Where Is Gold Going In This Market

[cloudhopper]

Well, looks like the latest euro deal is failing big time. The final bullet that the euro governments have left (confirmed on bbc today) is coordinated and massive printing of money to save the system- looks like we are heading in that direction and quickly.

Overall this should be excellent news for gold investors (paper money becomes even more ' worthless' relative to gold) and also great for stock investors as all this new cash will need somewhere to flow.

"Should be" yet gold has been trading down for the last 12 hours or so I have been watching it today. Times are changing...

Have to admit some disappointment on losing money on my gold exposures today given all that's been happening . Perhaps not enough people pretending it's worth something today

ok so with your lack of confidence in gold what do you see as being a strong and viable " currency " for the future?

Do not overlook the possibility that a massive global default and resulting deflation could make all currencies more valuable.

[highchol]

gold, apart from its industrial uses, cant eat it, drive it, darent wear it,why buy it, what use is it?

[fritter1970]

Well, looks like the latest euro deal is failing big time. The final bullet that the euro governments have left (confirmed on bbc today) is coordinated and massive printing of money to save the system- looks like we are heading in that direction and quickly.

Overall this should be excellent news for gold investors (paper money becomes even more ' worthless' relative to gold) and also great for stock investors as all this new cash will need somewhere to flow.

"Should be" yet gold has been trading down for the last 12 hours or so I have been watching it today. Times are changing...

Have to admit some disappointment on losing money on my gold exposures today given all that's been happening . Perhaps not enough people pretending it's worth something today

My understanding is that a lot of hedge funds are selling gold to take their profits in order to cover their increasing stock market losses- they need to bring some money in to keep their quarterly/annual % returns up otherwise they find it impossible to find new clients and lose existing ones. Makes sense, but not great for us smaller gold investors!

This is spot on ExpatJ. Hedge funds have been suffering a run up of redemption requests and do not want to crystalise their portfolio losses and have been forced to sell off their only winners (precious metals) to meet their redemptions.

There is a much bigger player though. The market manipulators. ie. The European and U.S. central banks who are terrified that the worthlessness of paper money is being exposed and that people are turning to precious metals. How do they stop that? By dumping a sh*t load of gold onto the market in order to lower its price and destroy confidence in it. A futile strategy that only dumb central bankers could come up with. It reminds me of the movie "Rogue Trader" where Nick Leeson used the same strategy believing he could turn the entire market.

[Naam]

As for a country that wants to finance exploration to find more of what they back/peg their currency to ( that which is held in their reserves ) Well they would need to save their revenues till they can afford it.

i need all my mental strength to be lenient with you Flying if your suggestion was followed most countries would be still decades backwards, emerging countries still submerged, pauverty and hunger much more rampant than today.

having said so, i'd like to point out that i don't condone the quasi unlimited credit expansion / debt accumulation we have seen in the last 50 years in developed as well as in emerging countries.

[flying]

gold, apart from its industrial uses, cant eat it, drive it, darent wear it,why buy it, what use is it?

Rather silly question

Can you eat your dollars?

Can you drive them? Wear Them?

Gold is used as it always has been.

A medium of exchange...Same as the paper of which ever realm you choose

[flying]

i need all my mental strength to be lenient with you Flying if your suggestion was followed most countries would be still decades backwards, emerging countries still submerged, poverty and hunger much more rampant than today.

having said so, i'd like to point out that i don't condone the quasi unlimited credit expansion / debt accumulation we have seen in the last 50 years in developed as well as in emerging countries.

Well I did say I only got into the whole discussion as a way to give a reason

why those who claim X amount of gold or anything is not enough for the amount of people in X country

That aside remember I am one who prefers free gold..untethered to seek its own place/price

But as you say you do not agree with the rampant credit/debt expansion of the last 50 years.

I agree & would extend that 50 years to 78 years because 79 years ago they could not expand it due to

[highchol]

gold, apart from its industrial uses, cant eat it, drive it, darent wear it,why buy it, what use is it?

Rather silly question

Can you eat your dollars?

Can you drive them? Wear Them?

Gold is used as it always has been.

A medium of exchange...Same as the paper of which ever realm you choose

to answer your question, ofcourse you could eat dollars should you wish, they may not taste nice as wouldn't gold, but your teeth would be in a better state after.

Back to the point, you can however walk into a shop and buy x number of foodstuffs with x number of baht and so on the next day with reasonable certainty you get the same for the same baht.

can you with reasonable certainty do the same with gold?

[flying]

can you with reasonable certainty do the same with gold?

Yes for thousands of years.

Can the same be said for Baht or dollars?

Can you walk into A Thai noodle shop & pay with dollars?

No you exchange it first for currency of the realm.

Same as anywhere in the world.

It is no different with gold.

If you are asking about the amount given for exchange...

Gold is actually far more stable over decades than any currency.

Edited November 2, 2011 by flying

[highchol]

can you with reasonable certainty do the same with gold?

Yes for thousands of years.

Can the same be said for Baht or dollars?

Can you walk into A Thai noodle shop & pay with dollars?

No you exchange it first for currency of the realm.

Same as anywhere in the world.

It is no different with gold.

If you are asking about the amount given for exchange...

Gold is actually far more stable over decades than any currency.

there is the nub.....the amount given for exchange!

extra tier / cream off, set / manipulated by the gold myth club, non productive group, nice to have (gold ), to look at like art, but can live without it ie dont realy need it.

Edited November 2, 2011 by highchol

[flying]

there is the nub.....the amount given for exchange!

extra tier / cream off, set / manipulated by the gold myth club, non productive group, nice to have (gold ), to look at like art, but can live without it ie dont realy need it.

Up to you

Seriously though if you look you will see.

For instance look at something tangible.

Take your pick...coffee,Wheat, cotton, gasoline, crude oil, college tuition

Look at a graph take it back to 1932

What you will see is basically those things cost about the same amount in gold throughout history.

Cant say the same for currencies whose charts go one way ...UP....As in taking more & more currency to buy the same things.

But hey I have never told anyone to buy gold or silver & I am not telling you to now.

Chok Dee

Edited November 2, 2011 by flying

[highchol]

there is the nub.....the amount given for exchange!

extra tier / cream off, set / manipulated by the gold myth club, non productive group, nice to have (gold ), to look at like art, but can live without it ie dont realy need it.

Up to you

Seriously though if you look you will see.

For instance look at something tangible.

Take your pick...coffee,Wheat, cotton, gasoline, crude oil, college tuition

Look at a graph take it back to 1932

What you will see is basically those things cost about the same amount in gold throughout history.

Cant say the same for currencies whose charts go one way ...UP....As in taking more & more currency to buy the same things.

But hey I have never told anyone to buy gold or silver & I am not telling you to now.

Chok Dee

i will have to make do and be satisfied with trips to the fridge to satisfy my needs and not worry about the value of mrs highchols jewlry box.

[midas]

Back to the point, you can however walk into a shop and buy x number of foodstuffs with x number of baht and so on the next day with reasonable certainty you get the same for the same baht.

Emm.......not necessarily

" Zimbabwe's annual inflation was 231,000,000% in July (Prices doubling every 17.3 days). At the beginning of November, 2008, the inflation rate was calculated to be at 516 quintillion percent (516,000,000,000,000,000,000%). The monthly inflation was 13.2 billion percent."

http://crisistimes.com/hyperinflation.htm

[letitbe]

gold, apart from its industrial uses, cant eat it, drive it, darent wear it,why buy it, what use is it?

Rather silly question

Can you eat your dollars?

Can you drive them? Wear Them?

Gold is used as it always has been.

A medium of exchange...Same as the paper of which ever realm you choose

to answer your question, ofcourse you could eat dollars should you wish, they may not taste nice as wouldn't gold, but your teeth would be in a better state after.

Back to the point, you can however walk into a shop and buy x number of foodstuffs with x number of baht and so on the next day with reasonable certainty you get the same for the same baht.

can you with reasonable certainty do the same with gold?

tell that to people in Zimbabwie or people during wiemar republic or many of other massive collapses in fiat money 35 years ago the average wage or salary was around 3,000 gbp in UK a year a decent house cost 3,000 gbp and you could buy a decent house for around 400 onz of gold today the average wage/salary is around 25k gbp a decent house costs around 200k gbp and a decent house in uk costs around 200 onz of gold conclusion a decent house is now about 65 times more expensive in fiat money while in gold it takes 50% less gold. Even if youd taken gold cost then and put it into a high yielding account say generously giving 5% compound youd only have around 18k gbp and if you got say very hard 10% compound youd have around 60k gbp so your fiat money would buy at best 1/3rd of a house or at best around 60 onz gold instead of around 400onz you would have had in around 1974. Admittedly if youd bought gold in 1980 and sold it in 2000 your fiat money would have beaten gold by huge margin particularly since you get no yield except capital growth in gold. Ill stick to 50% property 20 stocks and 30% gold and leave fiat money to people like you until world clears its ridiculous debt. Of course I need to keep around 50,000 us $ cash for emergencies but anything over that I now rapidly convert to stocks gold or property. And for next few years at least I have more faith that my gold will keep up with inflation than fiat money giving what 3% or so if your lucky with inflation at 5% but IMO real inflation nearer 10% +

[highchol]

Back to the point, you can however walk into a shop and buy x number of foodstuffs with x number of baht and so on the next day with reasonable certainty you get the same for the same baht.

Emm.......not necessarily

" Zimbabwe's annual inflation was 231,000,000% in July (Prices doubling every 17.3 days). At the beginning of November, 2008, the inflation rate was calculated to be at 516 quintillion percent (516,000,000,000,000,000,000%). The monthly inflation was 13.2 billion percent."

http://crisistimes.c...erinflation.htm

midas, you certainly got the touch

[fletchsmile]

Another of the most fundamental flaws for gold is in itself it generates no growth. Even a currency will generally pay interest. An equity share will pay dividends etc, and hopefully some capital growth. Over long periods of time, your money is therefore effectively "stuck" with gold, and prevents you doing much with it.

As an example, I currently hold some gold exposure. My favourite asset class has always been equities. One of the older UK unit trusts I hold is Fidelity UK Special Situations, launched in 17 Dec 1979. Between that time:

Gold has gone from $469.50 to around $1,700 up about 3.6 times in 30+ years.

FUKSS has gone from GBP 0.25 to around GBP 19.00 up about 76 times

Now if I'd been putting my money in gold all my working life, I'd still be doing so. I'd also still be working

Further, in real terms Gold is probably worth less now than at the start of this period, after factoring in inflation.

Yes gold does have some advantages, and I still think gold's fine for a bit of your money, and spreading risk, plus a few short games of musical chairs, as someone mentioned above. Long term, large holding - no thank you

Edited November 2, 2011 by fletchsmile

[fletchsmile]

ok so with your lack of confidence in gold what do you see as being a strong and viable " currency " for the future?

Midas, I'd have to say I'm not really a currency player full stop. My choice of currencies is based largely on particular assets choices, and where I store my wealth = where I come from, where I am, plus offshore.

eg THB We live in Thailand, so hold a chunk THB assets. About 2-3 years worth of liquid assets such as THB cash and bonds. The home we live in. Then Thai mutual funds - maily equity. All THB

GBP - Mutual funds, shares and bonds. Why? not because I particularly like GBP, but I'm comfortable investing in these markets.

My currency plays in themselves are small. CNY is probably a decent strong currency, tho' I don't bother much with it myself, as it's not my game. I also like SGD. THB itself isn't too bad if you live here. Hold some USD, although not really a fan, quite like AUD, and some NZD. Don't like the Euro.

Basically though my attitude to currencies is spreading them out to minimise loss if they go against me, and more importantly what I actually do them them. That's a big problem with gold - you can't do much with it. That's one reason I prefer ETFS to physical gold. Go online, click, sell it. Click and buy something else, or placed on fixed deposit, etc. Couldn't imagine anything worse than being sat on bars of gold in my safe. Have tried but my computer doesn't take them

Edited November 2, 2011 by fletchsmile

[fritter1970]

Another of the most fundamental flaws for gold is in itself it generates no growth. Even a currency will generally pay interest. An equity share will pay dividends etc, and hopefully some capital growth. Over long periods of time, your money is therefore effectively "stuck" with gold, and prevents you doing much with it.

As an example, I currently hold some gold exposure. My favourite asset class has always been equities. One of the older UK unit trusts I hold is Fidelity UK Special Situations, launched in 17 Dec 1979. Between that time:

Gold has gone from $469.50 to around $1,700 up about 3.6 times in 30+ years.

FUKSS has gone from GBP 0.25 to around GBP 19.00 up about 76 times

Now if I'd been putting my money in gold all my working life, I'd still be doing so. I'd also still be working

Further, in real terms Gold is probably worth less now than at the start of this period, after factoring in inflation.

Yes gold does have some advantages, and I still think gold's fine for a bit of your money, and spreading risk, plus a few short games of musical chairs, as someone mentioned above. Long term, large holding - no thank you

Since 2001 FUKSS is up 125 per cent.

Since 2001 gold is up 700 per cent....... and the secular bull market in gold has a long, long way to go. Gold is only in phase 1. When it progresses to phases 2 and 3 its gains will increase massively.

If you had only allocated 15 per cent of your FUKSS investment to gold in 2001 you would have a total net worth TWICE the size of what you now have.

[BEENTHEREDONETHAT]

Another of the most fundamental flaws for gold is in itself it generates no growth. Even a currency will generally pay interest. An equity share will pay dividends etc, and hopefully some capital growth. Over long periods of time, your money is therefore effectively "stuck" with gold, and prevents you doing much with it.

As an example, I currently hold some gold exposure. My favourite asset class has always been equities. One of the older UK unit trusts I hold is Fidelity UK Special Situations, launched in 17 Dec 1979. Between that time:

Gold has gone from $469.50 to around $1,700 up about 3.6 times in 30+ years.

FUKSS has gone from GBP 0.25 to around GBP 19.00 up about 76 times

Now if I'd been putting my money in gold all my working life, I'd still be doing so. I'd also still be working

Further, in real terms Gold is probably worth less now than at the start of this period, after factoring in inflation.

Yes gold does have some advantages, and I still think gold's fine for a bit of your money, and spreading risk, plus a few short games of musical chairs, as someone mentioned above. Long term, large holding - no thank you

Since 2001 FUKSS is up 125 per cent.

Since 2001 gold is up 700 per cent....... and the secular bull market in gold has a long, long way to go. Gold is only in phase 1. When it progresses to phases 2 and 3 its gains will increase massively.

If you had only allocated 15 per cent of your FUKSS investment to gold in 2001 you would have a total net worth TWICE the size of what you now have.

Fritter, you are cherry picking your dates. But had you bought it in 1980 for $850 and held onto it until now it would have to be worth over $2200 to break even after inflation. What's good for the goose. Or you could have sold it pretty much anywhere along the way to 2001 and lost 50% or more.

[mazd2]

Everybody knows that the gold/silver markets have been manipulated by the big central and commercial (jpmorgan,hsbc have been named in US litigation suits).

But that manipulation is gradually ending, perhaps in tumultuous fashion in the next year or two.

When that happens, gold and silver are going to the moon.

[midas]

. Couldn't imagine anything worse than being sat on bars of gold in my safe. Have tried but my computer doesn't take them

I couldn't think of anything worse than having all my assets represented in digital or paper format?

[fletchsmile]

Another of the most fundamental flaws for gold is in itself it generates no growth. Even a currency will generally pay interest. An equity share will pay dividends etc, and hopefully some capital growth. Over long periods of time, your money is therefore effectively "stuck" with gold, and prevents you doing much with it.

As an example, I currently hold some gold exposure. My favourite asset class has always been equities. One of the older UK unit trusts I hold is Fidelity UK Special Situations, launched in 17 Dec 1979. Between that time:

Gold has gone from $469.50 to around $1,700 up about 3.6 times in 30+ years.

FUKSS has gone from GBP 0.25 to around GBP 19.00 up about 76 times

Now if I'd been putting my money in gold all my working life, I'd still be doing so. I'd also still be working

Further, in real terms Gold is probably worth less now than at the start of this period, after factoring in inflation.

Yes gold does have some advantages, and I still think gold's fine for a bit of your money, and spreading risk, plus a few short games of musical chairs, as someone mentioned above. Long term, large holding - no thank you

Since 2001 FUKSS is up 125 per cent.

Since 2001 gold is up 700 per cent....... and the secular bull market in gold has a long, long way to go. Gold is only in phase 1. When it progresses to phases 2 and 3 its gains will increase massively.

If you had only allocated 15 per cent of your FUKSS investment to gold in 2001 you would have a total net worth TWICE the size of what you now have.

Fritter, you are cherry picking your dates. But had you bought it in 1980 for $850 and held onto it until now it would have to be worth over $2200 to break even after inflation. What's good for the goose. Or you could have sold it pretty much anywhere along the way to 2001 and lost 50% or more.

Indeed some rose tinted cherry picking there.

Gold bugs will quote "history", "thousands of years", "wouldn't have anything else" etc, and then when asked to back it up, will quote remarkably shorter time frames. Indeed gold is in fashion at the moment and over the last couple of years. Hence even people like myself dabbling

Would you mind have another go please fritter? Pick a 30 - 40 year period within our lifetimes to illustrate the benefits of why gold is the place to be.

[bTW doubling between 2001 to 2011, is a little better than the doubling it took gold in the 30 years plus from $850 in Jan 1980 to where we are today - suggest you don't pick that as a starting point ]

Edited November 2, 2011 by fletchsmile

[midas]

Gold bugs will quote "history", "thousands of years", "wouldn't have anything else" etc, and then when asked to back it up, will quote remarkably shorter time frames. Indeed gold is in fashion at the moment and over the last couple of years. Hence even people like myself dabbling

Would you mind have another go please fritter? Pick a 30 - 40 year period within our lifetimes to illustrate the benefits of why gold is the place to be.

[BTW doubling between 2001 to 2011, is a little better than the doubling it took gold in the 30 years plus from $850 in Jan 1980 to where we are today - suggest you don't pick that as a starting point ]

Before about 1990 both India and China's purchases of gold were negligible because both countries were effectively shut off from the rest of the world. It then took another decade for incomes of ordinary people in those two countries to provide the means to participate in the gold market. It's not surprising then that their purchases became more meaningful after these two economies properly opened up and the will continue to mop up despite your opinion to the contrary

Edited November 2, 2011 by midas

[letitbe]

Another of the most fundamental flaws for gold is in itself it generates no growth. Even a currency will generally pay interest. An equity share will pay dividends etc, and hopefully some capital growth. Over long periods of time, your money is therefore effectively "stuck" with gold, and prevents you doing much with it.

As an example, I currently hold some gold exposure. My favourite asset class has always been equities. One of the older UK unit trusts I hold is Fidelity UK Special Situations, launched in 17 Dec 1979. Between that time:

Gold has gone from $469.50 to around $1,700 up about 3.6 times in 30+ years.

FUKSS has gone from GBP 0.25 to around GBP 19.00 up about 76 times

Now if I'd been putting my money in gold all my working life, I'd still be doing so. I'd also still be working

Further, in real terms Gold is probably worth less now than at the start of this period, after factoring in inflation.

Yes gold does have some advantages, and I still think gold's fine for a bit of your money, and spreading risk, plus a few short games of musical chairs, as someone mentioned above. Long term, large holding - no thank you

Since 2001 FUKSS is up 125 per cent.

Since 2001 gold is up 700 per cent....... and the secular bull market in gold has a long, long way to go. Gold is only in phase 1. When it progresses to phases 2 and 3 its gains will increase massively.

If you had only allocated 15 per cent of your FUKSS investment to gold in 2001 you would have a total net worth TWICE the size of what you now have.

Fritter, you are cherry picking your dates. But had you bought it in 1980 for $850 and held onto it until now it would have to be worth over $2200 to break even after inflation. What's good for the goose. Or you could have sold it pretty much anywhere along the way to 2001 and lost 50% or more.

Indeed some rose tinted cherry picking there.

Gold bugs will quote "history", "thousands of years", "wouldn't have anything else" etc, and then when asked to back it up, will quote remarkably shorter time frames. Indeed gold is in fashion at the moment and over the last couple of years. Hence even people like myself dabbling

Would you mind have another go please fritter? Pick a 30 - 40 year period within our lifetimes to illustrate the benefits of why gold is the place to be.

[bTW doubling between 2001 to 2011, is a little better than the doubling it took gold in the 30 years plus from $850 in Jan 1980 to where we are today - suggest you don't pick that as a starting point ]

i posted this before but it relates to last 35 years would that do

tell that to people in Zimbabwie or people during wiemar republic or many of other massive collapses in fiat money 35 years ago the average wage or salary was around 3,000 gbp in UK a year a decent house cost 3,000 gbp and you could buy a decent house for around 400 onz of gold today the average wage/salary is around 25k gbp a decent house costs around 200k gbp and a decent house in uk costs around 200 onz of gold conclusion a decent house is now about 65 times more expensive in fiat money while in gold it takes 50% less gold. Even if youd taken gold cost then and put it into a high yielding account say generously giving 5% compound youd only have around 18k gbp and if you got say very hard 10% compound youd have around 60k gbp so your fiat money would buy at best 1/3rd of a house or at best around 60 onz gold instead of around 400onz you would have had in around 1974. Admittedly if youd bought gold in 1980 and sold it in 2000 your fiat money would have beaten gold by huge margin particularly since you get no yield except capital growth in gold. Ill stick to 50% property 20 stocks and 30% gold and leave fiat money to people like you until world clears its ridiculous debt. Of course I need to keep around 50,000 us $ cash for emergencies but anything over that I now rapidly convert to stocks gold or property. And for next few years at least I have more faith that my gold will keep up with inflation than fiat money giving what 3% or so if your lucky with inflation at 5% but IMO real inflation nearer 10% +

[fletchsmile]

Before about 1990 both India and China's purchases of gold were negligible because both countries were effectively shut off from the rest of the world. It then took another decade for incomes of ordinary people in those two countries to provide the means to participate in the gold market. It's not surprising then that their purchases became more meaningful after these two economies properly opened up and the will continue to mop up despite your opinion to the contrary

I thought gold bugs were supposedly masters of history. Back in the 1820's, China and India had the 2 highest country GDP (PPP's) is USD mios, the cycle is simply turning again

[fletchsmile]

i posted this before but it relates to last 35 years would that do

tell that to people in Zimbabwie or people during wiemar republic or many of other massive collapses in fiat money 35 years ago the average wage or salary was around 3,000 gbp in UK a year a decent house cost 3,000 gbp and you could buy a decent house for around 400 onz of gold today the average wage/salary is around 25k gbp a decent house costs around 200k gbp and a decent house in uk costs around 200 onz of gold conclusion a decent house is now about 65 times more expensive in fiat money while in gold it takes 50% less gold. Even if youd taken gold cost then and put it into a high yielding account say generously giving 5% compound youd only have around 18k gbp and if you got say very hard 10% compound youd have around 60k gbp so your fiat money would buy at best 1/3rd of a house or at best around 60 onz gold instead of around 400onz you would have had in around 1974. Admittedly if youd bought gold in 1980 and sold it in 2000 your fiat money would have beaten gold by huge margin particularly since you get no yield except capital growth in gold. Ill stick to 50% property 20 stocks and 30% gold and leave fiat money to people like you until world clears its ridiculous debt. Of course I need to keep around 50,000 us $ cash for emergencies but anything over that I now rapidly convert to stocks gold or property. And for next few years at least I have more faith that my gold will keep up with inflation than fiat money giving what 3% or so if your lucky with inflation at 5% but IMO real inflation nearer 10% +

Thanks for reposting. I assume it was more relevant to someone last time. Zimbabwe ... can't say it ever crossed my mind to put all my money in their currency. Weimar Republic? Now I know this old wizard has a reputation for having wandered middle earth and beyond, but it's a while since that one had any relevance to me either.

I think you have me confused with someone else. There is no way I leave all my money just sat as fiat currencies. A few posts above you'll read they are simply a means to an end, and by no means an investment in themselves.

[letitbe]

i posted this before but it relates to last 35 years would that do

tell that to people in Zimbabwie or people during wiemar republic or many of other massive collapses in fiat money 35 years ago the average wage or salary was around 3,000 gbp in UK a year a decent house cost 3,000 gbp and you could buy a decent house for around 400 onz of gold today the average wage/salary is around 25k gbp a decent house costs around 200k gbp and a decent house in uk costs around 200 onz of gold conclusion a decent house is now about 65 times more expensive in fiat money while in gold it takes 50% less gold. Even if youd taken gold cost then and put it into a high yielding account say generously giving 5% compound youd only have around 18k gbp and if you got say very hard 10% compound youd have around 60k gbp so your fiat money would buy at best 1/3rd of a house or at best around 60 onz gold instead of around 400onz you would have had in around 1974. Admittedly if youd bought gold in 1980 and sold it in 2000 your fiat money would have beaten gold by huge margin particularly since you get no yield except capital growth in gold. Ill stick to 50% property 20 stocks and 30% gold and leave fiat money to people like you until world clears its ridiculous debt. Of course I need to keep around 50,000 us $ cash for emergencies but anything over that I now rapidly convert to stocks gold or property. And for next few years at least I have more faith that my gold will keep up with inflation than fiat money giving what 3% or so if your lucky with inflation at 5% but IMO real inflation nearer 10% +

Thanks for reposting. I assume it was more relevant to someone last time. Zimbabwe ... can't say it ever crossed my mind to put all my money in their currency. Weimar Republic? Now I know this old wizard has a reputation for having wandered middle earth and beyond, but it's a while since that one had any relevance to me either.

I think you have me confused with someone else. There is no way I leave all my money just sat as fiat currencies. A few posts above you'll read they are simply a means to an end, and by no means an investment in themselves.

i thought you were questioning the long term value of gold and asked for examples of 30 years or so so mine was example you asked for. Was it you also questioning weather gold had beaten inflation anyway fact is over 35 years gold has kept its value while fiat money has gone down drain and even for short periods it gets eaten very quickly. SO what do you put your money into these days ??? property had its day I reckon but will be good long term over next 20 years stocks again had its day IMO although some of utility stocks paying 6% or so dividend are probably ok as well as stocks in agriculture oils and what people will always need. These days if I have spare cahs it goes into gold mostly and then if I see a property or stock I like sell it and buy that but I reckon its crazy to keep much cash for longer than 1 month or so given way the world is and those putting their money into government bonds are just IMO mad so gold is a good place I reckon for next few years at least until a new currency which cannot simply be printed like crazy is invented. So apart from cash if you dont have anything you particularly fancy where would you put say 200,000 us$ with some confidence it wont waste away quickly.

[letitbe]

i posted this before but it relates to last 35 years would that do

tell that to people in Zimbabwie or people during wiemar republic or many of other massive collapses in fiat money 35 years ago the average wage or salary was around 3,000 gbp in UK a year a decent house cost 3,000 gbp and you could buy a decent house for around 400 onz of gold today the average wage/salary is around 25k gbp a decent house costs around 200k gbp and a decent house in uk costs around 200 onz of gold conclusion a decent house is now about 65 times more expensive in fiat money while in gold it takes 50% less gold. Even if youd taken gold cost then and put it into a high yielding account say generously giving 5% compound youd only have around 18k gbp and if you got say very hard 10% compound youd have around 60k gbp so your fiat money would buy at best 1/3rd of a house or at best around 60 onz gold instead of around 400onz you would have had in around 1974. Admittedly if youd bought gold in 1980 and sold it in 2000 your fiat money would have beaten gold by huge margin particularly since you get no yield except capital growth in gold. Ill stick to 50% property 20 stocks and 30% gold and leave fiat money to people like you until world clears its ridiculous debt. Of course I need to keep around 50,000 us $ cash for emergencies but anything over that I now rapidly convert to stocks gold or property. And for next few years at least I have more faith that my gold will keep up with inflation than fiat money giving what 3% or so if your lucky with inflation at 5% but IMO real inflation nearer 10% +

Thanks for reposting. I assume it was more relevant to someone last time. Zimbabwe ... can't say it ever crossed my mind to put all my money in their currency. Weimar Republic? Now I know this old wizard has a reputation for having wandered middle earth and beyond, but it's a while since that one had any relevance to me either.

I think you have me confused with someone else. There is no way I leave all my money just sat as fiat currencies. A few posts above you'll read they are simply a means to an end, and by no means an investment in themselves.

i thought you were questioning the long term value of gold and asked for examples of 30 years or so so mine was example you asked for. Was it you also questioning weather gold had beaten inflation anyway fact is over 35 years gold has kept its value while fiat money has gone down drain and even for short periods it gets eaten very quickly. SO what do you put your money into these days ??? property had its day I reckon but will be good long term over next 20 years stocks again had its day IMO although some of utility stocks paying 6% or so dividend are probably ok as well as stocks in agriculture oils and what people will always need. These days if I have spare cahs it goes into gold mostly and then if I see a property or stock I like sell it and buy that but I reckon its crazy to keep much cash for longer than 1 month or so given way the world is and those putting their money into government bonds are just IMO mad so gold is a good place I reckon for next few years at least until a new currency which cannot simply be printed like crazy is invented. So apart from cash if you dont have anything you particularly fancy where would you put say 200,000 us$ with some confidence it wont waste away quickly.

heres your words I think ive put up a fairly good argument of benefits of gold over 30-40 year period you asked for

Would you mind have another go please fritter? Pick a 30 - 40 year period within our lifetimes to illustrate the benefits of why gold is the place to be.

[fletchsmile]

Letibe,

Thanks for adding further clarification. I hear some of your arguments better now - tho' Zimbabwe and Weimar republic detract from your main thrust. Now allow me to throw in a few more stats to the likes of yourself and Fritter.

From 1970 to Dec 2010. Returns ranked (Source Morning Star):

1) UK Equities +12.1%

2) Property - around 10.8% using your numbers of 3k to 200k

3) Gold + 9.4% (can be increased a bit if we cheat and take to current levels, but still under 10%).

4) UK Bonds +9.1%

5) UK Cash +8.1%

Now these don't look too bad for gold. This is unfortunately the sort of analysis people stop at, and is a little 1 dimensional. Some element of risk needs to be taken into account, what happens in the bad times, + portfolio survival rates if you're advising us retirees, we can store it and live off it. So:

A) The worst 5 year period of each of the above during 1970 to Dec 2010:

1) UK Equities -12.6%

2) Property = I don't have

3) UK Bonds -1.3%

4) Cash +3.2%

5) Gold??? I'm not sure eaxctly but the 21Jan80 to 5 years later was a whopping $850 down to $307.25. That's nearly 2 thirds of your money gone -63.8%. Leaving 36.2%

B ) Portfolio survival rates:

Let's make the assumption that someone withdraws 5% per year, so that is there target return rate.

In his worst 5 years the equity guy dips into his capital, as does the bond guy. Dipping into capital of 5 per annum for 5 years has a nasty effect on the recovery rates needed to get back. Depending on timings it's not unreasonable to say they would compound to loses of say a further 25% - 30%. Note 5 per year is taken and not simply 5% of the reduced balance. If I need 5 pounds to live this year, I probably do next year + inflation. {Incidentally why offshore portfolio bonds charge based on initial invested amounts and not variable balances}

This is where the bond holder such as Naam excels over the equity fan such as myself, and where negative returns come into play why cash and bonds are preferred. {remember: lose 5%, to 95% and you need to make back 5.3% to get to a hundred. lose 25% to 75% and you need to make 33% on your 75% to get back to 100}

Remember also the

The equity holder will be looking at losses of approx 40% (-12.6% less 25-30% , after taking out "5" in these years. Needing 40 on his 60 or 66% to get back to 100

The bond holder will be looking at losses of maybe 30% needing 30 on his 70 or 40% ish to get back to his 100

The cash guy. Well he's always had positive returns and maybe dips a little into capital, but not much

Now the poor gold guy who has 36.2% left has drawn 5x5, and is left with around 10% if he's lucky. There's not a cat in hell's chance of that leaving enough to generate returns next year to live on. Capital will last 2 to 3 years

Now you can argue a little on starting points and doing the maths. But bottom line is there's no way you can take 5 a year out of a portfolio that drops two thirds from 100 to 36 in 5 years, and expect to live on it.

BTW If anyone claims they'd "stuck money away" in good years. 9% p.a taking out 5% p.a leaves a balance to not quite meet the annual inflation rate

c) Portfolio survival rate for gold in practice:

It was over 20 years between that gold peak of $850 and even coming back to see that number again. That would be over 20 years of taking out of capital = dead

Sure gold has done well in the last 10 years.

However, I think the above fairly demonstrates that if you were living off your gold portfolio, as many people on here seem to advise, you wouldn't even have got to the last 10 years. You'd be dead. Most of the other asset classes might have a chance of scraping by, reducing expenses, braving it out, and waiting for the good times. In fact the GBP cash fiat guy, probably hasn't done too bad all things considered, and no doubt had less headaches.

Hence my referral to gold as useful for a short term game of musical chairs...

Edited November 2, 2011 by fletchsmile

[muchogra]

I usually don't speak to experts when I'm not loaded with booze. Now, I'm loaded because my home is threatened by flood due to mob who thinks they know what they are doing because they see on the surface without understanding what come into the equation. Same can be said about people who know a lot but fail miserably in TIMING - which means they are same, same, and more!

Excuse my loaded state that I have only gathered the followings, and I quote:

"Gold has gone from $469.50 to around $1,700 up about 3.6 times in 30+ years."

"Since 2001 gold is up 700 per cent..."

"But had you bought it in 1980 for $850 and held onto it until now it would have to be worth over $2200 to break even after inflation."

All y'all are correct, no doubt! While you realize you're correct in your argument, you never see, or learn, TIMING is the single most important factor especially when you possess the knowledge? Amazing!

Anyway, fleshfish is one who gives good advice! Many others expound after a certain thing has gone up double, treble, quadruple, or whatever and get all excited when it has come down 30 or 50 percent since....No fish for the whales kif there ain't no fish who think they swim well!...

[muchogra]

It has taken me decades to learn simple truths.

At your starting point - cycles that don't come often especially when you are middle-age - you assess what's coming in the coming months or year, you make a position. It's hard to explain and readers here won't accept neither because I don't speak the jargon though I invested long time ago as a hobby while making money the old fashioned way - I earned it.

I saw gold going up from 800 due to whatever reason I had then. Some could probably provide reasons why I felt that way cos I forgot! I traded along the way, gaining and losing on some, but my position was adding up (depending on how much I made). This happened at 1200 and 1400. I liquidated all between 1850 and entirely when it got close to 1900. After that, I have been clean, none whatsoever. I don't even want to talk about the silver when spot silver went from 18.5 to 0 from Feb to April. But there will always be people talking about it's undervalued. Why? Because it's been "punted" which they forget but now is down 30 percent, and they have forgot about the few hundred percent up before the 30% down. ... Equity is the same way especially in Thailand.