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Old 09-30-2007, 08:15 AM   #21
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Originally Posted by teejayevans View Post
Gold was $895 in 1980.
Gold doesn't pay dividends.
Gold is the worst investment I can think of.
Gold isn't an investment.

Gold is a hedge against things going to hell in a handbasket in terms of inflation and the dollar. In a traditional economic depression it would be a horrible choice. In a typical economic depression, cash is king. The question, though, is: if a depression is coming and is triggered or exacerbated by staginflation and/or a tumbling dollar, then what?

"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 09-30-2007, 07:06 PM   #22
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Maybe protectionism? Whatever it is, it will have a different spin than what happened in the past.

Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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Old 09-30-2007, 09:38 PM   #23
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Well, it's all a gamble. The great depression was world-wide, but who's to say that the US alone couldn't have a major setback. And, with the number of multi-national corporations based here, would that affect investments?

Could we have deflation from falling housing prices and then inflation from a falling dollar?

Are we so dependant on imported goods now that we can't even move to a protectionist position now?

Is China able to hold us hostage with the $1.5 trillion in dollar reserves? If they decided that dollars were a bad hedge, or if they wanted to cause some sort of backlash, would they dump the dollars on the market or slowly switch to something like euros?

With the Saudi's sitting on $800 billion in dollar reserves, how at risk are we for oil being repriced in euros across the board by OPEC?

Let's say everyone dumps currency, are we at risk for hyperinflation? If we enter a period of hyperinflation, is gold still an effective hedge?

Is it possible that the future could be much worse than the future? Is it conceivable that the US would switch to barter or even the euro as a means of commerce?

Personally, I'm not smart enough to know if I'm even thinking of the right things much less able to know what the outcome would be. So, I take the last depression into account, understand that we came out of it, and just stay the course I'm on.
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Old 10-01-2007, 01:51 AM   #24
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Originally Posted by teejayevans View Post
Gold was $895 in 1980.
Gold doesn't pay dividends.
Gold is the worst investment I can think of.
Not a gold bug myself. Gold is not a great investment... Some speculate on it and the price moves.

It can be a hedge when the financial stability of a country (or world economy) is a concern.

Some would say that a small portion of the portfolio in precious metal is not a bad way to go for diversification (low correlation). One can rebalance to keep it at the appropriate level and take some profit if it goes up.

I am thinking about it seriously. But I would not enter the market now. I am not concerned about pending doom. However, once that sector cools way down I may do so... I am a contrarian (may take 5-10 years). I will probably be using an ETF or VG fund and hold perhaps <= 5%.

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