3rd straight annual loss for Au

The Gold/Dow ratio is event more ridiculous than the G/S ratio.
Kurt touched on this already as it is two very differnet things. The DOW grows, Gold does not. Over time (at least hopefully) the "DOW" expands and there is more real estate, machinery, products, improved technology, etc., etc. than there was before. So not only does the Dow increase in value, the actually physical assets the paper represents increases also. This would be similar if you put an oz of Gold in the safe, and 10 years laters you go to pull it out, and it has grown to two ounces. (Wouldn't that be cool) Of course the value of the the Gold may increase, but the actually asset just sits there like a lump. This is the primary reason why equities are almost guaranteed to outperform PM's in the long run.

The second point is really the same as for the G/S ratio. Let's just assume that there is merit in the Gold/Dow ratio. You state that Gold is undervalued compared to historical norms, but you just guessed and there is absolutely no way to know that. It could be that the DOW is overvalued. It coulds also be that they are BOTH overvalued, it is just the DOW is overvalued more.

The botton line is pay no attention to these ratio's they are nothing more than propaganda put out by the Bullion pumpers to separate folks from their fiat.

 

Log in or Sign up to hide this ad.

Of course there ARE stock splits, too. If you put 100 shares of Apple in a metaphorical safe two years ago, you now have 700 shares. And if you put away 100 shares of AT&T 30 years ago, you have a small portfolio of stocks, a real rat's nest of paper.

By the way, when it comes to the tech sector, Wall Street IS nuttier than a squirrel's diet. Apple's P/E is only 11.

 

LOL, that is actually what my DAD did. He was a Bell employee and started buying T in the early 60's. He sold very little over the years and now has basically an index fund It is all on paper too, he never transfered it to elecronic, even though his TDAmeritrade guy said he would do that for him

 

"Remember 1980" Most folks don,t want to... I was 29 and energetic. Interest rates were at 10-16% during those Reagan years. I was building a few homes at the time and managed to scratch out an existence for my family. Others wern,t so lucky. Then came the first of the big booms as rates began to drop... then the first big recession of the 90s, and so on... the pattern still exists now! Growth causes rates to rise, stocks react in a negative way, metals react in a positive way, but nothing stays the same for very long. As investor money shifts thru the different sectors, short term changes occur. I still don,t and probably never will understand why the metals markets react in such a wild way. Maybe greed is the driving force!

 

1980 was the year when interest rates were highest, silver had just crashed from $40some an ounce the previous year and gold was barely holding the peak of 800 an ounce until it came shooting down at the same time.

And then the crash down in rates, metals, and commodities in general. Commodities stayed relatively stable for the next decade, but continued to make small solid gains.

Of course there is the old saying "past performance is not an indicator of future value" and that is where I think everyone is in for a big gotcha.

I expect small solid gains in commodities over the next 5-10 years - regardless of the market, but especially during times of turmoil and uncertainty.

 

If all we have to fear is fear itself, than uncertainty may haunt us forever. I still believe that common sense will dominate the markets. My crystal ball says buy the gold after it stabilizes with the rest of the economy.

 

This is a very refreshing and informative thread. I am very pleased to have found a forum with gold and silver Bullion collectors/investors who are quite calm and rational. I dable in silver bars myself, despite my main focus being collecting ancient coins. I remember 2-3 years ago signing up at a gold/silver Bullion forum because I wanted to share my passion for the hobby, but got ran out of there and perma-banned to cries of "fed shill" and "illuminati" for daring to suggest commodities were in a dangerous bubble. I guess they did not appreciate anything that wasn't "back the truck up and load up" and "to da moon."

 

Well you can back the truck up anytime you like - just use your mirrors and make sure where you're going.

There's some doomsdayers and soothsayers in here, but I come here to gather intelligence on where others think the markets are going - and why.

In my short tenure in this forum, I've definitely learned how to better separate numismatics from bullion. I've also learned a thing or two about market "tells" and how to capitalize on them.

The side benefit is that I've made a few good scores based on people finding Ebay bonus buck buys, coupon buys, and other various deals on bullion.

Cheers, and Happy Friday to ya Sallent!

 

I buy some bullion on the side once in a while and then lock it away because I don't really need to look at it once it's purchased (maybe I'll indulge in an appreciative gaze or two). I think of these purchases as at least paying lip service to diversification (whether it really is or not, honestly I'm not completely sure). But I make numismatic purchases for the eye candy factor alone, not for any kind of investment. Maybe I'll sell the numismatic stuff later for a higher price than I purchased it. Maybe not (my past experience, which admittedly isn't vast, so far tells me "not"). If I do, given my lack of experience, I'll peg it down to luck. If I don't, well, hopefully the loss isn't too gratuitous. I've only lost money to numismatics so far, but nothing egregious. The bullion I bought has definitely increased in value, but I guess we'll see how low gold can go.