Gold market demise is greatly exaggerated

Well, they already have more than enough tinfoil to last a lifetime.

doc thats a silly statement, do you realize what will happen to the derivative market if the fed raises rates?

The reality is there is market manipulation and it's called the FED and every other central bank and they will be printing for as long as need be, now you can sit there and buy gold @ $1400 and concede a real return of $600 over 33 years and keep thinking you'll get $5000 gold or whatever or you can buy equities and keep thinking the market is gonna crash......the reality is, its just not gonna crash, there will be small "crashes" along the way but at the end of the day shares of solid companies will always pay a nice divided while your physical gold will be bought above spot and sold below spot.....and FYI if the end really does come, someone with more firepower than you will take your gold

you realize from 1980 till today gold hasnt even returned 100%?

meanwhile with dividends reinvested

coke returned - 14,500%
exxon returned - 10,000%
Altria - 44,000%
Gold - 80%

please by all means use this backtest calculator....i seriously can't believe anyone really believes gold is a solid investment, its a store of wealth, nothing more....stocks have been through many crashes since 1980( tech bubble,9/11, housing crisis) and even with that, here we are today still worth more than gold rocks

LINK

I agree with the Big Fella, Gold sucks more dick than Mickey Goldmill.

gold is literally among the most dog shite investments i can think of, literally if you paid $800 in 1980 you're up $600 or 75% in 33 years....i think a CD would have returned the same given the high rates of past years

yes if shite hits the fan your gold coins will be worth well over spot.....but to who??? people are gonna be too busy shooting each other and beating up the nerds they find who have gold and silver coins.....I mean really how liquid is gold??? Stocks you can sell in a pinch if you pay $50 premium to buy your gold coin and then sell it for $50 under spot you gotta have some serious appreciation to even make a decent return

Yeah, my brother bought a bunch of silver after Obama's first election and listening to too much Alex Jones. It's still laying around somewhere in a safe. He's a fairly normal guy with a degree in finance from a good university.

Politics does weird things to the mind.

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“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (NYSE:XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”

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“I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola (NYSE:KO) will be making money, and I think Wells Fargo (NYSE:WFC) will be making a lot of money and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that."

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“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

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Warren Buffet

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“I don’t have the slightest interest in gold. I like understanding what works and what doesn’t in human systems. To me that’s not optional; that’s a moral obligation. If you’re capable of understanding the world, you have a moral obligation to become rational. And I don’t see how you become rational hoarding gold. Even if it works, you’re a jerk.”

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“I think gold is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939, but civilized people don’t buy gold, they invest in productive businesses.”

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Charlie MOTHER frickIN Munger

Emerging market bonds are known for having left-skewed and highly leptokurtic return distributions by the way.

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but you're getting fixed income with no appreciation

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Only if you're holding to maturity while buying at par or premium. You can buy a discount bond and get appreciation or you can just do what most bond investors do, buy cheap and sell rich. Fixed income absolutely can appreciate.

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Bonds have nowhere near the appreciation of stocks.

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Equities have outperformed bonds over the past 30 years, this is true. But saying "nowhere near" is nowhere near correct. These are your annualized returns from the S&P 500, Barclay's US Aggregate Index (intermediate duration), and Barclay's Long Gov/Credit Index (long duration) over different decades.

'82 - '92
S&P 500 - 16.17%
BCAG - 11.71%
BLGC - 13.14%

'92 - '02
S&P 500 - 9.34%
BCAG - 7.51%
BLGC - 9.03

'02 - '12
S&P 500 - 7.10%
BCAG - 5.18%
BLGC - 7.96%

And from '82 - '12
S&P 500 - 10.80%
BCAG - 8.10%
BLGC - 10.02%

Even if you want to get to the actively managed space, since the inception of the Gross' Total Return fund the annualized returns are 8.87% for the S&P and 8.86% for the TR Fund. If you want to take in another step further and take into account your standard deviations we both know which Sharpe ratios would be higher.

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.Look at Mcdonalds or Walmart, they've boosted the dividend by 20%+ annually the last decade effectively giving you a bond with a 20% annual raise, do your AAA bonds do that?

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No and I never mentioned AAA bonds, I wouldn't recommend AAA bonds to anybody right now with coupon levels so low and duration so high.

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No, Im sorry dividend growth stocks have their up's and down's but really people need to stop being traders

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On the retail side I can agree, but the institutional side needs to trade. Not only to harvest realized gains for dividend distributions to continue to fall under the 1940 Investment Act, but because liquidity would dry up if we didn't.

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over 30 years and crashes of 1987,tech bubble,9/11, crash of 2008 the blue chips with dividends reinvested were all over 10,000% returns.

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If you reinvest coupons you're in the same boat, and the problem with that backtest calculator is it is just that, a back test. You are retroactively picking blue chips, Kodak was also considered a blue chip at one point. If I knew what companies would still be around and growing in 10 years I promise I would make higher returns.

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Your bonds are nice if you're retired but if you have time on your side and can wait 10 years at a minimum I promise stocks will kick your bonds in the arse

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Hopefully I've showed you enough data to show that "stocks will kick your bonds in the arse" is just not true, and I also haven't even posted the returns from EM bonds as Fenton mentioned. I agree stocks do have higher return assumptions and they will return more this year. I also agree the younger you are or less funded your plan is the more risk you should take. However, in 2012 we had 16% equity returns with only a 0.50% growth in operating earnings. Monetary policy has created a giant wedge between economics and markets, benefiting both stocks and bonds. If central banks start pulling and the actual economics start determining the direction of markets I would wager than the "stocks outperform bonds" assumption as well as the "zero bound nominal interest rate floor" assumption would both be very strongly tested.

Could you specify what you are talking about in the derivatives market in regards to hiking rates?

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Everyone always brings up Kodak...was that a staple

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Absolutely, Eastman Kodak was around for over 130 years and was widely considered a leading blue chip for a long time. It was a photography and chemical giant before spinning off the chemical portion in '94.

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Coca cola,cigarettes,and big oil are not going the way of Kodak

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Never say never, if we continue on the current route of regulating what people can and can't do in regards to their health than the business models of Coca-Cola and Phillip-Morris may have to change or their product mix may have to be changed. "Big oil" may end up being "big shale" or just "big energy" within the next century. The only two companies I can think of that I have full confidence they will be here in 100 years are GE and WMT, but even then I'm not certain. We don't know the future which is why investors need to diversify. I'll take 8% annual returns all day every day the rest of my life rather than a couple years of 80-90% returns here and there, especially if returns are going to be as hard to come by as I suspect for the next 30 years compared to the previous 30.

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um first off...WTF kinda combo is that you just described for kodak, it sounds like the GE clusterfrick of I wanna have my hand in everything.

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Early photography was a very chemically intense process and the model made sense for a while until technology surpassed the need for it. Also, GE having its hand in everything has created the largest non-bank company by assets in the world. You say clusterfrick while I say the most diversified global real asset portfolio in the world.

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The companies I named do 1 thing, have done that 1 thing for years and have been profitable for as long as they've been around and WILL BE AROUND FOREVER

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That's not necessarily a good thing that they don't have a diversified model, and like I said neither you nor I know the future.

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Walmart? Really? you don't think online retailers like amazon,google, and others have a shot at derailing walmart this century?

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Wal-Mart does online sales too, and the reason I have confidence in them is due to their ridiculous distribution networks and unmatched bargaining power with suppliers due to them having the highest sales for any company in the world. Even though we don't know the future, those factors take a very long time to erode, relatively. Not sure how you can be so confident in KO, PM, and MCD while not having the same or more confidence in WMT?

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Whose gonna create a portfolio of drinks to derail coke(they own so many of our most popular drinks)?

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2006 was not that long ago when Pepsi was higher than Coke in market cap, and yes I know they have still yet to top them in sales but you seem to be underestimating the competition within the beverage industry. Things can change in the beverage industry very quickly, 1985 wasn't that long ago either.

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Phillip morris own 7 of the 15 largest cigarette brands on earth and contrary to reports abt percentage declines, due to population increases we're actually smoking more than ever
1.Philip Morris Spun off from altria to avoid dealing with the united states and our stupid regulations on everything, and since their spin off a few years ago theyre up about 300%

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Still doesn't decrease the regulatory risk, tax risk (via regulatory), or basic risk that maybe health concerns acutally start eroding revenue within the next 40-50 years. Again, I'm not saying it's a bad company but I'm curious how you think they have a greater chance to be around for the next century compared to those that I mentioned.

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2.You do realize the united states is a nation of only 300 million right? Regulations like new york and the BS on sodas really doesn't affect the bottom line for companies like coke who do plenty of business outside the US

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I am very well aware of the US in terms of total world population, but once again there are risks involved with their business model that are more significant than others. My main point is that saying "FOREVER" is an extremely dangerous assumption to take that many, many people have gotten burned on in this industry.

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What's funny is I always read seeking alpha and an author, granted a kid wrote this piece today about Gold vs Coca Cola as an investment, I think he's pretty spot on

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I agree that I would definitely invest in Coke before gold and I agree with a lot of his reasoning on why to not invest in gold. I stated a lot earlier what I thought about gold as an investment. However, he is making a lot of assumptions in his points on Coke's profitability, however my assumption based on his past articles is that he is merely making these points on a relative basis to gold. In which case I agree on a relative basis.

You're not going to answer the derivatives question, are you?