Silver and Gold Prices

So what? Some stocks don't pay dividends.

Everybody can invest however they see fit, none of us can see the future anyways. Silver/gold may be a better investment in the next decade than the stock market/bonds ect. or it may not.

Fact is no one knows for sure.

 

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Sorry, I didn't mean to data mine (even though that is exactly what you did by picking the late 70s), I misread your message. I thought you said 1970s. Even if you pick 1979, the price of gold quickly doubled the next year. In 1979 the average price was $306, in 1980 it was $615.

I do agree with what you are saying about 2017 (short term). I could see gold prices back down in the three digits. Again, I do not plan on selling anytime soon. If the price falls enough, I will just buy more.

 

Exactly right Tinpot!

Another wrinkle to add into these demographics is that the younger generations are crippled with student loan debt. A lot of them are waiting to pay down (or off) their loans, until they are in the housing market. Of course, if you are wealthy enough to own real estate, a pretty penny could be made on renting, because basically an entire generation is too broke to buy.

 

I remember almost just a couple of decades ago, gold was at $390 something and almost no one wanted to buy as it had been going down for the previous 10-12 years, I received a windfall event and my buddy and I went to the big city and bought 'some' . The dealer was happy to see us, as most coming in wanted to sell, and he was surviving on slim premiums, so we got some great deals on Saints and other classics. Went the next year, but he was gone. My point is, almost everyone says they will buy, buy, back up the truck as it starts down, but after several years, many painfully finds they need braces for the kids, mom needs surgery, the company is closing down, etc. and most have no ready reserve. If they take it out of their IRA, they have to pay the taxes, etc., so the pm may have to go for much less than paid. Many think, well if I buy mostly PM now, I will diversify later in life. The old saying " Man plans, God laughs" applies. Good Living!

 

Right, but many do. And growth stocks are growing a business that will lead to future cash flow growth.

This is a free country, anybody can do what they want. As an investment professional (CFA, CFP) with 30 years of experience, I am simply saying that very few fortunes or retirement plans have been built on precious metals. I myself have some gold and silver bullion...coins....etc. But they are a hedge against disaster and economic chaos (EMP, China moves on Taiwan, 3 of Top 10 banks fail on the weekend, etc.).

Making investment decisions based on 5-sigma or 10-sigma events is not rationale.

 

You are correct regarding the USD, but please consider the entire "sorry state" of the world economy that keeps the dollar as the "bell cow". The USD is the second best performing commodity YTD at 10%.

A quick and depressing visit to The U.S. National Debt Clock denotes the current U.S. debt at $18,158,480,178,157.00. This equates to $56,715 per each U.S. citizen. Our national deficit has increased an average of $2.35 billion per day since 9/30/12. It's just the way that we do business.

Many on this board view "speculation" as a dirty word, but I am going to "speculate" that this cannot continue indefinitely.

We can only use our faculties to try to discern direction and proper course. Please remember that very few guarantees exist in life. "interest & dividends" are not always the panacea. What is real estate actually, it's a recorded piece of paper with abstract information regarding the property and naming an owner. This process guarantees simplicity in attachment of property.

In times of national duress, strange things happen. We're all familiar with FDR's Executive Order 6102 making ownership of gold illegal until 12/31/1974.

There is no concise or correct course of action today. Use thought, speculate, and keep your powder dry.

 

Same with stocks -- or bonds.

Nobody wanted Treasuries or CD's or Munis when they yielded 15% in 1981 -- cause they were going to 20% 'pretty soon.'

Same with stocks 6 years ago in March 2009.

 

Greece, a 3rd-rate economy and NOT a reserve currency nation, started going down the toilet in the 1980's and didn't implode for 30 years.

If Greece can keep things going for 30 years, how long do you think the U.S. can ? I doubt your children or even grandchildren would see the Day Of Reckoning.

Debt/spending are a problem, but we are the best house in a lousy neighborhood.

FDR also interned Japanese-Americans but if I was Asian, I wouldn't be worrying.

Americans were poor and most didn't own gold in 1933. It would never happen today -- did you see the reaction to revoking 529 plan benefits, something that affects only about 5% of the population, maybe less ?

Gold/PM ownership is much higher.

 

Here is a compilation of National debt...Hmm, it seems that of the top 4, (US, UK, Germany, and France) the US is the best per capita, Look at the European countries. Luxenbourg is over 3.5 million USD per capita. Switzerland is about 3 X the US. So I guess it is the way most countries do business with each other.

http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

 

My point in using 1979 was to show how arbitrary start/stop points can bias results.

Rolling periods removes that bias, and on that score, gold and PM's do mediocre at best, poor for the most part.

 

Those numbers are 'off.'

I don't know what is going on, but no way the U.K. -- with a population about 1/5th ours -- has half the debt in the aggregate.

My guess is it includes financial debt, which distorts the numbers up for the UK since London is a global finance center for Europe, Asia, and the MidEast.

 

(Cited from: https://www.cointalk.com/threads/silver-and-gold-prices.260535/page-5)

WOW! I am reborn, truly have experienced an epiphany!

I am ashamed of my childish timidity. Thank you, Goldfinger. That Greece comparison was spot on. If a country with an olive based economy can hang for 30 years, surely the U.S. would receive massive world support from our friends and allies. I bet they would carry us for at least 2 centuries.

I am converted, crossing to the "Sunny Side of the Street" & "Whistling a Happy Tune". So long to the 7.5% PM (insurance) position. Back into the 17,800 dow for some dividend sniping. (Thoughts on Detroit Edison at $78 with 3.5% yield? Plenty of potential in Motor City growth!).

Only wish I had come to this forum sooner, I have been blessed with a statement of assurance not only for myself & children, but even my grandchildren. One doesn't get such an assurance often in life.

One cannot ignore such advice from a "professional" CFA/CFP (LUTCF also?) with 30 yrs. experience. It's not often that the "smartest kid in class" shares his wisdom at no charge.

Unlike equity and credit investments, bullion does not create growth. I can only apologize for my pagan speculation and lapse of faith in our leadership. Calling the broker!

 

No you said specifically, "If you bought into gold late in the 1970's it took you forever to break even even if you bought yearly."

I'm not letting off the hook that easy. But I do agree that cherry picking dates may not show the entire story.

Now for your next point: "gold and PM's do mediocre at best, poor for the most part." I will honestly take a random year, 1986 my birth year (since bonds are popular gifts for newborns), and let's see how precious metals performed.

Gold in 1986 - $368
Silver in 1986 - $5.46
Platinum in 1986 - $425
Palladium 1986 - $115

Gold today - $1154.30
Silver today - $15.58
Platinum today - $1118
Palladium today - $791

$1154.30/$368=3.13
$15.58/$5.46=2.85
$1118/$425=2.63
$791/$115=6.88

$50 savings bond in 1986 - $25
$50 savings bond purchased in '86 cashed in today - $108.84/$25 = 4.35

I would say that these are in the same ballpark as the bonds. And one key advantage of the precious metals: if the prices rise to a price you are comfortable at selling, you can at anytime without penalty. Not so with savings bonds. You have to wait until they mature.

 

Sarcasm noted. Ha-ha-ha-ha.

The point is that economies just don't implode, especially reserve currencies. I share your concern with spending/debt but it isn't a problem for the next few years or even for the next couple of decades.

Mathematically, the turning point appears to be about 170% debt/GDP and we are nowhere near that level.

If you think PMs will outperform a diversified portfolio of stocks/bonds, then go for it. Make your case logically, instead of with sarcastic point-after-point.

Maybe the readers will benefit. I'm game.

 

I never mentioned savings bonds.

I did mention bonds, as in a diversified portfolio of Treasury, mortgage, corporate, and other bonds. Something like the Barclays Aggregate Index.

Rough estimate, I would venture to say that a diversified portfolio of bonds is up 3-fold (200%) since 1986.

Stocks are up MUCH MUCH MORE.

 

Pssst...Goldfinger, they get upset when you start picking apart their Mad Max theories in here. Just saying.

 

Sorry, I must have misunderstood your message again. Would you care to back any of your points up with real data? I am interested in seeing what the typical returns would be. Did you even look at the numbers I posted? If bonds are up 3-fold since 1986, that would still put them in the ballpark of the PMs.

As far as stocks, If you hand-pick companies I believe it is a gamble. The company may not even exist in 5, 10, 20 years. Imagine you had money in radioshack or blockbuster. PMs will not go to 0! Now, you could diversify in other companies/industries to mitigate that risk.

 

I am well aware of this, having dealt with Gold Bugs for many years.

 

Bond returns depend on duration and credit-quality. Tough to just say what a 'bond' or bond index returns. There are 15,000 different bonds in a particular muni index, for example.

Did you ever hear of portfolio diversification ? Index investing ? Diversified mutual funds ?

Your focus on investing in 1 or 2 or even 3 stocks that go to zero (who's picking these winners ?) is off-tangent.

Stocks are the best investment vehicle and the best inflation-protection in the long run -- bar none.

 

Not in a couple of weeks but they will definitely go up! The US economy is facing too many problems to remain on top.