Value of gold is completely arbitrary. It doesn't create wealth, it doesn't multiply, it doesn't pay you interest...it just sits there and waits for people to decide it's worth more or less.

It is not an investment, it is speculation.

If you want to speculate, fine, but don't pretend you're 'investing' in something.

Gold has made a big run since this story was done in 2007, but numbers are still mostly valid:

"In case you're one of those folks, here is some food for thought: Even though gold has spiked sharply in value recently, it hasn't been a long-term winner for most investors. According to University of Pennsylvania finance professor Jeremy Siegel in his seminal book Stocks for the Long Run, here's what a dollar invested in various things would have grown to, from 1802 to 2001. (Amounts have been adjusted for inflation.)

Stocks: $599,605
Bonds: $952
Bills: $304
Gold: $0.98

some shorter time frames.....so those pretty little coins returned 3%/yr over a 25 yr period
..........................gold stocks
1982-2007 (25 years) 3% 11%
1987-2007 (20 years) 2% 8%
1992-2007 (15 years) 5% 9%
1997-2007 (10 years) 8% 5%
2002-2007 (5 years) 18% 13%

Gold doesn't always shine

This post was edited on 8/16/14 at 7:41 am

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Posted by Iowa Golfer

Heaven

Member since Dec 2013

10232 posts

Posted on 8/16/14 at 8:30 am to Ole War Skule

There's truth to the above post. But this here is debatable:

Stocks: $599,605
Bonds: $952
Bills: $304
Gold: $0.98

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Posted by JoeMoTiger

KC Area

Member since Nov 2013

2677 posts

Posted on 8/16/14 at 12:07 pm to Ole War Skule

quote:
Value of gold is completely arbitrary. It doesn't create wealth, it doesn't multiply, it doesn't pay you interest...it just sits there and waits for people to decide it's worth more or less.

Yeah that's why I bought pre 1933 gold coins, Indians, St Gaudens, liberties, etc. When someone wants to make an argument against gold they want to take the historical price of gold bullion versus the stock market but these old coins are just like anything collectable such as old Fender and Gibson guitars which if you would have bought 20-30 of those instruments 30 yrs ago needless to say you would have made quite a tidy sum. As far as what's gold worth? I guess the same question can be asked about the US dollar. The value of the dollar is based on faith, faith that the Feds and the government use wise monetary policy to ensure that the dollar retains value and to keep the US dollar as the preferred currency (petro dollar) for global trade. The problem we are facing is the dollar going to be conspired against by foreign/hostile governments to supplant the US dollar as the worlds preferred currency thus ending the reign of the almighty dollar?

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Posted by JoeMoTiger

KC Area

Member since Nov 2013

2677 posts

Posted on 8/16/14 at 12:23 pm to Ole War Skule

quote:
If you want to speculate, fine, but don't pretend you're 'investing' in something.

So why is it when I talk with my financial planner all my equities are investments but when I told him I was buying some gold he said "gold is historically high, I would not buy it at all but if you do wait for it to drop below $1000 an oz". When I buy company stock every two weeks am I not speculating that my companies revenues will grow and profits rise? I work for a large fortune 500 company and to be honest our revenues since 2007 have been nearly flat when factoring in inflation and probably worse if true inflation is calculated, now profits have been ok because we have reduced head count and any new hires don't get the same deal as employees prior to 2007.