[UglyBuzzard]

Anyone stacking on this dip?

Any financial folks out there have an opinion on the metals?

[Run Silent]

Originally Posted by UglyBuzzard

Anyone stacking on this dip?

Any financial folks out there have an opinion on the metals?

I’m not a believer of precious metals as an investment. It’s a commodity, which translated means it creates no revenue. I invest in things that create revenue. Bricks don’t create revenue, so I don’t buy bricks. I don’t buy cloth. I don’t buy commodities, and I don’t buy little gold or silver bricks either. The point is that the only thing which drives the market price of gold is demand. The only things that drive demand for gold are speculation or fear. The only way gold goes up in value is if more people want it. If less people want it, it goes down.

Are there some reasons to be afraid? Yes. That’s been driving the gold market for the last 10 years. Gold has done very well during that time. But it hasn’t done very well because gold has intrinsic value. It’s done very well because people are afraid. If you want to see a return of 8% or 15% over the long run, it doesn’t happen. It’s a commodity, and it’s based on demand.

Here’s another hint: If your investments are advertised right after a Snuggie ad, you are probably not in a good category of investments. If Snuggie is on, and then right after that, catheters and then gold coins, something is wrong.

[NeverL8]

Not big enough dip, I’ve been watching for a while...waiting for a dip like the one in early 2000s

[UglyBuzzard]

Originally Posted by usshelena725

I’m not a believer of precious metals as an investment. It’s a commodity, which translated means it creates no revenue. I invest in things that create revenue. Bricks don’t create revenue, so I don’t buy bricks. I don’t buy cloth. I don’t buy commodities, and I don’t buy little gold or silver bricks either. The point is that the only thing which drives the market price of gold is demand. The only things that drive demand for gold are speculation or fear. The only way gold goes up in value is if more people want it. If less people want it, it goes down.

Are there some reasons to be afraid? Yes. That’s been driving the gold market for the last 10 years. Gold has done very well during that time. But it hasn’t done very well because gold has intrinsic value. It’s done very well because people are afraid. If you want to see a return of 8% or 15% over the long run, it doesn’t happen. It’s a commodity, and it’s based on demand.

Here’s another hint: If your investments are advertised right after a Snuggie ad, you are probably not in a good category of investments. If Snuggie is on, and then right after that, catheters and then gold coins, something is wrong.

I agree with most of the above. I think the metals have a purpose in a portfolio though. Hedge against inflation, wealth preservation, pass down to kids, and for periodic treasure baths.

[kscarrol]

Have some actual silver, gold and platinum my father left me when he died. Have not added to it and don't think I will anytime soon...

[overcoil]

https://www.bloomberg.com/news/artic...s?srnd=premium

[UglyBuzzard]

Originally Posted by ScottSinger

https://www.bloomberg.com/news/artic...s?srnd=premium

Looks like a buying opportunity. Some day, it will be worth more than it is today.

[overcoil]

Originally Posted by UglyBuzzard

Looks like a buying opportunity. Some day, it will be worth more than it is today.

https://www.cbsnews.com/news/the-5-w...s-to-buy-gold/

[UglyBuzzard]

Originally Posted by ScottSinger

https://www.cbsnews.com/news/the-5-w...s-to-buy-gold/

Agreed. Physical for the long term and virtual to trade.

[BayMoWe335]

Gold is an unproductive asset and will underperform productive assets like stocks over time.

Stupid investment in general, proven with historical returns.

[Lups]

In the past three years I've had a new hobby, mining companies. I want to lie to you and tell you all it's because of their profit margins but of course this comes with an insane Lups twist.

This started with a mining company here that had high hopes, and that crashed faster than an erection of an impotent that's to them basically ruining their surroundings faster than the officials here could fine them. Anyway, ethical mining is my new thing. I basically track and study the field as a hobby to figure out which companies will end up paying hefty fines for environmental crimes. Fun, I know.

Anyway, if any of you finds themselves without a hobby, i highly recommend this one. You can make a buck playing both ways and it provides endless mind blown moments.

[Run Silent]

Originally Posted by UglyBuzzard

I agree with most of the above. I think the metals have a purpose in a portfolio though. Hedge against inflation, wealth preservation, pass down to kids, and for periodic treasure baths.

Gold is "NOT" a hedge against inflation anymore than any other investment. This is something that the sellers in the market will tell you, but what that means is that your actual dollars will increase in value greater than the inflation rate. Nearly any market investment will do that, and some no-risk items (such as long term CD's) will provide this comfort with little to no risk.

Overall, Gold is a terrible investment. Adjusted for inflation, over the last 50 years, Gold has average..... wait for it...... a whopping 2.9% return. Wow! That sucks!

If investing that money with no plan of any kind and just sticking it all in a completely un-managed index fund, you would have got 5.8% - nearly double the return.

If you invested that money more carefully in good, growth stock mutual funds, the annual return, adjusted for inflation, would have been 8.4% over the last 50 years.

Don't invest in gold.

Originally Posted by UglyBuzzard

Looks like a buying opportunity. Some day, it will be worth more than it is today.

It probably will, but this isn't guaranteed in any way. Over the long run, gold has just barely outpaced inflation (by about 2%). That is very minimal growth and it wouldn't take much of a market correction to cause that growth to disappear.

[TheMidnightNarwhal]

Originally Posted by usshelena725

I’m not a believer of precious metals as an investment. It’s a commodity, which translated means it creates no revenue. I invest in things that create revenue. Bricks don’t create revenue, so I don’t buy bricks. I don’t buy cloth. I don’t buy commodities, and I don’t buy little gold or silver bricks either. The point is that the only thing which drives the market price of gold is demand. The only things that drive demand for gold are speculation or fear. The only way gold goes up in value is if more people want it. If less people want it, it goes down.

Are there some reasons to be afraid? Yes. That’s been driving the gold market for the last 10 years. Gold has done very well during that time. But it hasn’t done very well because gold has intrinsic value. It’s done very well because people are afraid. If you want to see a return of 8% or 15% over the long run, it doesn’t happen. It’s a commodity, and it’s based on demand.

Here’s another hint: If your investments are advertised right after a Snuggie ad, you are probably not in a good category of investments. If Snuggie is on, and then right after that, catheters and then gold coins, something is wrong.

What do you mean.

If you bought a lot of bricks when bricks were invented at 1$ and were able to sell your bricks after a year for like 3$. The bricks made you money.

[Run Silent]

Originally Posted by TheMidnightNarwhal

What do you mean.

If you bought a lot of bricks when bricks were invented at 1$ and were able to sell your bricks after a year for like 3$. The bricks made you money.

Not if inflation caused $3 to be worth less than $1 a year later. You would have lost money. You have to present value the future cash flows. Of course, in your scenario, you estimated a 200% APY, which is completely unrealistic.

A more accurate scenario would be as follows:

In 2008, you buy something worth $100 for $100. Ten years later, in 2018, you sell that item for $125. Did you make a profit? Let's see. The discount rate for those ten years is about 2.2% (see below).

2008 3.8%
2009 1.4%
2010 1.6%
2011 3.2%
2012 2.4%
2013 2.6%
2014 1.7%
2015 1.0%
2016 1.3%
2017 2.4%
2018 2.9%
Average: 2.2%

So, if you take the value each year and multiply it by the reciprocal of the discount rate, compounded annually, 100 x (1+3.8%) = 103.80, then 103.80 x (1+1.4%) = 105.25, etc - you end up with a FV of $127.13. That means that $127 today would be equal to $100 in 2008. Since your original investment is now worth $125, it is worth less than $100 in 2018 dollars, so your investment lost money when adjusted for inflation. This investment example was an ineffective hedge.

[overcoil]

Originally Posted by usshelena725

Not if inflation caused $3 to be worth less than $1 a year later. You would have lost money. You have to present value the future cash flows. Of course, in your scenario, you estimated a 200% APY, which is completely unrealistic.

A more accurate scenario would be as follows:

In 2008, you buy something worth $100 for $100. Ten years later, in 2018, you sell that item for $125. Did you make a profit? Let's see. The discount rate for those ten years is about 2.2% (see below).

2008 3.8%
2009 1.4%
2010 1.6%
2011 3.2%
2012 2.4%
2013 2.6%
2014 1.7%
2015 1.0%
2016 1.3%
2017 2.4%
2018 2.9%
Average: 2.2%

So, if you take the value each year and multiply it by the reciprocal of the discount rate, compounded annually, 100 x (1+3.8%) = 103.80, then 103.80 x (1+1.4%) = 105.25, etc - you end up with a FV of $127.13. That means that $127 today would be equal to $100 in 2008. Since your original investment is now worth $125, it is worth less than $100 in 2018 dollars, so your investment lost money when adjusted for inflation. This investment example was an ineffective hedge.

buying the bricks was financial savings as opposed to consumption, so that is a positive thing. How you diversify, when you sell, how you sell, whom you marry when you die - yes all those things are factors.

[UglyBuzzard]

Those that are anti gold - have you held it in your hands? I challenge to hold a few of these and not like it

[Run Silent]

Originally Posted by UglyBuzzard

Those that are anti gold - have you held it in your hands? I challenge to hold a few of these and not like it

I'm not anti-gold, I am just against it for an investment. If you want to buy gold because you like it - then by all means, do so. Just buy it with the same mentality that you would by diamond jewelry. It's pretty and nice, and there is a chance that one day you may get most or all of your money back. But don't buy it with the plan to generate any meaningful LTCG's.

[Mingwan]

Originally Posted by UglyBuzzard

Those that are anti gold - have you held it in your hands? I challenge to hold a few of these and not like it

I have some gold mined from California. And yes, something about holding gold is strangely satisfying.

I've noticed that anytime I show someone samples of my gold, they have a peculiar look on their face.