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Post by realisedurgency on Jun 20, 2015 21:53:12 GMT 7
Fundamentally I don't think gold is worth anything close to USD 1,200 an oz. It's just a piece of yellow metal to me. OK Looks quite nice to some people, and is a fairly inert metal that lasts and has a few purposes because of it. One day people will realise it's just a piece of yellow metal. The only thing that makes it worth $1,200 in my view is that so many people are willing to pay that for it. I hold some via ETFs for an alternative store of wealth, in the hope it might be worth something sometime when other things aren't. Cheers Fletch  I think it helps to view it as a currency due to its history and its stock to flow, and like you say it only has value because people believe it does, a large % of those people being central banks. I see it as competition to currency as a store of value due to its inability to be inflated at the rates a fiat currency can. And historically it has kept up with inflation albeit in a very erratic fashion. Also in Thailand I find it is so convenient and liquid. It makes a nice gift for the other half, a gift that will have value in decades time that can be passed on. Unfortunately I don't have an eye for fine art that will be of value in a couple of decades. Nor do I have the means for fine art, whereas thanks to the yellow lump's divisibility I can get my hands on a good long term store of value that has a long history of doing just that, storing value. What I am undecided is how much of it I should own? A book called 'The Permanent Portfolio' is on my reading list. The Permanent Portfolio allocation is: 25% Stocks, 25% Long Term Treasury Bonds, 25% Gold Bullion, 25% Cash Doesn't sound appealing to me but apparently it has done well over the past 40 years. Link below has a graph of historical returns to 2011. www.crawlingroad.com/blog/2008/12/22/permanent-portfolio-historical-returns/ |
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The Arrow
Vigilante
Vigilante
Posts: 3,034
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Post by The Arrow on Jun 20, 2015 22:44:10 GMT 7
Defensive portfolio should be:
2% cash
48% gold
30% beans
20% shotgun
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AyG
Crazy Mango Extraordinaire
Posts: 5,871 
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Post by AyG on Jun 21, 2015 10:04:25 GMT 7
"..Over the centuries, bullion traditionally lured demand as a protection of wealth during crises, including conflicts and periods of inflation.." Why do journalists and others repeatedly spout this nonsense? As the chart below shows, the value of gold fell during both the greatest crises of the 20th century: World Wars I and II. Attachment DeletedFigures are inflation-adjusted. |
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Post by realisedurgency on Jun 21, 2015 16:34:04 GMT 7
Ha it doesn't do well when the world is at war, but yet it is useful during such extreme times.Germany needed gold to pay for imports during WWII, accepting iou’s from the Germans at the time was seen as too risky. It might not be great during world wars but gold does do well when the dollar doesn't. Central banks(more trustworthy than the average journalist imo) state this as a reason for holding it. The Banque de France lists the following as reasons for holding gold: -First, security: the absence of any credit risk is an intrinsic quality of gold: gold offers full security as long as it is properly stowed in central banks’ vaults. -Second, liquidity: in situations of political turmoil or high global inflation, gold’s liquidity is unchallenged. Certainly, in circumstances of orderly financial markets, gold is not the most liquid of assets (even though it is probably the most liquid of commodities). But its liquid quality becomes apparent and increases as uncertainty grows. In this regard, the absence of a return on gold can be viewed as the price of its “option component”: contrary to most other assets, gold prices go up when things go wrong. -Third motivation for holding gold: diversification. Gold bears no interest coupon. If lent, the lending rate is relatively modest. Then there is usually a cost of carry for gold holdings. This is partially offset by the “option component” I mentioned before. But gold is also a very good diversification instrument. Indeed in the long run, the price of gold has shown a very low and even a negative correlation with the dollar (the first-ranking reserve currency) and with US Treasuries. So gold is very useful to build a diversified portfolio as it enables you to improve your risk/return profile. ------ As well as having a negative correlation with the dollar and US Treasuries it also has a negative correlation with the stock market. Erste Group/Incrementum release a gold report(goldbug porn) annually in Jun/Jul. They are an interesting bunch of goldbugs, they even have a gold versus beer chart in one of their reports! Some of their charts and links to their reports below: 2011 - Gold Report2012 - Gold Report2013 - Gold Report2014 - Gold Report
2015 - Gold Report |
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Post by Fletchsmile on Jul 6, 2015 19:01:35 GMT 7
Thought we might of seen a bit of a rally in gold over the last few days while China's stock market tanked, the Greece debacle continues, and other stock markets have generally eased off. Not to be though. One of those times when you really wonder is it worth it |
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buddahas
Crazy Mango
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Post by buddahas on Jul 6, 2015 19:04:59 GMT 7
I own 5oz of pure Canadian maple leaf. I wanted to buy more, but in Thailand there is this problem of storing it. Good thing because if I did I would be in a hole since the price collapsed.
I do believe in gold. Gold is going to be worthless until after the fact. Just look what's happening in Greece. Bank accounts insured up to 100,000 Euros. Yeah, right. Give me a break.
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Post by Fletchsmile on Jul 7, 2015 21:50:37 GMT 7
Silver just tanked by 6% today. No idea where that came from all of a sudden. Gold down about 1.5% - often difficult to guess - but -6% in silver seems a bit excessive
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rubl
Crazy Mango Extraordinaire
The wondering type
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Post by rubl on Jul 7, 2015 22:05:18 GMT 7
It looks like gold is losing its shine. What's your view? Is it worth holding? Where's it going? Cheers Fletch May I suggest a reliable source to ask this question? Did you already check with your wife  |
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AyG
Crazy Mango Extraordinaire
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Post by AyG on Jul 9, 2015 12:25:54 GMT 7
Silver just tanked by 6% today. No idea where that came from all of a sudden. Gold down about 1.5% - often difficult to guess - but -6% in silver seems a bit excessive Iron yesterday made silver look like an amateur: overnight, the price of iron ore fell 10.1 per cent, a tenth straight loss, to a fresh six-year low. The same source mentions that "a wide commodity index neared a 14-year low." It does't name the index, and I can't click through to the details. Fortunately for myself I don't invest in commodities for the same reason I don't invest (directly) in gold: the prices are a matter of opinion, not fact. Source: www.ft.com/intl/fastft/357341/fast-asia-open-201 |
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