@MsMorrisine said:
the sample size here does not lean towards statistical meaningfulness.
If respondents are "experts" or generally considered to be knowledgeable, such in a forum as this, a very reasonable and accurate study can be obtained with just a few dozen responses.
@PerryHall said:
Gold is not an investment. Rather, it's a means for preserving wealth and it's good to own during times of economic uncertainty.
I'm sure that the people who bought gold at $1800-1900 would disagree about wealth preservation.
I bought gold when it was $35 back in the 1960's but anyone can cherry pick their data points.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I still remember $375 gold back in high school when I was buying. Wish I knew more about stocks back then, would have diversified quite a bit differently.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@Jinx86 said:
For many of my clients its "fear of confiscation".
To me gold is no different than any other currency. Not all currency are accepted everywhere, know you market.
So this and DavidK answer lean toward hiding assets.
Hiding is a derivative of fear.
I’m confused. Where was I referencing ‘hiding assets’?
You realize the boating accident reference is a long-standing joke, right? And, it’s true that gold will not degrade after a boating accident. See Atocha.
@Jinx86 said:
For many of my clients its "fear of confiscation".
To me gold is no different than any other currency. Not all currency are accepted everywhere, know you market.
So this and DavidK answer lean toward hiding assets.
Hiding is a derivative of fear.
I’m confused. Where was I referencing ‘hiding assets’?
You realize the boating accident reference is a long standing joke, right? And, it’s true that gold will not degrade after a boating accident. See Atocha.
I know its a joke. And longstanding. So what are the roots of this joke, if not to hide?
@Higashiyama said:
That is a great discussion topic!
To really believe that gold makes sense in a portfolio, you need to either (a) have some confidence in your ability to market time, or (b) be concerned about very severe and prolonged inflation-close to a point of a breakdown in society.
Over the long term, gold is not going to outperform inflation; unless you can market time, it is hard to justify. Market timing, by the way, may be more of a sell side issue. Accumulate gold during stable, low inflation periods, and sell gradually during the course of nightmare scenarios.
Although I do own gold, I don’t think I have a particularly rational reason for doing so. It’s just kind of cool stuff! However, as an inflation hedge, I tend to lean towards real estate.
At the current price, gold is likely to be a relatively poor longer term inflation hedge because it is historically overpriced versus the things people actually need to buy. Still better than financial assets but still relatively far too expensive. I think it has one more big leg down from here and then it will spike into a long term top one or several decades from now. If the global monetary system gets into trouble like the metal bugs perpetually seem to believe, they will need to sell into this spike, just as in 1980.
Real estate is almost certainly mostly going to be a very poor hedge longer term. Much of it is hugely overpriced due to artificially cheap credit and absurdly lax credit standards. Where it isn't, this is substantially (if not primarily) due to the area being in long term structural decline. This also isn't the 1970's where real estate was relatively much cheaper and wages more or less kept up with it, at least according to government data.
The best reason to believe there isn't going to be a very good inflation hedge is this one. Society has enjoyed a "free ride" of inflated but unearned and unaffordable living standards. It's eventually going to be time to "pay the piper" and as in the well known story, he isn't going to be cheated. The next time this happens, most people are going to experience a crash landing in their living standards, no matter what they do.
@Jinx86 said:
For many of my clients its "fear of confiscation".
To me gold is no different than any other currency. Not all currency are accepted everywhere, know you market.
So this and DavidK answer lean toward hiding assets.
Hiding is a derivative of fear.
I’m confused. Where was I referencing ‘hiding assets’?
You realize the boating accident reference is a long standing joke, right? And, it’s true that gold will not degrade after a boating accident. See Atocha.
I know its a joke. And longstanding. So what are the roots of this joke, if not to hide?
@Jinx86 said:
For many of my clients its "fear of confiscation".
To me gold is no different than any other currency. Not all currency are accepted everywhere, know you market.
So this and DavidK answer lean toward hiding assets.
Hiding is a derivative of fear.
I’m confused. Where was I referencing ‘hiding assets’?
You realize the boating accident reference is a long standing joke, right? And, it’s true that gold will not degrade after a boating accident. See Atocha.
I know its a joke. And longstanding. So what are the roots of this joke, if not to hide?
@Higashiyama said: @PerryHall said:
“I bought gold when it was $35 back in the 1960's but anyone can cherry pick their data points. “
If you were a US citizen at the time, you were breaking the law.
(Or maybe you bought double eagles!)
US gold coins were not illegal to own.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
That’s a good chart. Clearly the markets had a bit of trouble figuring a plausible price following the final complete official demonetization during the Nixon years. For the past twenty years or so, gold sure seems to want to be at about $ 2000 in 2018 dollars.
@Higashiyama said:
That’s a good chart. Clearly the markets had a bit of trouble figuring a plausible price following the final complete official demonetization during the Nixon years. For the past twenty years or so, gold sure seems to want to be at about $ 2000 in 2018 dollars.
So, that means gold has been a poor inflation hedge and terrible investment.
Wait, lemme guess, that is juuuust about to change, right?
Cuz This Time is DIFFERENT!
Right?
🤣
I clicked on that link and have two observations.
First, I'd really like to know what CPI index is being used because that chart doesn't correspond to anything I have ever seen. I consider it absurd. Gold is supposedly cheaper now at about $1400 than it was at the double bottom in 1999 and 2001 around $250. Really?
Second, the author of that marketing puff piece makes a comment about silver at $700. He says he isn't predicting it's going to happen but let's evaluate this number for a second. Unless practically every single other physical good and service that people need goes up by a roughly corresponding amount, silver would be ridiculously overpriced even at much lower levels.
As an example, at the May 2011 silver peak around $50, someone could have bought a middle class home in many decent middle class neighborhoods across the country in larger cities for between 2000 and 3000 ounces.
Other than the 1980 bubble peak, when was the last time silver was equivalently priced?
Answer: Probably never or at least not in the US since silver became plentiful after discovery of large scale silver deposits in the second half of the 19th century.
So, that means gold has been a poor inflation hedge and terrible investment.
My gold is a crisis hedge. I invest elsewhere.
Gold has done well preserving value compared to the dollar. Time has shown it to work better than the mattress.
Guess it's time to remind you what has happened to the dollar's purchasing power over time:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
First, I'd really like to know what CPI index is being used because that chart doesn't correspond to anything I have ever seen. I consider it absurd.
Like the chart says, it's the 1980 consumer price index. You know, the CPI formula that truly reflected inflation before they started tweeking it to get the results they wanted. After all, government cost of living increases in government benefits use this data to pay benefits. The lower the "reported" inflation, the lower the cost of living increase, and the more the recipient is screwed.
Many economists consider the 1980 CPI formula better reflects a true measurement of current inflation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Lol a crisis hedge lol what the heck is that, what exactly does gold do during a crisis hedge become edible?, drinkable? growable?, lol great joke,
that chart is a joke also, the dollar has been a great preservation of wealth perhaps the greatest, the dollar bought and buys stocks/equity also the CPI chart I use is my dad bought a new home in 1972 and his payment was 2-300 bucks no more, by the mid 80’s a struggle payment became a joke as each year passed, 300 bucks was piss away money, now that property is worth 10x as much and which is much greater, a minimum 1200@month for over 20 years and that can go on forever, bottom line is no one ever became wealthy purchasing gold and not 1 crisis known to man that gold has changed by someone purchasing it...
So, that means gold has been a poor inflation hedge and terrible investment.
My gold is a crisis hedge. I invest elsewhere.
Gold has done well preserving value compared to the dollar. Time has shown it to work better than the mattress.
Guess it's time to remind you what has happened to the dollar's purchasing power over time:
Well that depends on the ownership period, doesn't it?
Some stretches of time, it looks like cash in the mattress did far better than buying and then selling gold, especially considering the transaction vigorish.
Even in the best intervals for gold, that's faint praise, "better than wrinkled bills.
Now, crispy 100+ year old Federal reserve notes? ...I'd bet on the cash over gold bars, perhaps even most coins, dollar for dollar.
If you have a bitcoin, somebody has to buy and successfully process your sale when you wish to redeem
Is that also not true of PMs? Or could Bitcoin not be directly "redeemed" for another good or service?
It's true for all asset classes, so the answer to your question is neutral, until you evaluate each class on a relative basis for the times in which the evaluation is made.
I view the risk of runaway inflation as essentially negligible.
That's the general perception until it does happen. Normalcy bias.
gold is simply, and nothing more, than pure speculation...
And Google or Amazon aren't? Again, it depends on your own perspectives about value and risk.
Hiding is a derivative of fear.
There are irrational fears, and rational ones. Let history be your teacher and let rational thought be your method for how you deal with your fears.
Gold is not an investment. Rather, it's a means for preserving wealth and it's good to own during times of economic uncertainty.
I'm sure that the people who bought gold at $1800-1900 would disagree about wealth preservation.
This is an unfair statement based on a cherrypicked time reference. Any asset is subject to the same phenomena and this view doesn't address the original question.
every action one takes is a derivative of fear
Yikes.
This attitude explains much.
Live long enough, and you will see why, even tho' we all agree with diversification in principle.
That’s a good chart. Clearly the markets had a bit of trouble figuring a plausible price following the final complete official demonetization during the Nixon years. For the past twenty years or so, gold sure seems to want to be at about $ 2000 in 2018 dollars.
Excellent comment, although I find it really difficult to peg the price of gold in today's world - taking into account all of the debt overhang and off-the-books money creation and wanton fiscal policies for the past 50 years.
As an example, at the May 2011 silver peak around $50, someone could have bought a middle class home in many decent middle class neighborhoods across the country in larger cities for between 2000 and 3000 ounces.
Other than the 1980 bubble peak, when was the last time silver was equivalently priced?
Relative to the stock market and real estate, I do think that silver is undervalued but as I mentioned above it is difficult to properly value just about any asset when the unknowns about the debt overhang and how debt ties into the derivatives market and the worldwide exposure to the insolvent banking systems and sovereign government debt issuance.
the dollar has been a great preservation of wealth perhaps the greatest, the dollar bought and buys stocks/equity also the CPI chart I use is my dad bought a new home in 1972 and his payment was 2-300 bucks no more, by the mid 80’s a struggle payment became a joke as each year passed, 300 bucks was piss away money
lol, do you see the dichotomy and inconsistency in your statement? How can the dollar have been perhaps the greatest preservation of wealth and at the same time it has become "piss away money"? I do enjoy your posts, though.
Number of oz of gold needed to buy the median priced home in USA.
1975--280 oz
1980--108 oz
1985--257 oz
1990--314 oz
1995--344 oz
2000--632 oz
2005--460 oz
2010--156 oz
2015--276 oz
today--222 oz
What is y'alls opinion of this?
My opinion is that in 1980, houses were low and gold was high; in 2000, houses were high and gold was low.
In contrast to both of those times, today we see unprecedented debt and rates heading lower with little to zero chance of normalizing to reflect the time value of money. I consider this to be a serious development that is upending the social order.
In combination with the banking industry racket of skimming money from the fractional reserve scheme and the illegitimate fraud of fiat money via massive debt creation to finance profligate spending by Congress for their buddies and pet projects to buy influence and votes, it's unsustainable.
Some stretches of time, it looks like cash in the mattress did far better than buying and then selling gold, especially considering the transaction vigorish.
Even in the best intervals for gold, that's faint praise, "better than wrinkled bills.
Indeed, there are times when it may be wise to have some wrinkled bills lying around. But, that's hardly a condemnation of gold. It's more a confirmation of the problems caused by a corrupt banking system and corrupt government.
Q: Are You Printing Money? Bernanke: Not Literally
No. 1 perceived risk as I understand it from a variety of experts: inflation -- whether it has been or not.
No. 1 perceived risk by the buyers: ask them
not surprised the preppers buy for future spending
not surprised the preppers buy for anti-confiscation
not surprised the number of people here buy for future usa debt issues that leads to dollar decline that leads to inflation.
me? I'm still thinking there will be a way out of the future debt issues. seems "everyone is doing it." I'm guessing there will be a mutual forgiveness event or events.
I'm buying thinking there will be some minor dollar deterioration before such event.
@Higashiyama said "I view the risk of runaway inflation as essentially negligible."
to which @jmski52 responded "That's the general perception until it does happen. Normalcy bias."
In my case, it is not really normalcy bias, though perhaps you could call it a lack of imagination.
However, if someone truly believes that hyperinflation is a non-negligible risk, they should be able to construct a realistic and detailed scenario describing how US dollar based hyperinflation would emerge. (of course, they would not be predicting that scenario, but simply demonstrating that such a scenario exists. So far, that has never been done on this Board, or, in fact, on any publication referenced that I am aware of).
Typically, when members of his Board express concern over hyperinflation, the concern is backed by some very broad and not terribly meaningful statements, such as:
it happened in Weimar Germany, or Venezuala, or Zimbabwe, so it can happen here.
We have unsupportable levels of debt, astronomical levels of unreserved obligations (especially pension, medical)
We seem to be moving further and further down a path predicted by Hayek, wherein citizens in a democracy vote themselves ever increasing benefits (and seem disinclined to want to work for them)
There are severe geo-political issues as well ... Middle East, China, Russia, etc.
The challenge for anyone who believes that there is a material risk of hyperinflation is to look at these concerns (together with a solid knowledge of the way an economy and finance system work), and construct a scenario that shows a sequence of events that leads to hyperinflation. In asking Board participants to construct such a sequence of events, I would ask for significant details to be included. (eg. war with China leads to printing of money leads to hyperinflation is not enough )
When I personally try to do this, all of my scenarios lead to extended double digit inflation, but not hyperinflation.
First, I'd really like to know what CPI index is being used because that chart doesn't correspond to anything I have ever seen. I consider it absurd.
Like the chart says, it's the 1980 consumer price index. You know, the CPI formula that truly reflected inflation before they started tweeking it to get the results they wanted. After all, government cost of living increases in government benefits use this data to pay benefits. The lower the "reported" inflation, the lower the cost of living increase, and the more the recipient is screwed.
Many economists consider the 1980 CPI formula better reflects a true measurement of current inflation.
Thanks, but I'm familiar with the CPI and know it has changed.
Your reply doesn't change the inaccuracy of the gold chart from that marketing puff piece you referenced. The idea that prices have increased five times since 1999/2001 is nonsense. That's what it implies by showing gold now (around $1400) with the same purchasing power when it was priced at $250.
If this were remotely true, the standard of living of the typical American would have collapsed, despite increased debt and government spending over this period. In nominal terms, per capita and household income have increased nowhere near that amount.
We can debate how much silver is or isn't "underpriced" but it currently isn't that much out of line with any number of things people need to buy, regardless of what CPI methodology anyone wants to use. The cost of housing is one example and by this comparison, silver seems to be roughly in line with the historical ratio.
@Higashiyama said: @Higashiyama said "I view the risk of runaway inflation as essentially negligible."
to which @jmski52 responded "That's the general perception until it does happen. Normalcy bias."
In my case, it is not really normalcy bias, though perhaps you could call it a lack of imagination.
However, if someone truly believes that hyperinflation is a non-negligible risk, they should be able to construct a realistic and detailed scenario describing how US dollar based hyperinflation would emerge. (of course, they would not be predicting that scenario, but simply demonstrating that such a scenario exists. So far, that has never been done on this Board, or, in fact, on any publication referenced that I am aware of).
Typically, when members of his Board express concern over hyperinflation, the concern is backed by some very broad and not terribly meaningful statements, such as:
it happened in Weimar Germany, or Venezuala, or Zimbabwe, so it can happen here.
We have unsupportable levels of debt, astronomical levels of unreserved obligations (especially pension, medical)
We seem to be moving further and further down a path predicted by Hayek, wherein citizens in a democracy vote themselves ever increasing benefits (and seem disinclined to want to work for them)
There are severe geo-political issues as well ... Middle East, China, Russia, etc.
The challenge for anyone who believes that there is a material risk of hyperinflation is to look at these concerns (together with a solid knowledge of the way an economy and finance system work), and construct a scenario that shows a sequence of events that leads to hyperinflation. In asking Board participants to construct such a sequence of events, I would ask for significant details to be included. (eg. war with China leads to printing of money leads to hyperinflation is not enough )
When I personally try to do this, all of my scenarios lead to extended double digit inflation, but not hyperinflation.
The reason why no one has demonstrated a case for hyperinflation is because they cannot, not imminently or for the forseeable future. It's not impossible since human beings have freedom of action but It isn't likely at all. I agree it will happen "eventually" but what is far more important is the sequence of events, as those who "get it wrong" may be broke before it ever happens.
First, no one who supposedly has the ability to make it happen has the motives to do so. Not as long as interest rates are so low for governments and corporates and it is easy to borrow.
Second, no one who supposedly has the ability to do it can actually make it happen. Jerome Powell replacing "Helicopter" Ben Bernanke cannot do so as last I checked, he is only FRB chairman and not the dictator of the US. The Federal Reserve cannot do it either. It doesn't want to now, there is no reason to believe it will for the forseeable future but even if it did, to do so would be political suicide without a consensus including Congress, the executive branch and the financial services industry at minimum.
Third, institutions like the Federal Reserve are not monolithic. They don't act like human beings. Members of the Federal Reserve each have their own motives which may agree or may not. Same applies to other bureaucracies.
Fourth, at the current juncture, every single claim I have ever read for hyperinflation (literally) assumes that market participants are non-thinking robots who will just sit around and watch while central banks or governments "print" the currency to oblivion.
The reality? In the current highly leveraged fiat money fractional reserve banking system of today, any attempt to do so would crash the financial markets leading to a deflationary economic depression first.
John Williams estimates inflation at 9% currently, based on 1980 norms for figuring inflation. I didn't posit hyperinflation, but I do think that runaway inflation is quite possible in the near future. In 1980, inflation ran up to something like 14% - 15% as I recall and that was pretty serious.
Ignoring some major cost inputs so that increases in entitlement payouts are limited - is the name of the game for gov.com - it's been that way now for decades. But running huge budget deficits and raising the debt ceiling is somehow "acceptable" in this Bizzaro World. It's corrupt and dishonest and cheats every taxpayer who works to run an organization this way.
Today's rate cut means that the Fed will be creating more Treasuries to sell, where no Treasuries previously existed, in addition to the Treasuries that have to be rolled over. You may not think that inflation is rampant, but it depends on the criteria you use. If you consider housing costs and/or student debt, inflation is serious already. The debt total is certainly inflating, along with the ultimate costs of carrying that debt.
What percent of American households don't have $400 to draw upon in an emergency? How much is $400 anyway? If I'm not in financial trouble, how much fun is it when everyone else is? These are things to ponder.
Management of perceptions.
Q: Are You Printing Money? Bernanke: Not Literally
Comments
the sample size here does not lean towards statistical meaningfulness.
If respondents are "experts" or generally considered to be knowledgeable, such in a forum as this, a very reasonable and accurate study can be obtained with just a few dozen responses.
See Delphi Study.
Knowledge is the enemy of fear
just as long as you acknowledge us as experts...
I'm sure that the people who bought gold at $1800-1900 would disagree about wealth preservation.
I bought gold when it was $35 back in the 1960's but anyone can cherry pick their data points.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I did not buy any gold when it was $18-1900..... I bought a lot of gold when it was $300-400-500.....Cheers, RickO
I still remember $375 gold back in high school when I was buying. Wish I knew more about stocks back then, would have diversified quite a bit differently.
every action one takes is a derivative of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yikes.
This attitude explains much.
Liberty: Parent of Science & Industry
When I'm in my 70's I can do the same, not so much for much younger people.
I’m confused. Where was I referencing ‘hiding assets’?
You realize the boating accident reference is a long-standing joke, right? And, it’s true that gold will not degrade after a boating accident. See Atocha.
I know its a joke. And longstanding. So what are the roots of this joke, if not to hide?
Knowledge is the enemy of fear
At the current price, gold is likely to be a relatively poor longer term inflation hedge because it is historically overpriced versus the things people actually need to buy. Still better than financial assets but still relatively far too expensive. I think it has one more big leg down from here and then it will spike into a long term top one or several decades from now. If the global monetary system gets into trouble like the metal bugs perpetually seem to believe, they will need to sell into this spike, just as in 1980.
Real estate is almost certainly mostly going to be a very poor hedge longer term. Much of it is hugely overpriced due to artificially cheap credit and absurdly lax credit standards. Where it isn't, this is substantially (if not primarily) due to the area being in long term structural decline. This also isn't the 1970's where real estate was relatively much cheaper and wages more or less kept up with it, at least according to government data.
The best reason to believe there isn't going to be a very good inflation hedge is this one. Society has enjoyed a "free ride" of inflated but unearned and unaffordable living standards. It's eventually going to be time to "pay the piper" and as in the well known story, he isn't going to be cheated. The next time this happens, most people are going to experience a crash landing in their living standards, no matter what they do.
Glad you got the joke.
I was -28 years old in 1960
@PerryHall said:
“I bought gold when it was $35 back in the 1960's but anyone can cherry pick their data points. “
If you were a US citizen at the time, you were breaking the law.
(Or maybe you bought double eagles!)
200 years of Gold prices:
https://onlygold.com/gold-prices/historical-gold-prices/
I see 50-60 years of failing fiat currency.
I do not know said joke
US gold coins were not illegal to own.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Yes, that’s the point of my parenthetical comment!
PS-and you weren’t paying $35 an ounce!
For any historical price chart to be relevant it must first be adjusted for inflation:
Gold & Silver Prices Now at Inflation-Adjusted 50-Year Lows
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
So, that means gold has been a poor inflation hedge and terrible investment.
Wait, lemme guess, that is juuuust about to change, right?
Cuz This Time is DIFFERENT!
Right?
🤣
Liberty: Parent of Science & Industry
That’s a good chart. Clearly the markets had a bit of trouble figuring a plausible price following the final complete official demonetization during the Nixon years. For the past twenty years or so, gold sure seems to want to be at about $ 2000 in 2018 dollars.
What was that about gold being good for wealth preservation...
we need to agree not to re-debate certain topics unless new information is present. this is exhausting.
now if we could get them to switch to PCE....
I clicked on that link and have two observations.
First, I'd really like to know what CPI index is being used because that chart doesn't correspond to anything I have ever seen. I consider it absurd. Gold is supposedly cheaper now at about $1400 than it was at the double bottom in 1999 and 2001 around $250. Really?
Second, the author of that marketing puff piece makes a comment about silver at $700. He says he isn't predicting it's going to happen but let's evaluate this number for a second. Unless practically every single other physical good and service that people need goes up by a roughly corresponding amount, silver would be ridiculously overpriced even at much lower levels.
As an example, at the May 2011 silver peak around $50, someone could have bought a middle class home in many decent middle class neighborhoods across the country in larger cities for between 2000 and 3000 ounces.
Other than the 1980 bubble peak, when was the last time silver was equivalently priced?
Answer: Probably never or at least not in the US since silver became plentiful after discovery of large scale silver deposits in the second half of the 19th century.
My gold is a crisis hedge. I invest elsewhere.
Gold has done well preserving value compared to the dollar. Time has shown it to work better than the mattress.
Guess it's time to remind you what has happened to the dollar's purchasing power over time:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Like the chart says, it's the 1980 consumer price index. You know, the CPI formula that truly reflected inflation before they started tweeking it to get the results they wanted. After all, government cost of living increases in government benefits use this data to pay benefits. The lower the "reported" inflation, the lower the cost of living increase, and the more the recipient is screwed.
Many economists consider the 1980 CPI formula better reflects a true measurement of current inflation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Lol a crisis hedge lol what the heck is that, what exactly does gold do during a crisis hedge become edible?, drinkable? growable?, lol great joke,
that chart is a joke also, the dollar has been a great preservation of wealth perhaps the greatest, the dollar bought and buys stocks/equity also the CPI chart I use is my dad bought a new home in 1972 and his payment was 2-300 bucks no more, by the mid 80’s a struggle payment became a joke as each year passed, 300 bucks was piss away money, now that property is worth 10x as much and which is much greater, a minimum 1200@month for over 20 years and that can go on forever, bottom line is no one ever became wealthy purchasing gold and not 1 crisis known to man that gold has changed by someone purchasing it...
.
https://fred.stlouisfed.org/series/MSPUS
Using these 2 websites...
Number of oz of gold needed to buy the median priced home in USA.
1975--280 oz
1980--108 oz
1985--257 oz
1990--314 oz
1995--344 oz
2000--632 oz
2005--460 oz
2010--156 oz
2015--276 oz
today--222 oz
What is y'alls opinion of this?
Knowledge is the enemy of fear
Well that depends on the ownership period, doesn't it?
Some stretches of time, it looks like cash in the mattress did far better than buying and then selling gold, especially considering the transaction vigorish.
Even in the best intervals for gold, that's faint praise, "better than wrinkled bills.
Now, crispy 100+ year old Federal reserve notes? ...I'd bet on the cash over gold bars, perhaps even most coins, dollar for dollar.
Liberty: Parent of Science & Industry
If you have a bitcoin, somebody has to buy and successfully process your sale when you wish to redeem
Is that also not true of PMs? Or could Bitcoin not be directly "redeemed" for another good or service?
It's true for all asset classes, so the answer to your question is neutral, until you evaluate each class on a relative basis for the times in which the evaluation is made.
I view the risk of runaway inflation as essentially negligible.
That's the general perception until it does happen. Normalcy bias.
gold is simply, and nothing more, than pure speculation...
And Google or Amazon aren't? Again, it depends on your own perspectives about value and risk.
Hiding is a derivative of fear.
There are irrational fears, and rational ones. Let history be your teacher and let rational thought be your method for how you deal with your fears.
Gold is not an investment. Rather, it's a means for preserving wealth and it's good to own during times of economic uncertainty.
I'm sure that the people who bought gold at $1800-1900 would disagree about wealth preservation.
This is an unfair statement based on a cherrypicked time reference. Any asset is subject to the same phenomena and this view doesn't address the original question.
every action one takes is a derivative of fear
Yikes.
This attitude explains much.
Live long enough, and you will see why, even tho' we all agree with diversification in principle.
That’s a good chart. Clearly the markets had a bit of trouble figuring a plausible price following the final complete official demonetization during the Nixon years. For the past twenty years or so, gold sure seems to want to be at about $ 2000 in 2018 dollars.
Excellent comment, although I find it really difficult to peg the price of gold in today's world - taking into account all of the debt overhang and off-the-books money creation and wanton fiscal policies for the past 50 years.
As an example, at the May 2011 silver peak around $50, someone could have bought a middle class home in many decent middle class neighborhoods across the country in larger cities for between 2000 and 3000 ounces.
Other than the 1980 bubble peak, when was the last time silver was equivalently priced?
Relative to the stock market and real estate, I do think that silver is undervalued but as I mentioned above it is difficult to properly value just about any asset when the unknowns about the debt overhang and how debt ties into the derivatives market and the worldwide exposure to the insolvent banking systems and sovereign government debt issuance.
the dollar has been a great preservation of wealth perhaps the greatest, the dollar bought and buys stocks/equity also the CPI chart I use is my dad bought a new home in 1972 and his payment was 2-300 bucks no more, by the mid 80’s a struggle payment became a joke as each year passed, 300 bucks was piss away money
lol, do you see the dichotomy and inconsistency in your statement? How can the dollar have been perhaps the greatest preservation of wealth and at the same time it has become "piss away money"? I do enjoy your posts, though.
Number of oz of gold needed to buy the median priced home in USA.
1975--280 oz
1980--108 oz
1985--257 oz
1990--314 oz
1995--344 oz
2000--632 oz
2005--460 oz
2010--156 oz
2015--276 oz
today--222 oz
What is y'alls opinion of this?
My opinion is that in 1980, houses were low and gold was high; in 2000, houses were high and gold was low.
In contrast to both of those times, today we see unprecedented debt and rates heading lower with little to zero chance of normalizing to reflect the time value of money. I consider this to be a serious development that is upending the social order.
In combination with the banking industry racket of skimming money from the fractional reserve scheme and the illegitimate fraud of fiat money via massive debt creation to finance profligate spending by Congress for their buddies and pet projects to buy influence and votes, it's unsustainable.
Some stretches of time, it looks like cash in the mattress did far better than buying and then selling gold, especially considering the transaction vigorish.
Even in the best intervals for gold, that's faint praise, "better than wrinkled bills.
Indeed, there are times when it may be wise to have some wrinkled bills lying around. But, that's hardly a condemnation of gold. It's more a confirmation of the problems caused by a corrupt banking system and corrupt government.
I knew it would happen.
No. 1 perceived risk as I understand it from a variety of experts: inflation -- whether it has been or not.
No. 1 perceived risk by the buyers: ask them
not surprised the preppers buy for future spending
not surprised the preppers buy for anti-confiscation
not surprised the number of people here buy for future usa debt issues that leads to dollar decline that leads to inflation.
me? I'm still thinking there will be a way out of the future debt issues. seems "everyone is doing it." I'm guessing there will be a mutual forgiveness event or events.
I'm buying thinking there will be some minor dollar deterioration before such event.
"All assets have risk, but what is the #1 risk that is perceived to be alleviated by PMs?"
The perceived risk alleviated - that it has more of a guarantee.
@Higashiyama said "I view the risk of runaway inflation as essentially negligible."
to which @jmski52 responded "That's the general perception until it does happen. Normalcy bias."
In my case, it is not really normalcy bias, though perhaps you could call it a lack of imagination.
However, if someone truly believes that hyperinflation is a non-negligible risk, they should be able to construct a realistic and detailed scenario describing how US dollar based hyperinflation would emerge. (of course, they would not be predicting that scenario, but simply demonstrating that such a scenario exists. So far, that has never been done on this Board, or, in fact, on any publication referenced that I am aware of).
Typically, when members of his Board express concern over hyperinflation, the concern is backed by some very broad and not terribly meaningful statements, such as:
it happened in Weimar Germany, or Venezuala, or Zimbabwe, so it can happen here.
We have unsupportable levels of debt, astronomical levels of unreserved obligations (especially pension, medical)
We seem to be moving further and further down a path predicted by Hayek, wherein citizens in a democracy vote themselves ever increasing benefits (and seem disinclined to want to work for them)
There are severe geo-political issues as well ... Middle East, China, Russia, etc.
The challenge for anyone who believes that there is a material risk of hyperinflation is to look at these concerns (together with a solid knowledge of the way an economy and finance system work), and construct a scenario that shows a sequence of events that leads to hyperinflation. In asking Board participants to construct such a sequence of events, I would ask for significant details to be included. (eg. war with China leads to printing of money leads to hyperinflation is not enough
)
When I personally try to do this, all of my scenarios lead to extended double digit inflation, but not hyperinflation.
Sold!
Lol, jmski, to incorporate this with Higashiyama San and his post,
Ones bias either temporarily or permanently blinds ones common sense if they had any to begin with...
Thanks, but I'm familiar with the CPI and know it has changed.
Your reply doesn't change the inaccuracy of the gold chart from that marketing puff piece you referenced. The idea that prices have increased five times since 1999/2001 is nonsense. That's what it implies by showing gold now (around $1400) with the same purchasing power when it was priced at $250.
If this were remotely true, the standard of living of the typical American would have collapsed, despite increased debt and government spending over this period. In nominal terms, per capita and household income have increased nowhere near that amount.
We can debate how much silver is or isn't "underpriced" but it currently isn't that much out of line with any number of things people need to buy, regardless of what CPI methodology anyone wants to use. The cost of housing is one example and by this comparison, silver seems to be roughly in line with the historical ratio.
The current cost to mine and refine new silver directly averages about $12/oz.
Sometimes it even accumulates as a free byproduct of copper production.
Liberty: Parent of Science & Industry
The reason why no one has demonstrated a case for hyperinflation is because they cannot, not imminently or for the forseeable future. It's not impossible since human beings have freedom of action but It isn't likely at all. I agree it will happen "eventually" but what is far more important is the sequence of events, as those who "get it wrong" may be broke before it ever happens.
First, no one who supposedly has the ability to make it happen has the motives to do so. Not as long as interest rates are so low for governments and corporates and it is easy to borrow.
Second, no one who supposedly has the ability to do it can actually make it happen. Jerome Powell replacing "Helicopter" Ben Bernanke cannot do so as last I checked, he is only FRB chairman and not the dictator of the US. The Federal Reserve cannot do it either. It doesn't want to now, there is no reason to believe it will for the forseeable future but even if it did, to do so would be political suicide without a consensus including Congress, the executive branch and the financial services industry at minimum.
Third, institutions like the Federal Reserve are not monolithic. They don't act like human beings. Members of the Federal Reserve each have their own motives which may agree or may not. Same applies to other bureaucracies.
Fourth, at the current juncture, every single claim I have ever read for hyperinflation (literally) assumes that market participants are non-thinking robots who will just sit around and watch while central banks or governments "print" the currency to oblivion.
The reality? In the current highly leveraged fiat money fractional reserve banking system of today, any attempt to do so would crash the financial markets leading to a deflationary economic depression first.
John Williams estimates inflation at 9% currently, based on 1980 norms for figuring inflation. I didn't posit hyperinflation, but I do think that runaway inflation is quite possible in the near future. In 1980, inflation ran up to something like 14% - 15% as I recall and that was pretty serious.
Ignoring some major cost inputs so that increases in entitlement payouts are limited - is the name of the game for gov.com - it's been that way now for decades. But running huge budget deficits and raising the debt ceiling is somehow "acceptable" in this Bizzaro World. It's corrupt and dishonest and cheats every taxpayer who works to run an organization this way.
Today's rate cut means that the Fed will be creating more Treasuries to sell, where no Treasuries previously existed, in addition to the Treasuries that have to be rolled over. You may not think that inflation is rampant, but it depends on the criteria you use. If you consider housing costs and/or student debt, inflation is serious already. The debt total is certainly inflating, along with the ultimate costs of carrying that debt.
What percent of American households don't have $400 to draw upon in an emergency? How much is $400 anyway? If I'm not in financial trouble, how much fun is it when everyone else is? These are things to ponder.
Management of perceptions.
I knew it would happen.
Sometimes it even accumulates as a free byproduct of copper production.
BS. That's an accounting artifact and you know it.
I knew it would happen.