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Gold seems to have particular appeal to two sorts of investors. The first has doomsday fears, or more charitably, regards modern central-banks to be a pernicious scam, and is leery of burgeoning public-sector debt. The second treats gold as one of several competing investment-buckets, with periodic rebalancing between the buckets. For the former, former, gold is literally a precious resource while everything else founders. For the latter, gold is a useful hedge in temporarily desperate times, and a repository of value to be redeployed elsewhere during good-times.
But even a casual glance at a historical chart reveals a curious behavior of gold: it sits moribund for years, then zooms up, then settles back down. It's highly volatile. Sure, it may outpace stocks over even fairly long periods. But en route is oscillates a lot. Is that good for one's psyche?
As for the topic of inflation hedges, and gold vs. real-estate.... well, in that case I choose gold. Gold isn't saddled with property tax. Gold doesn't require lawn care, unclogging toilets or a new roof. Gold has no nasty neighbors and doesn't fall in value if the local schools suffer a reduction in rating. Gold can be sold almost instantaneously and almost at no cost, whereas real-estate incurs a 6% commission and maybe a 6-month wait.
You certainly have a way with words. Your calling should have been a novelist. Most of your posts are very well written.
Gold responds poorly to plain inflation ....there really is no direct link between normal inflation and gold ....there are way to many other factors that determine what other assets do and what gold does and inflation is just one of many .
The biggest factor is the dollar’s strength and whether real returns are negative on cash instruments or not....that determines golds outcome the most
I generally don’t like it as long term investment because it’s essentially a zero coupon bond with no default risk. That looks appealing when a substantial amount of debt has a negative yield, but you’re not generating any cash flow so I think gold is merely a less bad option than treasuries for buy and hold investors. Equities and real estate are better asset classes in my experience.
I generally don’t like it as long term investment because it’s essentially a zero coupon bond with no default risk. That looks appealing when a substantial amount of debt has a negative yield, but you’re not generating any cash flow so I think gold is merely a less bad option than treasuries for buy and hold investors. Equities and real estate are better asset classes in my experience.
Equities and real estate tend to follow each other in to the toilet in recessions or depressions and even bad market crashes .....gold has had a positive real return in 98% of bad market downturns .
So real estate and stocks are no proxy for gold. Gold may act like a zero coupon bond in cash flow but that is where it ends..gold and treasuries may move together now but that is only until they dont
Last edited by mathjak107; 11-25-2020 at 05:38 PM..
gold has had a positive real return in 98% of bad market downturns ..
That’s because real interest rates go down when there’s a recession. When real interest rates go down gold goes up.
Quote:
Originally Posted by mathjak107
So real estate and stocks are no proxy for gold.
Yeah, real estate and stocks have nothing to do with gold. They’re simply better long term.
If your objective is to minimize portfolio variance of returns then gold has its place. If your goal is to maximize your return I wouldn’t buy and hold gold
That’s because real interest rates go down when there’s a recession. When real interest rates go down gold goes up.
Yeah, real estate and stocks have nothing to do with gold. They’re simply better long term.
If your objective is to minimize portfolio variance of returns then gold has its place. If your goal is to maximize your return I wouldn’t buy and hold gold
Nothing will beat 100% equities generally over the long term ..however using gold in portfolios that are not high volatility /high equity level allocations , gold and stocks has actually beat bonds and stocks over many time frames.
Over the last 20 years a mix of equities , gold , long term treasuries and short term treasuries actually did beat 100% equities .
Portfolios that use gold , like the golden butterfly or pinwheel models have beaten 60/40 over most time frames in return , risk vs reward , volatility and number of losing years
US dollar rose sharply against the Yen (60%) and Euro (50%). The Big 3 money printing central banks acted as a tag team to monetize US financial assets. The Fed paused, while the ECB and BOJ announced purchase programs large enough to more than absorb all supply in US, Japan, and Europe. Gold and oil are denominated in US dollars You'd have to buy GEUR. The rapid rise in oil became untenable for policy makers here (see JCPOA agreement with Iran in the face of $110 crude oil).
ADDED: There's a minor parallel at the present. At the last meeting, the ECB has fed expectations of a policy change at the December meeting that expands the amount of purchases or moves interest rate deeper below zero. There is a major EU stimulus program that's been approved.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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my GLD investment -4.01%, 2020,
GLD etf has a high share value. It consumes a big part of one of my accounts. This prevents a proper diversification.
In a rising Market, GLD will fall. I had expected the Market to fall-my bad.
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