Is there any anti-gold bugs over the age of 47??
DoubleEagle59
Posts: 8,377 ✭✭✭✭✭
Just wanted to know if any of the anti-gold bugs are over the age of 47. Why 47? Because I figure at the last peak of gold (1980), you had to be at least 20 to give any thought to economics, because any younger and you obviously had girls and cars on your mind. Anyways, since 1980 I can understand that you may not like gold because it was horrible from 1980 to 2002. Agreed. BUT....if you're older than 47, then shame on you!! You have forgotten history. Look at the chart below. For investing in the long run, this is the only chart I refer to. It tells you when to be in gold (descending chart) and when to be in the Dow (ascending).
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
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Comments
CG
Thanks.
This chart shows the ratio of the Dow to the price of gold.
At the bottom there in 1980 the Dow was about 880 and the price of gold peaked at 850. Therefore the ratio is dow(880) divided by gold (850) = 1.03
At the highest peak of the chart (year 2000) the dow was about 10,000 and gold was $220. Divide these two numbers and you get 45 (chart number)
Now what this chart shows is long trend 30 to 40 year cycles.
This chart shows which sector to be invested in.
When the graph goes up, then the Dow does better than gold.
When the chart goes down, gold does better than the Dow.
Presently, and most importantly, if this chart will 'tell' the future, we are headed for a low ratio of 2:1 or 1:1. That means the Dow will be only 2 times greater than the price of gold. That is, if dow goes to 10,000 then gold will be $5,000 an ounce. At 1:1, the Dow will equal gold!!
The trend of this chart is lower and that is why I am a gold bull.
You may find these predictions laughable, but back in 1980 when the Dow was 880, if someone predicted the Dow was to hit 10,000 in twenty years (2000) that person would have been fitted for a straight jacket.
Now we're predicting these great gains for gold. It's not out of reach when you fully understand the present conditions of this market.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
I agree with this, but I can also say there are hard-core 'buy and hold forever' stock bulls, who lose when their favorite stocks starts nose diving and they never get out. -- Same thing.--
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>It mearly points out that there will be another time to buy if you're patient >>
or still alive...
I've been following the markets nearly as long as I've been collecting coins.
Certainly by age 11, I had a basic understanding of the markets and their levels.
I'm not a gold bug but see it as an excellent means to protect wealth during times
of inflation. To a lesser extent it's also insurance againt economic calamity and all
investors should maintain at least a small quantity.
roadrunner
Cladking, you were wise beyond your years (sarcasm not intended).
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Most kids don't get interested until a little later but by 20 most of my friends
who ever did get interested were paying attention.
Yes,
I'm not anti-gold.
I just don't think it has been a very good investment over the years unless you are trading it.
And the next leg is...well...down for the dow. $5000 gold may sound ludicrous at the moment...It's hard to imagine the adjustments that will happen to our lifestyles in the next few years that would be caused by such a thing...but I never thought I would see the canadian currency at parity with ours...until today. Of course, the canadians have the gold...so that helps. I think that $1400 gold is very posiible within a short time frame....remember a few years ago when silver was coming off its lows? It ramped to $14 in an amazingly short time. Add a few zero's and you have a nice model for what gold can do.
The only control the US gov't has over the price of gold is to buy it or sell it. Over the last few years, the mint has come up with multiple packaging of the same metal in order to sell more and more of it which helps hold the price down. But what happens when they stop selling?
In the last week they have discontinued sales of both the uncirculated and the proof collector sets. I have seen alot of discussion on this forum that they are repricing higher. I certainly hope so. Are the business issues of the eagles still for sale?
The one thing that the fed has to do before recalling all the gold and placing us on the gold standard again is to stop selling it! I dont expect them to any time soon...after all...that chart is no where near the bottom. There is sure lots of room to run...
Boy, look at the spike the balanced budget of the Clinton era put in that chart...just imagine what we could do if our gov't was fiscally responsible more often.
Random thoughts of a gold invester
Thanks again for the chart. Can you post the same chart with oil as the base monetary unit...I am curious...?
Snapdragon
What happens to the price of gold when we're in a recession??
Not leading up to a recession but during one?
I'm not able to pull up any charts with Oil.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Snapdragon
A very few people I know have a bit of gold tucked away. No one has a big stash of it (at least that I know of). Most don't want gold. This is one reason that I believe gold can sail much higher in price. Regular folks don't care about it. When and if they do, I believe the price of gold will be much, much higher. When novices start telling me about the "can't lose investment--gold" it will be time to sell all of it and perhaps go short. I'm not saying these scenarios will definitely play out, but there is that chance.
Snapdragon
Now I don't want to come off as arrogant or all knowing, but if some of you brothers are thinking that by buying on oz. or two of gold you are going to provide for your future, you are peeing into the wind.
Every one of you brothers are going to be an old man some day and that old man is going to look back at what you have done for ( or to ) him. Remember this, how you will live 1/4 to 1/3 of you life will depend on what you are doing now.
I'm way over 47 and I'm not pro or anti gold but I do know that if you are commited to providing for your retirement years then you need to build a solid financial foundation.
For God's sakes, talk to a financial advisor!
price controls lifted in the mid 1970's, pent up demand, low supply, and double digit inflation drove price to over $800
1980's gold gradualy declined in USD
increased mining activity in the 80's and 90's with technological improvements reduced the mining cost per ounce
central bank sales also contributed to the slide in gold in the late 90's
last 3 years energy and labor costs have increased the mining cost of gold
falling dollar has increased gold in USD
jewelry demand has increased
price of gold is correlated to currency fluctuations, investment and jewelry demand, and wholesale mining costs
any prospector will tell you only a fraction of gold has been recovered, however the easy placer gold is gone
gold is a commodity, no better or worse than other commodities, but easier to store than most
I like gold in rare coins that are interesting and have substantial numismatic value, but there are better investment choices than gold
Snapdragon
Hey Snapdragon, not you brother, it's the forum in general now-a-days. Gold fever is rampant around here.
Personally, if I were to believe all the gloom and doom, a gun would be more beneficial to my life than gold.
<< <i>
Hey Snapdragon, not you brother, it's the forum in general now-a-days. Gold fever is rampant around here.
Personally, if I were to believe all the gloom and doom, a gun would be more beneficial to my life than gold.
>>
I lived in Argentina (Buenos Aires) during the hyperinflation of the late 80's. Using a gun to get food would have gotten you killed or locked up for life. Gold on the other hand would have protected you from the slaughter of the Austral and protected your savings.
There is a time and a place for both Gold and guns. Gold is the first protector in a crashing economy, and guns the latter if the economy and social order spirals too far out of control.
Tyler
I didn't mean a gun for stealing and robbing. If you amass a pile of gold and things get as bad as some of these brothers are predicting, how are you going to spend gold without a gun on your hip?
<< <i>Now I don't want to come off as arrogant or all knowing, but if some of you brothers are thinking that by buying on oz. or two of gold you are going to provide for your future, you are peeing into the wind.
Every one of you brothers are going to be an old man some day and that old man is going to look back at what you have done for ( or to ) him. Remember this, how you will live 1/4 to 1/3 of you life will depend on what you are doing now.
I'm way over 47 and I'm not pro or anti gold but I do know that if you are commited to providing for your retirement years then you need to build a solid financial foundation.
For God's sakes, talk to a financial advisor! >>
well said
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Shouldn't the right hand scale be log since you're dealing with ratios? Also, how do you compare a single commodity (gold) to a floating component average (DJIA)? Would the DJ financial average be better than the industrial average? Does the chart include the interest lost on gold or stock vs appreciation, or acquisition/maintenance/storage fees? With the free market price of gold arbitrarily fixed from 1900 to 1933 and again from 1934 to about 1971, and with restricted ownership in the US for the latter part, are the late 20s peak and 50s-70s broad center hump real or just artifacts? It would seem that only after 1971 was there a real free market in which the relative values of gold and stocks could be compared.
Thanks – I’m just confused by the earlier explanation.
<< <i>Sorry, DoubleEagle59, but I got lost in your logic. Being neither pro- or con-monetary gold or gold investing I just would like to understand what you are saying.
Shouldn't the right hand scale be log since you're dealing with ratios? Also, how do you compare a single commodity (gold) to a floating component average (DJIA)? Would the DJ financial average be better than the industrial average? Does the chart include the interest lost on gold or stock vs appreciation, or acquisition/maintenance/storage fees? With the free market price of gold arbitrarily fixed from 1900 to 1933 and again from 1934 to about 1971, and with restricted ownership in the US for the latter part, are the late 20s peak and 50s-70s broad center hump real or just artifacts? It would seem that only after 1971 was there a real free market in which the relative values of gold and stocks could be compared.
Thanks – I’m just confused by the earlier explanation. >>
Here's the same chart, log scale. When plotted this way, the indicator is right in the middle of the range. Whether gold can climb enough (or the Dow will fall enough) to get the ratio to the lower purple trend line is an open question.
You make the excellent point that for many years the gold price was fixed, and for many more years, private gold ownership was illegal. So I agree that those earlier data points are more of a curiosity than useful data.
Is the green line a moving average? Are the purple lines one standard deviation from the green line? What happens if the same graph is produced but with the fixed gold value multiplied by annual inflation from 1900 to 1971 (to simulate a free market as it was after 1971)?
One other thought - General Electric Corp. is the only stock in the DJIA that has been a member over the time span of the graph. What happens if you graph only gold vs GE? In that instance you'd be comparing only one commodity and one company....
OK…no more questions. I’ve been enough of a pain in the neck in trying to understand this.
<< <i>That helps a lot! Thanks!
Is the green line a moving average? Are the purple lines one standard deviation from the green line? What happens if the same graph is produced but with the fixed gold value multiplied by annual inflation from 1900 to 1971 (to simulate a free market as it was after 1971)?
One other thought - General Electric Corp. is the only stock in the DJIA that has been a member over the time span of the graph. What happens if you graph only gold vs GE? In that instance you'd be comparing only one commodity and one company....
OK…no more questions. I’ve been enough of a pain in the neck in trying to understand this. >>
Green line is a trendline, as are the two purple lines.
GE has gone up a huge amount. The Metastock person probably can get that chart to come out in a couple of minutes. Again, for these long term charts, log scale is often easier to make head or tail of.
Most certified financial planners sell the same tripe story that they have learned by brain washing over the past 25 years. Their teachers taught them the same thing. Hold stocks forever.
Most porfolio's are told to be split between stocks and bonds.
Up to 80-100% stocks for young people and "only" 40-60% stocks for those nearing retirement. Sounds great on paper and only over the past 25 years. One CFP tried to get me deep into whole life insurance back in the later 1980's...what crap. This is the kind of stuff you get from 90% of the brainwashed CFP's.
My best CFP story was a local guy who was diversifying his "clients" into coins in the 1988-1990 market. He was buying fairly expensive stuff and knew nothing about quality....contrary to his own opinion.
He was stuffing 10-15% of his portfolio's with slabs, many of not so great quality. I had fun buying undergraded pieces from him from time to time and upgrading them. I wonder how his clients made out after 1990?
{i]What happens to the price of gold when we're in a recession??
Not leading up to a recession but during one?
If you consider the stagflation recession of the 1970's gold moved up smartly for all but the 1974-1975 period where it took a 50% beating, only to come back and go up 750% ($100 to $850). During the great depression gold increased overnight in 1933-34 once FDR outlawed private ownership. The dollar devalued 40% overnight (ie gold's value went up 40% overnight). Since gold's price was fixed following 1934 we can't make a comparison. But during the 1930's Home Stake Mining (gold miner that is today called Newmont) went up 600% while most of the market tanked. During the 1990-1993 recession I don't think gold did much of anything, you'd have to check. During the brief 2001-2002 recession gold stocks and gold lifted off. By 2003-4 many gold stocks were up by multiples. Based on these results I'd have to say it depends. But what we have now is more similar to 1929 and 1975 than it is to the 1990/2000 recessions.
roadrunner
I give away money. I collect money.
I don’t love money . I do love the Lord God.
This is another reason why I started this thread.
My financial adviser is a very intelligent person who I believe is very honest and ethical but at the age of 37, is totally ignorant and unappreciative of the benefits of having gold and silver.
His own words one time "Gold and Silver. I just don't get it. I wouldn't even know where to begin??"
It was at this time I thought to myself "Oh boy, I better not entrust this guy with 100% of our savings".
Bottom line....he has control of only 1/3 of what my wife and I have (he has recommended various stock funds).
The other 2/3 thirds is split 50/50 between precious metals and Cash.
That way if either inflation or deflation hits us, we should be OK.
I still believe that true investing is the 'Preservation' of one's wealth.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>For God's sakes, talk to a financial advisor!
This is another reason why I started this thread.
My financial adviser is a very intelligent person who I believe is very honest and ethical but at the age of 37, is totally ignorant and unappreciative of the benefits of having gold and silver.
His own words one time "Gold and Silver. I just don't get it. I wouldn't even know where to begin??"
It was at this time I thought to myself "Oh boy, I better not entrust this guy with 100% of our savings".
Bottom line....he has control of only 1/3 of what my wife and I have (he has recommended various stock funds).
The other 2/3 thirds is split 50/50 between precious metals and Cash.
That way if either inflation or deflation hits us, we should be OK.
I still believe that true investing is the 'Preservation' of one's wealth. >>
Preservation of one's wealth is a major objective at retirement years. If you are a younger person you need more risk.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Agreed!
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
I worked for a bullion dealer during the boom period, 1979-1980, while in high school.
I agree that many under the age of 40 have no clue as to the benefits of gold/silver investing.
The party will be over when the common folk start to whisper about buying gold/silver/etc. When mainstream jumps in, time to get out.
Or maybe that was a 1980's and 90's thing.
Even my wife's sister got into the business and within a year suggested we set up a meeting to discuss our finances. When my wife told me once of her suggestions was a whole life insurance policy I nixed any idea of a meeting. Guess I toss FP's into the same mix as used car salesmen and bad auto mechanics, I have no need for them (sorry). I'm sure there are good ones, such as yourself. Even during my 401K meeting on Friday our WS provider sent a CFP to discuss our options. He pooh-poohed anything do with non-growth stocks or anything outside the main family of company selections, even though that option is offered on 50% of one's total worth.
Diversify into energy, PM's, water, land? Heresy I tell ya.
Frankly, any CFP that didn't mention a means to diversify into hard assets (even a modest 5%), I wouldn't give them the time of day.
Our financial history goes back beyond 1980.
roadrunner
Half of this statement is half correct; the other half is a fallacy that had been perpetuated by the financial establishment ever since I can remember.
Preservation of one's wealth should be a major objective at all times, not just when you are retired. Why should it be limited to retirement years, after it's too late to correct the mistake if you've screwed it up when you are young? Better to make certain of being on the right track in the first place, imo.
High risk presupposes high variability of returns. The fallacy is in teaching the young that high variability is a good thing. That's like promoting gambling for your financial future. Yeah, if the investment is so unstable as to require a much higher return in order to attract capital, you should invest heavily in it when you are young. I disagree, except maybe when the decision is between total yields of 5% vs. 8% or something in that order of magnitude.
Consistancy in returns and in company performance through good management is much more desirable than hitting a home run one time out of seven or eight at bats. Gambling on high returns is not desirable, imo. Good management has always been in short supply, and that's what you should focus on for investment - identifying the good management teams still out there.
We just got our annual Social Security Statements, and after looking at the projected benefits I started thinking about our benefits, in addition to the funds that are "locked up" in our IRAs and Retirement Plans. If inflation is brewing (and I feel that it has been for several years), then all of the funds we have vested in these various pools of money are subject to degradation over the next several years before we retire, even as the stock market goes up, especially since these gains are ultimately taxed.
So, if inflation is understated and we leave this money in place, we stand to lose in real terms as this pool of retirement money gets degraded yearly. The stock market is now dependent upon several things, none of which can be considered benevolent in the long term. The temptations are too great for the bankers and our wimpy congress. Congress will bail out the bankers, who can get away with creating money for nuthin', to be used for buying votes from the poor, so that they can remain in power.
Congress can (and will) get away with expropriating our retirement funds by letting the bankers inflate the dollar. I severely question Congress's resolve to ever do the right thing. Financially for the U.S., it is truly inflate or die. Pretty soon, we all get to be poor, no matter how hard we've worked or how smart we've been in managing our assets. Boy, I'm a little ray of sunshine today, too. Argh.
I knew it would happen.
What are the relationships between the purple and green trendlines, and what is being said about buying/selling as the upper or lower purple lines are approached or crossed?