 billion a year and budget deficits over one trillion.Gold demand in the past 10 years is 100% linked to the decline in value/faith in the USD.
The fed is trying to hide the real inflation figures , that is why they stopped reporting M3.
The DJIA is 17.64% higher then 1999, but that is not the entire returns from investing in the DJIA which includes the returns from dividends.
The current economic situation is irrelevant to long term investing, which is what you were talking about with 50 or 40 year returns.
Why do you think we are headed for a massive spike in inflation? What evidence do you have? Current inflation numbers are at record lows, and growth forcasts are healthy: http://www.thestreet.com/story/10973436/1/gold-prices-getting-slammed.html If you think you have better information then the institutional investors who price gold, the by all means speculate in it for the short term, but it is not a well performing long term investment.
Why "should" any long term portfolio include gold? Over any 30 year period you can select a pure stock portfolio outperforms gold. It is not terrible to have some, but unless you are speculating with it in an efficient manner, you are just making less money then you could, with an equivalent level of risk.
Well on Dec 23 1999 the DJIA was at 11405 and on Oct 08 2010 the DJIA was at 11,006. The DJIA has spent the last decade going sideways whilst inflation has rocketed.
Why do i think inflation will continue to increase? a little thing called US debt , which has increased by around 4 trillion in the past 4 years.Trade deficits of between 500-800 billion a year and budget deficits over one trillion.Gold demand in the past 10 years is 100% linked to the decline in value/faith in the USD.
The fed is trying to hide the real inflation figures , that is why they stopped reporting M3.
If people had lost faith in US dollars, then the interest rate on US bonds would increase. This has not happened.
"Real assets hedge paper money being printed into oblivion, so you've got to own gold and you've got to own other commodity-related investments still," he said.
As gold [XAU=X 1368.25 5.85 (+0.43%) ] is likely to continue its rise, the value of the dollar [.DXY 78.82 -0.515 (-0.65%) ] is likely to remain in a long-term downtrend against other major currencies as the Federal Reserve maintains its policy of quantitative easing to stimulate the economy, according to Griffiths.
"The downward trend in the dollar is awesomely powerful. It's vital to get yourself out of the dollar long-term on any significant rally. Continuing to own a currency that is going to be printed virtually into oblivion … is crazy," he said.
On January 18 2011 20:11 iPlaY.NettleS wrote: Not owning gold 'A form of insanity' According to CNBC : http://www.cnbc.com/id/40997445
If everyone thought like this about gold, the bull run would be in trouble. The long run fundamentals of gold is good with China and India purchases and international currency debasement, but buyers should fight the urge to rush into the market with all of their money.
For non-speculators, interested individuals should buy at some regular intervals. Speculative purchasers might even reduce positions to find a better price point in the near future. It's a healthy sign that some gold believers are bearish about the short term prospects for gold. Skeptics should just not enter the market or start short positions, that'll make it cheaper for the rest of the market to buy.
Also prevalence of statements like this is a healthy sign. It's very difficult to overreach by much when a big segment of the population is selling.
On January 15 2011 13:19 Helios.Star wrote: Yep, everybody knows you should always buy when the price is at an all time high.
Clearly people stop buying 4 years ago when gold reached all time high of 950. Clearly.
I think that, given that gold is at an all-time high, it's a good time to sell gold. If you bought a bunch of gold a while ago, and the value of that gold has risen, it might be good to sell until you've paid off the initial investment into that gold-- everything from then on is just profit. Plus, given the usual "buy low, sell high" way of investing, now seems like the worst possible time to invest in gold and the best time to sell it, since it's high.
it's not just gold thats at record highs , copper , cotton and other commodities are also hitting records. When will you people realise the dollar is dying and fast?
Wait for gold to drop then buy it because if u buy it now what if like 3 months later it starts dropping for no reason? Just wait for gold to drop to a point where you think is reasonable and will rise again. If it doesn't ever drop then don't ever risk it in there are a lot of better things to invest in.
If it doesn't ever drop? That's the best kind of buy.
I know that the part of you that wants to time the market is screaming that you want the best deal, possible but you better know what you are doing or you'll miss out completely.
I think it's far greater a risk to buy something that's at an all-time high. If you're really afraid of a currency collapse, a diversified portfolio of real estate, stocks in stable companies, and durable commodities, along with investment in your own personal skills and property is better than just buying Gold. If you want Gold to be a part of your portfolio, do so with the caveat that there are a lot of speculators hanging out in the gold market.
Greenspan use to be smart...until he had everything deregulated and allowed this latest crash, which all could have been stopped in 2008 when he was still in charge.
EPT
![[image loading]](http://theeconomiccollapseblog.com/wp-content/uploads/2011/01/US_National_Debt_Chart_20101.gif)
