Why should I invest in Gold coins?

Your math & logic is flawed. You expressed the POG relative to the $'s market value, not it's intrinsic value. The market value of a $ is not equal to it's intrinsic value. Hence your contention that I have made a contradiction is incorrect as your math proof is incorrect.

 

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Lol. rather than read through (yet another) heated several-pages-long discussion of the proper distribution of portfolios p), I will give a very, very simple answer to the OP. The ONLY real answer, the only one that matters at all: Because you WANT to. If that reason does not hold true for you, then don't do it... it's an extremely bad idea for you. If it DOES hold true, then by all means, DO IT, as it's a great idea.

It's that easy One can argue the relative merits of (whatever) until one is blue in the face or dies of old age, but what gets overlooked is: do what makes you happiest That's all any of it comes down to, in the end. Lol.

I have a "portfolio" to make ANYONE here shudder but I am THRILLED with it, and have in it what I do, because it's what I WANT to have I couldn't possibly care less what is "smart" or "safe" or "diverse" or what have you. I just acquire things I truly enjoy having, owning, seeing, handling, looking at, etc.

That goes for everything I own, not only coins

 

How could that be?

1. I used YOUR source (The Futures Market) from the OP for the price.
2. I used YOUR measure of price (The Dollar) from the OP for the value.
3. I used YOUR intrinsic value of the dollar (Zero) provided by you several times in this thread.

All the sources of data were provided by YOU. Now you can wordsmith and logicsmith all you want but it ain't going to work with me. The intrinsic value of common stock in a bankruptcy situation is your personal exposure to creditors is limited to your ownership/equity stake in the company.

 

I also stated that intrinsic value and market value were completely different, but you choose to ignore this. If you draw conclusions from only picking the things I say that work for your argument and ignore those that don't then you are also guilty of committing a logical fallacy.

You can prove this wrong of course if you can demonstrate that paper intrinsic value = paper market value.

Because you are using a Chewbacca Defense.

 

I don't know about or trade in the companies you cherry-picked to prove your point. For a company such as XOM, I would argue that it will perform better than most investments including the Treasury I bonds which have been praised in other threads. You are correct that I think the Dow30 is a good place to look for investment ideas, but I don't personally advocate buying them all. For instance, I've pretty consistently indicated that I don't buy stocks in financials. I believe the Dow is a superior index for the average investor compared to the S&P500 if they intend to invest in an index, but I don't personally do it that way. So my position stands that stocks are at least as good as gold, probably better under most conditions, and I will continue to respond with my own ideas, so get used to it.

 

For those interested, see the refutations of this incorrect assertion earlier in this thread.

 

I stand by my words so I will put them here again. No need to cast FUD by telling people "oh he's wrong because it was said earlier in the topic"

 

I wish you wouldn't "stand behind" something demonstrably erroneous and putting out false information, but that is your right. "Common stock holders are considered lower than creditors of the company,and not owners of the company" is simply a lie. Any book on the subject will explain on page 2 how this is a lie. Common stock holder ARE the owners. Now if they screw up, hire bad managers, take on too much debt, and then have to go bankrupt they can lose their equity. The same thing can happen to you Fatima, and a bankruptcy court "with a stroke of the pen" can take all of your gold.

 

And it was stated in response that a bankruptcy proceeding doesn't make the mines, factories and distribution channels disappear or become valueless as you would suggest. It is only a change in ownership. If you own gold and lose it due to bankruptcy, divorce, or theft, the coin doesn't go out of existence either, but your investment still goes to zero. I know you can't see this, but perhaps others can so my comment is for their benefit, not yours. Study the GM bankruptcy if you still do not understand.

 

My statement is based directly on that quote from SEC.gov.

If something can have it's worth set to $0 by a court order, then said item has no intrinsic value. It really doesn't matter if you think it is a lie or not. I've quoted the governmental site that says otherwise.

 

I would contend that a company does not have intrinsic value. The assets owned by a company surely do, but none of that value is intrinsic to the company. Intrinsic value means that the value is there no matter what assets they hold, because it is inherent in the company itself regardless of everything else. Again, I will point to the definition of intrinsic as "by its very nature". Whatever intrinsic value a company may have is the same for every company. Whatever intrinsic value a stock may have is the same for every stock regardless of the company.

 

No sir, these are not analogs. We are talking about stock in a company. Not the company's hard assets. Gold still has worth if the court takes it from you and gives it to someone else. Gold's intrinsic value is preserved.

If a company goes bankrupt the paper stock you hold becomes worthless. Paper stock has no intrinsic value. Stock can be "canceled" as stated by that SEC.gov quote on corporate bankruptcy. Gold coins can't be "canceled".

No cigar for you.

 

They are absolutely analogs. The assets of the company are comparable to the gold. The ownership of the assets through purchase of common stock is comparable to your ownership of the gold through purchase of the coin or bar. You are confusing the assets and the ownership.

 

One could make the argument that the only reason that gold has value is because people place value on it. Ultimately it comes down to whatever someone is willing to pay for it regardless of intrinsic value. The difference I think is that the probability of value being placed on gold (a finite resource) indefinitely is significantly greater than something that can be manufactured at will. The value that is truly intrinsic to gold is based on its properties as a metal and its ability to last forever without corrosion which is independent of the value people place on it as a shiny metal or a hedge against currency. The properites it has does make it ideal as money. I think silver has more intrinsic value than gold from a properties standpoint, but not as money. As for stocks and bonds, the intrinsic value is whatever you would have left after the company or government no longer existed.

 

Well that is our difference sir. I believe the company, by nature of its assets, does have intrinsic value.

I was simply asking this of you to show the difference between stock and other securities. A bond has no intrinsic value, its a promise to pay. Same with many other financial instruments. A stock, though, is owning the company, and therefor its assets. Now, as owner you collectively may make bad decision like hiring bad management, pursue mone losing businesses, etc and have to start selling assets, but at any point in time a stock can be summed up at a minimum as the value of its assets. Yes, debt and other obligations can complicate this whole ownership, but at its core a stock is ownership of the assets of the firm. The example I gave was simplistic to point this out. If you owned 100% of the shares, you were the owner of the $30 million in hard assets. Period. If you owned 1 share you owned 1 millionth of those same assets, and you had 1 millionth say in running the company.

If you do not believe the company has intrinsic worth, then that is why we are disconnecting. We are disagreeing on the semantics. I just wanted to explain WHY I was asking the question, the point I wished to make.

 

This is incorrect. You are not an owner of the company's assets, you have a claim on shareholder equity of the company. Huge difference. First, lets define what we are talking about. This discussion is about a public company which sells stock that people can purchase. There are two types of stock, preferred and common. Stocks sold on the stock market are common stock. Hence this discussion has been about the intrinsic value of common stock of a company as sold on the US stock exchanges. There are no hypothetical companies needed as all companies conform to the same law that meet this definition.

If you own 100% of the stock or you are a 1/millionth owner of the stock of a $30 million dollar company, the only thing you own is a portion of the "shareholder equity" in the company. It's the company which owns the assets by definition. Shareholder equity is defined as company assets - liabilities. You also get to vote for the board of directors. Shareholder equity may not be weighted the same amongst all shareholders.

If liabilities exceed assets, then shareholder equity in the company = $0. Shareholder equity is $0 and your stock is worthless. The hard assets may still be there, but you never owned them and have no claim on them.

I can't think of a reason why someone would go through the expense and trouble of issuing common stock if they intended to hold 100% ownership of all the stock. The purpose of stock is to raise money. You can't do that if nobody can buy it. There are of course tax reasons for issue one preferred share of stock for yourself of what amounts to a private company, but we are no longer talking about common stock sold on a US stock market.

 

There is a chain of inference here that I cannot follow. A stock is not a company, and a company is not its assets. I have no qualms with agreeing that a company's assets provide real tangible value for the company, but it is not intrinsic to the company. Any intrinsic value would not rely on the assets, but rather the company itself. Yes, the assets have intrinsic value, but that is independent of the intrinsic value of the company. Nor do I have a qualm with agreeing that a stock provides real tangible value and is a piece of the company, but again that value is not intrinsic to the stock otherwise the value would still be there even if the company were not. You could own all the stock which entitles you to all the companies assets, but to transfer the intrinsic value of the assets to the intrinsic value of the stocks is something I cannot agree with, because the nature of the assets is not the nature of the stocks. They are different things. I do believe a company has intrinsic worth, which I would say is based on the success of the business model, not the assets it has acquired. The reason I put stocks and bonds in the same boat is because the intrinsic value is worth the paper they are printed on, by definition of the word.

 

The above POST explains why this conclusion is incorrect. The company owns the assets. Your stock only gives you an ownership of an equity in the company that is defined to be the value after the company's liabilities are subtracted. This is why stock can be worthless, but the assets can still have worth.

Ditto. You made the same mistake. i.e. Your stock does not give you ownership of the assets. Your stock only gives you a portion of shareholder equity.

 

So if you personally own Inflexion Mining, and it had $30 million in hard assets, you are saying Inflexion mining does not have any intrinsic value? If that is the case, like I said, we are disagreeing on a word. Fair enough. If, however, you believed that Inflexion Mining HAD intrinsic worth, then you being instead owner of 100% of the stock instead is identical. You giving half to your mother, (you are such a good son), would mean you still owned $15 million in hard assets. If you sold all but one share would still mean you owned $30 in hard assets.

Btw, never get hung up on stock "being a piece of paper". Its not, its a legal percentage of the firm, the piece of paper, (and there really isn't any anymore), was just a notation device of such ownership. Again, this is different than a bond, in which the piece of paper WAS the financial instrument and had to be presented to be collected upon in years past. Today they also electronically do this, but the nature of the two things are completely different.

 

As I said, it would be based on the business model, not the assets. The assets are not by the very nature of the company, but rather only the very nature of themselves. Otherwise they would be unique to the company and non-transferrable, just as you cannot transfer the non-corrosive properties of gold over to silver. The company's nature is not dependent upon its assets or its balance sheet. It has to do with what the company is and does. While what it does may rely on these assets, and those assets could make or break the company's ability to function, the assets themselves don't determine the intrinsic value. What they do is allow a company's intrinsic value to reach its potential.