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Seems like everyone has a piece of truth about gold. The problem with gold is that I don't get to look at earnings, cash flow, current ratio, and all the other stuff. As someone says "it is what it is" and I will add, "It will be what it will be".
In another thread I threw rocks at University of Texas Endowment Fund for buying 1 billion $ in gold bullion. And now they want to squabble about where it is being held - or "held" as one person said. It just seems to me that the whole gold thing is like a runaway train.
On the other hand, when I was a kid it was 32$/Oz. Shoulda bought some.
Gold like an commodity can overshoot on the upside and downside. Such predictions about fair value are worthless. The facts are simple, gold is now trending lower and we have no idea how long or short (in time and distance) this trend will be.
not that i am a gold bug at all but i will gladely take a chance with an asset that has survived 5,000 years which is far beyond any company on the planet.
certain things like diamonds and precious metals and even art work have intrinsic values that are ageless.
Back in the 1970's 1 dollar bought 1/35 of an ounce of gold. , today 1 dollar buys 1/1400th of an ounce of gold so there is a store of value going on there..
in fact going back to the 1800's 1 ounce bought a good mans suit and a pair of good shoes.
today 1 ounce still gets a good mans suit and a pair of shoes.
I view it more as a fallen angel, like Eastman Kodak, Pitney Bowes, Pan Am, newspapers, et al.
For a while it essentially had a monopoly on the currency market. Then fiat destroyed it - now it can't compete. And don't think its limited supply is any competitive advantage. It's not.
Anything with limited supply is going to have a "novelty premium." But don't mistake this novelty premium for intrinsic value. Cash flow is imperative for intrinsic value to exist.
The way I see gold it requires a double confidence in order to have any value. That is, gold's value to me is what I think its value is to you. There are very few things that can be bought with gold, importantly I have to pay my tax in Australian dollars, I can't roll up to the Treasury and hand over a few gold coins.
we don't actually spend gold but being a currency gold can be converted to any currency in the world at any time.
it is the once currency accepted world wide in exchange for local money.
why buy diamonds or any collectable for the most part either. they all are only valued at what the world will pay at any given time.
but like i said 5,000 years of a track record of being accepted anywhere on the planet is enough of a track record for me to qualify as an asset class the same as real estate , commodities and collectables would be.
Since the human race began using gold as a medium for buying good and services, gold has NEVER been worthless. The same can't be said for dozen's of countries currency, which did became worthless. Gold is a hedge against inflation, the simple fact is if you feel your countries currency is stable, gold is over priced and if you think your currency is unstable, it's under priced.
Personally I rather have a safe full of gold then any countries currency.
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. It just seems to me that the whole gold thing is like a runaway train.
