I'm looking to stock up on my gold reserves on this dip. I confess I don't know as much about gold as I should, so I would love to hear some opinions from the more learned folks on here to go along with whatever I read. Should I keep waiting or start buying now?
How long do you think this gold dip will last?
- Thread starter Crynos
- Start date
Gold is pretty simple it's value is nearly always stable (unless some new large pockets of it is found). The question is will the US dollar value go up or down, currently it's not looking good as the policy of massive spending and wars continues.
Personally I'd probably invest in oil futures as the value of oil is extremely low even though it doesn't seem it and gas prices will likely skyrocket.
Personally I'd probably invest in oil futures as the value of oil is extremely low even though it doesn't seem it and gas prices will likely skyrocket.
Berkshire Hathaway is a far better hedge against inflation than Gold.
Right now you're buying gold at a time when demand is sky-high from all the tin-foil hat 'mericans. To sustain the current price level demand needs to stay at the current high level.
When (if) panic over inflation subsides, demand for gold will fall. The price will fall. That's not to mention the fact supply has risen precisely because the price of gold is so high.
High supply, lower demand = price fall.
Right now you're buying gold at a time when demand is sky-high from all the tin-foil hat 'mericans. To sustain the current price level demand needs to stay at the current high level.
When (if) panic over inflation subsides, demand for gold will fall. The price will fall. That's not to mention the fact supply has risen precisely because the price of gold is so high.
High supply, lower demand = price fall.
Gold is a pretty risky investment atm, imo.
Hold onto your cash, wait for the Facebook IPO, buy all you can, sell a week later.
Hold onto your cash, wait for the Facebook IPO, buy all you can, sell a week later.
Do you really see the inflation panic going away though? Didn't Bernanke say the rates will be low at least through 2014? Plus it's not like we can ever stop inflating--the debt would kill us. Also, it's not just the Americans but the Chinese have started buying tons of gold. Once again, don't pretend to be an expert (reading and trying to get there though), and don't have a huge part of my portfolio in gold, but I think I should be expanding that percentage.
Pretty much. I think we actually have some pretty smart gay webmasters. I'm putting all my money the first place guerrila tells me to.
Berkshire is most likely not the best performing selection, especially due to the market cap.
You need more Beta (β).
Realistically though, it is a casino where a few have a significant unfair advantage.
Look at CEO compensation. Look at corruption. Look at insiders.
It's not a worthy pursuit for most people to do it the fair way.
You need more Beta (β).
Realistically though, it is a casino where a few have a significant unfair advantage.
Look at CEO compensation. Look at corruption. Look at insiders.
It's not a worthy pursuit for most people to do it the fair way.
I think he means as a hedge. Berkshire is so large now it is essentially an index fund.
As long as the major markets keep their upward trend, investors will keep pulling $$ from gold for better returns.
AAPL has run-up 50% just since Jan 1st.
AAPL has run-up 50% just since Jan 1st.
I understand why I want gold in my portfolio, I just don't understand enough to somewhat accurately predict the day-to-day changes. In the long run it's pointless for me to care about a few hundred bucks, but I'm hardcore cheap.
And an index fund of the best companies in America.
Companies with durable competitive advantages, companies with high returns on capital, companies with top quality management. All managed by WEB.
Ok. Here is my opinion, but I don't really understand gold either.
It reached a blow off top in August last year and has been in a down trend ever since. Looks like it could easily fall to 1500 to me.
^^ This 100%
Gold buyers are simply "speculators"... invest into companies that have moats and generate tons of cash.
I think inflation is a real problem, I just think buying gold at current levels is a knee-jerk reaction. I really have no idea what the price of gold will be in the long-term but I do know:
1. Gold has always been a safe haven and it always spikes when there are looming economic problems, nuclear fears etc. Why buy at a cyclical peak?
2. I think the risk that gold is in a bubble exceeds the risk of your dollar denominated investments devaluing.
On the flip side of the coin:
Most investors think businesses (stocks) are the best hedge against inflation because they can simply raise prices inline with inflation. Firstly only companies with pricing power can raise prices in line with inflation.
Secondly inflation inflicts a very heavy cost on asset heavy businesses. This is because the cost of maintaining and replacing their assets each year rises with the inflation. So if you own a (bad) business that returns just 5% a year and inflation is running at 5% a year - In real terms the business is breaking even.
This is why I recommended Berkshire, they're businesses (A) have pricing power (B) Are in general not asset heavy (C) earn sufficiently high returns to overcome the inevitable cost of inflation.
Most analysts have predicted that gold will creep up over $2,000 per troy ounce at some point this year, with the average high predicted at around $2,055. That being said, most predictions show the average price for the year to be around $1,750.
If you're looking to hold on to it for only 1-3 years (depending on the global, but primarily the U.S. economy) it's probably a good bet for a positive return, though not nearly as great as some other options (APPL for one).
Have a look at the following numbers. They represent the % change in average price of gold for the year since 1930.
1930 -17%
1931 21%
1932 27%
1933 32%
1934 0%
1935 0%
1936 0%
1937 0%
1938 -1%
1939 -2%
1940 0%
1941 0%
1942 0%
1943 0%
1944 3%
1945 0%
1946 0%
1947 0%
1948 -9%
1949 10%
1950 0%
1951 0%
1952 1%
1953 1%
1954 0%
1955 0%
1956 0%
1957 0%
1958 0%
1959 0%
1960 0%
1961 0%
1962 0%
1963 0%
1964 0%
1965 0%
1966 -1%
1967 12%
1968 5%
1969 -13%
1970 13%
1971 44%
1972 67%
1973 58% *
1974 4% *
1975 -22% *
1976 19%
1977 31%
1978 58%
1979 101%
1980 -25%
1981 -18% *
1982 13% *
1983 -15%
1984 -12%
1985 16%
1986 21%
1987 -2%
1988 -13%
1989 1%
1990 -6% *
1991 -5% *
1992 5%
1993 7%
1994 0%
1995** 1%
1996 -15%
1997 -11%
1998 -5%
1999 0%
2000 -3%
2001 14% *
2002 17%
2003 13%
2004 9%
2005 36%
2006 15%
2007 25% *
2008 12% *
2009 26% *
2010 28% *
2011 28% *
Keep in mind that the only changes tot he price of gold in U.S. trading prior to 1968 were changes that the government made. Gold was a set price for the most part prior to that time. In 1968, a two-tiered pricing system was implemented that allowed for gold prices to fluctuate based on market trading.
If you'll notice the major spikes in gold prices generally occurred around, and directly following, the times of recessions in the U.S. The major recessions in the U.S. (those lasting 8 months or more) occurred during the following times: 1969-1970, 1973-1975, 1981-1982, 1990-1991, 2001-2001, 2007-current. As you can see, most of the major upswings occurred in the years surrounding recessions. These were then followed by massive corrections for the most part.
While gold prices settled higher than they had been prior to the huge upswings, investors buying during the upswings lost their asses if they held onto the gold.
Since 2001 gold has been on a continual upswing. It's likely to stay that way until both the U.S. and the World economy have been in a sustained and meaningful recovery. But once that happens there is likely to be a huge correction. Gold may hit $2,000 this year, but in a decade it's likely to be hovering around $1,200 assuming the U.S. hasn't undergone hyper-inflation or hyper-deflation and the unemployment rate has returned to the 4-7% range.
tl;dr version: Gold's probably not a bad short-term hold (1-3 years), but long-term (6-10 years) you missed the sweet spot by about a decade.
If you're looking to hold on to it for only 1-3 years (depending on the global, but primarily the U.S. economy) it's probably a good bet for a positive return, though not nearly as great as some other options (APPL for one).
Have a look at the following numbers. They represent the % change in average price of gold for the year since 1930.
1930 -17%
1931 21%
1932 27%
1933 32%
1934 0%
1935 0%
1936 0%
1937 0%
1938 -1%
1939 -2%
1940 0%
1941 0%
1942 0%
1943 0%
1944 3%
1945 0%
1946 0%
1947 0%
1948 -9%
1949 10%
1950 0%
1951 0%
1952 1%
1953 1%
1954 0%
1955 0%
1956 0%
1957 0%
1958 0%
1959 0%
1960 0%
1961 0%
1962 0%
1963 0%
1964 0%
1965 0%
1966 -1%
1967 12%
1968 5%
1969 -13%
1970 13%
1971 44%
1972 67%
1973 58% *
1974 4% *
1975 -22% *
1976 19%
1977 31%
1978 58%
1979 101%
1980 -25%
1981 -18% *
1982 13% *
1983 -15%
1984 -12%
1985 16%
1986 21%
1987 -2%
1988 -13%
1989 1%
1990 -6% *
1991 -5% *
1992 5%
1993 7%
1994 0%
1995** 1%
1996 -15%
1997 -11%
1998 -5%
1999 0%
2000 -3%
2001 14% *
2002 17%
2003 13%
2004 9%
2005 36%
2006 15%
2007 25% *
2008 12% *
2009 26% *
2010 28% *
2011 28% *
Keep in mind that the only changes tot he price of gold in U.S. trading prior to 1968 were changes that the government made. Gold was a set price for the most part prior to that time. In 1968, a two-tiered pricing system was implemented that allowed for gold prices to fluctuate based on market trading.
If you'll notice the major spikes in gold prices generally occurred around, and directly following, the times of recessions in the U.S. The major recessions in the U.S. (those lasting 8 months or more) occurred during the following times: 1969-1970, 1973-1975, 1981-1982, 1990-1991, 2001-2001, 2007-current. As you can see, most of the major upswings occurred in the years surrounding recessions. These were then followed by massive corrections for the most part.
While gold prices settled higher than they had been prior to the huge upswings, investors buying during the upswings lost their asses if they held onto the gold.
Since 2001 gold has been on a continual upswing. It's likely to stay that way until both the U.S. and the World economy have been in a sustained and meaningful recovery. But once that happens there is likely to be a huge correction. Gold may hit $2,000 this year, but in a decade it's likely to be hovering around $1,200 assuming the U.S. hasn't undergone hyper-inflation or hyper-deflation and the unemployment rate has returned to the 4-7% range.
tl;dr version: Gold's probably not a bad short-term hold (1-3 years), but long-term (6-10 years) you missed the sweet spot by about a decade.
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