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Gold, Silver other PMs taking a major dump today

Discussion in 'The Furball Forum' started by Dragline, May 8, 2012.

  1. devildog2067


    Apr 20, 2005
    Hey, I can read SeekingAlpha too! Link

    You might want to consider citing a source the next time you decide to borrow someone else's words.

    And that said, let's look at the numbers. It's true that gold has outperformed BKR.A since 2000:


    but what about since 1990?


    As you can see, BKR.A has outperformed gold over the last 22 years, if not the last 12. I couldn't find any charts going back to 1980 and I don't have time to make one, but I suspect it's even more stark.

    You keep choosing "since 2000" as your time horizon, for no reason other than that it justifies your position. Yes, gold has done better than equities over the last 12 years. No, that is not a reason to think that it will continue to do so forever. The dollar isn't going anywhere as the world's reserve currency--not because it doesn't have problems (of course it does) but because everything else is worse.
  2. greatwun

    greatwun Senior Member

    Feb 11, 2009
    Orlando, FL


  3. wjv


    Jan 17, 2002
    Pacific NW
    PMs always take a summer dumps. Typically starting in May.

    Last year was an exception. Around Sep-Oct things will start to ramp up again.
  4. arclight610


    Dec 2, 2009
    Don't count on it. Do you know who Romney's biggest campaign donor is? Goldman Sachs. Do you know who Romney's biggest campaign donor is? Goldman Sachs. Banks are playing both sides.

    EDIT: I mistyped that. Goldman Sachs is not Obama's top donor, just one of the top.
    Last edited: May 9, 2012
  5. certifiedfunds

    certifiedfunds Tewwowist

    Apr 23, 2008
    DD - 2000 is relevant b/c that's when the gold bull started running.
  6. JohnBT

    JohnBT NRA Benefactor

    Feb 24, 2000
    Richmond, Virginia
    Let's use gold's all-time high of $850 per ounce in 1980 as a starting point. I bought a house in 1980 and could have kept renting and bought gold with the 30% down payment. The gold market back then was booming. I know people who got a second mortgage to buy gold and cashed in retirement accounts to buy gold as the price went up and up and up.

    With one 1980 dollar now the inflation-adjusted equivalent of almost $3, gold would have to rise to over $2400 just to set a new high.

    Iow, if I had bought gold at $850 in 1980, I'd still be losing money on the deal.

    You just never know when the crowd will panic and run the other way to buy something of more interest to them.

  7. eyesnorth


    Jun 9, 2004
    Any long term mortgage/gold comparisons? Say a couple hundred years or so, for comparison.
  8. .264 magnum

    .264 magnum CLM

    Dec 5, 2002
    Dallas TX
    For the record that gold's modern era high. It's all time A.D. high was most likely during "The High Middle Ages". One of my econ. profs did the calculations IIRC in ~1130 AD England gold was an inflation adjusted ~$39,000oz.
  9. Glotin


    Aug 16, 2011
    The longest available timeframe for that data is from 1965 when Buffett took over Berkshire Hathaway. Since 1965:


    In the past 20 years gold has increased 376% while Berkshire Hathaway has risen 1330%.

    Warren Buffett on CNBC: “When we took over Berkshire, it was selling at $15 a share and gold was selling at $20 an ounce. Gold is now $1600 and Berkshire is $120,000. Or you can take a broader example.

    You could you buy the Dow Jones Industrial Average for 66 at the start of 1900. Gold was then $20. At the end of the century, it was 11,400, and you would also have gotten dividends for a hundred years. So a decent productive asset will kill an unproductive asset.

    Why do you think gold bugs get so irate? Because they really do come out. ... You can knock almost any investment and nothing happens. But when you talk about gold it’s different. Of course that says something about their motivation for ownership. They want people to agree with them. They want everybody to get so scared they run to a cave with gold. Caves might be a better investment than gold. At least they’re not producing more caves all the time. So they want people to be as afraid as they are. Incidentally, they’re right to be afraid of paper money. Their basic premise that paper money around the world is going to be worth less and less over time is absolutely correct. They have the correct basic premise. They should run from paper money. But where they run to is the mistake."

    I'm not sure what you're asking.

    Inflation greatly helps a mortgage holder over time; not so for gold, as pointed out above.
  10. That is where we disagree. The dollar will be abandoned as the world's reserve currency. It's just a matter of when, not if. Nothing lasts forever. Ask the Romans. I think in the next decade or so it will happen. Gold will play a big part in Central Bank reserve currency transactions. In order for that to happen, gold will be repriced way higher than it is now.

    You obviously disagree and time will reveal who is correct.
  11. devildog2067


    Apr 20, 2005
    I don't disagree. I absolutely agree with you. The dollar will not last forever.

    Here's where you're wrong. The dollar will be displaced when something stronger comes along. As of right now, there simply does not exist a contender.
  12. Atlas

    Atlas transmogrifier

    Oct 1, 2001
    north of the equator

    "Stronger" is a relative valuation, yeah?
    Your phrasing implies that "when something stronger comes along" is of necesity far into the distant future...

    With the Fed in recent months buying more than 50% of the US's debt, how strong will "strong" be in five years, in ten years?
  13. devildog2067


    Apr 20, 2005

    Take a look around--whose economy do you think is stronger than the US's today? Who will be stronger in the next 10 years?

    The answer is, frankly, no one. No one even begins to come close. Will the answer be different in 20 years? Maybe. Depends a lot on what China decides to do with respect to exploiting their natural resources between now and then.

    But there's definitely no one whose currency will replace ours within the next ten. Everyone else has problems, just like we do.
  14. Atlas

    Atlas transmogrifier

    Oct 1, 2001
    north of the equator
    So you assume that any replacement for the dollar as the world's reserve would necessarily be a currently existing, sovereign currency?
    Last edited: May 10, 2012
  15. Sporaticus

    Sporaticus Aw sheet main

    Feb 28, 2003
    Finally made 1000 posts
    Interestingly enough, Michael Murphy predicted a retracement in silver to around $29 as part of a typical cycle. I'm waiting on Bernanke to start QE III and I am getting in big time.
  16. vikingsoftpaw

    vikingsoftpaw DEPLORABLE ME!

    Aug 29, 2009
    Willoughby, Ohio USA
    Only if said bad news involves the dilution or devaluation of a national currency. Think Quantitative Easing III IV V etc.
  17. Dennis in MA

    Dennis in MA Get off my lawn

    Aug 16, 2001
    Taunton, MA
    So now "tanking" means not a loss or even a real-dollar loss, but underperforming gold?

    Where do you teach economics and finance again?

    I'm done with this thread. CF and Atlas always bring up decent points. This changing shill argument is sophomoric.
  18. devildog2067


    Apr 20, 2005

    But it's not going to be a basket of currencies, it's not going to be an SDR, and it's not going to be gold.

    I can imagine a few things that are not existing sovereign currencies--maybe something like an energy credit (literal energy, like a gigajoule dollar). I'm not an economist and I don't have the imagination to come up with something truly revolutionary (if I did, that's what I'd be doing for a living right now!).
  19. Dragline


    Nov 5, 2003
    Coastal SC
    Downward slide continues today.
    Damn, I'm taking a beating too on the Palladium I bought recently.
  20. Geko45

    Geko45 Smartass Pilot CLM

    Nov 1, 2002
    I don't think modern economics has really adopted the idea of currency as a representation of "units of work" and I think there is much to be learned from understanding that relationship. I'm about to spend a lot of my own "units of work" on learning more about economics and this is one area I hope to explore. It's no "Higgs hunt" but I think it can contribute.
    Last edited: May 14, 2012