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re: Just dumped some cash and bought gold, good or bad?
Posted on 8/17/14 at 8:13 pm to Volvagia
Posted on 8/17/14 at 8:13 pm to Volvagia
quote:
If you had placed that 18.93 in some S&P 500 index, you would have had 226,000 at the end of 2013.
Yep
Ok I am not arguing the stock market has not performed better than gold over time nor that it will not continue to do so. Assigning arbitrary figures to the exact amount of returns that a dollar invested in 1802 would have gained my point. Sorry if I was not clear. Never have I claimed gold was a great investment only that I have on occasion purchased coins from pre 1933.
2
Posted on 8/17/14 at 9:14 pm to cave canem
Stocks win. Not as much as some statistics suggest however. I think they have returns closer to 5% than what is suggested by the book. As far as I can tell anyway. How returns are defined and figured gets pretty complicated though. It's shocking how well treasuries have held up. Again depending on which particular author's methodology you choose to buy in to.
Having said all of this, a lot of pretty smart investors still suggest holding at least some percentage of gold.
Having said all of this, a lot of pretty smart investors still suggest holding at least some percentage of gold.
Posted on 8/18/14 at 7:25 am to Iowa Golfer
quote:
Having said all of this, a lot of pretty smart investors still suggest holding at least some percentage of gold.
And that's something I don't understand...as well as the near universal view that bonds have a place in most portfolios. I'm not saying I 'know' they're both wrong, but really don't understand why most say gold has a part in portfolios.
There's a difference between saying that bonds and gold (any more than oil or beans or whatever) have a 'place' in portfolios and saying that current conditions make one or the other a good buy.
Is there some specific function gold is supposed to serve as a proven hedge? My understanding is that it hasn't been shown to be a good inflation hedge.
Posted on 8/18/14 at 8:10 am to Ole War Skule
I really wanted to click on this thread and respond around the OP, but I knew it would somehow, someway, devolve to this.
Gravity, death, taxes, gold investment discussions turning south quickly...
Gravity, death, taxes, gold investment discussions turning south quickly...
This post was edited on 8/18/14 at 8:11 am
Posted on 8/18/14 at 8:10 am to Ole War Skule
I'm more of an advocate for silver than gold, but one thing I read a lot is that gold represents wealth and is priced near what it takes to get it out of the ground. It seems to store wealth. In the same way a house does I guess.
To go a completely different direction, it is interesting to watch what some experts say versus what they do. e.g. Warren Buffet and derivatives, specifically his loss on silver futures (or his stockholder's loss, more accurately) and Buffet again on dividends.
It seems everyone agrees to some extent on returns from gold, up until recently anyway, but almost everyone runs to it to store wealth to some degree.
Personally I own silver and I consider it an investment, notwithstanding some Investorpedia definition. I base my decision on supply and demand. I own a little bit of gold.
To go a completely different direction, it is interesting to watch what some experts say versus what they do. e.g. Warren Buffet and derivatives, specifically his loss on silver futures (or his stockholder's loss, more accurately) and Buffet again on dividends.
It seems everyone agrees to some extent on returns from gold, up until recently anyway, but almost everyone runs to it to store wealth to some degree.
Personally I own silver and I consider it an investment, notwithstanding some Investorpedia definition. I base my decision on supply and demand. I own a little bit of gold.
Posted on 8/18/14 at 9:21 am to cave canem
quote:
Ok I am not arguing the stock market has not performed better than gold over time nor that it will not continue to do so. Assigning arbitrary figures to the exact amount of returns that a dollar invested in 1802 would have gained my point. Sorry if I was not clear. Never have I claimed gold was a great investment only that I have on occasion purchased coins from pre 1933.
One important consideration is being left out of this conversation and that is the debt/deficit the US has accumulated in the past 30 yrs, well over 100 trillion dollars in unfunded liabilities and at some point in time it will have to be dealt with. What can the Fed/government do to deal with it? Flood the money supply with dollars in an attempt lower the accumulated debts current value, default on the debt and start over? damn sure don't want interest rates going back towards historical averages or we won't be able to service the debt, raise federal withholding taxes up to 75%, don't think that's going to go over very well. The US has a real problem with debt and no one has a solution that would not cause the market to tank so we continue to "kick the can down the road", a lot of people are in a quasi state of denial when it comes to the US debt and what potentially catastrophic effects it may have on the economy and this is where more people are looking for tangible assets that will have some value if the dollar does collapse.....the US economy of 20-30 yrs ago does not exist, no more 5-7 yr business cycles, now we have jobless recoveries, post recession GDP growth of 2% when you need 3.5 or better for decent job creation, good luck to all.
Posted on 8/18/14 at 10:01 am to JoeMoTiger
Damnit I'll bite.
While I agree that off balance sheet unfunded liabilities are a very big issue for the US (#2 overall IMO), the debt/deficit and these unfunded liablities are two separate issues. The deficit has fallen substantially recently, and just having debt is not a "bad" thing the way so many in the media try to describe. A liquid and deep Treasury market is extremely important to the global financial system. China's holdings of Treasuries is an anchor for their financial system, Treasuries are far and away the primary source of collateral in the financial markets, and Treasuries are denominated in by far the most stable currency on earth, USD.
The Fed can do very, very little with this, and this isn't a Fed problem. The one thing I will always hold against George Bush was in 2004-2006, he had Congress, the WH, and a huge amount of political capital built up. That was likely our only shot at proactive entitlement reform in this generation. Now it will almost certainly come in some sort of reactionary band-aid political hot potato over the next 10-20 years. Presidents will get blamed for things they really have little say and espeically control over, but Bush had a clear opportunity and he decided against it because it would be damaging to the Republican party in the mid-terms and '08 election. 20/20 hindsight it wouldn't have mattered because democrats cleaned up anyway.
I'd argue more people are extrapolating dire outcomes regarding our debt load compared to those in denial. Having no Treasury market would be very devastating to the US' global standing, financially as well as politically.
And yet the US is by far the strongest developed nation economically at this point in time. I'd also argue emphatically that job creation is not a direct product of our current economic situation but much more of our current educational issues (#1 overall IMO).
quote:
One important consideration is being left out of this conversation and that is the debt/deficit the US has accumulated in the past 30 yrs, well over 100 trillion dollars in unfunded liabilities and at some point in time it will have to be dealt with. What
While I agree that off balance sheet unfunded liabilities are a very big issue for the US (#2 overall IMO), the debt/deficit and these unfunded liablities are two separate issues. The deficit has fallen substantially recently, and just having debt is not a "bad" thing the way so many in the media try to describe. A liquid and deep Treasury market is extremely important to the global financial system. China's holdings of Treasuries is an anchor for their financial system, Treasuries are far and away the primary source of collateral in the financial markets, and Treasuries are denominated in by far the most stable currency on earth, USD.
quote:
What can the Fed/government do to deal with it?
The Fed can do very, very little with this, and this isn't a Fed problem. The one thing I will always hold against George Bush was in 2004-2006, he had Congress, the WH, and a huge amount of political capital built up. That was likely our only shot at proactive entitlement reform in this generation. Now it will almost certainly come in some sort of reactionary band-aid political hot potato over the next 10-20 years. Presidents will get blamed for things they really have little say and espeically control over, but Bush had a clear opportunity and he decided against it because it would be damaging to the Republican party in the mid-terms and '08 election. 20/20 hindsight it wouldn't have mattered because democrats cleaned up anyway.
quote:
a lot of people are in a quasi state of denial when it comes to the US debt and what potentially catastrophic effects it may have on the economy and this is where more people are looking for tangible assets that will have some value if the dollar does collapse
I'd argue more people are extrapolating dire outcomes regarding our debt load compared to those in denial. Having no Treasury market would be very devastating to the US' global standing, financially as well as politically.
quote:
the US economy of 20-30 yrs ago does not exist, no more 5-7 yr business cycles, now we have jobless recoveries, post recession GDP growth of 2% when you need 3.5 or better for decent job creation,
And yet the US is by far the strongest developed nation economically at this point in time. I'd also argue emphatically that job creation is not a direct product of our current economic situation but much more of our current educational issues (#1 overall IMO).
Posted on 8/18/14 at 11:12 am to BennyAndTheInkJets
quote:
And yet the US is by far the strongest developed nation economically at this point in time. I'd also argue emphatically that job creation is not a direct product of our current economic situation but much more of our current educational issues (#1 overall IMO).
I can't disagree that we have many jobs unfilled due to qualified candidates not being available to fill said jobs, but with the labor participation rate at approx. 62.5% how do you get all these people who are not working back to secondary/college education to acquire the skills? Some won't work, others are incapable of advanced education due to poor primary education K-12, whether that is a system failure or on the individual is another discussion, then we have numbers game in play, even if everybody went back for vocational and college educations there are not enough jobs for them all plus the politicians would like to get do sort of amnesty deal done so this illegal immigration sh!t is no longer an issue and that will add several million more legal citizens that could potentially put more people on government programs, whew! I'm normally a pretty positive person but over the past few years I'm seeing a lot of things happening that appear to be trouble for the US in the present and future.
Posted on 8/18/14 at 1:26 pm to JoeMoTiger
quote:
even if everybody went back for vocational and college educations there are not enough jobs for them
If EVERYONE immediately became skilled in an instant and went back to work then no, we couldn't employ them. However in our current reality, unemployment in this country is very much a supply side issue compared to demand side. Business are hiring, in fact in the recent NFIB small business survey, over half of owners either hired or tried to hire in the past 3 months, and a quarter of owners tried to fill a position but couldn't.
quote:
all plus the politicians would like to get do sort of amnesty deal done so this illegal immigration sh!t is no longer an issue and that will add several million more legal citizens that could potentially put more people on government programs
This is more an emotional issue compared to economic but potentially yes regarding government programs, however you'd also be collecting potential income taxes from these new legal citizens who have shown very, very little tendency in the way of "entitlements". However this is much more political than it is economic so I don't really want to play here.
Posted on 8/18/14 at 2:05 pm to BennyAndTheInkJets
Thanks for posting all of that. I learn a ton every time you post.
Posted on 8/18/14 at 4:16 pm to BennyAndTheInkJets
quote:
over half of owners either hired or tried to hire in the past 3 months, and a quarter of owners tried to fill a position but couldn't
I am sure your stat is correct but it can mislead. For example my sister owns a small boutique selling womens clothes, she tried to hire someone to work two afternoons a week for little more than minimum wage. Yes, she was unsucessful in hiring someone but was that a reasonable offer? I just laughed when she whined to me about no one being willing to work. I would wager that very few full time jobs with reasonable pay are going unfilled. JMHO
Posted on 8/18/14 at 4:18 pm to BennyAndTheInkJets
quote:
If EVERYONE immediately became skilled in an instant and went back to work then no, we couldn't employ them. However in our current reality, unemployment in this country is very much a supply side issue compared to demand side
I think you have to look at the working age population and then understand that a significant percentage are not cut out for higher education, sorta like the square peg in a round hole analogy, many of these people worked in the manufacturing, industrial and building trades and the class room was something they were happy to leave behind after high school. A little off topic, my daughter is graduating high school this year and will be entering a university the following year, I really need to nudge her into studies that will be in demand when she graduates but not make her feel like I'm pushing her towards a career she does not like, any thoughts on which degrees are needed for many of these unfilled jobs?.........may need to fire this up as a separate thread.
Posted on 8/18/14 at 4:20 pm to cave canem
Different is different parts of the country. I had an opening where I paid $35K, health insurance and I match up to 3% of salary in a simple ira and had difficulty filling it. Basically a support position. Professional customer service for lack of better description.
I see it from an employer's perspective, consequently I'm biased, but I'd have to agree people don't really seem to want to work.
I see it from an employer's perspective, consequently I'm biased, but I'd have to agree people don't really seem to want to work.
Posted on 8/18/14 at 4:55 pm to cave canem
quote:
I am sure your stat is correct but it can mislead. For example my sister owns a small boutique selling womens clothes, she tried to hire someone to work two afternoons a week for little more than minimum wage. Yes, she was unsucessful in hiring someone but was that a reasonable offer? I just laughed when she whined to me about no one being willing to work. I would wager that very few full time jobs with reasonable pay are going unfilled. JMHO
I agree with your rationale for it being potentially misleading, however this arguement will certainly devolve into a "quality of jobs" arguement which is a philosophical argument rather than an economic one (What is a "good" job and what is a "bad" job? ).
Posted on 8/18/14 at 5:14 pm to JoeMoTiger
quote:
I think you have to look at the working age population and then understand that a significant percentage are not cut out for higher education, sorta like the square peg in a round hole analogy, many of these people worked in the manufacturing, industrial and building trades and the class room was something they were happy to leave behind after high school.
Doesn't this further support the supply side issue? Or is this notion that the demand side for these skills is not there?I agree but it's a tough arguement to start when you go from general demand for labor to specific demand for labor.
quote:
A little off topic, my daughter is graduating high school this year and will be entering a university the following year, I really need to nudge her into studies that will be in demand when she graduates but not make her feel like I'm pushing her towards a career she does not like, any thoughts on which degrees are needed for many of these unfilled jobs?.........may need to fire this up as a separate thread.
I guess it's actually not off-topic
Unfortunately she'll hate you for recommending these two majors I'm about to list off, however I can only speak from the financial side since I work in the markets. Accounting will always be in demand and accountants will always get paid. As long as money exists accountants will be fine. Compliance is far and away (and honestly the only) growing segment of finance. The sheer number and size of compliance teams assembled by the institutional and retail side to deal with Dodd-Frank, Basel III, supplemental leverage ratios, etc. is absolutey astounding. I don't know how long this momentum can last but a really good compliance officer is in much, much higher demand than any trader around the street right now.
Posted on 8/18/14 at 6:03 pm to BennyAndTheInkJets
I hear ya on accounting, my sister inlaw completed hers masters in accounting 2 yrs ago and immediately landed a job with a small company which may turn out well for her, compliance almost seems like a Business law degree but it's still a accounting/finance degree or both? Well the girl is in the Natl Honor Society, likes math but science....not so much, the way she likes to argue I was thinking law school but seems that field has become inundated the past decade or so. I appreciate your opinion and thoughts.
Posted on 8/18/14 at 6:18 pm to BennyAndTheInkJets
quote:
I agree with your rationale for it being potentially misleading, however this arguement will certainly devolve into a "quality of jobs" arguement which is a philosophical argument rather than an economic one (What is a "good" job and what is a "bad" job? ).
I am not sticking my foot in that water.
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