Investing in Gold

Value Collector said:

Consider this short story that will describe the difference between holding gold and holding other assets.

Imagine a Genie came to you an offered to give vast amounts of 10 Trillion dollars of assets, the catch was these assets were the only assets you family could ever own for future generations, they could sell them as needed, but couldn't buy anything else, She gave you 2 options.

Option 1 - All the gold the has ever been mined worth about $10 Trillion, it is a large cube that would fit between the legs underneath the Effiel Tower.

Option 2 - The Entire City of New York + All the farmland in the USA + The entire sharemarket of Australian share market + Apple, Google and Berkshire Hathaway, and still have about $1 Trillion left in cash to spend or deploy as you wish.

Obviously being felt that hand would be amazing and if you chose option 1 your family would live a very rich life for a long time, but over time your cube of gold would shrink, and your future generation would eventually run out of gold having sold it all to fund their life style.

But, if you selected option 2, your family would never run out of funds, because the rental checks from New York and every farm in the USA, dividends from the entire Aussie sharemarket and APPLE and Google, and share sales from Berkshire would never run out.

If you can understand that, you should be able to see why storying your retirement funds in gold might not be great if you plan to live off them in the future.

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Value Hunter said:

Stocks do well over time if the stock market is not too overvalued and the economy performs okay. Look at Japan. The Nikkei 225 only surpassed its 1989 high recently. A Japanese investor in 1989 would have done better buying gold. There is argument for owning both stocks and gold. Gold will still do okay if the world economy goes to hell but stocks will under-perform. So yhes you want a greater allocation top stocks but its reasonable to own some gold as a risk management/hedge. Not too mention gold is a physical asset if the internet or electricity goes down or the stock market shuts down for a while due to a major world war/crises, etc. the physical gold will come in handy.

But yes in general if you are holding for 50 years generally stocks will outperform gold. But returns are only one aspect of investing. Risk management is the other aspect.

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Value Collector said:

Am I reading that right? they charge a fee of 0.41% per year for storage/management.

So, technically if I buy a holding of 1 ounce, and hold it with them for a year, at the end of the year I actually only have 0.959 of an ounce left, and it keeps decaying away.

So not only do I not earn any income, but my "physical asset" is being eaten away, in you original example of gold going from $200 to $2000 over 25 years, how much of that original ounce you bought for $200 in 1999 would you have left? by my calculations you would only have 0.35 of an ounce left, worth $700 not $2000, After another 25 years you have 0.12 of an ounce left.

I think I would rather own the storage company than the gold.

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noirua said:

View attachment 174159 Live Chart: http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif

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Zimbabwe's Gold-Backed Currency: A Golden Opportunity or Fool's Gold?​

divs4ever said:

would you trust your gold ( or girlfriend ) with somebody else and pay for the privilege

there are ways and means of seizing/freezing your assets held by somebody else

gold is an inert , lifeless metal , human civilization revolves around it

currencies may topple. , empires collapse , but an ounce of gold is still an ounce of gold , and most likely worth something to somebody else , so think of it as a compact swap device

if you are completely self-reliant then you probably don't need gold , need to acquire something from somebody else( even when the power/internet is down ) gold might be useful

cheers
https://www.allaboutgemstones.com/
BTW if you do buy gold be very careful who you mention it to ( i only trust Mr. Nobody with secrets like that )

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divs4ever said:

currencies may topple. , empires collapse , but an ounce of gold is still an ounce of gold ,

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Value Collector said:

that’s part of the problem for me, I like assets that compound Discover gemstone facts, I want the assets I own to be growing, or throwing off income I can use to purchase more of it, or atleast buy some lunch.

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Value Collector said:

that’s part of the problem for me, I like assets that compound, I want the assets I own to be growing, or throwing off income I can use to purchase more of it, or atleast buy some lunch.

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