Gold is Silver and other interesting facts for the bullion investor.

Olympic factoids:

Composition of the medals given to the winners of the 2012 Olympics. The medals are made by the Royal Mint and interestingly from PMs mined from near Salt Lake City, Ut and a mine in Mongolia.

The Gold Medal mostly silver. :so-sad:

• Silver - 11.735 t oz
• Gold - 0.193 t oz
• Copper - 1.02 oz
• Melt value ~ $636.11

The Silver Medal is also mostly silver

• Silver - 11.895 t oz
• Copper - 1.06 oz
• Melt value ~ $327.11

The Bronze Medal

• Mostly copper then tin & zinc
• Melt value ~ $3.00

Metal prices since the last olympics:

• Gold Jul 30, 2008 - $898
• Gold Jul 30, 2012 - 1618.92
• Gold Gain - 80.38%

• Silver Jul 30, 2008 - $17.10
• Silver Jul 30, 2012 - $27.06
• Silver Gain - 58.25%

• S&P 500 Jul 30,2008 - 1284
• S&P 500 Jul 30, 2012 - 1386
• S&P 500 Gain - 7.94%

You would have done very well for yourself by avoiding the stock market over the last 4 years.

 

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That's true for the buy and hold and index investors. But for value investors and traders, there were incredible opportunities to make profitable investments in the first half of 2009. Like everything else, people who expect to make money by doing nothing should not be surprised when that strategy fails.

 

Indeed.

I hate it when I make money.

 

For physical bullion, IMO, this is the only kind of investing that one should be doing. This is why I compared it to the S&P 500 as it is the defacto standard for buy & hold equity investors. Certainly there are other investments that are higher risk and most likely beyond the time and ability of most people to be successful in.

 

The day will come when the bullion faithful will lose a large percentage of their investment value. While it might be true that a lot of it is past profit, similar to long term stock market investors, it will hurt a lot nonetheless. This was true for PMs and bonds in the 70s, real estate at various times and places, the tech stocks in the 1990s, and it will happen again. Every investment has its day, and all days end.

 

Maybe, I'm thinking maybe not. The late 1970s were an aberration given the volatility of those first few years after Americans could legally own gold again after decades of not being able to. Even during the 1970s we are only talking about a short term bubble. Any buy and hold investor who bought early in the 70s did quite well for themselves.

Outside of this period, gold has been used to maintain wealth for over 300 years. Far longer than any financial instrument cooked up in the last just 40 years.

 

While the folks who bought gold in the early 70s did okay, those who bought in the late 70s did not. The same can be said today. Those who bought a decade ago have done okay, but those who buy today may not. And those who continue to hold, as those in the 70s did, may have to watch half or more of their value melt away after the top, and wait a very long time to get it back. I don't think this will happen soon, or I wouldn't own PMs. In fact, I think a bubble is probable and I hope to have the mental fortitude to sell into the rise and not get greedy. But I consider the eventual crash to be an inevitable outcome. The fact that gold can't go to zero is irrelevant to the investor seeking a high rate of return on their investments.

 

hmm avg price of gold in 1977 was 147.84, average price of gold in 1978 was 193.40, average price in 1979 was 306.00.

The yearly price did not go below 306.00 until 1998.

 

I saw on TV this morning that for every Gold Medal brought back in the USA, the IRS will charge the athlete $236 in income tax for having won it. This is based on the melt value. While these medals are high profile, for the rest of us, this is example enough why you might want to keep your gold out of the system.

 

Well, if you average the three years together, it works out to about $216. When you consider that gold was around $252 20+ years later, that was dead money compared to almost anything else you could have invested in, and didn't even come close to keeping up with inflation. That's why one-decision investing is generally wealth destroying. The human life span just isn't long enough to sacrifice two decades of compounding if you desire decent investment returns.

 

I know, I know, Fatima...anecdotal, but I found just the opposite to have been true for me. Had I invested the same amount in gold, true I would have made a tidy profit, but it would have been about 30% less than my other investments. This isn't to say I think 10-15% in gold isn't a good idea in any portfolio.
Guy

 

This is completely different than what was being responded to.

You originally said that:

"The day will come when the bullion faithful will lose a large percentage of their investment value."​

Then you brought up the 1970s as an example of this. Yet even in this worst case scenario, the worst that has happened to the investor is they held onto an investment that didn't keep up with inflation up until that point. If however they continued ot hold it, they would now be doing quite well for themselves.

 

Even the investor in gold in the late 70s had to cringe at the loss of value as gold went from $800 to a fraction of that. The losses are painful, even if much of it was profit at one time. If gold went to $800 today, the buyer at $400 would still feel the loss and think about what could have been if they had sold [example, not a prediction]. And you have mentioned many times that inflation has destroyed a large percentage of the worth of a dollar over the years. So while the nominal dollar amount is relatively flat, the value is much less. Even much less than cash in an interest bearing bank account over that time period. Now they are doing better, but how much better could they have done if they hadn't followed the buy and hold religion for those two decades? I'm just saying that it's far better to move between asset classes as they wax and wane.

The painful truth is that gold was close to the worst thing you could have invested in during the late 70s and held to the early 00's. People should keep that in mind when they decide that they will hold their gold forever.

 

Wow....you win a gold medal because you are the best in the world at your sport, and nearly 90% is silver.....