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Why invest? If gold rises along with prices, and the dollar depreciates...
PocketArt
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What does it matter?
Just asking. If the dollar depreciates, and the price of gold rises; how does one get a better value for gold as an investment when it's pegged to a depreciated dollar? As the dollar tanks, gold soars, where is the advantage in this mess? Along with rising prices of goods?
Why invest in metals? Not trying to be critical; just curious.
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prices of goods have not inflated much... yet.
It's spotty, yet happening....
"The overall cost of most types of meat, poultry, fish and eggs has increased by 4.3%, the largest increase of any single grocery category. Various cuts of beef saw a 3.7% increase, while pork prices went up by 3% and poultry prices rose 4.7%."
"In some areas of the country, the increases were larger — the price of ground beef in the Dallas-Fort Worth area of Texas increased by 14.5%, the price of chicken breast in Los Angeles skyrocketed by more than 26% and the price of orange juice is up 14.6%, according to Nielsen data exclusively obtained by NBC News."
source:
https://www.today.com/food/why-are-grocery-prices-rising-t181700
I see ground beef at close to $7 a pound where I live in NW Ohio.
A friend likes hoarding five dollar bills. He said he has a over a thousand saved. He said it's easy to not miss a five. Then I mentioned to him about how five years ago he could have turned it into 350 ounces of silver and that it would be worth nearer ten thousand today; and he could trade them in for that many five dollar bills if he really likes them, that much. He finally sees.
Its function is not to provide a better value for gold but to provide a better value for the dollars that it can be converted back into.
While profits exceeding inflation are possible, gold's true role is in its "store of value." It offers protection (insurance) from the declining value of the currency it is priced in. It is a place to store dollars to facilitate those dollars keeping their purchasing power until it is time to spend those dollars.
There are much better investments than metals except in times, such as now, of an often short lived bull run. Gold is currently telling me that there is a greater expectation of declining purchasing power (inflation) in the dollar. A lot of this fear is in the realization that the current, massive increase in the money supply will, as usual, result in price inflation. Such has been the case for the last decade with most of that price inflation directed to equity markets. Appears PMs are sharing some of that benefit with FED Round Two likely because future consumer price inflation is on the stove.
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
ok.
prices haven't risen due to the MMT, but due to supply problems from the virus issues.
yes. the idea is store of value.
Lets not call it MMT. Let's call it what is has always been known as, money creation. MMT is just a new, sexy name for it that attempts to make it more palatable. No different than calling isolation "social distancing."
MsM which prices are you referring to?
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
I understand, and respect what you are saying @derryb, my concern is if those metals are priced against a dollar that is continuing in a decline from a monetary policy that is now used to mitigate, and support markets...along with a fiscal policy that is spending monies to sustain corona...the only hope is that other countries are doing the same? Is that how the dollar survives this mess?
It seems that we follow what others do in this dance...whether it be with monetary/fiscal policy, or, with measures to mitigate contagion. If anything...I'm getting the impression we are going along.
I have no clue what this may portend. I personally am not as brave as others who have a feel where any of this is going?
I honestly think we have lost measures to gauge investments...let alone livelihoods for the next year...maybe longer?
Actually the US central bank takes the lead in world wide monetary policy. It taught other central banks how to mismanage their economies.
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
the above referenced food prices.
No doubt vast infusions of money into the economy have saved people from Depressive-era desperation, the long-term be hanged. The problem is that we squandered the respite, and still have no machinery to limit the impact of the pandemic in this country, such that the only recourse is to generate yet additional vast infusions, and to continue to do so until a vaccine arrives that 1) works, and 2) is taken by more than 70% of the people.
Here's a warning parable for coin collectors...
and we are making and going to take these vaccines in a shorter time frame that what normally would take. the extra time that is saved? the long-term evaluation of safety as well as long-term immune response study.
the safety part is a big hmmmmmmm.....
convalescence plasma is a huge help if people would donate and keep donating their plasma.
Well, it looks like our misdeeds are coming to roost to some degree. I guess I'd be nervous holding a lot of PM's if runnaway inflation came about.
Why invest? If gold rises along with prices, and the dollar depreciates...
...then the buying power of the dollar is way down, but the number of dollars you get for gold is way up. supposed net 0.00
Gold is, and always will be, money.....and will represent more of the fiat currency as fiat falls... bank accounts do not do that... though they do accumulate a token bit of interest. Cheers, RickO
Gosh. I've never heard this question before.
LoL, no, 1st time 😉
And my answer is always about diversification. I own gold, silver, and platinum bullion for the same reasons as I have some (but not only) stocks, rental real estate, rare coins, art & antiquities, and plain ole cash.
I also own precious metals for different reasons than those other things.
Liberty: Parent of Science & Industry
Depends where you are in net worth brackets where people should be applying different risk/reward levels. Gold adds a stabilizing force which people may or may not need. A theoretical broke college student should stay away from gold and look more towards speculative plays. By contrast, some 1% with like a 100M portfolio should have some broad diversification that includes gold. Investments can't be looked at as just +/- Sadly most people are chained down by debt.
Gold is a poor investment.
Dave
People tend to look at too many different things ... if you know what I'm saying ... my focus is on the ups and downs of the value of the PM's market not why it's doing what it's doing.
I'm one of 7.8 billion people on this planet.
I can't change anything.
Just saying.
Those who invested in GLD at $138.04 on March 19 and sold it for $185.43 on Friday might disagree with you.
GLD is up 1.74% for the week,
11.44% for the month,
16.6% over past 3 months,
39.71% for the past 12 months,
and 76.3% for the past 5 years.
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
Understanding "why" adds to the knowledge base that controls one's decisions. It enables foresight.
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
Obviously you're right ... but I'm in it for the money ... not the understanding of why.
Don't forget about 0% for the past decade. If your going to tell a story tell the full story. Rgds!
The whole worlds off its rocker, buy Gold™.
@blitzdude - LOL
Dave
There is no "0%" for the past decade. Gold was a $1200 ten years ago, far lower than it is today. Making up numbers to prove a point does not prove the point. LOL
The "full story" goes back to 1971 when the gold standard ended and the US no longer held the price at $35 per ounce.
someone with a calculator please tell us what the percentage increase is from $35 to $1976.
Poor investment? LOL
And the poor guy who held onto his $35 cash since 1971? Not only does he still have only $35 in his pocket, but that $35 will buy substantially less of anything it could buy in 1971.
Best to know the full story before using it to discredit yourself. Rgds!
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
49 years
(some number)^49 = ( (1976 - 35) / 35)
(sn)^49 = 55.45
sn = 49th root of 55.45
sn = 1.0854 or 8.54% per year
=====================
check the work:
(1.0854) ^ 49 = 55.4499
Knowing "why" it is up today enables one to maybe make even more money by holding it longer. The "whys" are the fundamentals. Understanding fundamentals makes for better decisions. Otherwise you are just throwing darts.
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
gold historically protects from inflation.
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
Let's see folks teach their kids that at home this fall.
Checking your work:
fv=pv(1+i)^n
=35(1+.0.085402879)^49
= 1941.00
Your method is a pretty good approximation but this is how I would do it.
fv is future value, pv is present value, i is the interest rate, n is periods.
fv=pv(1+i)^n
fv/pv=(1+i)^n
(fv/pv)^(1/n)=1+i
i=(fv/pv)^(1/n)-1
0.08579882
Check the work:
fv=35(1+.08579882)^49
=1976.00
Gold is cyclical, just like everything else. Step 1 is always identify if anything is either currently in a bear or bull cycle. Gold was clearly bull back in December, pre-Pandemic. Since then...(and it will shift to bear again at some point). Dollar index down -10% last 6 months, Gold index up 25%, SP500 up 1%
ok. here's the deal. mine is wrong.
let's say it is 35 in 1971 and 35 in 2020.
my method is (35 - 35) / 35 = 0
35 future value(some number) is the 49th root of 0.00
that leaves 35 on the left equaling 0.00 on the right. (so i'm wrong)
Let's not forget the re-introduction of QE in the final quarter of 2019 (repo market "not QE") that ignited the current gold bull. The massive money supply increase duration, that became amplified in COVID-2020, will be a major factor in the lifespan of gold's current push upward. My gut says that as long as the FED wants to continue it's pillage of the economy (for whose benefit?) there will be a need to wear a mask.
"When the rule of law collapses, civilization can no longer survive." - Martin Armstrong
LoL, you're overthinking it
Zero "weirds out" some math.
In this example you can stop at
35=35 therefore growth is zero.
Liberty: Parent of Science & Industry
I actually thought the way you did it was really cool. It's a quick and easy way to get really close. I sat here thinking about it for over an hour after you posted it trying to figure out why your number and mine were slightly different.
Can we get both huge inflation and huge unemployment at the same time. Lots of jobs are not coming back at all and many companies are paying more for less customers. But free money for everyone.
Successful BST deals with mustangt and jesbroken. Now EVERYTHING is for sale.