I shouldn't get into these discussions, because I know you have unshakeable faith in gold.
Fine. I get that too.
I'm not trying to persuade you. I am trying to keep other, impressionable younger people from making a serious mistake, which would be placing too much trust in metals.
I happen to know that you made the bulk of your fortune in equities, not gold. Over my lifetime, and even more so over yours, equites outperformed every other asset class.
So....if the world were the same as it always was, the smart thing to do would be to buy stocks and hold them. But we know equites and most other asset classes are in a real bubble now. That much I think we can all agree on.
And when bubbles pop, equites overcorrect.. And when civilizations end, markets end too, and intangibles, like stock certificates, can turn into something you can use to start the evening fire in the fireplace and not much else. This can happen now over minutes or hours, or at best days, given our technology.
So....stocks just ain't what they used to be. The stock market keeps going up, but at some point, a huge correction is coming.
So, then....what are the alternatives?
Let's look at the logic of the meme you just posted. The dollar keeps getting worth less and less.
Very true. If you went to cash in 1913 stood pat for the last 105 years, you got hosed.
But people almost never, ever do that. (Maybe people who went through the Great Depression. My parents, for instance, never understood how inflation robbed them blind.)
But people with middling common sense and enough money to save and invest, have to decide what asset classes to hold, and how much to allocate.
And....that is different for different people........depending on your age, your level of surplus money, your risk tolerance, and other things.
And timing always matters. If I took $1900 of my hard-earned fiat in 2013 or so, and bought one oz of gold, it'd be worth about 1200 today, a very material loss of 37% over five years. 37% of real buying power. The dollar hasn't lost nearly as much, over that short time horizon. Sorry you goldbugs. It's a fact, not my opinion.
That might not be a big deal if humans lived 500 years, but they don't. We accumulate wealth, us working people do anyway, to sustain our standard of living in our old age. We have a time horizon of a few decades.
Most people today in our culture work about 40 years. Given that it often takes a decade or so just to get to a point where one might have a surplus, then that leaves perhaps 30 years for an average working man to amass his wealth. Five years is 16% of that time.
So people can't really afford to hang in with gold, because it isn't unusual in these modern circumstances for gold to underperform other assets for several years.
But gold, like all tangible assets, is a store of value. It will always be worth something. It will never go to zero, like Enron stock. And in one unique circumstance (hyperinflation) it has a history of amazing performance.
That's happened in this country exactly never. It's never happened to a global reserve currency at all. Never,ever.
So, why is gold such am great asset, compared to other tangible assets?
As far as I can see, it has only one advantage. It's highly PORTABLE. No bank account needed.
But..... that has problems, because in order to move any substantial quantity of gold over any border these days, you have to break the law to do it. There are ways, of course. It's not a new problem. But it is very risky.
In our likely FutureWorld (say the next 50 years) what is the likely circumstance with money? I think you have to ask that question in order to parse out which assets to hold, and which to avoid.
I'd say that all consumable things will have to cost more, because cheap fossil fuel to make things at affordable cost and also to produce foodstuffs, are going away.
And fiat will continue to decline in value over the long haul...against gold, yes. But against everything else too.
Many assets other than gold are also in bubbles. Real estate is in a bubble, but nothing like stocks are. Some classes of real estate are doomed. Trump Tower properties will go to near zero and be torn down and sold for salvage. Nobody wants to carry water up forty flights of stairs to flush their gold plated toilet.
But cheap rent houses won't go out of style until the real die-off comes. People will always have to spend something to keep a roof over their heads. Until they absolutely cannot.
Likewise, good arable land in a climate cool enough to grow food will always be worth something...but the modern FF dependent heavily mechanized, GMO dependent methods will fail and fall into history.
I'm talking Doom Lite here, which is the style of doom to which you subscribe, according to what you've shared with me.
In Full Doom we're likely to be in a situation along the lines of Cormac McCarthy's "The Road". Bullets and bandits.
I expect Doom Lite for some time, to be followed eventually by Full Doom. So I prep for what comes first, but I also prep for what might come later.
We might (not saying we will)...but be MIGHT have Doom Lite for most of my kids lifetime. Your grandkid's lifetime.
If you have lots of wealth (and I know you do) then gold is okay. You can hold lots of gold and not worry. You have other investments. You make money in the markets nearly every week. I know that. You are nimble enough to make money in a down market. Because you're a good trader.
But you MADE your money as a buy and hold of assets that performed well in the past. And as we both know "Past performance is a not a guarantee of future results." Ever read that anywhere? LOL.
Buy and hold is now DOA. The stock and bond markets are cruising for a bruising. Good traders have their finger on the trigger at all times. People who have large portfolios of shares they've held for decades might not be wiped out, but they're going to take a haircut.
Tangible assets make more sense now. Metals are tangible assets. But regular working people like me, who might live another 30 years, can't afford to put too much into gold, because they need to use their money to make more money.
Some really good tangible assets are not good investments though. Oil and gasoline are tangible assets that are likely to come in handy...but diesel and gas don't have unlimited shelf life. And the markets for those assets are a roller coaster. I wouldn't mind having a full 1000 gallon propane tank though. That'd be a worthy prep. But here, solar PV seems to offer more bang for the buck, ultimately.
Gold is a tangible asset that has a place. Silver is probably better because it's seriously undervalued now.
There's always an arbitrage opportunity, if you can find it. You know this instinctively, and you've done better than 99% of the people I know, when it comes to being a financial winner.
But you shouldn't give people the idea that hoarding gold got you to where you are. It's very much the reverse of that. You can afford to hoard gold because you created a big surplus for yourself by investing. I feel like your gold rants might tend to make some younger people put the cart before the horse, so to speak. That's what bothers me about your gold rants.
You're a mentor to some people. Even me. You have a responsibility to be scrupulously honest if you want to write about money and assets.
You get absolutely zero about me. Anyone who would put his faith in an inanimate metal coming out of the earth is a fool. Faith is something you place in people, close friends loved ones or your god. You have it backwards as usual. You can have faith that is positive in friends, loved ones, and special friends and faith that is negative for most others.
I have complete faith that power corrupts, that men in power will always do what history teaches us, steal, rob and pilfer from the weak and dim through inflation, usury, and the kind of bankster tactics we see today with the government and monopolists as partners in garnering the wealth for themselves. It is also my unshakeable belief that those not in power will lie, cheat, steal on their taxes, like you did, at every opportunity to keep as much of the pie as possible for themselves. That is namely human nature that my negative faith is placed in.
If your concern is for the children that might be listening to me your goodness, kindly address them in your commentary in the future and not me. Don't pretend to be my friend and suggest we get together.
You know nothing of where the bulk of my wealth was made or my asset mixture and weighting. You assume through tidbits of information provided by me in an effort to build a sort of friendship and comradery here at the diner, as others do here in providing intimate glimpses into their life, always a mistake on my part when I go against my faith in human nature to be negative from original sin.
The next headlined statement of yours, the only one that is correct by the way is the reason one should buy gold. Those who held the cash effectively lost all their purchasing power, a real hosing as you say.
You then counsel me not to leave impressions to others that hoarding gold made me rich. That is something that you assumed and what people assume from my commentary, is their doing, not mine, no matter how twisted or contorted their assumptions might be. It has always been my practice to counsel often that "Assumption was the Mother of all Fuckups". Believe it, it's true.
The other myriad of scrambled pieces that you bring up such as the only thing you see positive about gold is it's portability and conjectures about this or that or what is cheap and expensive are too numerous and absurd for me to comment on here except to say I view them as excess verbiage to disguise what is a vicious attack on me and my character by you.
Your last and most hideous assault was to characterize me as a liar, a deceiver and corrupter of the youth.
Once I got over my initial pride at the remark, the same one made at Socrates by the dim, evil, and men in power who wished to silence him, my pride soon turned to laughter to think this famous play was being reenacted unknown by the accuser.
In this case it was the big fish actor, in the very small pond or puddle if you wish, looking out at the vast ocean and seeing Moby Dick. Not to worry accuser, your little pond of perch, frogs, and sunfish will never ever hold me.
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Topic: Gold & Silver News (Read 397128 times)
June 06, 2015, 08:05:44 AM