Precious Metal vs Stocks

mrpaseo · April 18, 2013 3:55AM

In the long term, isn't PMs a better option for long term investments? After all, Gold and Silver has lasted 5,000 years and has not gone under whereas no stock has lasted that long. With inevitable ups and downs is it safe to say that given enough time your PMs could be sold at a profit?

I'm not saying all eggs in one basket, I'm saying a percentage of a diversified portfolio (After bills, loans, credit cards and an established emergency fund of course).

That said, what is your opinion on a general percentage of ones portfolio? I'm thinking 5%-10%.

DoubleEagle59 · April 18, 2013 4:09AM

The mining stocks are at an extremely low point right now.

I prefer PM's, but maybe mining stocks would provide a better return?

edited to add: I misunderstood your post, as I thought you were talking about mining stocks.

To correctly answer your question,

Definitely PM's for me as I still believe the Dow-Gold ratio will hit 1 to 1, (currently it's at 10:1) so that would mean PM's would appreciate greatly when compared to stocks.

derryb · April 18, 2013 4:20AM

<< <i>Definitely PM's for me as I still believe the Dow-Gold ratio will hit 1 to 1, (currently it's at 10:1) so that would mean PM's would appreciate greatly when compared to stocks. >>

Or stocks would have to take one heck of a hit. Probably be somewhere in the middle.

JCMhouston · April 18, 2013 5:49AM

I keep a small potion of my investments in gold, somewhere around 5%. The short answer from my view point is no, PM's are not a better long term investment than stocks. If we set an arbitrary number like 10 years as long term you should be able to find comparisons online of how various investments have done. There might be 1-2 periods that PM's have outperformed stocks but not many. If you just look at silver there are still plenty of people that are sitting on bullion they bought in the 80's for $50/oz, perhaps in the next 10-20 years they will recoup their cost plus inflation, but perhaps not.

I also compare PM's to specific stocks, not to indexes. So I look at something like Chevron that I bought in the low $60's in 2008, now over $110, and yielding around 6% (on a cost basis) in dividends each and every year. Even if you had bought the indexes at their peak in 2007/2008 you are ahead now, that is one period where gold outperformed stocks, but if you bought gold at $1800 last year it could be a long time to break even including inflation.

Personally I look at gold not as an investment but as an insurance policy in the event of a complete meltdown of the world economy. I don't even watch the daily ups and downs.

fishcooker · April 18, 2013 6:04AM

For me and my miniscule net worth, if an idea is not worth 10% of the portfolio, it's not a very impressive idea.

Also, I prefer to get in to whatever the Financial Advisors have not. When they kick in and start moving their clients in, it gets fun.

Look back at tech, gold, oil, natural gas, real estate, Asia Pac, etc.... we got some pretty good parties when they had to move clients' monies in to those sectors.

guitarwes · April 18, 2013 6:16AM

For long term:
Stocks= Investment vehicle
Gold= Hedge

mrpaseo · April 18, 2013 6:59AM

<< <i>For long term:
Stocks= Investment vehicle
Gold= Hedge >>

Interesting, I understand but my brain merged the two. I would be interested to hear more of your thought process.

guitarwes · April 18, 2013 7:10AM

My view of long term gold is a "store of wealth". A hedge against inflation/falling dollar.

Sometimes gold is used as an investment vehicle also, for those that are really in tune with the market and play the dips and such to increase capital, such as with ETF metals.

Long term growth stocks have a good track record of increasing capital over time, albeit mostly slow and steady, with the combination of compounding interest. Talking 20-30+ years.

mrpaseo · April 18, 2013 7:53AM

<< <i>My view of long term gold is a "store of wealth". A hedge against inflation/falling dollar.

Sometimes gold is used as an investment vehicle also, for those that are really in tune with the market and play the dips and such to increase capital, such as with ETF metals.

Long term growth stocks have a good track record of increasing capital over time, albeit mostly slow and steady, with the combination of compounding interest. Talking 20-30+ years. >>

How does one hedge? What amount/percentage?

Baley · May 22, 2015 10:45AM

That's great advice from guitarwes. mrpaseo, there's not a fixed percentage.

"hedge" just means an offsetting investment position that is expected to move in the opposite direction of another position, intended to reduce risk wikipedia "hedge"

bronco2078 · May 22, 2015 11:17AM

<< <i>That's great advice from guitarwes. mrpaseo, there's not a fixed percentage.

"hedge" just means an offsetting investment position that is expected to move in the opposite direction of another position, intended to reduce risk wikipedia "hedge" >>

When are you going to choose your title Baley?

I vote something like Resurrector of Ancient Threads

Julio · May 22, 2015 12:00PM

Stocks as of late; slowed down on the PM's, but still stacking. Take care. jws

Precious Metal vs Stocks

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