Will Gold be worthless in the future?

It's not true that gold will be wortheless because women will want nice rings and necklaces

 

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Gold will never be worthless at any point in the future. Gold is an example of a precious metal, which is a commodity, or an asset class if you will. It is considered an asset because of it's rarity and scarcity in the world, and has been considered so for a couple thousand years. Famous British economist John Maynard Keynes called gold in the economy a "barbarous relic" but I disagree with that statement. Our economy's shift towards a more technological "buying on credit" system will never replace the tangibility of gold or even silver for that matter.... Just my 2 cents.

 

To take PTrain22's concept further, with an eagle now around $1350, which would you rather have 5 years from now, a gold eagle or $1350 in paper money??

 

But that is never, ever the point. Never. Anyone who ever says "I would rather have $100 worth of gold in 1950, 1930, 1855, etc over a $100 today is simply making a "Duh!" statement. Of course you would, so would I, so would every single person on earth who understands the nature of modern economies. Currencies are designed to inflate over time. Since gold pays zero dividends, it has to go up with inflation over time to simply retain its purchasing power. Therefor, of course over time an ounce of gold will be worth more nominal dollars. Same could be said of oil, would you rather have a barrel of oil today or the $4 it was worth in 1960? That is a no brainer. Now, would I rather have a barrel of oil today or that same 1960 $4 invested in bonds or the S&P Index? I am betting, (especially assuming accounting for dividends), that the stocks would be worth more today than that barrel of oil.

So PM is fine for maintaining your purchasing power long term. We agree to that. Does it really grow more than inflation? Most analysis says no, so any money "invested" in pm is not really an "investment" at all, its putting money aside in case of an emergency, knowing it most likely will not grow at all is real purchasing power. What you could have bought in 1975 for an ounce of gold is what you can buy with an ounce of gold today. That is all you are protecting.

Btw Stalepie, I believe we all agree women will wish to wear jewelry in the future. Who says it will be gold they desire though? Rich women in some countries today would not be caught dead wearing something as cheap as gold, preferin instead platinum. I would not wish to bet my financial future on women's fashion tastes alone.

 

I agree with this statement definitely. If you look at the value of gold as an asset in the short term it's value is no better than the dollar. In the long term it is much more preferable, but not necessarily as a vehicle of growth so much as a way of protecting wealth as a hedge against inflation. Preservation of wealth and generating/producing wealth are two separate things. No dividends are paid out for owning PM's, so if you're buying it as a short term play, then you're just playing a speculative hunch in my opinion, hoping for a price spike.

 

The problem with your analysis -- we are living TODAY in unprecedented times. The money supply has NEVER increased exponentially before. The debt levels have NEVER exploded so rapidly before. The average household (now I speak of the last 50 years) has NEVER seen its net worth decline 30%. The Fed has NEVER played such an enormous role in our day-to-day lives. Financial crime has NEVER been this pervasive or dismissive or manipulative; you need only look at the billion-dollar fines levied on banks and corporations to see how far we've sunk, and how fast we're sinking.

Some of the "old" rules no longer work. For the time being, the majority of you will not let go of the old rules, nor adapt to new ones. Where medoraman and I agree, we agree strongly -- the only point to buying PM's is to preserve purchasing power, but unfortunately, the vast majority of Americans tally up their assets strictly in depreciating dollars, and if they are wrong, they will (again) be devastated.

Buying food, weapons, fuel, etc., is an entirely different issue. As I have taken pains to explain, if and when medicines are cut off, some of us will never live to open that second crate of chicken soup, and I expect that's the way it will play out.

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By the way, with savings and money market accounts earning south of 1%, it doesn't matter that gold doesn't pay dividends. Nor will the $40/year for a SDB (big enough for all the gold you're ever likely to accumulate) bust your budget. Because I hold about 95% silver, my storage charges are higher, but considering the risk profile, that doesn't matter either. There's plenty of excuses not to buy PM's.

 

I Just hope the Aliens don't take the golds away from us when they visit this planet.

 

You'll have a month to react. DHS will suspend habeas corpus and detain them for 30 days, without filing charges or permitting counsel. We'll give each one a free ticket for a Beyonce concert, and they'll go away happy.

 

I no longer have any idea what is going on.

 

Actually since the gold on earth comes from extraterrestrial sources, if they can come to earth, they probably have gold toilets on the ships and no need for our gold. They will come after tasty earthlings.

 

"They will come after tasty earthlings."

And colorful gemstones.

 

Well, only in the sense that the earth itself came from elsewhere.

 

Everything came from elsewhere

 

But then from where did elsewhere cometh?

 

somewhere else

 

We are stardust, we are golden, we are billion year old carbon,
And we got to get ourselves back to the garden.

 

If only it were that simple, and if only I were able to see five years into the future.

For example, inflation could quite realistically average 3% annually, and if so, then $1,350 in paper money would still have about $1,160 in purchasing power when measured in today's dollars. It isn't unrealistic that gold could fall below $1,000/oz in the next five years. If that is what is going to happen, then give me $1,350 in paper dollars today.

Of course we could experience double digit inflation and gold could go to $2,000/oz. If that is what is going to happen, then I'll take the 1 oz of gold.

Which is more likely? Who knows... We'll have to revisit this thread in five years to find out. Assuming of course that the apocalypse hasn't arrived and we still have an Internet.

If you asked a similar question three years ago, with a three year outlook, it would look pretty bad for gold. The "official" inflation numbers show we've averaged 2.11% over the past three years, but nobody believes them so let's just call it 3%. One ounce of gold in Aug 2011 was $1,848. $1,848 in paper money today would still have $1,586 in purchasing power measured in 2011 dollars, whereas 1 ounce of gold is worth only $1,288 today.

Either way, I'm not the kind of person to stuff cash in a mattress. I'd invest it in something that should either earn a return, or appreciate in value. If I'd invested that $1,848 in an S&P 500 index fund, I'd have $3,189 today. I could sell those shares and purchase almost 2.5 ounces of gold. The capability to turn 1 ounce of gold into 2.5 ounces of gold by investing in the market is a net benefit of 1.5 ounces of gold, regardless of anyone's opinion on real inflation numbers or the strength of the dollar or how deep in debt we are.

I own PM because I enjoy the benefits of owning it, but I recognize that my PM isn't earning a return, so more than 90% of our investment capital is in the market and doing quite well.

 

If it becomes worthless, I will have them melt the gold and case it around my finger so I can be known as the Man with the Goldenfinger.

 

Depends on the nature of the collapse.
War, especially nuclear, will cause an immediate collapse, and depending on how far reaching it is, survivors will quickly dwindle and revert to ever more primitive and barbaric states. At first, food, water, guns, ammo, gasoline, gold and silver will be valuable, but eventually, seeds, land, water supply, and basic tools will become high value. Cavemen have different priorities. Modern society has different needs, but they are dependent on modern society existing at some level.
Gold and silver have always had value even in the days of flint and bearskins. It was they who initially discovered gold etc, was soft and easy to work, pretty, and inert, so as not to leave green marks. They were initially valued as jewelry etc, which value translated over into early civilizations. King Tut and other Egyptian kings had scads of it, and later civilizations made their coins of it, as it had intrinsic value.
But, given the paper promises of the stock market, the near fiction of electronic fund transfers, would you prefer these to a stack of gold and silver coins? If society collapses, are you going to buy bread with your stock portfolio? Or milk with your ATM card?

 

First sign of nuclear war, I'm outta here. Life won't be worth living. If you have an extended family of 15 or 20, several households living together in a compound in the boonies of Idaho, etc., with lots of useful skills, tools, and supplies, maybe you have an incentive to survive; I don't.

Here's a pretty realistic film to watch [Wikipedia]:

The Day After is a 1983 American television film that aired on November 20, 1983, on the ABC television network. It was seen by more than 100 million people during its initial broadcast.[1] It is currently the highest-rated television film in history.[2]

The film postulates a fictional war between NATO forces and the Warsaw Pact that rapidly escalates into a full-scale nuclear exchange between the United States and the Soviet Union. However, the action itself focuses on the residents of Lawrence, Kansas, and Kansas City, Missouri, as well as several family farms situated next to nuclear missile silos. (more)

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In an emergency, away from urban areas, there will always be plenty of people with mixed-up priorities, who will trade food, water, and ammo for gold or silver, assuming the government hasn't confiscated your stash a month before.