Two pet peeves

I still think metals are a poor inflation hedge. If they were good as one, why have they not worked in this capacity for as many years as there have been gold and silver buyers and sellers? Think about it. If you buy 20 oz of gold in todays dollar and wait for the economy to rebound and sell when the dollar is strong, I guarantee gold will be deflated, because it always is in times of prosperity. So, you're selling at a stronger dollar value, but lower gold prices, and you're lucky to break even. I've seen this happen about every decade with those who think they just found the fountain of perpetual wealth in the bullion markets. Now, if you buy stock in a bad economy with a weak dollar and weak market prices and wait till the economy rebounds, now we're talking investing for the future.
Guy~

 

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You beat me to it. Also in regards to cash withdrawals. Most banks... at least the ones I deal with, will let you take up to $10,000 cash out at a time. Anything over $10,000 cash and they have to send paperwork to the FBI/CIA so they can monitor you for drug trafficking, terrorism, etc... I have withdrawn $9,995 cash on a few occasions without any problems.

 

I'm not sure many here really believe the dollar is going to get stronger down the road though. Well, I shouldn't speak for others. I think it is continually dripping "purchasing power", just look at the national debt clock.

Sure, it may get strong here and there just like gold will have it's occasional dips, but in the long run, it seems, at least to me, that the dollar is in trouble...

 

Your calculations fail to take into account that the vast majority of people fail to match the averages in the stock market, that for much of that time period the tax on dividend income was at ordinary rates that were much higher than today, that significant capital gains taxes would have had to be paid on the stocks along the way to match the changes in the components in the DJIA, that commission rates for much of the period were far higher than today, that dividend yields were generally much lower than the rates you suggest, that in the late 1960's before SIPC was created, many investors lost there stockholdings when numerous brokerage firms went bankrupt, and that large holders of gold have earned a yield on their holdings about equal to short term bond rate by basis trading, which is probably equal to or more than the dividend yield, but I excluded both for simplicity.

I think those factors are at least a wash with the dividend yield. Life is never as easy as many of the simplistic statements make it sound. Most anti-gold authors don't really want to discuss the true picture. It is much easier to make a statement that stocks are always superior, and hope that nobody checks.

But my basic point isn't that gold is the best investment [because it isn't]. It is that the case against gold is far from clear when you check the record.

 

It aint about hedging! The edited dollar anit going 2b worth edited in 5yrs. GOLD/SILVER=FOOD/WATER! Only other metal that will be worth anything will have a bullet infront of it and powder in back of it!

 

From 2000 - 2009 USD lost 23.5% purchasing power. If I can find that article, I'll post it here.

What will come about the USD's value in the next decade? We do have some libertarians trying to make their way into Washington, but I don't think they will be enough to turn this ship around, they can probably slow it down?

 

You saw it in the 80s and 90s. But you didn't see it during the 70s or the past 10 years when gold outpaced both inflation and the stock market. So the bullion markets have been good [and bad] for two of the past four decades.

Nothing works all of the time, including gold. There is a time to own just about every investment, and a time to sell.

 

Agreed. I think we're all trying to do our best to educate ourselves in what to invest in. Everyone knows the stock market up until recently, has done poor.

But hey, if you bought Ford stocks in Feb. 2009 for $1.89, it's doing $11.44 today! That's an enormous profit!!

But it's also hindsight, and who wanted to be in the stock market anyways the last couple of years? Let alone an American car company stock...


Unless someone finds a bunch of pirate ships loaded up with gold, I'm sticking with bullion.....

 

Its time to take this discussion to the next level. If gold is such a bad investment, how come we see all of these cash for gold commercials. If gold is going down, wouldn't these companies be more interested in selling gold...not buying it.

Also, if gold is such a poor investment, then why would anyone invest in bullion? How can bullion be a store of wealth if it doesn't do better than the dollar bill? Why are you investing in bullion? All subscribers to this site, and especially those that commented on this thread that gold is a poor investment....exactly why are you here?

 

The cash for gold companies make money by paying a small fraction of bullion value for the metal they buy, and not because of rising gold prices. Rising gold is just the hook to get people to sell.

 

I remember on Foxnews about 3-4 months ago, they sent a gold bullion to one of these cash for gold companies. I assume about 3-4 months ago, gold was hovering somewhere around $1000.

They got back about $250 bucks!!!

They are the LAST people you would ever want to deal with. I'm sure these "gold parties" pay even better than that.

From worse to better:

Cash for gold
gold parties
Jewelry/coin shops
Sending your gold directly to melting companies


If anyone has any other ideas where you can best get the value for your gold jewelry please chime in!!

 

As for the next level and Cash for Gold - do you think they are holding onto the stuff? I believe they are converting the purchased gold into US dollars as fast as they can.

 

Maybe they turn around and sell the jewelry at even higher costs so they double dip on the buy and the sell....

 

So, basically, if you sell your gold for 25% of it's value, that a bad investment. Well Duh!

Ok, but that doesn't explain why people here say gold is a bad investment.....so why are they here?

 

Who knows, but they are most certainly not really responding, at least not right now.

It would take a lot to pursue me to leave the PM market. My USD's have found a new home....

 

Theory.......You'd think bullion companies would want everyone to buy gold/silver. If everyone got involved, it would push the price up, way up. But, if the price went up over night, these bullion companies wouldn't have time to buy more before the ultimate price jump. So, by discouraging buyers, or worrying others that bought previously, they give themselves more time to make more money.

Does anyone else think this is the reason why these so call "experts" are telling you bullion is a poor inflation hedge....because really it is a good one, and if you buy bullion, you will be taking away bullion that they could be buying?

Just a thought.

 

I've always thought about this too. Well first you theory about bullion sellers.

I do think that many do not have any physical holdings to sell if there's a run on bullion. And it would bring down their quality of service. So I think they are trying to find a happy medium. It also helps to have repeat customers like ourselves so they don't have to work too hard selling bullion.


When gold was very hot a couple months ago, $1220+....I remember APMEX not having that many AGE's. I think it was either less than 1000 or 2000....but in any event. That's not very much if there's a run on bullion. And APMEX, at least to me, is one of the bigger more reputable companies. So all it would take (in APMEX's case) is just 2000 or so people wanting to purchase just 1 oz of AGE and they would be completely wiped out, stock wise..

As for those bearish on gold/silver. Perhaps some may secretly be trying to hoard it for themselves, but I get the feeling the majority don't own that many physical PM's, if any at all!!! I'm not the smartest guy when it comes to wall street, but I try to be logical. And right now, logically, I can't see USD's ever holding their value in the long term. The debt we're in just makes it not possible.

California is about to be literally bankrupted. NY closing in. Pensions for soon to be retirees have on money. So here we go again with more printing.

If there's even the slightest chance China/Japan may not want to buy our debt anymore, you watch the run on gold/silver!!!

 

Bullion dealers make money on the spread between cost and sale price. They aren't necessarily trying to make money on the price rise. If gold prices rise, all it means is that they will have to pay more to restock the inventory as it is sold. The price rise is useful primarily in generating high sales volumes.

 

Because this is a coin forum, and as hard is it is to believe, not every coin is made of gold. I don't think it's a "bad investment". I do think there are far better ones, and they have proven to be so. People that are scared and bunkered down with doomsday scenarios dancing in their heads are paranoid the dollar is failing and gold will be the salvation. That fear feeding is a bad investment and one with no basis. Those people will lose, and lose big, I believe. Putting a nominal amount of your savings in gold is a fine strategy. But banking your entire savings on the end of days and a gold barter system is rediculous.

So, I guess thats why I'm here. Why are you here?
Guy~

 

I'm here because I believe an investment in bullion at this time is a good idea. As an inflation hedge and as a solid "commodity" investment. Commodities are going up as the world, not just the U.S. and G.B., continue to print money. The world economy will dictate it. U.S. is a big importer, other countries rely on selling to the U.S. For their products to be cost reasonable, they have to have a weaker currency than the U.S. dollar. At present the U.S. dollar is tanking out. So, this will force other countries to devalue their currency as well. One thing is certain about silver and gold.....there is only so much of it in the world. It is a limited quantity. You can't make more of it, as it is an element. Not so with U.S. dollars and other currencies. So, if all countries mint 10X or 50X their currencies to keep competitive with the U.S. dollar, you can bet the price of silver and gold will go up 10X or 50X....in comparison.

That's why I'm here.