4 ms·

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

by 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#eyJjb21wYXJpc29ucyI6IlZGSU5YIiwiY29tcGFyaXNvbnNDb2xvcnMiOiIjMWFjNTY3IiwiY29tcGFyaXNvbnNHaG9zdGluZyI6IjAiLCJjb21wYXJpc29uc1dpZHRocyI6IjEiLCJzaG93QXJlYSI6ZmFsc2UsInVzZUxvZ1NjYWxlIjp0cnVlLCJtdWx0aUNvbG9yTGluZSI6ZmFsc2UsImJvbGxpbmdlclVwcGVyQ29sb3IiOiIjZTIwMDgxIiwiYm9sbGluZ2VyTG93ZXJDb2xvciI6IiM5NTUyZmYiLCJtZmlMaW5lQ29sb3IiOiIjNDVlM2ZmIiwibWFjZERpdmVyZ2VuY2VDb2xvciI6IiNmZjdiMTIiLCJtYWNkTWFjZENvbG9yIjoiIzc4N2Q4MiIsIm1hY2RTaWduYWxDb2xvciI6IiMwMDAwMDAiLCJyc2lMaW5lQ29sb3IiOiIjZmZiNzAwIiwic3RvY2hLTGluZUNvbG9yIjoiI2ZmYjcwMCIsInN0b2NoRExpbmVDb2xvciI6IiM0NWUzZmYiLCJsaW5lVHlwZSI6ImxpbmUiLCJyYW5nZSI6Im1heCJ9 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

by Mikeb85 10y ago

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