Bullion VS Stocks

we are supposed to keep this like a "50s sitcom"...so i cannot really get into much detail about whats wrong with me

 

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I'm not bashful about handing out investment advice, and I will stand by it 100%

Buy Low

Sell High

If that doesn't work for you, SUE ME!

Anything you can do that with is an "investment" - ANYTHING.

However, for many people, including myself, PMs are not primarily that kind of investment. Instead they are a store of wealth. The idea is that they will hold some intrinsic value forever. They have a track record going back throughout recorded history. No matter what the Fed does, or what China does, or what anyone does, they keep some value.

 

Stocks hand down. You don't need to go searching for a buyer when you want to sell. You can do it from your phone, house, etc...

 

Thats the best answer I've seen on these boards in years, and is exactly why I've always said bullion is a terrible investment vehicle. Anything that doesn't produce value based on real need is never going to sustain itself. There may be industrial uses for gold and silver, but those uses have been plummeting yearly. Gold may have risen, but compared to even sub-average stocks, it's still a loser. Even blue chips have fared better over the same period.

Mark is correct in saying it's not a fair fight. It's a heavyweight vs a bunny.

 

One hundred years from now, my one ounce Buffalo will still be worth one ounce of gold (and maybe some collectors value by then ) What will that stock be worth?

 

But what will one oz of gold be worth? What you paid for it? $1.50? $10,000? People don't hold stock for 100 years simply because they don't live that long generally. But, that stock will, like your gold, still be worth something, providing you did an ounce of homework before buying.

 

Well, lets do the math. To be realistic, we should pick an index fund that tracks the S&P 500. I am going to pick 1928 as our starting point because I have found data on returns on both Gold and the S&P 500. It was 85 years ago, so that is close enough for government work to be around a 100 year track record.

Gold has returned 4.96 % since 1928 and the S&P 500 9.82% average annual return. Spot price on Gold is $1224 as on today so we will use that as the value of the Buffalo.

So we can work that out and 100 years from now your Buffalo should be worth $166,012 Yowzers!!!!!! Now if you went with the index fund instead, it works out to be $21,637,038. That's right, a cool 21 million. The power of compounding interest. Einstein said it is the most powerful force in the universe.

I am going with the Stocks, Good luck with the metal......

 

That's right! ...and a nominal brokerage fee stores them safely and securely. The benefit of PMs is a place to store wealth during times of extreme economic upheaval. It's also nice to have some assets the Government can't track.

The Government can reach out and "own" any asset you have that's tied to a SSN...house, paycheck, bank accounts, IRAs, 401Ks, etc...but not PMs...not if you hide them well enough. These new PM laws are designed to put an end to that, too.

 

Here's a reasoned debate that expresses both sides of the discussion well...

http://video.cnbc.com/gallery/?video=3000179852

 

To be realistic, we shouldn't assume the next 100 years is going to be the same as the past 85 years.

 

Also, your math is off.

Compounding monthly is all fine and dandy, but that's not how the 4.96% and 9.82% average annual returns were calculated for the historical numbers, so you should not use monthly compounding when calculating future returns. If you use annual compounding as you should have, the returns would be roughly half what you estimated.

 

You need to use something, otherwise it is just a guess. What is your recommendation on what to look at? History is the best thing I could come up with.

 

Point taken, but your math is in error also, it actually 2/3 's not 1/2 as you indicated, as the the stock index would still return over 14 million in 100 years when compounded annually.

 

Given that many people invest in PM for an entirely different purpose than they do in stocks, only looking at capital appreciation might not be the best way to judge which is the best option.

How much confidence does the investor have in the economy? The dollar? Their government? Their bank? Wall Street? How much is a little peace of mind in uncertain times worth?

All that being said, I still have 10x more money invested in stocks than bullion, and stocks and bullion aren't my only investments.

 

I did say "roughly" since I did the math in my head, and my estimate was closer to 1/2 than 1.

 

Yes, I agree, Bullion is a totally different animal, and should be treated as such, but I was only answering a question, and tried to use the best info that is currently available

 

One could imagine the brighter of the dinosaurs discussing whether meat or plants were the best way to survive that fateful time, about 65 million years ago, when the end actually came

 

How about in the last 5,000 years Gold/Silver have never been worth nothing, but stocks (enron) and 99% of all fiat currencies have.

 

Umm... You realize that you're wrong, right? 99% of stocks/fiat (that you would consider investment worthy) have NOT been worth nothing.

 

In addition to what NK said, there is also an error in logic about the Gold/Silver. It all depended on what part of the planet you happened to be standing on. In many places it was worth zero.