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View Poll Results: Where will the price of gold by in 5 years?
Over the next 5 years gold will out perform the SP500 by 10% or more 18 32.14%
Over the next 5 years gold will be with plus or minus 10% of the SP500 16 28.57%
Over the next 5 years gold will under perform the SP500 by 10% or more 22 39.29%
Voters: 56. You may not vote on this poll

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Re: Gold
Old 04-08-2006, 01:39 PM   #61
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Re: Gold

interesting though is the fact that right now maybe the exception...we have rising rates and a falling cpi..(so the gov. says)...hense tips and i-bonds have been awful investments lately.
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Re: Gold
Old 04-08-2006, 01:40 PM   #62
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Re: Gold

Quote:
Originally Posted by mathjak107
interest rates and the cpi historically flow together.....the higher the cpi the higher the feds fund rate...an index can actually be constructed by merging the 2.
Ok, and what applicability does that have to the discussion at hand? All that tells me is that the fed uses the federal funds rate to fight inflation.

What does it have to do with the original point you made that "gold always has the same buying power", which appears to not be true?

And what does it have to do with gold as an investment?

All that chart tells me is that golds price hardly moved through drastic changes in inflation, the federal funds rate, several bull markets in both equities and bonds, several bear markets in both equities and bonds, and when it wasnt moving at all, it was unpredictably and violently volatile.
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Re: Gold
Old 04-08-2006, 01:42 PM   #63
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Re: Gold

Quote:
Originally Posted by mathjak107
interesting though is the fact that right now maybe the exception...we have rising rates and a falling cpi..(so the gov. says)...hense tips and i-bonds have been awful investments lately.

actually this is stagflation and is usually very short term before leading to some other economic condition be it further inflation or recession......rates and cpi dont seem to veer very long from each other
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Re: Gold
Old 04-08-2006, 01:45 PM   #64
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Re: Gold

well the truth is gold does buy the same thing today as it did 100 years ago.....i dont view gold as an investment.i view it as insurance against a market melt down or at the least just having a small part of it in something other than stocks and bonds.surley 5% is my max for gold and commodities.....will it perform as needed? beats me but id rather not find out....
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Re: Gold
Old 04-08-2006, 01:57 PM   #65
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Re: Gold

Ok, so just so I know that I'm not an idiot, what you're saying is that 'right now today, an ounce of gold buys as much as it did in 1906" and not
Quote:
Originally Posted by mathjak107
but for the most part does it still buy the same goods with 1 ounce of it for the last 100 years? yep pretty darn close
The former being true, and the latter being absolutely not true? And the former being an interesting tidbit but of no practical application towards the benefits of investing in gold?
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Re: Gold
Old 04-08-2006, 03:59 PM   #66
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Re: Gold

yeah thats it!
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Re: Gold
Old 04-08-2006, 07:20 PM   #67
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Re: Gold

Cute Fuzzy Bunny:

didn't take you long to pick-up the new picture ... but "cute"?

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Re: Gold
Old 04-08-2006, 09:08 PM   #68
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Re: Gold

I haven't been carefully following this thread, but I'll respond anyway . First, I thought the poll results were interesting. My interpretation: For the most part, I think about one-third of the folks here think gold may continue its run. I think this is very possible too. Then there's the crew that doesn't. They tend to not like gold or, in some cases, commodities A large portion of the folks here have made a substantial part of their money invested in the stock market. Plus a big part of that "growth" is due to financial stuff (specifically loose, borrowed, easier than historical money, whatever that is). Many people think such things will stay the same (see FIRE-calc and its believers)--that things will continue pretty much along the same lines of not just the past thirty years but also pretty much along the same lines of the past 100 years. And it may--unless you look deeper into the bear case, if you believe it. But one can easily see why the defense of the current system is going on; it has been very, very good to many, many people over the past 20-30 years. Even here at this poll, nearly two-thirds think gold holding is some sort of mild abomination. All of them have made their money inside that system, following the rules of the game.

Some gold bugs see a reckoning of sorts--that this way comes. They tend to see further out than 30 years. They know that EVERY paper currency has been debased by the government that controls it at some point in time. In fact, the first step is usually to sever the bond between paper money and gold. They always do it by stealth so that many, many citizens don't see it while its in process (see "inflation" CFB, and the doctoring of numbers that even you admit is happening). Oh, and the deficits on the Federal level and the huge debts, both personal and at almost every level of our society. Gold bugs tend to see an active conspiracy going on of printing, spending and lieing. This may or may not be true. The gold bug argument is that it is NEVER different this time, that once the debasing of currency gets going it is almost impossible to stop except with some sort of crisis (see So. America for their history of handling paper money). But maybe it's different this time for us

One can see the tilt of debt in a specific direction and a doom, gloom, or possible boom (explosion) on the horizon. Gold bugs, at least the ones I read, see only one or two possibilities: either we (as a gov't--and people who have voted for such) continue to grease everything with M1, M2, and M3 to keep things from falling apart; or we fall into a recession/depression until most of the debt is worked off. This includes Medicare and Social Security obligations too. We can go either way--maybe both. And it still may be a long dragged out process that won't even unfold in our lifetimes. That's a possibility. But some of my money is betting on sooner.

What I've mentioned above are all extreme cases, just for illustration purposes. Real events will probably fall somewhere in the muddle between. For me as someone who sees such negative possibilities in the future a moderate position in gold is a good thing. I don't think being 70-80 years old and having a house I can't afford to live in anymore, a gov't that may not be there for me in any way, and an inability to get a Wal-Mart greeter job because a deserving youngster needs it more is a good possibility for an ending. So I own some gold shares just in case money turns into you know what. Maybe I'll be able to buy a ton of it to burn and stay warm with 1/4 oz of AU--although it's probably filled with toxic preservatives that the gov't hasn't told me about--either. Or maybe I'm wrong.

I think a small position of 5-10% gold is a cautious and prudent portfolio choice if a few of the circumstances I mentioned are believeable or possible in your lifetime.

--Greg

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Re: Gold
Old 04-08-2006, 09:16 PM   #69
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Re: Gold

Greg...I dont know how to agree or disagree with what you said, as you covered a lot of ground.

But I didnt hear any explanation as to why you feel gold is a good investment in todays economy.

If your argument is that paper money will continue to devolve into a state of worthlessness...gosh thats possible but I cant see the benefits of gold over beaver cheese as a valuable product in what would surely be a mad-max like world.

Certainly holders of precious metal stocks or mutual funds would fare poorly. Direct holders of the metal...well...it would make a fine paperweight but as I've often said, if things devolve to the point where holding a physical somewhat rare ornamental metal is your ace in the hole... :P

Where we agree is that a small holding might make sense for highly diversified portfolios. Not because it tracks inflation, hedges the dollar or any other financial "reason", but simply because I know people will flock to it when they perceive its "right to do so".

At this stage where the price is run up, and given this commodities historic pricing behavior...its almost surely going to drop back to its mean and perhaps further. Therefore I wouldnt recommend taking a position at this time. Or holding an existing one.

But thats just my opinion...five or ten years, maybe twenty...will tell us for sure.
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Re: Gold
Old 04-08-2006, 09:27 PM   #70
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Re: Gold

Quote:
Originally Posted by Cute Fuzzy Bunny
Where we agree is that a small holding might make sense for highly diversified portfolios.* Not because it tracks inflation, hedges the dollar or any other financial "reason", but simply because I know people will flock to it when they perceive its "right to do so".
The reason not to hold it is that it is dead weight in a portfolio. With the exception of a spike in prices every couple of decades gold does not earn its cost of carry. And if you happen to buy it at the wrong time, such as after a run-up in price, your chances of earning a positive return in your lifetime becomes increasingly remote.

I agree with CFB that if the currency disappears as a medium of exchange, your gold ETFs will be worth about as much as my S&P 500 Index funds. Better off stockpiling powdered milk, canned tuna fish and ammunition.
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Re: Gold
Old 04-08-2006, 09:33 PM   #71
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Re: Gold

Politicians, in order to get their jobs will promise a whole bunch of stuff to a whole bunch of people, then print a whole bunch of money to pay for all this stuff.

People, commodities just reflect a Finite Resource being valued by an Infinite pile of Paper.

Gold, Oil, land, etc are not going up in value, there is just a whole bunch of paper with Dead Guy's faces on it being used as a media of transfer.

The amount of Gold available and the amount still in the ground is not that great, the amount of trees that can be harvested for paper and the number of printing presses, infinite.

We will soon hear Terms like Bazillion, or Magizillion, or Infinitiziom, and the average hourly wage will be $1,000.00

Paper with Dead Guys Faces on it.
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Re: Gold
Old 04-08-2006, 09:35 PM   #72
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Re: Gold

Quote:
Originally Posted by 3 Yrs to Go
Better off stockpiling powdered milk, canned tuna fish and ammunition.
What, you planning on shooting some sick birds?

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Re: stockpiling powdered milk, canned tuna fish and ammunition
Old 04-08-2006, 09:37 PM   #73
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Re: stockpiling powdered milk, canned tuna fish and ammunition

or as Cute Fuzzy Bunny suggests, beaver cheese
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Re: Gold
Old 04-08-2006, 09:49 PM   #74
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Re: Gold

Quote:
Originally Posted by 3 Yrs to Go
I agree with CFB that if the currency disappears as a medium of exchange, your gold ETFs will be worth about as much as my S&P 500 Index funds. Better off stockpiling powdered milk, canned tuna fish and ammunition.
I've always hated this argument (basically because it uses my technique of looking at the extreme), but then you draw a conclusion that while valid in the narrow sense fails on the practical level. For instance, if things get pretty bad you're probably going to run somewhere a little safer if you can. Just try taking all your powdered milk and beans with you. The Jews ran from Hitler ( ) and probably took the most concentrated value items they had--not tuna fish, I'll bet. A little gold in physical form is probably not a bad idea just in case.
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Re: Gold
Old 04-08-2006, 10:24 PM   #75
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Re: Gold

For Vietnamse village down the road from me when I lived in the area - gold hammered into sheets and sew into clothing was the best way to leave for America - if one could get out with anything - at least that was the story I was told in the 70's.
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Re: Gold
Old 04-08-2006, 10:40 PM   #76
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Re: Gold

CFB: In one sense you're right, that gold and beaver cheese are about the same. My primary reasoning for pushing gold is that if some sort of horrid mess happens, the middle class has very few defenses. They have their house, their portfolio, and their wits. And some have family, but my feeling is that the retired may be taking care of their kids and grand kids with the remainder of their pile. At 70 or 80 which you're quite a ways from, wits is not all you want to have to depend on if all else goes stinky. The rich will have their estates, special gated communities, land, Bahamas condo, etc., with hired help to assist. The really poor have tuned up their wits and skills way beyond my ability to match up in a direct confrontation. A bit of gold and cash on hand or easily accessible is good and possibly the only alternative to wits. Plus, I should see something like what I'm talking about coming and be prepared in advance. I'm already pretty much prepared for a stock market crash. The game is still young, and if we're lucky, the coming 2x4 will straighten us out quickly.

The big problem as you've hinted at is the timing issue. I personally think gold (after a substantial drop, probably some time this year, it may really take off). Because of the voatile nature of the beast, and it will remain an incredibly volatile substance far into the future, I've tended toward stocks such as CEF and GTU-UN.TO which just hold physical in Canada. I can stand some swing but not a huge portfolio drop. I buy for security not regular panic attacks, so I'm careful about amounts and how it moves. I think mining shares are almost pure speculation and because of their wild nature only keep about 40% exposure of all AU holdings. The CEF and GTU is for inflation protection, but I know that at some point it needs to be sold for whatever currency it pays out in. It's my primary inflation hedge at about 60% of total AU holdings.

It drives me crazy that someone might be worried about losing 4-5% in yearly compounding on 5-10% of their money squirreled away in gold. It tells me they are caught hook, line and sinker in the stutus quo and, in fact, may be pressing themselves right to the edge for that last little bit of money. They focus on the tree as the forest around them burns.

But I like T-bills too.

--Greg
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Re: Gold
Old 04-09-2006, 12:09 AM   #77
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Re: Gold

I see your point. I found my solution in zero debt and knowing that even if things get crappy but fall short of the mad max scenario, I'll still have at least a small leg up on everyone else. That whole "I dont have to outrun the bear, I just have to outrun YOU" idea. All I have to do it put food on the table, stick something flamable in the fireplace and drop by the river for a few buckets of water once a day...should it come to that.

In the meanwhile, the wife and I have broadly marketable skills, an income stream from our investments, and no need to sell any assets for really any reason.

But as an aside, I'd rather haul some powdered milk than a bunch of frickin gold if I had to "run for it". If it gets to the "run for the hills" stage, my money isnt going to be my biggest concern.
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Re: Gold
Old 04-09-2006, 01:41 AM   #78
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Re: Gold

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Originally Posted by Focu$ed
. . . yet it seems the mention of an investment in gold, a tangible asset and 5000 year store of wealth, brings out that kind of response.
Mud is tangible.
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Re: Gold
Old 04-09-2006, 03:58 AM   #79
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Re: Gold

im no gold bug either.but i do feel i should hold some ,no more than 5% ...even though an ounce of gold does buy pretty much what it did 100 years ago i wouldnt consider it an investment as my stocks have surpassed it many times over..its more an insurance policy against a total market and economic melt down.do i think that may ever happen? highly doubt it ...but non the less economically gold seems to theoretically at least hedge the bond portion of my mix against hyper inflation...since we never had anything even close to hyper inflation we have no clue as to how gold would react again when asked to do its job...if i understood hedging options with futures and calls and puts that may work alot better than gold even then too but since i dont i find hedging with gold and commodities funds easier and just another level of diversification in my mix....
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Re: Gold
Old 04-09-2006, 04:07 AM   #80
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Re: Gold

I started this post stone cold sober and am finishing four hours later in not the same condition. Sorry but it is cherry blossom season and I am blossoming.

One thing that hasn't been mentioned is national reserves. As has been said gold doesn't back currency. I read a couple of years ago govts were looking to dump their reserves. I don't know if this is still true. Also everyone has some gold coins from their father etc.

I wonder if there is a lot more potential supply then the gold bugs are thinking? Isn't this similar to what happened to the Hunt brothers and silver in the 80's?

Also I wonder how much of gold's demand is from actual uses instead of hording?

Anyway, my feeling is that the boat has left this and I may need to catch the next one or take a nap because the room is spinning.

Mike
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