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Gold hits $875
Old 01-08-2008, 09:10 AM   #1
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Gold hits $875

Got gold?

"The weak US dollar and a skyrocketing oil price have boosted the precious metal as market players look for an alternative to the most common source of cash reserves and a hedge against inflationary pressures, while the economic uncertainty emanating from the subprime debacle has seen gold reassert itself as a store of wealth in times of turmoil."

"JP Morgan analyst Michael Jansen, adding that he expects gold to trade in a range between 800 usd and 950 usd an ounce in Q1 08."

Metals - Gold hits all-time high above 875 usd on weak dollar, oil bounce UPDATE - Forbes.com


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Old 01-08-2008, 02:09 PM   #2
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so, from it previous high (Jan, 1980 ?), the average annual return has been ...? how much?! oh.
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Old 01-08-2008, 02:17 PM   #3
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What is the return from 1980?
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Old 01-08-2008, 02:27 PM   #4
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Basically if you bought gold in 1980, adjusted for inflation, you'd have lost half your moneys purchasing power by now. And you'd have had to have been pretty patient between then and now to see it come back that far.
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Old 01-08-2008, 02:36 PM   #5
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Thanks, Guess Im fairly ignorant when it comes for commodities. I would have never guessed gold has done so bad.
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Old 01-08-2008, 02:46 PM   #6
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But if you bought it in 2001...

Anyway, I wasn't advocating buying gold for investment purposes. I inherited a few ounces (bullion) years ago that I keep stashed away and just like to follow it (and other precious metals) for fun.

Thought some others might as well.
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Old 01-08-2008, 02:52 PM   #7
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It might be fun to have some bullion stashed away. Anyone know how one goes about buying it?
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Old 01-08-2008, 02:56 PM   #8
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I would have never guessed gold has done so bad.
Except for the spike around 1980 when people got jittery about inflation and for some reason thought gold might be a solution to that problem, and the advent of modern portfolio theory (which advocated a ~3% holding in precious metals) as a widely adopted standard investment strategy in the late 90's/early 2000's, gold hasnt been very interesting to own unless you like losing money.

Broad based holdings of commodities have some advantages, at least they did historically before you could buy commodity ETF's.

Hard to say going forward if they're good investments based on their history of reacting to unexpected inflationary situations or if they're going to become in general an emotional/behavioral investment like gold
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Old 01-08-2008, 03:01 PM   #9
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It might be fun to have some bullion stashed away. Anyone know how one goes about buying it?
Go buy some coins at your local coin dealer. Better still, buy one, wait a month or two and then try to sell it back to the dealer.

Might be an interesting experience in capitalism.

If you just want to jump to the answer and avoid the lesson, my FIL bought a bunch of gold coins a while ago and since the price has gone up, has been making a mild to moderate effort to sell them. None of the coin dealers in town including the one he bought them from is interested in buying them.
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Old 01-08-2008, 03:07 PM   #10
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If you buy bullion you can try selling back to high end jewelry stores. They'll often make a deal. Don't know if they'd buy coins to melt.
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Old 01-08-2008, 03:14 PM   #11
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Back when gold peaked (1980?) I sold my class ring.
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Old 01-08-2008, 03:30 PM   #12
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I'm already pretty much out of gold, though I wish I weren't. When my last small miner got taken over, I just didn't find anything that seemd to have the value that I think I can see in financial stocks.

Of course the market has been strongly disagreeing with me on this so far.

By the way, all the "Yeah, but how about return since 1980" is ridiculous.

Do you wear a condom all day long or only when you need one for protection?

It was easy to buy gold stocks in the early 70s, and sell them perhaps not at the top but at a decent gain before the top. It was also easy to buy gold back at its 2002 lows around $250-$300. For me at least it is harder to buy now, not because it may not keep right on rising, but because I also know that there is alot of air below. It might be a good entry for someone who feels competent with the momentum approach.

I am of the "Hard to get killed falling out of a basement window school", mainly because I don't trust myself to get it right. I do however trust others to often get it spectacularly wrong.

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Old 01-08-2008, 05:57 PM   #13
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Go buy some coins at your local coin dealer. Better still, buy one, wait a month or two and then try to sell it back to the dealer.

Might be an interesting experience in capitalism.

If you just want to jump to the answer and avoid the lesson, my FIL bought a bunch of gold coins a while ago and since the price has gone up, has been making a mild to moderate effort to sell them. None of the coin dealers in town including the one he bought them from is interested in buying them.
Well, now I feel dumb. Why wouldn't the dealers want to buy them back? The price has gone up so they could sell them to someone for more than they would have paid your FIL. :confused:
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Old 01-08-2008, 06:10 PM   #14
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i inherited a few pretty maple leaf coins but i used them to update the house.
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Old 01-08-2008, 06:35 PM   #15
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Basically if you bought gold in 1980, adjusted for inflation, you'd have lost half your moneys purchasing power by now. And you'd have had to have been pretty patient between then and now to see it come back that far.

id love to figure out though had you bought it in 1980 at 800.00 bucks but rebalanced your portfolio all those years buying cheaper and cheaper gold all along just how you would have faired now
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Old 01-08-2008, 06:38 PM   #16
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id love to figure out though had you bought it in 1980 at 800.00 bucks but rebalanced your portfolio all those years buying cheaper and cheaper gold all along just how you would have faired now
Would have sucked if you were in the nest egg consumption years
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Old 01-08-2008, 06:57 PM   #17
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Because we could and because we tend to cover bases we bought some Philharmonics back in '99 to put with our barrels of water , propane tanks, kerosene lamps, .22 shells, and such like. Because they are pretty and we suffer from inertia we haven't done anything with them. The price goes up and down. In that respect it seems a bit like i imagine owning bonds would be like - as long as you hold to maturity then the rise and fall of the bond value before maturity is meaningless and the bond is just like a CD. 'Course there's no guarantee that gold will be worth any set increase, but what it does before you sell doesn't mean much. It is pretty and heavy though. CFB - has your father-in-law tried MONEX to sell his coins or is he just trying small local coin dealers?
Or these guys up in Portland Or? Gold Coins and Bullion Dealer - American Gold Eagle, Canadian Maple Leaf, Panda and Krugerrand Gold Coins
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Old 01-08-2008, 07:28 PM   #18
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id love to figure out though had you bought it in 1980 at 800.00 bucks but rebalanced your portfolio all those years buying cheaper and cheaper gold all along just how you would have faired now
Thats easy. The money you invested in 1980 would be worth half today. The money you put in since then would have barely broken even vs the CPI after the recent uptick.

For the last 20 years you would have been taking money away from appreciating assets and burying it in this giant loser.

Lets not forget that this "asset" pretty much did nothing PRIOR to 1980. For decades and decades.

CL - I'm sure he could sell them if he really wanted to, but he's a busy guy. I think the point is that the dealers have plenty of inventory and are looking for the price to head south. Holding a huge mound of depreciating inventory isnt good business. Whats telling is that he didnt ask for market price, just what they'd give him. "Nothing. Dont want them right now. Have all we need. Ask again later.".

I'm sure some of the larger gold handlers would execute the transaction at market, otherwise they'd have a heck of a liquidity problem.
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Old 01-08-2008, 08:56 PM   #19
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Lets not forget that this "asset" pretty much did nothing PRIOR to 1980. For decades and decades.
Very catchy statement until you remember that the US government controlled the price of gold for those decades and decades; until 1971 when President Nixon refused to redeem $s for gold, even from foreign governments.

At the time of gold’s release, it was selling at $35. From there to the present, a period of 36 years, really doesn't look too terrible even with absolutely zero tinkering.

If you bought it when it was uncontrolled, and held to today it returned 9%, according to Excel. Not half bad, for a truly uncorrelated asset class

Of course, ymmv.

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Old 01-08-2008, 09:58 PM   #20
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I never thought I'd miss Nixon.

I think the key word there was "uncorrelated". I still havent heard anyone explain to me the correlation (or lack thereof) for gold to other asset classes. I appreciate that its uncorrelated, but so are loofah's and hubcaps. For the last 35 years its shown its lack of correlation by losing value (real and unadjusted) while everything else made money. Usually you want uncorrelated asset classes where one goes up while another goes down. Or at least have it go up once in a while, a while being a little less than 20-25 year periods.

On the other hand, I have this weird thing about collecting pots and pans, so who the heck am I to question?
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