Since we are coin collectors, these are my observations.
1. Holding some silver, gold and platinum is advisable.
2. Those holdings could be selected Mint products. The surcharge from the Mint is usually moderate and the rarity factor is the kicker in the equation. Thus you have rare metals on top of coin rarity.
3.In the real world, one must protect against all eventualities such as inflation, deflation, recession and war time conditions. As such ,diversity of ones assets is always recommended.
Stocks, bonds, CDs, cash, coins, real estate will in the proper mix provide some measure of protection.
4.Inflation is the government's way to get out from under its mountain of debt, by merely printing more money. This is in effect a tax on the people as it takes away from each of us some portion of the purchasing value of our money. Since civilizations began, the debasement of money by decreasing or elimination rare metals from coinage is consistent. In our case, we removed gold backing on gold note. Then we removed silver backing on silver notes and now we have mere paper notes with no backing.
5. Severe recessions and high unemployment, require cash reserves to weather the down turn. If you lack such reserves, you may be forced to sell valuable assets at far less then their true value
6. All of the various assets provide strengths and weaknesses, however by having a basket of such asset forms, you have averaged out those strengths and weaknesses to your advantage.
It has been shown that a mix of 5-15% of PM's in one's portfolio, improved the LONG-term returns in every case. The PMs portion of the portfolio helps to weather the downturns in the stock market very well. What little you lose on the stock up turns is more than paid back on the downturns (ie PM's are a good thing to have in any balanced portfolio for the long term...guess that makes them an "investment" or should I say "approved speculation").
<< <i>Since we are coin collectors, these are my observations.
1. Holding some silver, gold and platinum is advisable.
2. Those holdings could be selected Mint products. The surcharge from the Mint is usually moderate and the rarity factor is the kicker in the equation. Thus you have rare metals on top of coin rarity.
3.In the real world, one must protect against all eventualities such as inflation, deflation, recession and war time conditions. As such ,diversity of ones assets is always recommended.
Stocks, bonds, CDs, cash, coins, real estate will in the proper mix provide some measure of protection.
4.Inflation is the government's way to get out from under its mountain of debt, by merely printing more money. This is in effect a tax on the people as it takes away from each of us some portion of the purchasing value of our money. Since civilizations began, the debasement of money by decreasing or elimination rare metals from coinage is consistent. In our case, we removed gold backing on gold note. Then we removed silver backing on silver notes and now we have mere paper notes with no backing.
5. Severe recessions and high unemployment, require cash reserves to weather the down turn. If you lack such reserves, you may be forced to sell valuable assets at far less then their true value
6. All of the various assets provide strengths and weaknesses, however by having a basket of such asset forms, you have averaged out those strengths and weaknesses to your advantage. >>
Bear, you are a marvel!
If you flip your post counter clockwise you have an almost exact graph of the gold price since this thread started
Great post guys...I am in the 20% camp and thinking about joining the 25% camp
Of those choices mentioned, the AU early gold and type faired very poorly in the speculative 1985-1990 bull market. Most circ type and key dates faired very poorly as I recall. Proof gold and higher grade early type faired very well of course. Will the next phase of our current bull market push investor-sought coins or more collector coins? Will investors (or new money) understand AU58 early gold or a gem common date $20 Saint? There are lots of factors involved. I'd say an early AU $10 gold piece has already seen too much appreciation. Will in out maneuver a gem $20 Saint from here? I'm betting no (one has doubled or tripled and the other is at the same price it was when gold was at $375 for the first time in Jan 2003). Compare the potential downside of a $150,000 MS64 $10 early gold piece vs a MS65 1924 $20 Saint ($600 melt). Which is easier to double from here? Can both of these double or triple again as in the past? (not from here imo....only one can)
Maybe we are talking in different tongues. Yes, a common 1924 MS 65 Saint has a better chance of doubling with a gold price increase of 50%. A generic 1 oz gold coin(modern) does a nice jump directly with spot gold increases.
And you can buy one or a hundred of each.
But what is the downside? and what is the collector interest in any of these coins, except in the higher grades.?
I'd rather be safer, and hold some rarer coins, than just gold, in some round shape.
I like metals, but don't feel they are useful as "investments". They act like commodities, not money, and and as others have mentioned, they do not produce dividends or interest and they incur selling/buying and storage costs. However, I like metals, especially gold, as a "hedge" against long term inflationary forces. I also like gold and silver as financial dooms day stores of money, but I buy them without expectation of making money (although I hope to) if that financial dooms day never arrives in my lifetime and I end up with a bunch of gold in my safe at age 88.
I think you are right in that metals are responding to huge buying pressures from massive worldwide liquidity buying up commodities, and for greatly increased demand, but those same forces could reverse course when liquidity contracts and gold, silver and platinum as commodities would likewise drop in demand and in price.
Gold will be the ultimate winner if the massive trade imbalances, goverment debts, and asset bubbles worldwide render fiat currencies worthless as a store of money. I am of the opinion that buying gold is best for 1) fun (collectors), 2) as a hedge, and 3) in the off chance that in one's lifetime, a worldwide restructuring of the financial system becames necessary, with gold and silver as the temporary form of money until a new form of exchange can be derived.
Personally, I would own 10-15% of assets in gold despite the circumstances, and would only load up when gold has been beaten down and nobody is buying and central banks are selling cheap. Will those cheap gold prices return sub $500.00? It doesn't seem likely in today's financial straits. But it has happened before, and I wouldn't count it out.
If a person buys gold because they love it, they have a lot of time, and they aren't looking for a $50-$100 or more per ounce return in the short term, they probably won't be speculating, nor will they be disappointed.
I'm with Bear on that. If you figure a 15% premium when buying from the Mint, vs. a 5-10% premium when buying from a bullion dealer (in a rising market), the double whammy of bullion value plus potential rarity provided by Mint bullion is a good bet, at a reasonably small difference in cost.
Food for thought - Which one is more likely to have a profound influence on bullion prices over the long term? Bunker and Nelson Hunt in 1980, or China in 2007? To wit:
Looking at this in terms of supply and demand, China is a very large, up and coming sink of bullion of all flavors and colors as it becomes more "westernized." Both "utility" metals (zinc, copper, etc) and "bauble" metals (silver, gold, plat - which also have scientific utility) are likely to continue to increase in price (an interesting parallel is the price of gas). China now imports nearly twice as much zinc as it used to export just a few short years ago - its exports have nearly stopped. I see nearly all metals continuing to rise in price over the next several decades. Silver, Gold, and Platinum are likely to be the biggest winners. Sure, there will be bumps along the way, but overall I see large increases...
If the Hunt Brothers could move the silver market like they did in 1980, I have a hunch that when China gets into full swing consumption the world will change totally - and metals prices will reflect those changes.
Q: Are You Printing Money? Bernanke: Not Literally
I'm bullish on silver and bearish on gold myself. Too much gold above ground, the only thing it's useful for is a store of wealth for the super rich really... joe public doesn't have enough money to work with it.
Silver is a store of wealth for the masses, plus it has industrial demand and record low above ground inventories, with a relatively inelastic supply and demand curve, meaning a rise in price won't have a significant impact on supply or demand.
Plus it is the original money... a "dollar" is actually a set measure of silver.... but that's not that important. I see them as investments... not really stores of wealth. You can use just about anything as a "store of wealth" which is all a matter of perception.
If you are suggesting that commodity prices will rise over the next number of years due to the China factor (which I do not disagree with), then are there not better investment places related to metal commodities than the metals themselves? I would suggest that is the case.
Firms that deal with commodities can react to market changes and provide product and output that can be varied with the changes in the market, while the metals themselves are static with no ability to react or manage changing conditions.
I would never recommend holding bullion in a portfolio, but I would consider a very minor investment in the industry segment, as always diversifying among the major players.
It has been said many times here, coins are a great hobby and should never be considered an investment, particularly by the uninitiatied. I strongly believe that.
Retired United States Mint guy, now working on an Everyman Type Set.
<< <i>If you are suggesting that commodity prices will rise over the next number of years due to the China factor (which I do not disagree with), then are there not better investment places related to metal commodities than the metals themselves? I would suggest that is the case. . >>
You should buy lead and nickel to catch the Oriental economic expansion, not silver or gold.
"Poets are the unacknowledged legislators of the world." PBShelley
Not to odd that so many have opinions on this subject. I just wonder how many would be swayed by some of the comments as to how great an investment metals are. Not long ago some people tried to make a fortune with Silver. That failed. Lots of programs on TV as to how to make a fortune with land or properties. That is failing right now. Lately lots of programs on TV about how to make a fortune with the stock market. Myself, I'd rather just see what that guy with the pocket fisherman is coming up with next. One of these days science will notify the public of the latest method of producing precious metals from Aluminum or dirt.
You all have a point, However as a Banker, I have been reviewing personal FS and personal tax returns for 40 years. The wealthiest individuals I have seen earned their money the old fashion way, they inherited it. Real Estate investments are # 2, particularly those that started 30-40 years ago. #3 Are those that have invested in solid S&P stocks. Now I am also a collector and have seen a pretty decent return on Antique firearms, vintage BB cards (Mantle was my choice) and coins. My US stamp collection from 1847 thru 1995 has not appreciated much, but I don't care, I enjoyed collecting them. The problem with collections, coins etc. is that you cannot liquidate them as quickly as stocks, bonds and CDs. But they are still considered hard assets and are a hell of a lot more interesting than following the ten year TBill rate, Libor,Fed Funds, etc.etc. BORING!!!! I enjoy collecting, it is historical and challenging. Many of my wealthy customers who check their CD and savings balances and follow their stocks and bonds every day are dull and and live in that grey twilight that knows not victory or defeat because they never try anything different. Personally I think silver is a great investment coins, or bullion. It is my understanding that most of the U.S. silver mines are closed or depleted and there is insatiable demand in China and India. This was a great thread and could be answered many ways. Many of you are very articulate in your opinions and I appreciate you sharing your knowledge with all of. Now if you will excuse me, having finished my Mickey Mantle registry set(#6) I am going to the Heritage auction site and finish completing my PCGS Washington set 1932-1964.
even better investments then silver would have been copper and nickel. Also many tout uranium as they say more nuclear power plants will be built and demand will increase.. they've all outperformed both gold and silver... just look at an item that has low above ground supply with growing demand... and there you have it.
35 out of 40 years of that "incredible" stock/real estate markets has occurred with incredible fiat growth as the gold standard was let loose. To be in any one thing will expose oneself to incredible risks during longer-term down markets. And to equate the past 60 yrs of the rapidly growing US Economy (as we held the world's reserve currency with no one close to 2nd place) to what will happen in the next 20-60 years is quite as assumption.
<< <i>No. We're talking about meaningless lumps of metal. In the long run, it's a moronic investment. Why should a lump of metal appreciate in real terms? If you're going to invest, use your head and be creative. And don't come here looking for investment advice. We're coin weenies, not financial gurus.
Consider the truly meaningless lumps of metal (rare coins selling for absurd premiums) and meaningless lumps of paper (FRN's) or how about meaningless lumps of wood (antiques, decoys, vintage guitars for example). Why should these useless lumps increase in value? Use your head and think outside the box. Commodity bulls have occurred during periods of great unrest (wars). What's occuring now? To those doubting Thomases please post charts showing a decline in the multi-year gold market trends to support your positions. "In the long run.......everything is a poor investment." Wait long enough, 10...20...50...100 years, etc. and eventually EVERYTHING basically tanks for long periods or vanishes entirely (ie most companies in the 1928 stock indicies). Gold will tank for extended periods, it will not however vanish in our lifetimes. Stocks will tank for long periods......and most will eventually vanish. With few exceptions.....hold them long enough...and they will become worthless....just like an FRN or US savings bond.
Read my lips: there are no true investments, just places to either make money or lose money based on certain driving economic factors and speculations. Between scamming hedge funds, Govt manipulation and brokerages/corporations that cook their books, who gets a fair shake? Little guy holding stocks?
The forum has pooh-pooed gold and silver since the days of Dollardude. Gold and silver have outperformed the stock market by far since 2001. This economic cycle will continue until the commodity boom is over (when Asian growth slows considerably). Commodity cycles have typically lasted 10-17 years (we're in year 6 or 7 depending on how you count it). Good luck with your decisions.
P.S. those that have $20 MS65 Saints in their PCGS Trading accounts will do very well in 2007.
roadrunner >>
You are kidding?
What chart are you looking at when you say stocks will tank for long periods?
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
<< <i>35 out of 40 years of that "incredible" stock/real estate markets has occurred with incredible fiat growth as the gold standard was let loose. To be in any one thing will expose oneself to incredible risks during longer-term down markets. And to equate the past 60 yrs of the rapidly growing US Economy (as we held the world's reserve currency with no one close to 2nd place) to what will happen in the next 20-60 years is quite as assumption.
roadrunner >>
Actually, the best way to invest is to keep a narrow focus. Diversity is for the weak at heart. Know the company, a buy gobs of it when it's value is underestimated. That's one good way to get rich.
"Poets are the unacknowledged legislators of the world." PBShelley
What chart are you looking at when you say stocks will tank for long periods?
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
Kidding? Hardly. Refresh yourself with the stock market charts from 1929 to the 1940's. In fact the stock market did not recover it's 1929 high until 1954. The stock market from 1966 to 1982 was hardly gangbusters. Considering how much inflation ate into one's real wealth from 1966 to 1982, I'd call that tanking....and a long period as well. Down periods in stocks have lasted up to 25 years. Is that a long period? If one is retiring on the wrong side of that hill, you have troubles.
I'm sure gold outperformed stocks from 1970 to 1980....or from 1966-1980. Gold went from $34/oz to $875/oz. I know the stock market posted no such gains during those lackluster years. During the first half of the 1930's Homestake Mining went up 6X while the stock market as a whole floundered. Since FDR wouldn't let you own physical gold, this was the alternative.
Currently gold is outperforming stocks from 1999-2007. Give it another 2 years, and you'll have your next 10 year period to add to the list. And who decides that 10 years is a magic period? Why can't gold outshine stocks for 5 years and be acceptable. Or why not 7 years? or 15 years?
<< <i>What chart are you looking at when you say stocks will tank for long periods?
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
Kidding? Hardly. Refresh yourself with the stock market charts from 1929 to the 1940's. In fact the stock market did not recover until the 1950's. The stock market from 1966 to 1982 was hardly gangbusters. Considering how much inflation ate into one's real wealth from 1966 to 1982, I'd call that tanking....and a long period as well. Down periods in stocks have lasted up to 25 years. Is that a long period? If one is retiring on the wrong side of that hill, you have troubles.
I'm sure gold outperformed stocks from 1970 to 1980. Or 1966-1980. Gold went from $34/oz to $875/oz. During the first half of the 1930's Homestake Mining went up 6X while the stock market as a whole floundered. Since FDR wouldn't let you own physical gold, this was the alternative.
Currently gold is outperforming stocks from 1999-2007. Give it another 2 years, and you'll have your next 10 year period.
roadrunner >>
Very true, it's hard to compare charts when gold was fixed and couldn't be owned until 1974.
<< <i>What chart are you looking at when you say stocks will tank for long periods?
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
Kidding? Hardly. Refresh yourself with the stock market charts from 1929 to the 1940's. In fact the stock market did not recover it's 1929 high until 1954. The stock market from 1966 to 1982 was hardly gangbusters. Considering how much inflation ate into one's real wealth from 1966 to 1982, I'd call that tanking....and a long period as well. Down periods in stocks have lasted up to 25 years. Is that a long period? If one is retiring on the wrong side of that hill, you have troubles.
I'm sure gold outperformed stocks from 1970 to 1980....or from 1966-1980. Gold went from $34/oz to $875/oz. I know the stock market posted no such gains during those lackluster years. During the first half of the 1930's Homestake Mining went up 6X while the stock market as a whole floundered. Since FDR wouldn't let you own physical gold, this was the alternative.
Currently gold is outperforming stocks from 1999-2007. Give it another 2 years, and you'll have your next 10 year period to add to the list. And who decides that 10 years is a magic period? Why can't gold outshine stocks for 5 years and be acceptable. Or why not 7 years? or 15 years?
roadrunner >>
I looked at the chart of gold from Dec 31 1970 to dec 31 1980.
Gold went from 35 to 641. ( source wikipedia)
Nice return.
Guess where gold is at today?
Guess where the Dow Jones was in Dec 1980 versus today?
Look, we can all look back and find pockets of outperformance and underperformance for any investment area.
But you made the statement that stocks "over the long term tank"...and that they "vanish"? (whatever that means)
Roadrunner, I know from your posts you are a gold bull but these assertions about stocks for the longterm are totally untrue and you know it.
The truth is stocks steadily over the long term far outperform gold.
Capitalism and free markets is not about investing in gold! Whats going to happen in 2 years...or 20 years, or more, is that world growth will continue and you should own not only the S&P but the EFA as well!
Not gold for the long term!
Look at any long term graph of the S&P versus gold. Please!
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
<< <i>35 out of 40 years of that "incredible" stock/real estate markets has occurred with incredible fiat growth as the gold standard was let loose. To be in any one thing will expose oneself to incredible risks during longer-term down markets. And to equate the past 60 yrs of the rapidly growing US Economy (as we held the world's reserve currency with no one close to 2nd place) to what will happen in the next 20-60 years is quite as assumption.
roadrunner >>
Actually, the best way to invest is to keep a narrow focus. Diversity is for the weak at heart. Know the company, a buy gobs of it when it's value is underestimated. That's one good way to get rich. >>
How rich are you from your investment philosophy?
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
It's interesting how people will first make wide generalizations, but when challenged and found to be incorrect, change the question again and again. This seems to happen a lot concerning metals.
First we go from the statement that stocks have "always" outperformed gold in 10 year periods. When proven wrong, the statement is changed to "well where is gold today?" or "how have stocks vs gold done since 1980?" Bottom line, the question was answered. When stocks are up for 20 years (gold is likely down). When stocks are down for 10 years or longer, gold is likely up or at least the same. Let's not forget that the world's pure fiat experiment is only 32 years old. The 2nd chapter is being written now.
I don't consider myself a gold bull, but certainly pro-gold or "gold enlightened." When gold, PM's and even rare coins run their current course, I'll be more heavily into equities once again. We are not talking about "pockets" of anything lasting a few months or a couple of years. We are talking about economy changes that last 10-25 years at a crack (commodity vs equity cycles). We are now 7 years into a commodity phase that has several years left to run. This ain't no "pocket." And the bottom line is that gold and gold equities have far outstripped the general stock markets in this "pocket." While you don't see this in the newspaper all that much, it is in fact true.
Roadrunner, I know from your posts you are a gold bull but these assertions about stocks for the longterm are totally untrue and you know it.
First of all who said anything about long term? What's that mean? 50-100 year cycles holding one investment? Since when is that investing in today's highly manipulated and leveraged world? The days of buy and hold anything for decades is long gone. 10 years was the criteria put out. Here's a S&P chart going back to before 1929. It's quite clear that the market took 25 years to break even after 1929, and 18 years to recover following the peak in 1964-66. It's no secret that gold would have outperformed the S&P or DOW from the later 1920's and 1960's for periods of over 10 years.
An interesting link demonstrating abuses with excess monetary liquidity over history. During these periods, hard assets and "things" do better than paper investments. A good refresher as there are dozens just in the 20th century. Currently, it appears that the entire world is hell bent on creating hyperinflation though their printed words state they are "tough on inflation."
The orig title to this thread was is gold and silver a good place to put your money at these levels?
Considering that the market had moved up from $570 to $680 one would have to say probably not. Certainly this was not a correction but the recovery. Best to buy during the end of corrections following some consolidation. In any case, asking that question today the answer would be yes, or very soon. Buy on negative sentiment and sell on frenzy.
Actually, the best way to invest is to keep a narrow focus. Diversity is for the weak at heart. Know the company, a buy gobs of it when it's value is underestimated. That's one good way to get rich.
I would agree. But considering that 90-99% of the world's "public man's" investment dollars do not follow that motto indicate just how hard it is to do in the real world. The "box of 20" is applying the same concept to coins. Another method is to follow the general trends and hang with it. That's an easier method for most to follow.
<< <i>It's interesting how people will first make wide generalizations, but when challenged and found to be incorrect, change the question again and again. This seems to happen a lot concerning metals.
First we go from the statement that stocks have "always" outperformed gold in 10 year periods. When proven wrong, the statement is changed to "well where is gold today?" or "how have stocks vs gold done since 1980?" Bottom line, the question was answered. When stocks are up for 20 years (gold is likely down). When stocks are down for 10 years or longer, gold is likely up or at least the same. Let's not forget that the world's pure fiat experiment is only 32 years old. The 2nd chapter is being written now.
I don't consider myself a gold bull, but certainly pro-gold or "gold enlightened." When gold, PM's and even rare coins run their current course, I'll be more heavily into equities once again. We are not talking about "pockets" of anything lasting a few months or a couple of years. We are talking about economy changes that last 10-25 years at a crack (commodity vs equity cycles). We are now 7 years into a commodity phase that has several years left to run. This ain't no "pocket." And the bottom line is that gold and gold equities have far outstripped the general stock markets in this "pocket." While you don't see this in the newspaper all that much, it is in fact true.
Roadrunner, I know from your posts you are a gold bull but these assertions about stocks for the longterm are totally untrue and you know it.
First of all who said anything about long term? What's that mean? 50-100 year cycles holding one investment? Since when is that investing in today's highly manipulated and leveraged world? The days of buy and hold anything for decades is long gone. 10 years was the criteria put out. Here's a S&P chart going back to before 1929. It's quite clear that the market took 25 years to break even after 1929, and 18 years to recover following the peak in 1964-66. It's no secret that gold would have outperformed the S&P or DOW from the later 1920's and 1960's for periods of over 10 years.
An interesting link demonstrating abuses with excess monetary liquidity over history. During these periods, hard assets and "things" do better than paper investments. A good refresher as there are dozens just in the 20th century. Currently, it appears that the entire world is hell bent on creating hyperinflation.
roadrunner >>
Your said stocks tank for the long term and implied they vanish. ( You never told us by what you meant by long term.)
I suggested a 10 year rolling period of outperformance of the S&P. You came back with period of 1970 to 1980.
I acknowledged the return of gold in that time frame as "nice return" .
I then pointed out that gold is the same price it was on Dec 31 1980 as it was at the close YESTERDAY.
The S&P smashes that same 27 year return. By dividend growtrh alone much less appreciation.
So you are the one trying to put square pegs into round holes by coming up with these meaningless time frames when the truth is STOCKS OUTPERFORM GOLD OVER LONG PERIODS.
And in reference to your 'stocks vanish" comment did you know the S&P index had a 50th aniversary on Mar. 1 2007.
It has not vanished !
Companies in the index may have been bought out, merge, some went under but your investment in that index 50 years ago, with or without dividend reinvestment CRUSHES the return on gold.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
Your said stocks tank for the long term and implied they vanish. ( You never told us by what you meant by long term.)
I'd say up to 25 years is long term. Most stocks from the 1929 big board did go away. To those buying at those previous peaks in the S&P or DOW, holding 15-25 years to break even again must have stunk. Any chance we'll see a repeat? I posted a nice chart last week on commodity and stock cycles. The commodity cycles tend to mirror wars and world anxiety. We began such a commodity cycle in 1999-2001. The cycles are very obvious through the 20th century. It would tend to disprove the theory that gold (or commodities) have no real purpose....except for future's traders to make a living.
I suggested a 10 year rolling period of outperformance of the S&P. You came back with period of 1970 to 1980.
Define rolling average. It can be done a number of ways. Generally 10 years is 10 years. 1970 to 1980 is simplistic, in fact I expanded that to 1964/1966-1980/1982. That's far more than 10 years. Please provide a rolling average graph that shows stocks going up 10 to 20X during this period. Are you serious that 1970-1980 is not an example of a 10 year "rolling average."...because the years end in zeroes? I hope I got that wrong.
I acknowledged the return of gold in that time frame as "nice return" . Nice return? Gold went up 20X in 6 years to be specific. Thanks for being so laudatory.
I then pointed out that gold is the same price it was on Dec 31 1980 as it was at the close YESTERDAY.
And I pointed out that this has NOTHING to do with your original axiom: ie that gold never out peforms stocks for any 10 year rolling periods. In fact, your observation is what makes gold such a buy in today's world. Money stock has increased 13X since 1980, yet gold is still at the same general price! (though it has gone up 2.5X since the double bottoms in 1999/2001). The powers to be sure worked hard to keep gold under wraps while increasing money stocks.
The S&P smashes that same 27 year return. By dividend growtrh alone much less appreciation.
Again, what does this have to do with gold NEVER outperforming stocks in 10 year rolling periods. Do factored in dividends from 1966 to 1982 make any difference that stock appreciation was totally FLAT and gold increased 20X?
you are the one trying to put square pegs into round holes by coming up with these meaningless time frames when the truth is STOCKS OUTPERFORM GOLD OVER LONG PERIODS.
Back to square one. I'm countering a ludicrous statement that gold never outperforms gold for any 10 yr rolling periods. Stocks do not outperform gold for ALL 10 year periods. And while we are in the current one, I'm holding my share of gold. It has done quite nicely since 2001 along with my gold stocks. I can't quite say the same for my 401K or other stocks. Those haven't even kept up with the 30% decline in the dollar. I'm glad you consider decade long periods where gold outshines the S&P/Dow as "meaningless periods." Those that diversified into PM's at those opportunities probably thought otherwise. We are in a meaningless 10 year period now as well. Coins tend to appreciate when gold does, at least since the fiat creation in 1971-1974. That's meaningless too.
And in reference to your "stocks vanish" comment did you know the S&P index had a 50th aniversary on Mar. 1 2007.
Stocks do in fact "vanish" for years at a time. What have they done since 1999? Nasdaq 50% back? Dow set new records? Well, only if you don't factor in the 30% decline in the dollar in the same period. The DOW's been around even longer, but how many companies even survive today? That's been discussed on the forum before.
Companies in the index may have been bought out, merge, some went under but your investment in that index 50 years ago, with or without dividend reinvestment CRUSHES the return on gold.
Are you sure this isn't Dollardude talking? He was always insistent that all gold holders hang in for 50 years as well. Geez, I've held gold for 5 yrs, made some nice money, and plan on doing so for another few years as gold heads to $1000+. Why does a PM vs gold discussion always revert to a 50 yr comparison when gold is shown to have periods of high performance. It's almost like the sheeple don't want anyone else to see a better return than them. My 401K only recently gave us the option to go outside the basic funds made available and to be able to go into the general market with up to 50% of one's assets. I took advantage of that and diversified away from all the pro-growth stock funds into one of the top notch gold share funds. However, I know of no one else in the company who thought it might be worth venturing into the resources area (timber, REIT's, water, energy, oil, gas, land, foods, metals, etc.)
You hang on to your pro-growth only stock funds for 50 years and I'll keep gold, gold coins, and gold shares for 10 years. We'll both be happy. My return will be meaningless, and yours will be nice.
Save a lot of trouble and do an archived search for "dollardude." He pretty much said all the same negative gold/pro-stock and real estate stuff from 2003-2005. Most everything he's said about gold was since proven wrong. And now real estate is following. Any significant fall in stocks from here will make it a clean sweep. Long live the Dollardude.
If anyone is still reading (I would wager not many) one wildcard not mentioned is that when governments fail, or wars are lost, or similar historical events happen stocks, bonds, deeds to real estate, may not be worth anything, may be seized, or assets frozen. Yes, similar things happened in 1933 for gold. However, it is a lot easier to move a strongbox of gold under the radar than a portfolio of stocks or deed to real estate. Americans have not experienced changes of governments or similarly historic events. The rule of law has almost always held sway. Most Americans assume that the rule of law will always hold, but it is a false assumption. The talk about long term stock performance almost always points to American stocks, and maybe British stocks. How did someone owning Russian, Japanese, German, French, equities do over the long, long term? Or pick any number of other countries, the American performance is more the exception than the rule.
This week a lot of focus was on China. What does a person thinks will happen when the Chinese get into a shooting war? I'd put the probability of that at 50/50 for ten years out, and 75% likely for twenty years out. Think the markets are hurting this week, wait until missiles start flying towards Taiwan or Japan or elsewhere.
These are the real reasons that everyone that has any significant money is best off owning a pinch of gold. 3% is what I suggest for average folks. If people want to do their due diligence and research and put in more than that is fine. However, if a person knows little to nothing [like the vast majority on this board] 3% is what I suggest. It may not look like much, and is more of an insurance policy than an investment. It may be enough to buy passage to somewhere safer and start a new life, if not for yourself, then perhaps for your kids. It may be enough to feed a family for months or years when paper assets are seized or frozen.
Red Tiger, good point...... I mean about no one still reading the thread
Let's face it. It's hard to change ways of thinking that have been ingrained over 25 years:
Stocks, bonds, real estate are the only ways to invest and retire. Stocks only tend to go up Real estate tends to only go up. You can't get hurt owning RE. Some inflation (ie 3% per year) is needed for a healthy and growing economy(read that again!) Gold is a barbarous relic Gold never outperforms stocks for 10 years or longer
Red Tiger, an allocation of 3% in hard asset gold is reasonable. You do not have to portray a doomsday scenario to reasonably recommend a 3% investment in gold.
Roadrunner seems to suggest a much higher allocation to gold ( correct me if I'm wrong) and gives all kinds of headline reasons why a person should have a much higher allocation in gold.
Roadrunner, if you want to put 50% of your 401k assets into a gold fund or some other commodity fund and hold a high % of your net worth in bullion that certainly your choice.
But you often come on the boards spouting these scenarios and statistics as if it were true. ( that gold is somehow a great long term investment) And it isn't.
I do not know of any successful long term investors who think like this.
The successful long term investors are well diversified. They own stocks, ( large, mid, and small cap, int'l) both value and growth. They own some bonds. They desire to have their homes paid for.
For accreditied and qualified investors they own alternative investments as well ( hedge funds, credit structures, private equity, real estate). Some also own some gold, art, wine, and other esoteric investments.
All in a well planned asset allocation strategy.
Moreover, foundations, corporate pension plans, endowments, state retirement plans like CALPERS, etc, all have a well thought out, diversified asset allocation to perpuate the mandate set before them and act in a prudent fiduciary manner on behalf of the millions of people and causes they represent.
Now I guess if I began thinking about the doomsday possibilites you two dream up, I suppose its possible one day I might have to spend my proof 66 trade $ on a glass of fresh water but I do not live my life that way and neither should most people.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
You don't have to believe in a doomsday scenario to think that gold is undervalued. Inflation is being under-reported, and credit derivatives are being created way beyond what they were even 10 years ago. It's a situation which now defies proper financial analysis, in my opinion.
I put my ex-wife through law school in 1980-1982 with the proceeds from gold contracts in the 1978-1980 gold market. I have many of the same concerns now that I did back then, only more so.
Perhaps age turns one into more of a pessimist or a cynic. Perhaps. But when I think about how social security is funded (or not), and the shrinking pool of workers to rely upon, I question how things will progress.
When I think of the massive government entitlement programs that I am paying for, but not receiving any benefits from - I question how long it will continue after I stop earning a steady income.
I've made money in the markets, and lost some as well - but the stock market must reflect the health of our industrial base, which has been shrinking and has been exported into cheap labor markets for years now. If you think that we can prevail without an industrial base, I suggest that is a huge error in reasoning.
At some point, when the capital balance has shifted outside the U.S. and we are no longer dominant in manufacturing, those skills will fade away. They will reside in Malaysia, and India, and China. At some point, "they" will not be willing to take more dollars, because "they" will have the means to go on without our know-how.
At that point, you had better hope you stashed some gold, or bought plenty of stocks in multinational conglomerates who aren't in jeopardy of having their overseas assets nationalized.
I realize that it's a complicated world. Yet, somehow I feel much more in control knowing that I can put my hands on enough gold to sustain me and my loved ones, if needed. And I don't have to worry about fiduciary mismanagement or other misbehavior from a shaky financial system as we "go forward."
3% in gold? And I assume that the other 97% is diversified between various types of stocks and is risk-balanced with various "income producing instruments." Good Luck with that. Like I said before, paper and electronic assets can vanish. It's happened before, and it will happen again, only maybe a little faster when it does. Just food for thought.
Q: Are You Printing Money? Bernanke: Not Literally
3% in gold. And I assume the other 97% is diversified between various types of stocks and is risk-balanced with various "income producing instruments." Good Luck with that. Like I said before, paper and electronic assets can vanish. It's happened before, and it will happen again, only maybe a little faster when it does. Just food for thought.
I have had alot of good luck with that. I am not worried about paper and electronic assets vanishing. I am not concerned with a doomsday scenario. I do believe in more international investing.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
You read my post wrong. Surprise. While my 401K allows 50% to be placed outside the fund's normal sphere, I never said what amount I actually placed into a gold fund or any other. What I did say was that having 100% into stocks and bonds was not the best idea. Small, mid, large cap stocks are all-related to some extent. If the market tanks, all 3 will experience a similar drop. That is not diversification imo. Nor is putting the difference in bonds or treasuries for example. With 50% available to me now, I can diversify properly and spread the risk out.
For the umpteenth time, no where have I preached a buy and hold gold forever philosophy. But it seems to be what you'd like for me to say. Gold has it's place, and it's right here in our laps today. We might only have 2-3 years left in this market cycle. The risks in the world require a stake in PM's. 3% is not enough imo, unless you need enough to cross a border. 5%-15% should be the minimum amount being considered.
There are no true investments today. It's all speculation. Hedge funds, 401K's, illegal manipulations, huge derivatives growth, etc. have made this possible. It's less about substance and reality and more about flash and Wall Street bonuses. Gentleman, place your bets, because it ain't about investing any more.
Comments
Speak for yourself.
We're talking about meaningless lumps of metal.
Enron, now THAT's meaningless.
I knew it would happen.
1. Holding some silver, gold and platinum is advisable.
2. Those holdings could be selected Mint products. The
surcharge from the Mint is usually moderate and the rarity
factor is the kicker in the equation. Thus you have rare metals
on top of coin rarity.
3.In the real world, one must protect against all eventualities
such as inflation, deflation, recession and war time conditions.
As such ,diversity of ones assets is always recommended.
Stocks, bonds, CDs, cash, coins, real estate will in the proper mix
provide some measure of protection.
4.Inflation is the government's way to get out from under its mountain of
debt, by merely printing more money. This is in effect a tax on the people as
it takes away from each of us some portion of the purchasing value of our money.
Since civilizations began, the debasement of money by decreasing or elimination
rare metals from coinage is consistent. In our case, we removed gold backing on gold
note. Then we removed silver backing on silver notes and now we have mere paper notes
with no backing.
5. Severe recessions and high unemployment, require cash reserves to weather the down turn.
If you lack such reserves, you may be forced to sell valuable assets at far less then their true value
6. All of the various assets provide strengths and weaknesses, however by having a basket of such
asset forms, you have averaged out those strengths and weaknesses to your advantage.
Camelot
It has been shown that a mix of 5-15% of PM's in one's portfolio, improved the LONG-term returns in every case. The PMs portion of the portfolio helps to weather the downturns in the stock market very well. What little you lose on the stock up turns is more than paid back on the downturns (ie PM's are a good thing to have in any balanced portfolio for the long term...guess that makes them an "investment" or should I say "approved speculation").
roadrunner
Great posts, one and all!!!
Bear......you are awesome!!!!
These series are so well thought of by advanced collectors---who always seem to be interested in starting or adding these coins to their collections.
I will give some examples for the early gold. Jay and Steve could go on forever about the Saints.
Early $2 1/2 gold
Early $5 gold
Early $10 gold
If purchased in 2002, these coins in any grades above AU55 would have doubled or tripled in today's markets.
And there is still plenty of room for increases in value. And little if no downside, for properly graded coins.
AU 58 FH dollars are today selling for $35,000 to 50,000. MS 63 early $5 gold(1800 to 1807) sell in the range of $25,000 to $32,000.
MS 64 Bust dollars sell well above $150,000. MS 64 $10 gold( 1799 to 1803) sell in the low 6 figures. And the better dates even higher.
And proof gold? Never a stronger market.
I like the risk reward scenerio for the numismatic material over the generic eagles and saints.
<< <i>Since we are coin collectors, these are my observations.
1. Holding some silver, gold and platinum is advisable.
2. Those holdings could be selected Mint products. The
surcharge from the Mint is usually moderate and the rarity
factor is the kicker in the equation. Thus you have rare metals
on top of coin rarity.
3.In the real world, one must protect against all eventualities
such as inflation, deflation, recession and war time conditions.
As such ,diversity of ones assets is always recommended.
Stocks, bonds, CDs, cash, coins, real estate will in the proper mix
provide some measure of protection.
4.Inflation is the government's way to get out from under its mountain of
debt, by merely printing more money. This is in effect a tax on the people as
it takes away from each of us some portion of the purchasing value of our money.
Since civilizations began, the debasement of money by decreasing or elimination
rare metals from coinage is consistent. In our case, we removed gold backing on gold
note. Then we removed silver backing on silver notes and now we have mere paper notes
with no backing.
5. Severe recessions and high unemployment, require cash reserves to weather the down turn.
If you lack such reserves, you may be forced to sell valuable assets at far less then their true value
6. All of the various assets provide strengths and weaknesses, however by having a basket of such
asset forms, you have averaged out those strengths and weaknesses to your advantage. >>
Bear, you are a marvel!
If you flip your post counter clockwise you have an almost exact graph of the gold price since this thread started
Great post guys...I am in the 20% camp and thinking about joining the 25% camp
<< <i>The day this post was started gold and silver July 27, 2006 am 634.20 pm 639.00 am 11.2200
Today-current ny gold $653. ny silver $12.53
Anyone think we will see sub $10 silver and sub $600 gold soon or again? >>
I see both markets collapsing when the economy slows...as it seems to be doing now.
MS 64 Bust dollars sell well above $150,000. MS 64 $10 gold( 1799 to 1803) sell in the low 6 figures. And the better dates even higher.
And proof gold? Never a stronger market.
Is the above supposed to lead us to any specific conclusions?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Of those choices mentioned, the AU early gold and type faired very poorly in the speculative 1985-1990 bull market. Most circ type and key dates faired very poorly as I recall. Proof gold and higher grade early type faired very well of course. Will the next phase of our current bull market push investor-sought coins or more collector coins? Will investors (or new money) understand AU58 early gold or a gem common date $20 Saint? There are lots of factors involved.
I'd say an early AU $10 gold piece has already seen too much appreciation. Will in out maneuver a gem $20 Saint from here? I'm betting no (one has doubled or tripled and the other is at the same price it was when gold was at $375 for the first time in Jan 2003).
Compare the potential downside of a $150,000 MS64 $10 early gold piece vs a MS65 1924 $20 Saint ($600 melt). Which is easier to double from here? Can both of these double or triple again as in the past? (not from here imo....only one can)
roadrunner
Maybe we are talking in different tongues. Yes, a common 1924 MS 65 Saint has a better chance of doubling with a gold price increase of 50%. A generic 1 oz gold coin(modern) does a nice jump directly with spot gold increases.
And you can buy one or a hundred of each.
But what is the downside? and what is the collector interest in any of these coins, except in the higher grades.?
I'd rather be safer, and hold some rarer coins, than just gold, in some round shape.
I think you are right in that metals are responding to huge buying pressures from massive worldwide liquidity buying up commodities, and for greatly increased demand, but those same forces could reverse course when liquidity contracts and gold, silver and platinum as commodities would likewise drop in demand and in price.
Gold will be the ultimate winner if the massive trade imbalances, goverment debts, and asset bubbles worldwide render fiat currencies worthless as a store of money. I am of the opinion that buying gold is best for 1) fun (collectors), 2) as a hedge, and 3) in the off chance that in one's lifetime, a worldwide restructuring of the financial system becames necessary, with gold and silver as the temporary form of money until a new form of exchange can be derived.
Personally, I would own 10-15% of assets in gold despite the circumstances, and would only load up when gold has been beaten down and nobody is buying and central banks are selling cheap. Will those cheap gold prices return sub $500.00? It doesn't seem likely in today's financial straits. But it has happened before, and I wouldn't count it out.
If a person buys gold because they love it, they have a lot of time, and they aren't looking for a $50-$100 or more per ounce return in the short term, they probably won't be speculating, nor will they be disappointed.
Tyler
you are paying a high premium for rarity, many times over the
value of the gold. For us more humble type of folk, A selected
Mint product, in precious metals, has a rarity potential with a price, far
closer to the value of gold. It a matter of getting the most bang
for the buck. Either way is prudent, it is just that one way is
a lot cheaper and has less inherent risk. A rare coin can be over priced,
can fall from favor can have dramatic dips in value. A Mint Gold or platinum coin
if selected properly and purchased from the mint ,would have less risk.
Camelot
Food for thought - Which one is more likely to have a profound influence on bullion prices over the long term? Bunker and Nelson Hunt in 1980, or China in 2007? To wit:
Looking at this in terms of supply and demand, China is a very large, up and coming sink of bullion of all flavors and colors as it becomes more "westernized." Both "utility" metals (zinc, copper, etc) and "bauble" metals (silver, gold, plat - which also have scientific utility) are likely to continue to increase in price (an interesting parallel is the price of gas). China now imports nearly twice as much zinc as it used to export just a few short years ago - its exports have nearly stopped. I see nearly all metals continuing to rise in price over the next several decades. Silver, Gold, and Platinum are likely to be the biggest winners. Sure, there will be bumps along the way, but overall I see large increases...
If the Hunt Brothers could move the silver market like they did in 1980, I have a hunch that when China gets into full swing consumption the world will change totally - and metals prices will reflect those changes.
I knew it would happen.
Silver is a store of wealth for the masses, plus it has industrial demand and record low above ground inventories, with a relatively inelastic supply and demand curve, meaning a rise in price won't have a significant impact on supply or demand.
Plus it is the original money... a "dollar" is actually a set measure of silver.... but that's not that important. I see them as investments... not really stores of wealth. You can use just about anything as a "store of wealth" which is all a matter of perception.
Firms that deal with commodities can react to market changes and provide product and output that can be varied with the changes in the market, while the metals themselves are static with no ability to react or manage changing conditions.
I would never recommend holding bullion in a portfolio, but I would consider a very minor investment in the industry segment, as always diversifying among the major players.
It has been said many times here, coins are a great hobby and should never be considered an investment, particularly by the uninitiatied. I strongly believe that.
<< <i>If you are suggesting that commodity prices will rise over the next number of years due to the China factor (which I do not disagree with), then are there not better investment places related to metal commodities than the metals themselves? I would suggest that is the case.
. >>
You should buy lead and nickel to catch the Oriental economic expansion, not silver or gold.
One of these days science will notify the public of the latest method of producing precious metals from Aluminum or dirt.
David Hall can turn plastic into gold
Coin collecting can turn a multi millionaire, into a millionaire
Camelot
roadrunner
<< <i>The day this post was started gold and silver July 27, 2006 am 634.20 pm 639.00 am 11.2200
Today-current ny gold $653. ny silver $12.53
Anyone think we will see sub $10 silver and sub $600 gold soon or again?The close of gold today is around $10 less than the price of the date of
Brian Kuszmar
2nd Generation Coin & Currency Dealer
Lbts, Fla. 33308
954-493-8811 >>
Even with the correction in the dow and world markets the last few days, your money would have been better off in equities.
The close of gold today ( around 642) is around $10 less than the price of the date of this post, almost 7 months later.
Too many gold bugs around here.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>No. We're talking about meaningless lumps of metal. In the long run, it's a moronic investment. Why should a lump of metal appreciate in real terms? If you're going to invest, use your head and be creative. And don't come here looking for investment advice. We're coin weenies, not financial gurus.
Consider the truly meaningless lumps of metal (rare coins selling for absurd premiums) and meaningless lumps of paper (FRN's) or how about meaningless lumps of wood (antiques, decoys, vintage guitars for example). Why should these useless lumps increase in value? Use your head and think outside the box. Commodity bulls have occurred during periods of great unrest (wars). What's occuring now? To those doubting Thomases please post charts showing a decline in the multi-year gold market trends to support your positions. "In the long run.......everything is a poor investment." Wait long enough, 10...20...50...100 years, etc. and eventually EVERYTHING basically tanks for long periods or vanishes entirely (ie most companies in the 1928 stock indicies). Gold will tank for extended periods, it will not however vanish in our lifetimes.
Stocks will tank for long periods......and most will eventually vanish.
With few exceptions.....hold them long enough...and they will become worthless....just like an FRN or US savings bond.
Read my lips: there are no true investments, just places to either make money or lose money based on certain driving economic factors and speculations. Between scamming hedge funds, Govt manipulation and brokerages/corporations that cook their books, who gets a fair shake? Little guy holding stocks?
The forum has pooh-pooed gold and silver since the days of Dollardude. Gold and silver have outperformed the stock market by far since 2001. This economic cycle will continue until the commodity boom is over (when Asian growth slows considerably).
Commodity cycles have typically lasted 10-17 years (we're in year 6 or 7 depending on how you count it). Good luck with your decisions.
P.S. those that have $20 MS65 Saints in their PCGS Trading accounts will do very well in 2007.
roadrunner >>
You are kidding?
What chart are you looking at when you say stocks will tank for long periods?
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>35 out of 40 years of that "incredible" stock/real estate markets has occurred with incredible fiat growth as the gold standard was let loose. To be in any one thing will expose oneself to incredible risks during longer-term down markets. And to equate the past 60 yrs of the rapidly growing US Economy (as we held the world's reserve currency with no one close to 2nd place) to what will happen in the next 20-60 years is quite as assumption.
roadrunner >>
Actually, the best way to invest is to keep a narrow focus. Diversity is for the weak at heart. Know the company, a buy gobs of it when it's value is underestimated. That's one good way to get rich.
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
Kidding? Hardly. Refresh yourself with the stock market charts from 1929 to the 1940's. In fact the stock market did not recover it's 1929 high until 1954. The stock market from 1966 to 1982 was hardly gangbusters. Considering how much inflation ate into one's
real wealth from 1966 to 1982, I'd call that tanking....and a long period as well. Down periods in stocks have lasted up to 25 years.
Is that a long period? If one is retiring on the wrong side of that hill, you have troubles.
I'm sure gold outperformed stocks from 1970 to 1980....or from 1966-1980. Gold went from $34/oz to $875/oz. I know the stock market posted no such gains during those lackluster years.
During the first half of the 1930's Homestake Mining went up 6X while the stock market as a whole floundered. Since FDR wouldn't
let you own physical gold, this was the alternative.
Currently gold is outperforming stocks from 1999-2007. Give it another 2 years, and you'll have your next 10 year period to add to the list. And who decides that 10 years is a magic period? Why can't gold outshine stocks for 5 years and be acceptable. Or why not 7 years? or 15 years?
roadrunner
<< <i>What chart are you looking at when you say stocks will tank for long periods?
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
Kidding? Hardly. Refresh yourself with the stock market charts from 1929 to the 1940's. In fact the stock market did not recover
until the 1950's. The stock market from 1966 to 1982 was hardly gangbusters. Considering how much inflation ate into one's
real wealth from 1966 to 1982, I'd call that tanking....and a long period as well. Down periods in stocks have lasted up to 25 years.
Is that a long period? If one is retiring on the wrong side of that hill, you have troubles.
I'm sure gold outperformed stocks from 1970 to 1980. Or 1966-1980. Gold went from $34/oz to $875/oz.
During the first half of the 1930's Homestake Mining went up 6X while the stock market as a whole floundered. Since FDR wouldn't
let you own physical gold, this was the alternative.
Currently gold is outperforming stocks from 1999-2007. Give it another 2 years, and you'll have your next 10 year period.
roadrunner >>
Very true, it's hard to compare charts when gold was fixed and couldn't be owned until 1974.
<< <i>What chart are you looking at when you say stocks will tank for long periods?
Show me any rolling 10 year period where gold has outperformed stocks.
Much less longer periods of time?
Kidding? Hardly. Refresh yourself with the stock market charts from 1929 to the 1940's. In fact the stock market did not recover it's 1929 high until 1954. The stock market from 1966 to 1982 was hardly gangbusters. Considering how much inflation ate into one's
real wealth from 1966 to 1982, I'd call that tanking....and a long period as well. Down periods in stocks have lasted up to 25 years.
Is that a long period? If one is retiring on the wrong side of that hill, you have troubles.
I'm sure gold outperformed stocks from 1970 to 1980....or from 1966-1980. Gold went from $34/oz to $875/oz. I know the stock market posted no such gains during those lackluster years.
During the first half of the 1930's Homestake Mining went up 6X while the stock market as a whole floundered. Since FDR wouldn't
let you own physical gold, this was the alternative.
Currently gold is outperforming stocks from 1999-2007. Give it another 2 years, and you'll have your next 10 year period to add to the list. And who decides that 10 years is a magic period? Why can't gold outshine stocks for 5 years and be acceptable. Or why not 7 years? or 15 years?
roadrunner >>
I looked at the chart of gold from Dec 31 1970 to dec 31 1980.
Gold went from 35 to 641. ( source wikipedia)
Nice return.
Guess where gold is at today?
Guess where the Dow Jones was in Dec 1980 versus today?
Look, we can all look back and find pockets of outperformance and underperformance for any investment area.
But you made the statement that stocks "over the long term tank"...and that they "vanish"? (whatever that means)
Roadrunner, I know from your posts you are a gold bull but these assertions about stocks for the longterm are totally untrue and you know it.
The truth is stocks steadily over the long term far outperform gold.
Capitalism and free markets is not about investing in gold! Whats going to happen in 2 years...or 20 years, or more, is that world growth will continue and you should own not only the S&P but the EFA as well!
Not gold for the long term!
Look at any long term graph of the S&P versus gold. Please!
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>
<< <i>35 out of 40 years of that "incredible" stock/real estate markets has occurred with incredible fiat growth as the gold standard was let loose. To be in any one thing will expose oneself to incredible risks during longer-term down markets. And to equate the past 60 yrs of the rapidly growing US Economy (as we held the world's reserve currency with no one close to 2nd place) to what will happen in the next 20-60 years is quite as assumption.
roadrunner >>
Actually, the best way to invest is to keep a narrow focus. Diversity is for the weak at heart. Know the company, a buy gobs of it when it's value is underestimated. That's one good way to get rich. >>
How rich are you from your investment philosophy?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
If you don't have the skills to do the same, you should invest differently.
First we go from the statement that stocks have "always" outperformed gold in 10 year periods. When proven wrong, the statement is changed to "well where is gold today?" or "how have stocks vs gold done since 1980?" Bottom line, the question was answered. When stocks are up for 20 years (gold is likely down). When stocks are down for 10 years or longer, gold is likely up or at least the same. Let's not forget that the world's pure fiat experiment is only 32 years old. The 2nd chapter is being written now.
I don't consider myself a gold bull, but certainly pro-gold or "gold
enlightened." When gold, PM's and even rare coins run their current course, I'll be more heavily into equities once again. We are not talking about "pockets" of anything lasting a few months or a couple of years. We are talking about economy changes that last 10-25 years at a crack (commodity vs equity cycles). We are now 7 years into a commodity phase that has several years left to run. This ain't no "pocket." And the bottom line is that gold and gold equities have far outstripped the general stock markets in this "pocket." While you don't see this in the newspaper all that much, it is in fact true.
Roadrunner, I know from your posts you are a gold bull but these assertions about stocks for the longterm are totally untrue and you know it.
First of all who said anything about long term? What's that mean? 50-100 year cycles holding one investment? Since when is that investing in today's highly manipulated and leveraged world? The days of buy and hold anything for decades is long gone. 10 years was the criteria put out. Here's a S&P chart going back to before 1929. It's quite clear that the market took 25 years to break even after 1929, and 18 years to recover following the peak in 1964-66. It's no secret that gold would have outperformed the S&P or DOW from the later 1920's and 1960's for periods of over 10 years.
Saville on S&P cycles
It is what it is. Gold outperforms the general stock markets in the down cycles. If you have some charts showing something different please post them.
past hyperinflation around the globe
An interesting link demonstrating abuses with excess monetary liquidity over history. During these periods, hard assets and "things" do better than paper investments. A good refresher as there are dozens just in the 20th century. Currently, it appears that the entire world is hell bent on creating hyperinflation though their printed words state they are "tough on inflation."
roadrunner
Considering that the market had moved up from $570 to $680 one would have to say probably not. Certainly this was not a correction but the recovery. Best to buy during the end of corrections following some consolidation. In any case, asking that question today the answer would be yes, or very soon. Buy on negative sentiment and sell on frenzy.
Actually, the best way to invest is to keep a narrow focus. Diversity is for the weak at heart. Know the company, a buy gobs of it when it's value is underestimated. That's one good way to get rich.
I would agree. But considering that 90-99% of the world's "public man's" investment dollars do not follow that motto indicate just how hard it is to do in the real world. The "box of 20" is applying the same concept to coins. Another method is to follow the general trends and hang with it. That's an easier method for most to follow.
roadrunner
<< <i>It's interesting how people will first make wide generalizations, but when challenged and found to be incorrect, change the question again and again. This seems to happen a lot concerning metals.
First we go from the statement that stocks have "always" outperformed gold in 10 year periods. When proven wrong, the statement is changed to "well where is gold today?" or "how have stocks vs gold done since 1980?" Bottom line, the question was answered. When stocks are up for 20 years (gold is likely down). When stocks are down for 10 years or longer, gold is likely up or at least the same. Let's not forget that the world's pure fiat experiment is only 32 years old. The 2nd chapter is being written now.
I don't consider myself a gold bull, but certainly pro-gold or "gold
enlightened." When gold, PM's and even rare coins run their current course, I'll be more heavily into equities once again. We are not talking about "pockets" of anything lasting a few months or a couple of years. We are talking about economy changes that last 10-25 years at a crack (commodity vs equity cycles). We are now 7 years into a commodity phase that has several years left to run. This ain't no "pocket." And the bottom line is that gold and gold equities have far outstripped the general stock markets in this "pocket." While you don't see this in the newspaper all that much, it is in fact true.
Roadrunner, I know from your posts you are a gold bull but these assertions about stocks for the longterm are totally untrue and you know it.
First of all who said anything about long term? What's that mean? 50-100 year cycles holding one investment? Since when is that investing in today's highly manipulated and leveraged world? The days of buy and hold anything for decades is long gone. 10 years was the criteria put out. Here's a S&P chart going back to before 1929. It's quite clear that the market took 25 years to break even after 1929, and 18 years to recover following the peak in 1964-66. It's no secret that gold would have outperformed the S&P or DOW from the later 1920's and 1960's for periods of over 10 years.
Saville on S&P cycles
It is what it is. Gold outperforms the general stock markets in the down cycles. If you have some charts showing something different please post them.
past hyperinflation around the globe
An interesting link demonstrating abuses with excess monetary liquidity over history. During these periods, hard assets and "things" do better than paper investments. A good refresher as there are dozens just in the 20th century. Currently, it appears that the entire world is hell bent on creating hyperinflation.
roadrunner >>
Your said stocks tank for the long term and implied they vanish. ( You never told us by what you meant by long term.)
I suggested a 10 year rolling period of outperformance of the S&P. You came back with period of 1970 to 1980.
I acknowledged the return of gold in that time frame as "nice return" .
I then pointed out that gold is the same price it was on Dec 31 1980 as it was at the close YESTERDAY.
The S&P smashes that same 27 year return. By dividend growtrh alone much less appreciation.
So you are the one trying to put square pegs into round holes by coming up with these meaningless time frames when the truth is STOCKS OUTPERFORM GOLD OVER LONG PERIODS.
And in reference to your 'stocks vanish" comment did you know the S&P index had a 50th aniversary on Mar. 1 2007.
It has not vanished !
Companies in the index may have been bought out, merge, some went under but your investment in that index 50 years ago, with or without dividend reinvestment CRUSHES the return on gold.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I'd say up to 25 years is long term. Most stocks from the 1929 big board did go away. To those buying at those previous peaks in the S&P or DOW, holding 15-25 years to break even again must have stunk. Any chance we'll see a repeat? I posted a nice chart last week on commodity and stock cycles. The commodity cycles tend to mirror wars and world anxiety. We began such a commodity cycle in 1999-2001. The cycles are very obvious through the 20th century.
It would tend to disprove the theory that gold (or commodities) have no real purpose....except for future's traders to make a living.
I suggested a 10 year rolling period of outperformance of the S&P. You came back with period of 1970 to 1980.
Define rolling average. It can be done a number of ways. Generally 10 years is 10 years. 1970 to 1980 is simplistic, in fact I expanded that to 1964/1966-1980/1982. That's far more than 10 years. Please provide a rolling average graph that shows stocks going up
10 to 20X during this period. Are you serious that 1970-1980 is not an example of a 10 year "rolling average."...because the years end in zeroes? I hope I got that wrong.
I acknowledged the return of gold in that time frame as "nice return" . Nice return? Gold went up 20X in 6 years to be specific.
Thanks for being so laudatory.
I then pointed out that gold is the same price it was on Dec 31 1980 as it was at the close YESTERDAY.
And I pointed out that this has NOTHING to do with your original axiom: ie that gold never out peforms stocks for any 10 year rolling periods. In fact, your observation is what makes gold such a buy in today's world. Money stock has increased 13X since 1980, yet gold is still at the same general price! (though it has gone up 2.5X since the double bottoms in 1999/2001). The powers to be sure worked hard to keep gold under wraps while increasing money stocks.
The S&P smashes that same 27 year return. By dividend growtrh alone much less appreciation.
Again, what does this have to do with gold NEVER outperforming stocks in 10 year rolling periods. Do factored in dividends from 1966 to 1982 make any difference that stock appreciation was totally FLAT and gold increased 20X?
you are the one trying to put square pegs into round holes by coming up with these meaningless time frames when the truth is STOCKS OUTPERFORM GOLD OVER LONG PERIODS.
Back to square one. I'm countering a ludicrous statement that gold never outperforms gold for any 10 yr rolling periods. Stocks do not outperform gold for ALL 10 year periods. And while we are in the current one, I'm holding my share of gold. It has done quite nicely since 2001 along with my gold stocks. I can't quite say the same for my 401K or other stocks. Those haven't even kept up with the 30% decline in the dollar. I'm glad you consider decade long periods where gold outshines the S&P/Dow as "meaningless periods." Those that diversified into PM's at those opportunities probably thought otherwise. We are in a meaningless 10 year period now as well. Coins tend to appreciate when gold does, at least since the fiat creation in 1971-1974. That's meaningless too.
And in reference to your "stocks vanish" comment did you know the S&P index had a 50th aniversary on Mar. 1 2007.
Stocks do in fact "vanish" for years at a time. What have they done since 1999? Nasdaq 50% back? Dow set new records? Well, only if you don't factor in the 30% decline in the dollar in the same period. The DOW's been around even longer, but how many companies even survive today? That's been discussed on the forum before.
Companies in the index may have been bought out, merge, some went under but your investment in that index 50 years ago, with or without dividend reinvestment CRUSHES the return on gold.
Are you sure this isn't Dollardude talking? He was always insistent that all gold holders hang in for 50 years as well. Geez, I've held gold for 5 yrs, made some nice money, and plan on doing so for another few years as gold heads to $1000+. Why does a PM vs gold discussion always revert to a 50 yr comparison when gold is shown to have periods of high performance. It's almost like the sheeple don't want anyone else to see a better return than them.
My 401K only recently gave us the option to go outside the basic funds made available and to be able to go into the general market with up to 50% of one's assets. I took advantage of that and diversified away from all the pro-growth stock funds into one of the top notch gold share funds. However, I know of no one else in the company who thought it might be worth venturing into the resources area (timber, REIT's, water, energy, oil, gas, land, foods, metals, etc.)
You hang on to your pro-growth only stock funds for 50 years and I'll keep gold, gold coins, and gold shares for 10 years. We'll both be happy. My return will be meaningless, and yours will be nice.
Save a lot of trouble and do an archived search for "dollardude."
He pretty much said all the same negative gold/pro-stock and real estate stuff from 2003-2005. Most everything he's said about gold was since proven wrong. And now real estate is following. Any significant fall in stocks from here will make it a clean sweep. Long live the Dollardude.
roadrunner
This week a lot of focus was on China. What does a person thinks will happen when the Chinese get into a shooting war? I'd put the probability of that at 50/50 for ten years out, and 75% likely for twenty years out. Think the markets are hurting this week, wait until missiles start flying towards Taiwan or Japan or elsewhere.
These are the real reasons that everyone that has any significant money is best off owning a pinch of gold. 3% is what I suggest for average folks. If people want to do their due diligence and research and put in more than that is fine. However, if a person knows little to nothing [like the vast majority on this board] 3% is what I suggest. It may not look like much, and is more of an insurance policy than an investment. It may be enough to buy passage to somewhere safer and start a new life, if not for yourself, then perhaps for your kids. It may be enough to feed a family for months or years when paper assets are seized or frozen.
Let's face it. It's hard to change ways of thinking that have been ingrained over 25 years:
Stocks, bonds, real estate are the only ways to invest and retire.
Stocks only tend to go up
Real estate tends to only go up. You can't get hurt owning RE.
Some inflation (ie 3% per year) is needed for a healthy and growing
economy(read that again!)
Gold is a barbarous relic
Gold never outperforms stocks for 10 years or longer
roadrunner
Roadrunner seems to suggest a much higher allocation to gold ( correct me if I'm wrong) and gives all kinds of headline reasons why a person should have a much higher allocation in gold.
Roadrunner, if you want to put 50% of your 401k assets into a gold fund or some other commodity fund and hold a high % of your net worth in bullion that certainly your choice.
But you often come on the boards spouting these scenarios and statistics as if it were true. ( that gold is somehow a great long term investment) And it isn't.
I do not know of any successful long term investors who think like this.
The successful long term investors are well diversified. They own stocks, ( large, mid, and small cap, int'l) both value and growth. They own some bonds. They desire to have their homes paid for.
For accreditied and qualified investors they own alternative investments as well ( hedge funds, credit structures, private equity, real estate). Some also own some gold, art, wine, and other esoteric investments.
All in a well planned asset allocation strategy.
Moreover, foundations, corporate pension plans, endowments, state retirement plans like CALPERS, etc, all have a well thought out, diversified asset allocation to perpuate the mandate set before them and act in a prudent fiduciary manner on behalf of the millions of people and causes they represent.
Now I guess if I began thinking about the doomsday possibilites you two dream up, I suppose its possible one day I might have to spend my proof 66 trade $ on a glass of fresh water but I do not live my life that way and neither should most people.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I put my ex-wife through law school in 1980-1982 with the proceeds from gold contracts in the 1978-1980 gold market. I have many of the same concerns now that I did back then, only more so.
Perhaps age turns one into more of a pessimist or a cynic. Perhaps. But when I think about how social security is funded (or not), and the shrinking pool of workers to rely upon, I question how things will progress.
When I think of the massive government entitlement programs that I am paying for, but not receiving any benefits from - I question how long it will continue after I stop earning a steady income.
I've made money in the markets, and lost some as well - but the stock market must reflect the health of our industrial base, which has been shrinking and has been exported into cheap labor markets for years now. If you think that we can prevail without an industrial base, I suggest that is a huge error in reasoning.
At some point, when the capital balance has shifted outside the U.S. and we are no longer dominant in manufacturing, those skills will fade away. They will reside in Malaysia, and India, and China. At some point, "they" will not be willing to take more dollars, because "they" will have the means to go on without our know-how.
At that point, you had better hope you stashed some gold, or bought plenty of stocks in multinational conglomerates who aren't in jeopardy of having their overseas assets nationalized.
I realize that it's a complicated world. Yet, somehow I feel much more in control knowing that I can put my hands on enough gold to sustain me and my loved ones, if needed. And I don't have to worry about fiduciary mismanagement or other misbehavior from a shaky financial system as we "go forward."
3% in gold? And I assume that the other 97% is diversified between various types of stocks and is risk-balanced with various "income producing instruments." Good Luck with that. Like I said before, paper and electronic assets can vanish. It's happened before, and it will happen again, only maybe a little faster when it does. Just food for thought.
I knew it would happen.
I have had alot of good luck with that. I am not worried about paper and electronic assets vanishing. I am not concerned with a doomsday scenario. I do believe in more international investing.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
You read my post wrong. Surprise. While my 401K allows 50% to be placed outside the fund's normal sphere, I never said what amount I actually placed into a gold fund or any other. What I did say was that having 100% into stocks and bonds was not the best idea.
Small, mid, large cap stocks are all-related to some extent. If the market tanks, all 3 will experience a similar drop. That is not diversification imo. Nor is putting the difference in bonds or treasuries for example. With 50% available to me now, I can diversify properly and spread the risk out.
For the umpteenth time, no where have I preached a buy and hold gold forever philosophy. But it seems to be what you'd like for me to say. Gold has it's place, and it's right here in our laps today.
We might only have 2-3 years left in this market cycle.
The risks in the world require a stake in PM's. 3% is not enough imo, unless you need enough to cross a border. 5%-15% should be the minimum amount being considered.
There are no true investments today. It's all speculation. Hedge funds, 401K's, illegal manipulations, huge derivatives growth, etc. have made this possible. It's less about substance and reality and more about flash and Wall Street bonuses. Gentleman, place your bets, because it ain't about investing any more.
roadrunner