Gold’s Performance vs. the S&P 500?

They're real stocks. Look them up.

 

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If you look at it that way, why don't you just hoard $100s under your mattress?

 

Yes, and gold is one commodity.

 

It's a metal, nothing more nothing less. It's NOT a store of value.

If you got 3 ounces of gold per month as a salary in 2011, then you have been getting paycuts ever since.

 

I am very familiar with them. If you are going to use a few stocks as indicative of the S&P 500, why not use Amazon or NetFlix or Microsoft ?

 

I agree with one point here, the original article simply cherry picked their starting date. This is VERY prevalent in financial literature. The first question anyone should have regarding any financial chart is why did the author use that date range?

About stocks being able to go to zero, that is a red herring argument. Is someone invests in the S&P 500 index fund, if one stock drops it is replaced with another. The total fund is as likely to go to zero as gold is. It will not happen. Any Sears or ToysRUs will be a tiny percentage in the portfolio, and is already factored in historical returns. Only by owning one individual stock are you taking that risk, (a foolish one I agree).

PM has a small place in a portfolio, but never a total portfolio. I own stocks, I own pm, I own land, etc. Diversification is not to be right, but to never be 100% wrong.

 

Because gold was at a bottom and the S&P 500 was at a top.

Rolling periods eliminates timing bias.

Not only that, but the S&P 500 is a capitalization-weighted index. By the time those stocks have sunk on hard times, their weight in the index is much less than even 1/500th of the index.

PMs are disaster insurance, and like art, something you can hold and appreciate.

 

Plus pretty little things you can Scrooge McDuck if you want to. I just got in the mail tonight 3.2 ounces of proof platinum eagles from Harlan Berk. I am starting to work on the set. I find the artistry better than average for US mint products.

 

Just like every other fiat currency in the world. No matter how much central banks try to kill it, it is still standing.
In 1932 you could buy a new car for $700. If I had 37 $20 gold pieces, I could buy a $54,000+ car. It is money. Not an investment. MONEY.

 

It's NOT money because it's not a store of value and is not defined as such. Your home country (United States) you get paid in dollars and the dollars do not get redefined in the time between cashing and spending your paycheck.

Big difference !

 

Gold and silver are insurance, just in case central bankers screw up.

 

I haven't been to a car dealership that accepted PMs for purchases.

PMs have to be first converted to cash/money to be used to buy other things. There may be a premium gained/lost from that transaction.

If you use PM based coins at a grocery store, they'll be used at face value. So that silver half dollar is worth 50 cents. If you sell the silver half dollar to someone that wants it for it's silver content, then you can get more cash out of it to be used to buy something.

Isn't that why ppl CRH for Silver Halves ? They are in Half Dollar/50 cent rolls as the banks consider them 50 cents each. When found, they are sold at their silver value instead their face value.

Because PMs have to be converted to spend them at full metal value and not face value if in mint coin form, PMs are normally considered a "storage of wealth".

But everyone will have their own definitions of PMs, so YMMV.

 

One of my sons owns a car dealership. If you showed up with PMs to purchase a car he would call me quick to have me check authenticity. There is no way he would let a sale slip by!

 

In 1932 you could swap a new house for ten new cars. I could swap the house I live in today for ten new cars. HOUSES ARE MONEY!

Or, prices fluctuate, but tangible things on average tend to have stable real values. Except when they bubble or collapse, like real estate, or collectible coins, or precious metals.

 

People who claim "PMs are money" are confusing relative worth for money. Money is the government authorized medium of exchange, PERIOD. They USED TO be printed on gold and silver in this country, but even then the metal was not full value. Go back 100 years and see that $1 worth of US coinage did NOT contain $1 worth of silver. The real MONEY was PRINTED ON PM to make some feel better about them, but apparently didn't work really well, or most didn't care, since silver dollars and gold coins circulated very little compared to paper money.

The discussion about trading 10 ounces of gold for something in 1919 and can still do so today is about ounces of gold bullion, NOT "money", as we have already established gold was not money 100 years ago, nor today. The fact that someone would need to be called in to calculate the conversion between gold and "real money" in a transaction proves that gold is a commodity with value, but not on its face "money". I could do the same with barrels of oil, pallets of copper wire, heads of cattle, acres of Iowa farmland, etc. All of these things have held their relative value, and to an interested seller bartered for a car, etc. but NONE of them are "money", they are items that retain value and can be bartered for the same relative value over time.

Of course, preaching to the choir to you Jeff.

 

When I was a kid - my father would send me proof sets of small US coins. Honestly much of them I used at the corner store. Feel bad about it now. However the silver dollars, or rare coins he sent me - still have them and they are worth more now. It would have taken time and effort to get that converted into cash. I kind of see that a bit with my continued collection of silver and gold coins. Its an emergency fund that can't be accessed or used easily - so i keep it.

Now about housing - I spend more on paying down my mortgage early - then I invest in my 401K right now. For me I don't see anything more important than owning a home before I retire. Its an investment of sorts - and has appreciated - but certainly not as much as the stock market. Dont care - I want a roof over my head no matter what.