June 02, 2011
– Comments (14)
FYI - YES WE CAN! REAL HOPE FOR AMERICA!
Between January 1980 (the high price for gold) and 2001 when the price bottomed, you lost 85% of your purchasing power when measured in McDonalds hamburgers.
This doesn't sound like a stable store of value to me.
You choose 20 years.
Lets look at the last 3000 years.
What has worked?
Not stocks...like all fiat currencies they return to their intrinsic value.
actually - 4000 years?
Dated to between 2000 and 1500 B.C., the stones were used to grind ore, the team said. The ore then would have been washed with water to tease out gold flakes.
"Nubia was renowned for its gold deposits," said Geoff Emberling, a leader of the expedition.
After Egypt's New Kingdom (1539 to 1075 B.C.) conquered the southern Nubian kingdom of Kush, "they took in tribute hundreds, if not thousands, of pounds of gold each year."
The first recorded kingdom in sub-Saharan Africa, Kush was one of the first civilizations to take hold in the Nile River Valley.
How many people do you know who got rich off of investing in gold? I don't know any. My whole family is wealthy from owning stock. Put all of your money in gold and we will see how wealthy you are in a few years when the fear subsides and gold prices crash.
abitare - 20 years is long enough compared to a person's working life that the loss of purchasing power parity is quite material. Let's look at gold now. The price would have to be about $2400/oz to get back to the purchasing power of gold in Jan 1980. That's 30 years. If it takes 70 years to return to purchasing power parity, it doesn't matter, none of us will be alive in 70 years. Something that can lose you 85% of your purchasing power for decades isn't a very good store of value.
You don't get rich from gold you get poor from holding dollars and stock.. you think that... nevermind not worth the effort
If you just chose a random 30-year period that would be one thing, but to purposely choose the worst possible time-frame to illustrate a point is quite another. There probably aren't many investors that would've gone all-in on gold at the peak and never invested another dollar in anything.
Given the same time period and a more realistic investment likelihood of, for example, buying one ounce of gold each year starting in 1980 until 2010, would yield a much different and more positive result.
Mcdonalds is no longer food, its tasty cardboard. Lets index that to organic raw foods. Then, perhaps factor in the slave wage they pay, and you will see that its about more than feeling good with fake stats that were made for people in denial. Get off your knees and rise in anger. And for Ron, I hear he is a good guy, but fixing the government is not going to fix our lives, we have to change our own lives, the man cant do that. Fix your own life and you will find you dont need Ron anymore.
The ideal gold investor's formula is:
-Buy gold at the begining of a bull market
-Hold until the bull market turns speculative
-Sell gold and buy a different asset class: equities & real estate.
Gold goes through cyclical ups and downs just like the market, real estate, and commodities. Never become so attached to the gold ideology that you are blind to it's downside.
kdakota630 - I chose that time period precisely because it shows that gold is not always a good store of purchasing power. The only reason to do a trade is because you think you will have more purchasing power after it is over than when you started. A trade that loses you 85% of you purchasing power is a bad trade.
There are times where buying gold is very profitable. There are times when buying gold will lose you purchasing power. Rational people try to figure out which is which.
Well chk... you must admit that 2011 is different from 1980. Out debt and money printing (not just ours but most countries) is outrageous. Gold has always been a store of money in these situations (although this degree of shenanigans has never occured... I mean, we're the reserve currency!)
Just to be clear, I'm not saying, "This time, it's different." I'm saying, this time, "ITS EXACTLY THE SAME." Anyone that has ever lived in a country with this much debt, should have been trading fiat for gold left and right.
#6 "20 years is long enough compared to a person's working life that the loss of purchasing power parity is quite material."
So why not look at the DOW? We peaked at 381 on Aug. 26, 1929. 20 years later we were at 178. Not only that, but the value of the dollar was reduced by 50% in 1934, so the TRUE value of the DOW was 89. That's an 87% loss in 20 years.
FreeMarkets - I've never claimed that you can't lose money in the stock market. I've even seen people do it!