> You sure about that? You woulda been better off holding SPY for 50 years than gold.
Holding its value in inflation-adjusted terms is very different than getting the highest return. I think most gold investors want the first and ignore the second: if I want profits, holding a piece of metal is the last thing I would do long-term; no question there.
The links you posted did not convince me, sorry (no offense). Yes, you can pick a 5-10 year period when gold did very poorly compared to inflation (and vice versa). But the value drop is not huge. And long term, if you look at food, clothes, housing, etc. you will find that they cost roughly the same in gold 100 years ago as they do today. When I wrote that gold held its value I meant exactly that: preservation of value.
For me (and I am not claiming that this is a universal approach), physical gold is a catastrophic risk protection. I have seen, twice, the currency of the country where I grew up become worthless over a pretty short term: a bill that would be sufficient for a vacation earlier would not buy a loaf of bread anymore. And 5 years earlier I would never have thought it possible.
So I am perfectly happy to put 1-2% of my net worth into gold. If fit hits the shan, it could buy my family a passage and some time of living expenses somewhere quiet and far away; if it does not, my grandkids can laugh about their crazy old man while enjoying most of the value that I originally put into it.
> When I wrote that gold held its value I meant exactly that: preservation of value.
Re-read the articles. If you're looking for short/mid term inflation protection (5~10 years) then gold doesn't hold (unless you happen to get lucky for that period over a 100 year period). If you're looking for long term inflation protection (50+ years) then it doesn't either. If your assumption is that gold is valuable because it stood the test of time during the 1700's and 1800's then
> If fit hits the shan, it could buy my family a passage and some time of living expenses somewhere quiet and far away
If shit really hits the fan, you wouldn't be able to convert to a currency that you could actually live on so this point is moot.
> I have seen, twice, the currency of the country where I grew up become worthless over a pretty short term
This context makes more sense than anything else. I'm talking about USD here.
>> When I wrote that gold held its value I meant exactly that: preservation of value.
> Re-read the articles. ... If you're looking for long term inflation protection (50+ years) then it doesn't either.
How about some specific references? This was not productive (especially since the second reference is behind a paywall). Quote a specific statement and we can drill into this.
> If shit really hits the fan, you wouldn't be able to convert to a currency that you could actually live on so this point is moot.
Forgive me for what I am saying next (it is not a payback for your "re-read the articles" comment; honest), but I find statements like this incredibly naive. I think you have a pink pony view of the "catastrophic risk". Have you seen civil wars? real hunger? deaths from easily treatable infections? cannibalism?
Throughout this type of crap having some physical gold is one of the most reliable tickets out. You can often trade it (with significant haircuts) for stuff you need or a safe passage. Yes, you have to deal with underworld or gangs, but this is still much better than the alternative.
I am now one of the "rich, soft americans" and I hope my kids do not have to go through any of this. And I personally do not see it likely in the US, at least in the next 10-20 years. But the world can change fast and I still want to have a few gold coins in my physical possession, together with a good knife. No offense, mate, and good hunting!
Holding its value in inflation-adjusted terms is very different than getting the highest return. I think most gold investors want the first and ignore the second: if I want profits, holding a piece of metal is the last thing I would do long-term; no question there.
The links you posted did not convince me, sorry (no offense). Yes, you can pick a 5-10 year period when gold did very poorly compared to inflation (and vice versa). But the value drop is not huge. And long term, if you look at food, clothes, housing, etc. you will find that they cost roughly the same in gold 100 years ago as they do today. When I wrote that gold held its value I meant exactly that: preservation of value.
For me (and I am not claiming that this is a universal approach), physical gold is a catastrophic risk protection. I have seen, twice, the currency of the country where I grew up become worthless over a pretty short term: a bill that would be sufficient for a vacation earlier would not buy a loaf of bread anymore. And 5 years earlier I would never have thought it possible.
So I am perfectly happy to put 1-2% of my net worth into gold. If fit hits the shan, it could buy my family a passage and some time of living expenses somewhere quiet and far away; if it does not, my grandkids can laugh about their crazy old man while enjoying most of the value that I originally put into it.