Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
And this comparison is of course silly, you are comparing bubblicious gold prices to a depressed equity market.
Gold has been very volatile since the 70's, if you purchased during the last bubble in gold you still have not gained anything in inflation adjusted terms. The peak in 1980 was around $2,000 in today's dollars. This is not to mention most of the gain has been over the last 5 years or so.
There is little reason to believe gold makes a good long term investment, but due it its extreme volatility trading it short-term can make sense. But its obviously highly risky...
Exactly right.
As an old fart I remember quite clearly the gold bubble of the late 70's - and the subsequent rapid crash in it's value.
Had a boss who got caught up in all the gold hype and had invested heavily.
He ended splattering his brains against the wall.
Folks investing in gold need to be VERY VERY careful.
Gold is a great hedge against high inflation that we will soon be facing due to the dumb federal monetary policy the Bush/Obama administrations have bestowed upon us. India bought 200 metric tons of it for under $7 Billion. China has more than doubled their gold reserves. These countries are getting ready for the currency crisis heading our way. They're not buying it for looks. They know the *** is up soon and we are heading for an inflationary depression.
Gee that must be why Gold makes up but a fraction of these countries reserves when compared to the number of dollars they hold.
The fact is, both China and India's dollar holdings are VASTLY larger than their gold holdings. Those countries are simply buying pretty much everything they can get their hands on (US dollars, gold, and all kinds of other assets) simply because they have tons of money pouring into them because of their advantageous balance of trade. They have to spend all that money on something so they are buying pretty much everything.
Given the responses I've had to my query about the future of the economy, I am thinking I need a hedge against inflation. Is this correct? I am a retiree on modest fixed income, so what might you suggest? Would buying some gold be a proper decision for me? I can afford to put some money into that, but gold seems so expensive now. If it goes down or stays the same, what then.
natalie456
Seems too late in the game for me, I wouldn't. What is low right now? Buy THAT.
....
Gold has been very volatile since the 70's, if you purchased during the last bubble in gold you still have not gained anything in inflation adjusted terms. The peak in 1980 was around $2,000 in today's dollars. This is not to mention most of the gain has been over the last 5 years or so. ...
So you accuse me of cherry picking results, then you pick one particular date and do the same thing. LOL I have heard this excuse to stay away from gold before and what is always left off is that period which lasted just a few months, was a true bubble in gold that was generated by the actions of the Federal Reserve. Of course people with their heads in the sand don't bother to look into the reasons for things.
If you don't want to buy gold that is your business. You are losing out by holding assets in $s or putting money in the markets. More importantly however your reasons for doing so, are not based in any types of facts as you already demonstrated that you know nothing about gold vs the economy by your postings in the other topics on this subject. Maybe your castaway with the seeds and cow on the remote island will be able to give you better advice.
Exactly right.
As an old fart I remember quite clearly the gold bubble of the late 70's - and the subsequent rapid crash in it's value.....
It didn't crash. Since when has anyone holding gold ever gone broke? Remember Nasdaq? It has never recovered.
Funny you remember one 4 month period in the course of 40 years, but somehow have conveniently forgotten the rest of it. The point of investing is to buy on the dips and I am not sure why Gold is singled out as the one investment where this is a bad thing.
Because such outfits don't make their money by buying and holding gold. They make it by buying gold at prices LOWER than the going rate - then turn around and immediately sell it at the going rate....
They sell it for the scrap rate as jewelery and other similar items have to be refined to remove the alloys and other junk before the gold can be converted to a form that sells at at the going prices for gold. Most mom & pops in this business have to sell to refiners because they don't have the equipment to purify the gold.
However Cash4Gold claimhave s to be it's own refiner, and there isn't a disclosure on what they are doing with all the gold bars they are producing. To claim they are not holding some of it as an investment isn't based on knowledge. You are not making much sense, because according to you, gold is worthless as an investment, yet here is an entire industry making a considerable amount of money from something that is supposedly worthless.
Do NOT buy gold ever. When it is advertised on TV it's way to late. American Funds is the way to go. Fundamental Investors, Washington Mutual, Bond fund, New World Growth etc.
Tell that to people who bought in 2003. They are doing a lot better with gold than your funds would be doing for them.
There is no such thing as a good investment or a bad investment. Only good timing and bad timing. AOL was a good investment for MANY people, then it was a bad investment for many people. The only difference between the people was their timing.
The following from a financial news letter..hope it helps..
The US Dollar vs. Gold
In my last column, my predictions for 2010 (or at least the first part of it) were that both the stock market and commodities are destined for a fall, and that the dollar is the only major asset primed for a significant rise. This generated such reader comments as...
"I believe commodities are the thing for 2010. The dollar continues to give ground. I say you are WRONG in your prediction."
"... based on the US govt's incredible spending, there is a likelihood that gold will be the one to go up, not the dollar. The government has to devalue it to pay for everything it wants to pay for. I would say you are off base."
"As long as the US spends like drunken sailors, the dollar will get weaker and weaker. Continue to short the dollar. Gold is in uncharted territory but will remain the safest harbor until there is a change of government policy."
"I am inclined to agree with the majority of your prognostication with the exception of the US Dollar strength. I cannot see how the USD can gain strength because the Administration/Federal Reserve has increased the money supply out of proportion to its intrinsic value."
"Can the Dollar gain strength with all the printing presses going full speed ahead?"
There is some merit in all these comments, of course. But what matters in the markets is...
a) the perceptions of those looking to invest, and
b) the value of a given asset relative to others
Before I start in on those topics, let me state the following;
I do believe that longer-term, the US dollar and, for that matter, any paper currency is ultimately going to go the way of the Confederate dollar before this crisis is over.
In fact, I think what will eventually draw a line under the worsening economic climate will be an announcement by a major country/region that they will be backing their currency with gold regardless of what the IMF or the rest of the world's central bankers have to say about it.
That said, it will be a while yet before any of this comes to pass. Whoever is brave enough to try such a bold move will probably have to be armed to the teeth. Otherwise they won't be able to forestall a military-based attempt at a "currency attitude adjustment" from the followers of paper currency. There is no way the followers of paper currency will give up the ghost without an all out knock down barroom brawl.
The only country strong enough to do such a thing at the moment is the US of A -- and our government is one of the least likely to endorse the fiscal responsibility that gold backing enforces upon a currency regime!
In fact, the US government is going to be the most aggressive at trying to prove the supremacy of paper dollars over gold.
For the next little while they'll probably succeed. Take a look at the GAP between the current gold price and its 50 week moving average and you'll see why:
The last time the gold price raced up past that 50 week average (and peaked in both the Stochastics and MACD indicators) it first stagnated and then corrected fairly sharply.
The weakness lasted for a good 10 months. Of course there's no guarantee that the same thing will happen again but any time any asset "runs away" from its moving average there is going to be a period where it loses power and momentum and allows its moving average to catch up to it.
Click Here to Ask Questions or Comment
So Where's Gold Going Then?
Considering that gold finally stabilized at a level of previous resistance the last time around ($700 in October 2008) it's fair to project that a similar drop would level off at the $950-$1,000 mark a few months from now. That would be roughly where the 50-week moving average sits at the moment (or perhaps even a bit lower than that).
Based purely on fundamentals and what we know of the printing presses, deficits, fiscal irresponsibility and so forth – this sounds absolutely preposterous, doesn't it?
But the charts are hinting rather strongly that it will happen.
Here's the latest chart of UUP (the PowerShares DB US Dollar Index Bullish Fund):
The volume spike I talked about in the last column is tailing off and right now UUP is overbought on the Stochastics indicator. However, the very heavy volume at the bottom would indicate that some very serious players are betting on a significant rise in the US dollar.
What Do They Know That We Don't?
Probably that the US government is going to throw everything it can at the dollar in the next little while because they have to persuade the world that US debt is a good thing to buy and hold.
After all, a massive amount of debt is going to have to be issued this year to cover the widening deficits the government is trying to fund. Without a (perceived) strong dollar there's no way that debt is going for anything less than fire sale prices.
That's would be a disaster the government and its backers really don't want to even begin to contemplate, so they're going to throw all the financial weaponry at it as they possibly can.
How long they can keep it up remains to be seen, but you can bet that it will be for a few months unless the US government has truly lost its influence (I don't think it has, even though it's weaker than it once was). Don't forget that the USA is still a major financial power and there are enough parties with vested interests (i.e. current US debt-holders) who aren't about to stand in their way.
Why not? Well, let's say you're holding a whole bunch of dollars right now that you'd love to get rid of.
Don't you think it's likely that the Chinese -- amongst others -- might just use a US dollar rally to begin dumping part of their USD holdings? They're not going to squelch a USD run that facilitates such a dump which also cheapens something they'd much rather be accumulating: gold.
And even if they're not truly hardcore goldbugs, a lot of other non-USD alternatives will get cheaper too. Take a look at the dollar's main paper rival – the Euro has some problems of its own...
Just like gold, the EUR collapsed by quite a ways once it decisively broke through its moving averages after a MACD crossover (red arrow). A very similar situation is developing today, just as with the gold chart.
So are the Chinese truly looking to accumulate a few extra Euros too? Well, we won't know for sure until after the fact -- but Euros are likely to go on sale for a discount in the next few months.
Bear Market Rallies Can Be Brutal
The USD is therefore looking quite tempting for those looking to profit from a bear market rally – which is exactly what this is when you look at the longer term historical picture of paper assets vs. hard assets in a financial crisis.
The rally won't last forever.
But when you see how successful "The Powers That Be" were at ramping up the stock market last year, there's no reason to believe that they won't pull out all the stops to do the same for the dollar this year.
It's much tougher to manipulate the forex markets than the stock market, but as you're probably aware, we're living in an era of unprecedented government interventions in the free markets. And there are a LOT of vested interests that would love to see a dollar rally this year -- even if it means stocks and most other paper currencies take it on the chin for now.
The elephants are leaving some pretty big footprints, and those footprints are telling us that the USD is going to demonstrate real strength at gold's expense in the short to medium term.
To claim they are not holding some of it as an investment isn't based on knowledge. You are not making much sense, because according to you, gold is worthless as an investment, yet here is an entire industry making a considerable amount of money from something that is supposedly worthless.
More silliness. Where did I EVER say it was "worthless as an investment"?
Quit making up "facts".
The truth is - gold is a commodity like any other commodity. Sometimes it goes up sometimes it goes down - and often when it moves it moves relatively quickly. This can mean big profits (if you timing is right) or big losses (if your timing is poor).
It didn't crash. Since when has anyone holding gold ever gone broke? Remember Nasdaq? It has never recovered.
Funny you remember one 4 month period in the course of 40 years, but somehow have conveniently forgotten the rest of it. The point of investing is to buy on the dips and I am not sure why Gold is singled out as the one investment where this is a bad thing.
Never crashed eh?
LOL
What do you call having a price of nearly $900/ounce, falling to $500/ounce within a few weeks and then down to $300/ounce within 2 years?
Clearly, that is NOT a crash.
PS - and WHY do I pick on on relatively short period of time for gold?
Because I see the same silly arguments and ignorant mentality NOW that I saw THEN.
And the results will likely be the same.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
