5 ms·

> Glad he also threw in some "buy gold" scaremongering too. I'll bite; why is gold a bad investment? Does it not have low risk and stable value? Hell, these da

by duaneb 10y ago

> Glad he also threw in some "buy gold" scaremongering too. I'll bite; why is gold a bad investment? Does it not have low risk and stable value? Hell, these days it even has REAL value as a special metal.

Mikeb85 10y ago
It's value isn't that stable... It's just another commodity. It trades like a commodity, its not anything special, it's not currency, it's metal dug from the ground. People attribute way more importance to it than they should.
- jklontz 10y ago
  True, but unlike other commodities it's easy to take a long position on gold with ETFs like GLD which actually store the physical gold. For other commodities (like oil with ticker USO) it's not so simple to take a long position. The best you can do is trade options, with the added risk of a contango market.
  - kasey_junk 10y ago
    You are potentially overselling the "store physical gold" component of GLD depending on what you think the redemption rules of the fund are. As per usual Kid Dynamite is my favorite writer on the subject: http://kiddynamitesworld.com/why-is-gld-so-hard-for-people-to-understand-an-etf-lesson-part-iii/ http://kiddynamitesworld.com/why-is-gld-so-hard-for-people-t...
- endswapper 10y ago
  I'm no gold-bug. It's value is relatively stable. The fact that it is a commodity, or that it is not a currency, has nothing to do with its value. It is special, in the sense that is is both a precious metal and an industrial metal, and it is also a common store of value, i.e. gold reserves. Many incredible, valuable things are "dug from the ground." Gold is not a bad investment as part of diversified portfolio. To justinlardinois's point, the stability and risk duaneb refers to, are reasons fearmongers encourage divesting other holdings in to gold in times of instability.
  - nradov 10y ago
    The value of gold is not at all stable. It has higher variability than the S&P 500 index. http://finance.yahoo.com/chart/GLD#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 http://finance.yahoo.com/chart/GLD#eyJjb21wYXJpc29ucyI6IlZGS...
    - endswapper 10y ago
      "Relatively stable," appropriately qualifies the statement and your link to a chart for a gold ETF is not support for your claim that, "The value of gold is not at all stable."
- Gustomaximus 10y ago
  You dont buy gold as its stable. You buy it as it's; 1) A generally appreciating asset 2) It physically exists (or is backed by exiting material). And most importantly: 3) It is a flight to safety commodity so when things go bad you expect to make money. So I would argue it is something special as a commodity. People dont rush to iron ore in a market crash. Maybe people do attribute more to it than it deserves but its disingenuous to pretend it doesn't have a special place in financial markets.
  - Mikeb85 10y ago
    > 1) A generally appreciating asset It's down in the last 5 years. Also, all assets are generally appreciating because of inflation. > 2) It physically exists (or is backed by exiting material). This doesn't actually matter. All prices are set by what buyers will pay. Some things, like currencies or bonds, are backed by governments or physical assets like real estate, other commodities, land, etc... > 3) It is a flight to safety commodity so when things go bad you expect to make money. As are other assets and securities. Again, nothing inherent to gold. > Maybe people do attribute more to it than it deserves but its disingenuous to pretend it doesn't have a special place in financial markets. You could argue every commodity has a 'special' place in financial markets. I'm not arguing gold isn't real or is worthless - it does have value because of its use in electronics as well as in adornment and its historical use as currency. What I am arguing is that: > Maybe people do attribute more to it than it deserves
iambateman 10y ago
Warren Buffett on gold [1]: "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." [1] http://www.minyanville.com/trading-and-investing/commodities/articles/Warren-Buffett-brka-gold-investing-investing/10/3/2012/id/44617#ixzz4MAd3l9GE http://www.minyanville.com/trading-and-investing/commodities... Gold has no utility. This quote changed the way I think about gold when I first heard it.
- underdown 10y ago
  Gold has lots of utility - just not enough to justify the speculative price.
- downandout 10y ago
  I don't often say this about Warren Buffett quotes, but that is one of the most idiotic things I have ever heard anyone say. If you owned this 67 ft. cube - all of the gold in the world - you would be able to extract any profit you wanted from the vast majority of all electronics sold in the world, along with a long list of other products. Your $7 trillion would turn into...whatever you wanted it to. Buffett is showing his age and publicly admitted lack of understanding of technology.
  - fooker 10y ago
    People would just switch to some other material for industrial uses if you demamd an exorbitant price. Gold, while useful is not indispensable.
    - downandout 10y ago
nikdaheratik 10y ago
All things being equal, it's no worse than other commodities and better than many. However, there are alot of less than scrupulous people who keep pushing it onto less sophisticated investors. And many of those people are paid by various companies to herd those less sophisticated investors into buying their product. Not saying that Bill Gross is one of those by any means, just pointing out why it has a bad rep. And if the non-GOP candidate wins, they'll be another round of "buy gold" and/or "buy guns" or another TFH approved product come January.

by duaneb 10y ago

Mikeb85 10y ago

It's value isn't that stable... It's just another commodity. It trades like a commodity, its not anything special, it's not currency, it's metal dug from the ground. People attribute way more importance to it than they should.

jklontz 10y ago
True, but unlike other commodities it's easy to take a long position on gold with ETFs like GLD which actually store the physical gold. For other commodities (like oil with ticker USO) it's not so simple to take a long position. The best you can do is trade options, with the added risk of a contango market.
- kasey_junk 10y ago
  You are potentially overselling the "store physical gold" component of GLD depending on what you think the redemption rules of the fund are. As per usual Kid Dynamite is my favorite writer on the subject: http://kiddynamitesworld.com/why-is-gld-so-hard-for-people-to-understand-an-etf-lesson-part-iii/ http://kiddynamitesworld.com/why-is-gld-so-hard-for-people-t...
endswapper 10y ago
I'm no gold-bug. It's value is relatively stable. The fact that it is a commodity, or that it is not a currency, has nothing to do with its value. It is special, in the sense that is is both a precious metal and an industrial metal, and it is also a common store of value, i.e. gold reserves. Many incredible, valuable things are "dug from the ground." Gold is not a bad investment as part of diversified portfolio. To justinlardinois's point, the stability and risk duaneb refers to, are reasons fearmongers encourage divesting other holdings in to gold in times of instability.
- nradov 10y ago
  The value of gold is not at all stable. It has higher variability than the S&P 500 index. http://finance.yahoo.com/chart/GLD#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 http://finance.yahoo.com/chart/GLD#eyJjb21wYXJpc29ucyI6IlZGS...
  - endswapper 10y ago
    "Relatively stable," appropriately qualifies the statement and your link to a chart for a gold ETF is not support for your claim that, "The value of gold is not at all stable."
Gustomaximus 10y ago
You dont buy gold as its stable. You buy it as it's; 1) A generally appreciating asset 2) It physically exists (or is backed by exiting material). And most importantly: 3) It is a flight to safety commodity so when things go bad you expect to make money. So I would argue it is something special as a commodity. People dont rush to iron ore in a market crash. Maybe people do attribute more to it than it deserves but its disingenuous to pretend it doesn't have a special place in financial markets.
- Mikeb85 10y ago
  > 1) A generally appreciating asset It's down in the last 5 years. Also, all assets are generally appreciating because of inflation. > 2) It physically exists (or is backed by exiting material). This doesn't actually matter. All prices are set by what buyers will pay. Some things, like currencies or bonds, are backed by governments or physical assets like real estate, other commodities, land, etc... > 3) It is a flight to safety commodity so when things go bad you expect to make money. As are other assets and securities. Again, nothing inherent to gold. > Maybe people do attribute more to it than it deserves but its disingenuous to pretend it doesn't have a special place in financial markets. You could argue every commodity has a 'special' place in financial markets. I'm not arguing gold isn't real or is worthless - it does have value because of its use in electronics as well as in adornment and its historical use as currency. What I am arguing is that: > Maybe people do attribute more to it than it deserves

iambateman 10y ago

Warren Buffett on gold [1]: "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." [1] http://www.minyanville.com/trading-and-investing/commodities/articles/Warren-Buffett-brka-gold-investing-investing/10/3/2012/id/44617#ixzz4MAd3l9GE http://www.minyanville.com/trading-and-investing/commodities... Gold has no utility. This quote changed the way I think about gold when I first heard it.

underdown 10y ago
Gold has lots of utility - just not enough to justify the speculative price.
downandout 10y ago
I don't often say this about Warren Buffett quotes, but that is one of the most idiotic things I have ever heard anyone say. If you owned this 67 ft. cube - all of the gold in the world - you would be able to extract any profit you wanted from the vast majority of all electronics sold in the world, along with a long list of other products. Your $7 trillion would turn into...whatever you wanted it to. Buffett is showing his age and publicly admitted lack of understanding of technology.
- fooker 10y ago
  People would just switch to some other material for industrial uses if you demamd an exorbitant price. Gold, while useful is not indispensable.
  - downandout 10y ago

nikdaheratik 10y ago

All things being equal, it's no worse than other commodities and better than many. However, there are alot of less than scrupulous people who keep pushing it onto less sophisticated investors. And many of those people are paid by various companies to herd those less sophisticated investors into buying their product. Not saying that Bill Gross is one of those by any means, just pointing out why it has a bad rep. And if the non-GOP candidate wins, they'll be another round of "buy gold" and/or "buy guns" or another TFH approved product come January.