121–130 of 208 posts
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When the revolution comes, I'm going to hide somewhere and wait for everyone to run out of bullets.
value(canned food) > value(bullets) > value(gold)
It's a different kind of value.
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You don't have to be lucky with gold. You could have bought in roughly 88 of the last 90 years and been perfectly well protected over time from the loss of value in the dollar.
Indeed, it's always good to sell near the peak of a speculative bubble. What is your argument that "this time it's different" for gold? That the current exceptional run-up of gold prices over the last decade is sustainable and the current inflated gold price will be the price floor for the remainder of the 21st century? If you're lucky enough to buy gold in the doldrums and sell it at the peak of a bubble, you make a…
I'm making the argument that the dollar is not going to increase in value over the next 10, 20, 30 years. Rather, the dollar is going to continue to lose large amounts of real purchasing power. Gold priced in dollars will rise accordingly.
Just calculating entitlement costs alone, the Fed will be required to massively devalue the dollar over the coming decades to keep a mass social panic from occurring due to defaults by the Feds on paying SS or Medicare et al.
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> stole all of America's privately held gold Except for the bit where he, y'know, paid for it at the then-prevailing rate. (Which was defined by law, since at that point the US dollar was still on the gold standard.)
Yes, and then immediately after taking the gold he changed the standard, so if you wanted to buy your original gold back you would have to pay more money. What happened was robbery.
The last 30 years of disinflation, stable growth were not a good time to own gold.
http://blog.streeteye.com/blog/2012/01/gold-as-part-of-long-...
http://blog.streeteye.com/blog/2012/01/are-long-term-asset-c...
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> stole all of America's privately held gold Except for the bit where he, y'know, paid for it at the then-prevailing rate. (Which was defined by law, since at that point the US dollar was still on the gold standard.)
.... only to devalue the dollar by 50% or so as soon as it was believed there was not a lot of gold left in private hands. While "stealing the gold" is not technically correct, eliminating 50% of the value of everyone's saving IS, and the confiscation of gold was done to eliminate the best (and popular) store of value. Of course, it was all legal -- but when the government makes the laws, that statement is completely…
'Best' no, 'popular' yes and that was crippling the economy.
1) that you can only count on this over longer timeframes (15+ years) 2) his argument assumes an inflationary environments (versus a deflationary environment like Japan and Europe) 3) if you don't have the skills to read a Exxon Mobile or Coca Cola income/balance sheets once a quarter and find it fun you should invest in index ETFs.
These three things are why average investors should have a mix of stock and bond index funds in their portfolio that is based on their timeline.
Shameless plug: I'm bootstrapping a startup to help average investors manage their portfolios. If you are interested in getting started with or managing an existing index oriented asset allocation investment plan, I'd love to help you at https://azul.io (free of charge to folks signing up before I get Stripe integrated)
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What kind of fun inflationary items? And please don't say gold or oil as it would be an extreme case of cherry picking commodities.
The Fed CPI excludes food and energy. So when milk goes from $1.50 to $3.60 per gallon over 20 years, they pretend that never happened. Or when gasoline goes from $0.75 to $3.59 over 30 years, they pretend that never happened. They pretend you don't need to eat food or drive anywhere.
Specifically, the CPI-U includes food & energy, but economic analysts and policymakers like to use the CPI-U for All Items Less Food and Energy because of the volatility of commodities.
The CPI-U however is still available and was last sitting at 3% for 2011. Again, that's with food & energy. http://www.bls.gov/news.release/cpi.nr0.htm
Not only that, but the numbers that exclude food and energy make inflation look higher than when they are included.
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Gold is priced in dollars. If the dollar loses real value, gold goes up. It's the same reason oil is $100, its baseline price is getting set ever higher, because it's priced in dollars. Price oil in silver or gold and you'll see that oil hasn't gone up in price, the dollar has gone down. It's not paranoia or speculation primarily driving the price increase, but the objective destruction of value represented in what a…
I know you're heavily invested in gold, but what you say is simply not true. The Gold-Oil ratio has fluctuated from upwards of 36:1 to 1:8 over the past 40 years. Further, if it were true then in 2009 when oil plunged from $140 to $50 a barrel, the value of the dollar should have shot up significantly. When gold dropped 20% last year, there wasn't a corresponding increase in the purchasing power of my dollar. You onl…
I'm heavily invested in my self. I own a business.
Which is also why in one of my posts, I said the best investment you can ever make is: you.
Tracking lines on oil and gold requires that you do so over an actual duration, not on select spot prices. Over time, oil and gold have tracked each other extraordinarily well.
Ultimately the point is really simple: check out a graph on oil and gold prices since 1970. To the moon. Why? They're priced in junk dollars.
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>Gold is up 87 fold over 90 years or so. There is no way to capture that kind of return out of stocks, other than to buy one stock $1 in gold 90 years ago: $87 today (by your number anyway) $1 in a basket of stocks that were traded to match the DOW starting 90 years ago: $174 today (from the article's numbers) Keep in mind this includes the recent 5 year period where gold has shot up and stocks have performed miserab…
The problem is you could have actually owned gold for 90 years. Average Joe could have bought gold and held it. You could not have owned the Dow index for 90 years and then left that to your children or grandchildren. Would you like to still be holding Polaroid or Kodak? Or perhaps just bought and held the classic Dow index perpetual GM? You would have gotten wiped out in the Dow shuffling. The Dow gets to drop somet…
I don't understand why this is a problem.
You seem to be arguing that if you were a person of average wealth, thinking about investment 90 years ago, gold might have been a reasonable choice.
But if I want to invest today, investing in an ETF will almost certainly give me far greater return than gold.
I don't think that Buffett is saying that stocks, at any given point in time, will deliver you better returns over a given time period than gold or bonds. He quite clearly notes that there are times when bonds are beaten up and they'll offer a great return. Buffett, being a virtuoso, variously reaps returns from derivative contracts, insuring sweepstakes prizes, and solar farms. He once bought a boatload of silver an…
As the money supply increases, all currency is devalued and everything that's denominated purely in currency loses value as well. This is a gross oversimplification. The monetary supply can increase without inflationary effects as long as there is a corresponding increase in the production of value in an economy.