re: Gold now over $2700/oz.

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You know that gold has smoked the S&P this century right?

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S&P500 has beaten gold since 1/1/2000.

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You know that gold has smoked the S&P this century right?

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The comparisons to the S&P really aren’t that meaningful. What gold’s rise really means is this: The dollar has lost about 40% of its value vis a vis gold since January 2021. I wonder how much worse it’s going to get.

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It makes no sense to diversify? Only you could pull that off saying somwthing like that The money board

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It makes sense to diversify with a purpose. I simply can’t fathom what purpose diversifying into gold serves. It doesn’t move inversely to equities markets. Contrary to popular silliness, it would be near valueless in a true SHTF scenario. What goal is met by diversifying into gold?

Because I have to say this on every thread: I love the idea of gold, or precious metals in general. And the day that precious metals are legally treated as currency, my tune will change immediately. But as long as it’s just like any other asset, I evaluate it as I would any other asset, and I find it wanting.

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I simply can’t fathom what purpose diversifying into gold serves

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It is a hedge against the debasement of a fiat currency.

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It is a hedge against the debasement of a fiat currency.

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So is literally everything that isn’t cash. Gold, equities, real estate, art. I know because it used to be actual currency that gold has some mythological aura surrounding it regarding counteracting inflation, but again, it’s just another asset. Is it better than fiat currency? Yes. Is it better than other asset classes that are also better than fiat currency? No.

Well not “literally everything,” but you are right in part. The dollar has lost a big part of its purchasing power when it comes to those assets too.

I own equities. I like the simplicity of dollar cost averaging on select things. I like the ease of selling stocks. I like having them in my portfolio. I do not however get any real enjoyment out of it. It's just business.

I get actual enjoyment out of stacking PMs. I find it fun.

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You know that gold has smoked the S&P this century right?

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Gold has separated from real rates signaling that it is going much higher. Gold is telling us in no uncertain terms that the US Govt can not afford positive real rates. Equities have long since separated from rational valuation metrics. Ultimately there is a couple hundred trillion of worthless sovereign debt out there that will be squeezed into gold, btc and cash flow positive equity over the next decade. It all ends up on CB balance sheets eventually.

Using "this century" as a metric is pointless. This century can be divided into two completely different regimes, pre covid and post covid. Post covid sovereign duration has experienced its worst drawdown since the Napoleonic Wars. That will continue. It's just math at this point. We were headed there pre covid but the global printing spree of 10T pulled it forward. Boomers retiring en masse during/after covid pulled it forward. US entitlements and interest expense will continue to blow out fiscal deficits until most boomers are dead. This is not an opinion. It's just math and no politician can or will fix it. Find me a politician running on a platform of immediate and permanent 30% cuts to entitlements and defense, lol.

Why did the Fed cut 50 bips into low unemployment and positive GDP? It had nothing to do with their twin mandates and everything to do with their unspoken principal mandate: keep the US Govt solvent. What do you think happens next? Gold will almost certainly outrun the incoming wall of inflation as sovereign debt gets marked to market. We have 5k years of history to base this assumption on. Certain equities will as well but will the broader index? It'll certainly go up in nominal terms, way up, but in terms of purchasing power? That's an open question imo.

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With gold you are always subject to capital gains tax

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Capital gains really should be expressed in constant dollars. As it is, it is a government racket where inflation creates empty gains that are taxed again.

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There's always someone like you on every discussion about Gold, comparing it to stocks. You look at the base numbers(spot price) and do elementary comparisons, not realizing there is a ton of nuance when it comes to precious metal. Examples listed below

- Your arguments really do not apply to a guy like me. Want to know why? Because I routinely snag deals on Gold and Silver below market price (Silver more often admittedly). I'm immersed in the markets and grab items below market value fairly regularly. I recently bought some Sterling Australian Florins for 35% below spot. You can't factor something like that in to your number comparisons. I would like to see you buy stocks below market price without doing high risk options or starting your own publicly traded company.

- In the same vein as my first point: There are lots of guys that only buy scrap metal. Many of them buying below melt. I know guys that flip this, but I also know some that refine their own .999 bullion from it. Again, you're not factoring something like that in. Their average cost is below spot, by a decent margin sometimes.

- Some stackers are into graded coins. Others are into rare/numismatics that have value far above the metal weight. You can't factor these types of things in.

Gold collecting is also a hobby for a lot of guys. They simply enjoy owning it. This is another thing that makes it different. Some also love prospecting for it, or metal detecting for it. There is no quantifying these things. A hobby that can give back.

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I understand all of these things. But this "nuance" is the equivalent of someone saying that REITs aren't that great, and then someone replying that they weren't considering the merits of real estate ownership from the perspective of property management. For an apples to apples comparison to something like just dumping money into the S&P or VTSAX, the only reasonable comparison is buying readily available gold at the readily available price at regular intervals. If you start to turn it into a job, of course your returns will get better. But now you have to start doing time/value analysis, which means you start to get apples to oranges really quickly.

To say nothing of it being a hobby. Hell, most people's hobbies cost them money. If you can manage to make money on your hobby, no matter how little, godspeed

Just saying that, in the context of "investments", how much fun you have managing the investment generally isn't considered much of a factor. With that said, I did see, and have read, you other posts, which I'll reply to. But I didn't want things to get too long or complicated