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Gold prices are hitting records
- ortusdux 3y agoIf you adjust for inflation, there have been 3 periods in the last 50 years with higher gold values. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-...
- Dig1t 3y agoLooks like Great Depression, 1979/1980, and right after the Great Recession. What is the significance of 79/80?
- strangesmells06 3y agoIt was the most severe recession since the Great depression lol good times /s https://en.m.wikipedia.org/wiki/Early_1980s_recession https://en.m.wikipedia.org/wiki/Early_1980s_recession Good time to buy defense contractor stock because one way to get out of serious depressions/recession is a war. And the presidential election is next year...
- Buttons840 3y agoThose previous recessions were marked by high unemployment, right? But currently we have record low unemployment. Is the high unemployment on its way, or is this something new?
- strangesmells06 3y agoI guess it depends on how you define unemployment. Over half of of employed people nowadays don't make enough to pay their fundamental bills and/or live paycheck to paycheck and have to take up huge debt to make it every month. so while they technically have a "job"...is it really if it doesnt cover their bills? classifying something as a job is extremely bullshitable.
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- sickofparadox 3y agoI wonder how the US army feels about a South American venture this time? Given the things happening in Guyana.
- nextweek2 3y agoGiven how small the Venezuelan military is, I’d wager the Americans would see it as too easy. What Guyana needs is to invite the British and American military in for a joint “training” exercise. The uk has a nice new aircraft carrier that could do with a shake down.
- I_Am_Nous 3y agoThere was an energy crisis related to unrest in Iran, the Iraqi invasion of Iran, and the oil output fluctuating as a result.
- AnimalMuppet 3y agoInterest rates spiked as the Fed tried to address inflation. Gold serves, in essence, as a short against paper currency. When inflation is running 14%, gold looks like a good alternative. So everyone was buying gold.
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- ortusdux 3y agoGold is generally considered a hedge against inflation. https://www.forbes.com/advisor/investing/gold-inflation-hedge/ https://www.forbes.com/advisor/investing/gold-inflation-hedg...
- ajross 3y agoAnd by bidding it up at the end of a period of inflation, those trying to hedge burned themselves. Same thing is happening now: inflation is back down to baseline, but people think it's high because prices are higher than they were (brains have trouble with reasoning based on derivatives of functions). Basically gold is, as it always has been, a sucker's bet. All the people buying it now are probably going to lose money.
- ortusdux 3y agoYep. The key is to buy it 6 months ago, and then do everything you can to get others to continue buying in.
- AnimalMuppet 3y ago1979/80 wasn't the end of the inflation. Especially 1979. But even later... there's a lag time in peoples' minds and, especially, emotions. When inflation has gone up to 10%, it's a huge surprise, but your mind is still back on 6% or 8%. When it comes back down to 10%, your mind is still on the 14% it was, not on the 6% or 8% it's (maybe) headed back to.
- ta_billlegrand 3y agoSince Nixon ended the convertibility of the US dollar to gold (at $35/oz) in 1971, the price of gold in dollars has increased at about 8% a year. The S&P 500 over that time frame has returned a bit over 10% a year. If gold has been a sucker's bet, stocks have been barely less of one. Of course, the correlation between gold prices and stock prices is quite low, so a blended portfolio (occasionally rebalanced) would have outperformed a 100% allocation to either with less volatility.
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- blacksqr 3y agoIt was a period of what was called "stagflation", economic stagnation combined with inflation. It was supposed to be impossible to have the two happen at once, and no one knew what the hell was going on. Gold seems attractive in periods of uncertainty.
- tomrod 3y agoVolcker and stagflation. Rather than fix the economy by raising rates and being accused of politics, Fed kept rates artificially low (which, incidentally, attributed somewhat to the US political shift that year).
- incomingpain 3y agoHere's a better way to look at it. What was 65 years(retirement age) year before each of these.I'll do it for you. So 1930 - 65 = 1865. The end of the American Civil war. 1979 - 65 = 1914. The end of WW1 2009 - 65 = 1944. The end of WW2 Each of these events correspond with a major baby boom post war and subsequent major retirement period. These financial crisis are a consequence of major war. Economists figured this out ages ago and now understand how to prevent future recessions. So how about covid? 2020 - 65 = 1955 end of korean war. It was simple to predict "covid" and guess what I was invested in on January 2020. Large cap healthcare. Big box consumer staples. All the stuff that would stay open. Also an interesting discovery. No amount of money printing keeps the economy afloat, you must let it crash. 2040 is the next big one for vietnam, but that was a long war. Might not be the same. Might be harder to predict.
- jeffbee 3y agoPeak blood lead levels.
- randomdata 3y ago~1980, ~2010, and ~2020 are the three times it was higher, inflation adjusted. The Great Depression era doesn't come close (and is also well outside of the 50 year window given).
- blacksqr 3y agoTrading in gold was banned in 1933 in the United States. The price was set by the government at $35/oz. The ban wasn't lifted until 1974, at which time the price skyrocketed.
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- fatherzine 3y agothe gold price serves as an independent yardstick for the level of real inflation. it defeats the purpose to 'adjust for inflation'. 'adjusting for inflation, prices have been remarkably stable for the past century'
- vel0city 3y ago> for the level of real inflation I'm not normally doing much business in gold, the value of gold compared to the dollar is nearly meaningless to me. I do often buy things like food and energy. To me the value of the dollar compared to a gallon of gas or a plate of food or a kWh of electricity is the "real" inflation. The value of gold isn't "real" to me or most consumers.
- deleted 3y ago[deleted]
- fatherzine 3y agoprices, of all goods, inflate exponentially the relative value of specific goods fluctuates within a small constant in the long run, the exponential dominates the linear ---- thus the price of gold is a yardstick of the exponential inflation of prices, irrespective of the relative fluctuations of gold vs food vs energy
- AnimalMuppet 3y agoIn an economy, gold is just one more good. Sure, we could use it as an inflation index. Or we could use gasoline, or new cars, or eggs, or any of a million other things. Why should we use gold as opposed to all those other things? Or, here's an idea, maybe we should use a weighted index of several of those things as a measure, in order to prevent misleading data from the fluctuations in the price of any one item?
- vel0city 3y agoHey, that idea sounds really great. We could create some normalized basket of goods consumers normally buy. Then we could chart that basket as some kind of index of consumer prices. Nah. Who would do that. We can just look at the price of gold, that's all that really matters.
- echelon 3y agoDoes this as an index track global anxiety?
- randomdata 3y agoIt seems to track economic recovery, seeing the historical growth largely coming after major recessions/depressions. Such growth may be the intersection of people starting to be able to invest again, but still having anxiety related to the decline of the business environment they just went through, thus not wanting to invest in businesses.
- foobarian 3y agoI wonder if there is concern about the incoming boomer peak selloff, i.e. the larger than proportional age group coming into retirement and about to (presumably) sell off a bunch of indexes/stocks in their 401ks. Not sure what else could be a good hedge.
- DylanBohlender 3y agoDifferent generations have different investment preferences, so the best hedges are going to be things Millennials want that Boomers do not typically own.
- nostromo 3y agoThe US real estate to gold ration has always facinated me: https://www.longtermtrends.net/real-estate-gold-ratio/ https://www.longtermtrends.net/real-estate-gold-ratio/ If you bought a house with gold in 1890 or 2023, the price would be... about the same.
- oldpersonintx 3y agothe old maxim is that an ounce of gold would always buy a man a new suit, a meal, and a place to sleep for the night
- curiousllama 3y agoLol I love this
- nairboon 3y agoSo in terms of gold, real estate is currently kind of cheap?
- randomdata 3y agoOr gold is expensive.
- foobarbaz33 3y agoI forget where I heard it. Supposedly the amount of silver needed to buy a goat during Roman times is similar to today. Cold metal seems to act as cold storage of value across history.
- kspacewalk2 3y ago>Supposedly the amount of silver needed to buy a goat during Roman times is similar to today. Probably not during famines.
- ARandomerDude 3y agoAckchyually...if you compare ancient famine surge pricing to modern, stable, non-famine pricing then probably not. But go somewhere on earth where famine is still a real thing without humanitarian aid and compare famine-to-famine pricing. I imagine it would probably be similar.
- oldpersonintx 3y agoI've been trading gold and silver intermittently for decades you see periodic life in the gold price movement, but mostly it goes nowhere gold bugs rejoice in those few weeks in a decade when the price comes to life...but are mum on the fact that mostly it is a flatlined asset
- DeathArrow 3y agoI think gold is stable, money just lost a lot of value recently.
- gnicholas 3y agoHow does this track with bitcoin prices, out of curiosity? (Full disclosure: I own neither!)
- jaktet 3y agoBTC has drastically outperformed gold over last 10 years but is also extremely volatile https://inflationchart.com/gold-in-btc/?logarithmic=1 https://inflationchart.com/gold-in-btc/?logarithmic=1
- latchkey 3y agoZoom out a bunch on the gold price chart and you'll see it is volatile as well.
- anonymous_sorry 3y agoIf you have to zoom out to see it though, it's by definition less volatile, surely?
- latchkey 3y agoZoom out on bitcoin then and it looks less volatile too!
- janandonly 3y agoThe price of gold priced in ₿, keeps falling. See also https://www.longtermtrends.net/bitcoin-vs-gold/ https://www.longtermtrends.net/bitcoin-vs-gold/
- gnicholas 3y agoThanks for the link I guess I was wondering if bitcoin vs USD and gold vs USD have similarities. I remember thinking they would, but then finding out that at least during certain periods, bitcoin was boosted by low interest rates, as people would borrow money to bet on bitcoin. That led bitcoin to drop when interest rates went up. I'm curious if the correlation is generally positive (as people seek both when getting out of cash) or negative (for the reason described above).
- ramboldio 3y agoHow can gold and stock prices be at record high at the same time?
- graton 3y agoStock prices are not at record high though. About two years ago the S&P 500 was at $4,766.18 while today it is around $4,568.
- latchkey 3y ago4.16% difference?
- factorialboy 3y agoIt's not that hard. We printed dollars in record numbers (bipartisan - both Trump and Biden). Of course assets will pop in dollar-terms. Fed's interest rate controls are bound to ease up, as the US economy is _addicted_ to getting injected with printed fiat currency.
- TheRealPomax 3y agoNote that "stock prices" don't exist as a generalized statement. Individual stocks exist, and some of those may be at a record high, but most stocks aren't. Are you thinking of "these are the highest value companies we could aggregate" index funds, like the S&P 500 or the like? As for the answer: because any unregulated commodity market will see that commodity priced based on demand, and demand creates demand.
- amai 3y agoMaybe because Russia is buying all the gold: https://www.reuters.com/markets/commodities/russians-bought-record-number-gold-bars-2022-data-shows-2023-02-03/ https://www.reuters.com/markets/commodities/russians-bought-... to circumvent sanctions: https://www.reuters.com/markets/russia-with-gold-uae-cashes-sanctions-bite-2023-05-25/ https://www.reuters.com/markets/russia-with-gold-uae-cashes-...
- amai 3y agoRussia is not alone on this: https://www.ft.com/content/76bddb74-4ddb-4e36-b70c-c0e26d8bf557 https://www.ft.com/content/76bddb74-4ddb-4e36-b70c-c0e26d8bf...
- amai 3y agosee also https://www.thisismoney.co.uk/money/experts/article-12180789/amp/Could-China-mystery-buyer-driving-price-gold-investors.html https://www.thisismoney.co.uk/money/experts/article-12180789...