Is Gold worth owning?

[eta2020]

Quote:

Originally Posted by calmloki My Mom owned shares of Rath Packing, which operated from 1891 to 1985. "Through two world wars, stock market panics, depression, and drought, the company had failed to show a profit in only four of its years". Their Blackhawk Indian chief emblem was omnipresent in any grocery meat and deli area. Pretty high quality stock. Then they went bust and weren't worth anything. Don't think that has happened to gold in like, ever? For hundreds or thousands of years? Mom also had Enron through the bust, and we had GM and BofA. (can you tell we are real stock pickers?) All fine stocks until they weren't. Gold holds a different role in a portfolio.

40 Bucks to $10 Million: What Warren Buffett Can Teach You - DailyFinance

She should had bought 40 Bucks of KO in 1919 and she would end up with 11 Million today .

I wonder what is value of 40 dollars of Gold from 1919. Is it 5000 bucks or 3000? Looking at some charts on internet looks to me like about 3000 bucks. And if you look at inflation from 1919 till today it very well may be that 40 bucks of gold from 1919 is worth just about 40 bucks in 1919 dollars today So one earned no real money in it.

But lets say we are not that smart. So we put money into S&P 500 Index. Well feed this into historical returns calculator and get ready for pleasant surprises.

http://dqydj.net/sp-500-return-calculator/

[unno2002]

For those contemplating “paper gold”, note that there is not enough physical gold on the planet to make good on all of the outstanding contracts.


For those contemplating physical gold, note that there are many reports of fake coins, bars, etc. Some of the best fakes have a tungsten insert with a thick enough gold coating that chemical tests show the gold to be real. I’ve read of large dealers and even banks being scammed with these fakes. It would be difficult for an individual to be certain of what they are getting.


Diverging, I understand that even US “juke silver” coins have been faked.


So, opinion, I used to think some gold or silver would be a good investment against prospective high inflation, but I gave up on the idea.
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[gerntz]

Quote:

Originally Posted by eta2020 I would rather own high quality equity that grows dividend faster then inflation rate like PEP or CL.

For the equity part of my allocation, me too.

[gerntz]

[QUOTE=unno2002;1584298]For those contemplating “paper gold”, note that there is not enough physical gold on the planet to make good on all of the outstanding contracts.

[QUOTE]By "paper gold", do you mean ETF's backed by physical gold ounce for ounce, or options? Agree with you on the latter. Those are the primary cause of so much volatility.

[eta2020]

Quote:

Originally Posted by gerntz For the equity part of my allocation, me too.

I allocate 100% of my money to equity. At age 50 no regrets so far.....

[haha]

Quote:

Originally Posted by samclem The stock paid dividends 96% of the time? Gold pays dividends 0% of the time, right? The true value of gold based on its utility (use to industry, etc) is a small fraction of its market value. The balance is due to very fickle demand based on . . .sentiment, habit, belief that another buyer will eventually be found at a higher price, whatever. But in many ways it is just as much a "fiat currency" as paper money.

Except that its supply is constrained. Also, dollars are a proven loser over time, gold is so far and for long time, a proven winner. Not a moon shot, but not bad.

Ha

[haha]

Quote:

Originally Posted by unno2002 Diverging, I understand that even US “juke silver” coins have been faked. _______________________

You mean junk silver?

[CoolChange]

Quote:

Originally Posted by haha Except that its supply is constrained. Also, dollars are a proven loser over time, gold is so far and for long time, a proven winner. Not a moon shot, but not bad. Ha

Similar to my thoughts on gold. My PM exposure (currently just gold but considering adding silver) is basically insurance/ballast in my portfolio: An annoying drag on performance when everything else is hitting on all cylinders but hopefully protective if the markets and/or dollar take a nosedive, inflation ticks up significantly, etc.

For myself, I do not physically take possession but use GTU fund.

[Totoro]

Gold as a proven winner?

It was for five short years in the late 70s and early 80s. Then a big fat loser until 2002. The last ten years it was back in business. Recently, not so much.

Gold Price History

and in real terms:
Historical Gold and Silver Prices - 100 Year Chart | MacroTrends

All of that gold is still in inventory. And some of its value is cultural buying by Indians (dowry) and Chinese.

Might as well invest in lottery tickets and hope you hit it big (my not so humble opinion).

[gerntz]

Quote:

Originally Posted by eta2020 I allocate 100% of my money to equity. At age 50 no regrets so far.....

Good for you. I have no regrets owning GLD.

[gerntz]

Quote:

Originally Posted by Totoro Gold as a proven winner? It was for five short years in the late 70s and early 80s. Then a big fat loser until 2002. The last ten years it was back in business. Recently, not so much. Gold Price History and in real terms: Historical Gold and Silver Prices - 100 Year Chart | MacroTrends All of that gold is still in inventory. And some of its value is cultural buying by Indians (dowry) and Chinese. Might as well invest in lottery tickets and hope you hit it big (my not so humble opinion).

Your charts show holding gold is way better than holding cash & by inference, low interest CD's. I don't see your point.

[Dash man]

Gold is a hedge against a financial crisis such as the collapse of the dollar. Not so much as an investment.

[Rothman]

No gold is not a safe hedge in my view, it's more of a speculative alternative currency play. Gold has some industrial use like other metals but that is such a small part of the demand it's not really consequential in valuation.


Sent from my iPad using Early Retirement Forum

[gerntz]

Quote:

Originally Posted by Rothman No gold is not a safe hedge in my view, it's more of a speculative alternative currency play.

Good way to look at it. Doing so thus makes holding US currency/fractional % interest rate CD's/bonds way more speculative since 1975.

[Empresario]

There could be a time when owning some gold could be quite useful. Same can be said about land. Some very caution folks probably own gold, land, munitions, etc. And. They may ultimately be the wise ones. I do not own gold.


Sent from my iPhone using Early Retirement Forum (that's why it's brief!)

[eytonxav]

We recently inherited some US gold coins that were appraised at ~ $16K, however, the value is more determined by rarity than by the value of the gold content. We plan to keep the coins as a collectible or diversifying store of value. Also, have a small allocation to GLD in my portfolio, probably 1.5% at most.

Have other assets in firearms and lead in case SHTF.

[imoldernu]

Not specifically, or ONLY for gold, some interesting advice extracted from Bank of America guidance.

It’s Time to Hold More Cash and Buy Gold - GoldCore Gold Bullion Dealer

Quote:

Gold is a regarded as a hedge against market turbulence by Bank of America who, in a note to clients, advised holding gold and paper currency at this time. Bloomberg report that Bank of America Merrill Lynch describe the markets as being in a “Twilight Zone” – the zone between the end of QE and the Fed beginning to raise rates to try to bring normality back into the markets. The note highlights two problems with raising rates which are prolonging this sojourn in the Twilight Zone. The first is that the real economy in the U.S. is not currently strong enough to withstand a rise in interest rates. The second is that raising rates could cause a shock to the markets and the economy as the practically free money juicing the markets comes at a more realistic cost and some government, corporate and household debts become unserviceable. For these reasons, Bank of America believe that the Fed is far from taking action to return the markets to normality and “the investment backdrop will likely continue to be cursed by mediocre returns, volatile trading rotation, correlation breakdowns and flash crashes.” To deal with this they advocate adding gold to one’s portfolio along with higher levels of cash. Citing factors such as liquidity, profits, technological disruption, regulation, and income inequality they say there exists a potential for a “cleansing drop in asset prices.”

more.....

[Running_Man]

Quote:

Originally Posted by Totoro Gold as a proven winner? It was for five short years in the late 70s and early 80s. Then a big fat loser until 2002. The last ten years it was back in business. Recently, not so much. Gold Price History and in real terms: Historical Gold and Silver Prices - 100 Year Chart | MacroTrends All of that gold is still in inventory. And some of its value is cultural buying by Indians (dowry) and Chinese. Might as well invest in lottery tickets and hope you hit it big (my not so humble opinion).

According to the chart you linked unless the gold you hold was purchased between July 1979 and August 1980 or after Dec 2009 you are presently ahead on an inflation basis on your purchase of gold. Anyone holding on to currency would be far behind. There are no lottery tickets older than one year that hold any value.

[unno2002]

Regarding the article at the link, it seems to indicate there is up to 228 claims for every ounce of gold available...

http://www.zerohedge.com/news/2015-09-09/something-just-snapped-comex


Given the whopping progressive currency creation in recent years, I found it surprising that gold and silver did not skyrocket. I guess the situation at the COMEX sort of explains it. It looks like most investors / speculators who buy some gold, don’t want to actually have the gold delivered to them, they prefer to just have it on the books in their account, with the gold “safely” held somewhere else. That way they can buy/sell with computer clicks, no shipping or assay (purification verification) involved.


A problem is going to come up though if we reach a point where “too many” people decide they want their physical gold. Only the first few are likely to actually receive the gold they think they own.


How many? At a 228 : 1 ratio, if roughly 8/10% (eight tenths of one percent) of gold “owners” wanted delivery, the supply would be gone. I suspect that well before that,

“Someone” would step in and in some manner halt the outflow.

If you can’t hold it in your hand, you don’t own it

[prudent_one]

I don't know what's the general buzz is out there, but three relatives approached me over the holiday weekend and asked if I would get them some gold. They know I have connections to get it at a good price but all of a sudden this big desire to get some gold? And these aren't people who follow markets.