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> All asset (and storage) types have their advantages / problems, you should read about it of course. Am I right in thinking that gold/silver are widely though

> All asset (and storage) types have their advantages / problems, you should read about it of course. Am I right in thinking that gold/silver are widely thought to be inflation proof? So I wasn't so concerned about growth could I just park my money in gold?

roenxi 7y ago
Depends what you want to call inflation. Gold's price movements don't track anticipated inflation in any meaningful sense [0]. That being said, over very long time horizons it is difficult to see why the real price of gold would change. They probably aren't going to mine it any cheaper and it isn't crazy to handwave an argument that demand can't drop all that far from where it is now. On that basis it easily outperforms cash. If interest rates stay near 0 or drop negative gold might outperform bonds too. It is hard to say; the central banks do strange things to the bond markets. Also, note that all these graphs only go back to the 1970s. Bit of a mystery why [1]. Gold's value tends to transcend such short-term concerns as the current global financial regime and that is a draw for some. Personally I think the current US dollar system is getting a bit long in the tooth. The biggest draw in this regard is that gold is a real expensive thing that is exceptionally easy to store (ignoring theft risks) and it is just hard to see how it could become less valuable than it is right now (short of government bans on gold trading). [0] https://upfina.com/gold-vs-inflation/ https://upfina.com/gold-vs-inflation/ particularly "Longer Term Correlation Between Real Gold & TIPS Doesn’t Hold Up" [1] That was when the last monetary system failed https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system
xiphias2 7y ago
Gold is mostly inflation proof, but it has a volatility. The price of a cow in gold/silver hasn't changed that much in the last 5000 years (you can check the prices in ancient Egypt yourself). USD lost more than 99% of its value in a few hundred years. There are still market cycles for gold, and also if you're going physical, there's 2-3% exchange cost as well. Silver may or may not have a VAT problem in your country.

roenxi 7y ago

Depends what you want to call inflation. Gold's price movements don't track anticipated inflation in any meaningful sense [0]. That being said, over very long time horizons it is difficult to see why the real price of gold would change. They probably aren't going to mine it any cheaper and it isn't crazy to handwave an argument that demand can't drop all that far from where it is now. On that basis it easily outperforms cash. If interest rates stay near 0 or drop negative gold might outperform bonds too. It is hard to say; the central banks do strange things to the bond markets. Also, note that all these graphs only go back to the 1970s. Bit of a mystery why [1]. Gold's value tends to transcend such short-term concerns as the current global financial regime and that is a draw for some. Personally I think the current US dollar system is getting a bit long in the tooth. The biggest draw in this regard is that gold is a real expensive thing that is exceptionally easy to store (ignoring theft risks) and it is just hard to see how it could become less valuable than it is right now (short of government bans on gold trading). [0] https://upfina.com/gold-vs-inflation/ https://upfina.com/gold-vs-inflation/ particularly "Longer Term Correlation Between Real Gold & TIPS Doesn’t Hold Up" [1] That was when the last monetary system failed https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system

xiphias2 7y ago

Gold is mostly inflation proof, but it has a volatility. The price of a cow in gold/silver hasn't changed that much in the last 5000 years (you can check the prices in ancient Egypt yourself). USD lost more than 99% of its value in a few hundred years. There are still market cycles for gold, and also if you're going physical, there's 2-3% exchange cost as well. Silver may or may not have a VAT problem in your country.