3 ms·

Gold is the least bad currency option when compared to all the fiat currencies.

throw0101a 3y ago
Gold is an unproductive asset, that does not do anything useful against inflation, and when used to back currency (e.g., Gold Standard) does not help with stability (and may actually cause instability): * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL
- OrvalWintermute 3y ago
  Gold is great as a hedge for many things, and that is exactly how I use it. However, I am not suggesting all people have to have a physical supply. There are 3 ways at least that it is regularly used as an investment Physical Gold Gold via a fund e.g. SPDR (GLD) https://www.spdrgoldshares.com/ https://www.spdrgoldshares.com/ Gold mining stocks e.g. SPDR (GLDM) https://www.spdrgoldshares.com/ https://www.spdrgoldshares.com/ Gold does work as a hedge against sustained inflation, but not momentary blips in inflation https://www.investmentnews.com/gold-standard-fight-inflation-not-235164 https://www.investmentnews.com/gold-standard-fight-inflation... Gold also works as a hedge against currency hyperinflation First of all, most fiat currencies don't last very long. https://medium.com/@bewdliberty/on-a-long-enough-timeline-the-survival-rate-of-fiat-currencies-drops-to-zero-3bd7d281329b https://medium.com/@bewdliberty/on-a-long-enough-timeline-th... 2nd, diversification across asset classes still makes sense https://www.morningstar.com/portfolios/why-portfolio-diversification-still-works https://www.morningstar.com/portfolios/why-portfolio-diversi... In the case of a weakening dollar, sanctions as weapons, and the potential rise of a new basket, or reserve currency, there are many reasons why gold may make sense to add to a portfolio. >Gold is an unproductive asset Anecdotally, my gold hedge via GLD is up >20% per annum in capital gains. If the US dollar is debased more through excessive printing, it will go much, much higher.
  - chii 3y ago
    > Gold also works as a hedge against currency hyperinflation currency hyperinflation is often caused by (very) bad monetary policy (or other decisions) from the gov't, or an apocalyptic event of some sort - which, even if you try to hedge, will not save you from the fallout from such an event. You'd be better off moving away to a more stable country, or if there's no where to move, you'd be needing guns and ammo. Either way, investment returns would be the last thing on your mind.
  - lottin 3y ago
    A hedge is a financial instrument that is negatively correlated with an exposure. A hedge position is not supposed to have a positive return, it's supposed to offset another position, so that the combined return of both positions is zero, or close to zero. You're using financial jargon in an attempt to sound clever, but you only sound like somebody who doesn't know what they're talking about.
    - OrvalWintermute 3y ago
      > You're using financial jargon in an attempt to sound clever, but you only sound like somebody who doesn't know what they're talking about. Stop with the snark, you're violating the rules. > Hedge defined "To hedge, in finance, is to take an offsetting position in an asset or investment that reduces the price risk of an existing position. A hedge is therefore a trade that is made with the purpose of reducing the risk of adverse price movements in another asset. Normally, a hedge consists of taking the opposite position in a related security or in a derivative security based on the asset to be hedged." https://www.investopedia.com/terms/h/hedge.asp https://www.investopedia.com/terms/h/hedge.asp > "What Are the Advantages of Buying Gold Over Treasuries? Gold is popular among investors because it can be used as a hedge against currency devaluation, inflation, or deflation. It’s also liked for its ability to provide a safe haven during times of economic uncertainty. When it comes to gold and taxes, depending on your income level, Treasury investments are typically more favorable tax-wise." https://www.investopedia.com/articles/investing/092514/better-inflation-hedge-gold-or-treasuries.asp https://www.investopedia.com/articles/investing/092514/bette... I have hedged my heavy US bond & US Treasury & US stock positions & US dollar positions with another asset class. My hedge is producing outsized returns is the anecdotal observation.

Gold is an unproductive asset, that does not do anything useful against inflation, and when used to back currency (e.g., Gold Standard) does not help with stability (and may actually cause instability): * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL

OrvalWintermute 3y ago
Gold is great as a hedge for many things, and that is exactly how I use it. However, I am not suggesting all people have to have a physical supply. There are 3 ways at least that it is regularly used as an investment Physical Gold Gold via a fund e.g. SPDR (GLD) https://www.spdrgoldshares.com/ https://www.spdrgoldshares.com/ Gold mining stocks e.g. SPDR (GLDM) https://www.spdrgoldshares.com/ https://www.spdrgoldshares.com/ Gold does work as a hedge against sustained inflation, but not momentary blips in inflation https://www.investmentnews.com/gold-standard-fight-inflation-not-235164 https://www.investmentnews.com/gold-standard-fight-inflation... Gold also works as a hedge against currency hyperinflation First of all, most fiat currencies don't last very long. https://medium.com/@bewdliberty/on-a-long-enough-timeline-the-survival-rate-of-fiat-currencies-drops-to-zero-3bd7d281329b https://medium.com/@bewdliberty/on-a-long-enough-timeline-th... 2nd, diversification across asset classes still makes sense https://www.morningstar.com/portfolios/why-portfolio-diversification-still-works https://www.morningstar.com/portfolios/why-portfolio-diversi... In the case of a weakening dollar, sanctions as weapons, and the potential rise of a new basket, or reserve currency, there are many reasons why gold may make sense to add to a portfolio. >Gold is an unproductive asset Anecdotally, my gold hedge via GLD is up >20% per annum in capital gains. If the US dollar is debased more through excessive printing, it will go much, much higher.
- chii 3y ago
  > Gold also works as a hedge against currency hyperinflation currency hyperinflation is often caused by (very) bad monetary policy (or other decisions) from the gov't, or an apocalyptic event of some sort - which, even if you try to hedge, will not save you from the fallout from such an event. You'd be better off moving away to a more stable country, or if there's no where to move, you'd be needing guns and ammo. Either way, investment returns would be the last thing on your mind.
- lottin 3y ago
  A hedge is a financial instrument that is negatively correlated with an exposure. A hedge position is not supposed to have a positive return, it's supposed to offset another position, so that the combined return of both positions is zero, or close to zero. You're using financial jargon in an attempt to sound clever, but you only sound like somebody who doesn't know what they're talking about.
  - OrvalWintermute 3y ago
    > You're using financial jargon in an attempt to sound clever, but you only sound like somebody who doesn't know what they're talking about. Stop with the snark, you're violating the rules. > Hedge defined "To hedge, in finance, is to take an offsetting position in an asset or investment that reduces the price risk of an existing position. A hedge is therefore a trade that is made with the purpose of reducing the risk of adverse price movements in another asset. Normally, a hedge consists of taking the opposite position in a related security or in a derivative security based on the asset to be hedged." https://www.investopedia.com/terms/h/hedge.asp https://www.investopedia.com/terms/h/hedge.asp > "What Are the Advantages of Buying Gold Over Treasuries? Gold is popular among investors because it can be used as a hedge against currency devaluation, inflation, or deflation. It’s also liked for its ability to provide a safe haven during times of economic uncertainty. When it comes to gold and taxes, depending on your income level, Treasury investments are typically more favorable tax-wise." https://www.investopedia.com/articles/investing/092514/better-inflation-hedge-gold-or-treasuries.asp https://www.investopedia.com/articles/investing/092514/bette... I have hedged my heavy US bond & US Treasury & US stock positions & US dollar positions with another asset class. My hedge is producing outsized returns is the anecdotal observation.