I hear the Punjab is all jabby due to their 200 tonne purchase at record highs. Oh well.

All of the gold I own is in electronic components. That's it.

In other news, right now is a good time to buy gold.

I take it that no one, including subby, actually read the article?

Petit_Merdeux: I take it that no one, including subby, actually read the article?

Would you mind adjusting that for inflation?

NewportBarGuy: Petit_Merdeux: I take it that no one, including subby, actually read the article?

Would you mind adjusting that for inflation?

It's not a 30 year + chart champ. Would you ask for an inflation adjusted chart if it was a 1 year?

Anyhoo, I smells another bubble... tick... tock... tick... tock

NewportBarGuy: Petit_Merdeux: I take it that no one, including subby, actually read the article?

Would you mind adjusting that for inflation?

Meaning that it has only reached a nominal high... meaning that it can go much higher.

/thanks to Mr. Bernanke

sell, Mortimer, sell!!!!!

//pay no attention to this, no idea what I'm talking about

There is nothing special about gold as an investment and you're fooling yourself if you think there is. Look at the industrial and commercial demand for the material and base your investments on that - even then, because gold is fungible and can be melted down and re-used indefinitely (we see this is the gold-recovery efforts from electronics), "peak gold" shouldn't be as huge a factor as we find in the oil market, which is for a material that is destoyed as it is used.

BigBooper: Would you ask for an inflation adjusted chart if it was a 1 year?

Nope, but I'm getting sick of the gold bugs. It was a good trade for a time, but it's gotten ridiculous. Oil was a much better play from the Jan. bottom.

I personally wouldn't invest in it, however gold production has lagged the gold market for several quarters now. The market is currently still growing, so even if someone invests now, they should see at least a small profit for a short term investment. However, I would definitely stay clear of it for a long term investment option.

Petit_Merdeux: I take it that no one, including subby, actually read the article?

Umm. Yeah. Did you read this? "Investment demand for gold also slipped from high levels in the third quarter of 2008. Retail investment in products such as coins and bars was down 31 percent year-on-year, while ETF inflows tumbled 72 percent to 41.4 tonnes." Demand is fading fast. At some point, those investors are going to try to cash out. And then the supply will be higher than the demand, and the price will fall. If everyone tries to cash out, the price will fall faster.

NewportBarGuy:
Would you mind adjusting that for inflation?

My dad's fond of a comparison that may actually be true. Supposedly in Rome one ounce of gold would get you a nice toga, the suit of the time. Today, one ounce of gold will get you ... a nice suit.

That's why I invest in Lead. Those crazy slopes in the Far East use it in everything. And, if the rumors are true, Orientals are very smart right? So.....if they're using Lead in clothes, toothpaste, childrens' toys and dog food, then I am investing in it. Gonna be a billionaire.

/GONG!!!

Welcome to Econ 101. Demand goes up, prices rise. Prices get too high, demand falls.

Nothing to see here, move along.

stucka: Umm. Yeah. Did you read this?

Umm. Yeah. That means you will lose it all in the future, but you haven't lost it now. So hold on to it so you can be ruined then, Mr. Buffett wannabee.

I assume you will be shorting gold futures this week, Mr. Doesn't-see-how-the-article-doesn't-support-the-headline-mitter?

Petit_Merdeux: stucka: Umm. Yeah. Did you read this?

Umm. Yeah. That means you will lose it all in the future, but you haven't lost it now. So hold on to it so you can be ruined then, Mr. Buffett wannabee.

I assume you will be shorting gold futures this week, Mr. Doesn't-see-how-the-article-doesn't-support-the-headline-mitter?

I was criticizing your criticism of the subby. Now you're criticizing me criticizing the subby. What?

I don't know if gold will go up or down.
Neither do you.
I don't know how stocks will perform in the next year, neither do you.
Inflation, deflation, prosperity, recession - we're always in one, although we don't always know which one we're in while we're in it.

Gold makes sense as part of diversified portfolio that protects and profits under any of those four situations.

Permanent Portfolio (new window)

25% gold
25% cash
25% longterm treasuries
25% stocks (S&P Index)

- averaged 10% since 1972
- only lost money in two years
- went UP in 2008 - S&P lost 36%

I sleep well at night.

stucka: I was criticizing your criticism of the subby. Now you're criticizing me criticizing the subby. What?

And now I'm gonna criticize your critical criticism of my critizizm of your crtzmmzmzm cinnamon.

wat

Assgasket: Welcome to Econ 101. Demand goes up, prices rise. Prices get too high, demand falls.

Nothing to see here, move along.

Except Econ 101 is vastly oversimplified. Speculators can drive prices much higher than demand can support, for a time. Throw in the belief that gold is a hedge against inflation, mix with emotion, and gold prices don't have to make any sense. At least for the short run, eventually prices will correct, and we may see $300 gold again. The only question is how high will gold rise, and when will the bubble burst? Like the housing bubble, and the tech bubble before that, it will probably go higher, and stay there longer than reason and markets say it should.

I like to listen to the idiots that say that the high price of gold is the new normal, and that it will never go down in value again!

Petit_Merdeux: stucka: I was criticizing your criticism of the subby. Now you're criticizing me criticizing the subby. What?

And now I'm gonna criticize your critical criticism of my critizizm of your crtzmmzmzm cinnamon.

wat

mmmmmm, cinnamon... I like it with sugar on buttered toast. Warm, freshly toasted bread, slathered in fresh farm butter, and sprinkled liberally with cinnamon and sugar.... :drools:....

/wait, what were we talking about?

The Spice Must Flow!

Mumbler: Permanent Portfolio (new window)

25% gold
25% cash
25% longterm treasuries
25% stocks (S&P Index)

- averaged 10% since 1972
- only lost money in two years
- went UP in 2008 - S&P lost 36%

I sleep well at night.

Uh, if you'd just dumped that all into the S&P 500, you'd have averaged over 11% return since 1972.

/yeah, I know the annualized rate is a bit lower, but you probably weren't counting that way either

Hearing all the wharrgarbling far-right talk radio hosts hyping gold so much, I knew there must have been something wrong with it.

rcain: In other news, right now is a good time to buy short gold.


Its an asset bubble like any other. If you got in 4 years ago great time to cash in. IF not stay away, there are other ways to hedge inflation.

So when you buy gold what do you buy? Say I go buy 1oz of gold on the market, does UPS arrive at my door with an oz of gold or do I get a piece of paper saying I can walk up to Fort Knox and pick it up? Or is it just a piece of paper saying somewhere in the world is 1 oz of gold that is mine?

Mumbler: I don't know if gold will go up or down.
Neither do you.
I don't know how stocks will perform in the next year, neither do you.
Inflation, deflation, prosperity, recession - we're always in one, although we don't always know which one we're in while we're in it.

Gold makes sense as part of diversified portfolio that protects and profits under any of those four situations.

Permanent Portfolio (new window)

25% gold
25% cash
25% longterm treasuries
25% stocks (S&P Index)

- averaged 10% since 1972
- only lost money in two years
- went UP in 2008 - S&P lost 36%

I sleep well at night.

I looked at your site link, and that 10% is an arithmetic average of annual returns. Why should I believe anything from a site which either a) doesn't know how to calculate returns, or b) is lying about them?
The actual annual return from that portfolio is well under 6%.

Gee, maybe investors are realizing gold is no more valuable than stocks. Its all emotion. If there was some catastophic economic collapse, do you know how much gold would be worth? $0.00.

HypnozombieX: Problem is is....You can't eat gold.

Yeah, really. Have fun with your shiny rocks, I'll invest in shotguns, ammo, and whiskey.

I dumped all my gold for Eggo futures.

stucka: NewportBarGuy:
Would you mind adjusting that for inflation?

My dad's fond of a comparison that may actually be true. Supposedly in Rome one ounce of gold would get you a nice toga, the suit of the time. Today, one ounce of gold will get you ... a nice suit.

But the difference here is a nice toga was based on the quality of the materials. You can get "a nice suit" now for 3-400 bucks. Above that any are paying for name and/or exotic materials.

Postal Penguin: So when you buy gold what do you buy? Say I go buy 1oz of gold on the market, does UPS arrive at my door with an oz of gold or do I get a piece of paper saying I can walk up to Fort Knox and pick it up? Or is it just a piece of paper saying somewhere in the world is 1 oz of gold that is mine?

yes, you order gold coins

I read the article. There is a secondary bubble building up around gold. Currently, market price does not reflect demand at all. Gold is currently trading at a high price, but the bubble will not last forever. When it pops, cue ha ha guy to laugh at everyone who invested heavily in gold.

Postal Penguin: So when you buy gold what do you buy? Say I go buy 1oz of gold on the market, does UPS arrive at my door with an oz of gold or do I get a piece of paper saying I can walk up to Fort Knox and pick it up? Or is it just a piece of paper saying somewhere in the world is 1 oz of gold that is mine?

If you buy it from a remote seller, yes, it arrives in the mail. It can be a coin or a bar (coins are safer because bars can be whittled down surreptitiously). You can also buy it locally if you have a jeweler that sells gold.

If you want to let someone else store your gold, you can buy it in the form of an ETF; ticker GLD (new window)

stucka: NewportBarGuy:
Would you mind adjusting that for inflation?

My dad's fond of a comparison that may actually be true. Supposedly in Rome one ounce of gold would get you a nice toga, the suit of the time. Today, one ounce of gold will get you ... a nice suit.

Thats a cute comparison, but one ounce of gold would probably buy you about 500 togas in ancient rome.

Link

I shorted gold a couple weeks ago. A few days later India made that big purchase and I lost about a grand in 48 hours. But I am confident in a 2-3 year time span I made the right call.

GOB: stucka: NewportBarGuy:
Would you mind adjusting that for inflation?

My dad's fond of a comparison that may actually be true. Supposedly in Rome one ounce of gold would get you a nice toga, the suit of the time. Today, one ounce of gold will get you ... a nice suit.

Thats a cute comparison, but one ounce of gold would probably buy you about 500 togas in ancient rome.

Link

Interesting link. Thanks!

Nobody is buying gold because so many people have bought gold?

The only reason anyone tells you to buy gold is because they have some to sell.

Beware the advice of the wealthy; they do not seek your company.

Look just because it happened to real estate and tech and savings and loans and junk bonds, does not mean that this bubble will pop too. Gold always goes up and there is only so much of it and everyone wants it. BUY BUY BUY!

Gold is a poor investment. It's not a bad hedge if you're expecting the currency to collapse. I have around 4.5k in gold and silver... not a retirement fund, but enough to weather financial panic. People saying that "you can't eat gold" are silly. The government, the economy will always survive, but during periods of transition it's nice to have enough cushioning to bridge the gap.

copper and lead are always a good investment when you have gold.

Has G. Gordon Liddy been pushing gold the last few years? I used to listen to him many years ago and he was always telling people to put their money into no-load mutual funds...

rumpelstiltskin:
I looked at your site link, and that 10% is an arithmetic average of annual returns. Why should I believe anything from a site which either a) doesn't know how to calculate returns, or b) is lying about them?
The actual annual return from that portfolio is well under 6%.

At a lower risk and lower volatility. I couldn't stomach risking a 50% loss like happened last year. Maybe you're younger and have time to recover from a disaster like that. But I can't. I need steady, safe growth under any economic environment. And I don't trust the government to work in my personal interest.

My point is that you need to be protected from the unknown future. If you and your crystal ball can predict the future and time the market, go ahead. We'll check up on each other in 20 years.

I need to leave for the day so I can't continue the discussion. Good luck, seriously.

Senescent Dawn: People saying that "you can't eat gold" are silly.

Well, survivalists in general are a little silly, but honestly, if you are a survivalist and you are investing in gold, that's silly too.

Back when oil prices were high, I mentioned on a number of threads that an investor with some available cash and willing to take some risks (I only had one of the two) should buy gold and short oil. The ratio of gold/oil was under 10. It is at 15 now. I wasnt sure which was going to change, either gold was going to shoot up or oil plumment, but that ratio couldnt hold. It turned out both would have been good investments.

10-20 is normal long term range for the ratio. It drops to 8 and rises to 25 on occassion. Below 10 and above 20 are opportunities.

I have an idea! Instead of stocks, let's all gamble on the weather. I'll pick "Sunny in the morning with temperatures and winds rising in the afternoon," you can have "Sunny in the morning with winds rising but temperatures falling in the afternoon," Joe Blow down the street can have "Drizzly all day," et cetera. Then when a given person's weather pattern happens, they get handed money and the right to laugh at the lesser peons who gambled on different patterns. Why? Well, both stocks and the weather are nonlinear, chaotic systems that even the experts have trouble predicting, but the weather cannot be influenced by greased palms, there's no such thing as insider forecasting, and if you wait long enough, sooner or later your pattern is going to turn up.

What's that you say? Hitching your fortune and reputation to a chaotic system is retarded? You don't say...

EatHam: Well, survivalists in general are a little silly, but honestly, if you are a survivalist and you are investing in gold, that's silly too.

Sure... survivalists are the types who expect to retreat to their backwoods cabin and support themselves while the world goes to hell. It's a fantasy, obviously. I don't think it's unhealthy to want to ensure that you always have a medium of exchange. The dollar makes me nervous.

schief2: Uh, if you'd just dumped that all into the S&P 500, you'd have averaged over 11% return since 1972.

/yeah, I know the annualized rate is a bit lower, but you probably weren't counting that way either

Investing in the 25% portfolio IS lower, that's correct.

The key is the volatility - in the data provided, the index has a standard deviation of 19%, versus a standard deviation of 9% for the 25% portfolio.

The significance of this is that if you're near retirement age (within about 10 years or so) you may not want to gamble on your retirement. Sure, you might have a slightly better chance of getting a higher payout if you're cashing out if you happen to retire in a bull market, but you risk compromising your retirement. The return is not worth the risk.

Although 25% is probably a little high for gold. You want to be well-diversified over various asset classes. Going 10% gold and sticking that extra 15% in short-term bonds would help.

There's a relevant Bob the Angry flower where he invests billions in tomatoes, but those things are a pain to find.

That said, I believe gold is due for a big correction.