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And 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 basel

by ajross 3y ago

And 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 ago
Yep. The key is to buy it 6 months ago, and then do everything you can to get others to continue buying in.
AnimalMuppet 3y ago
1979/80 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 ago
Since 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.
- ajross 3y ago
  You're probably being downvoted unfairly because of the reference to the fiat currency conspiracism. But to treat your actual point: That's an extremely cherry-picked date. 1970 was the bottom a deep trough in gold prices. If you look just a few years in either direction, it was 50% higher. You would have had to aim your investment with shocking precision to even get close to stocks in terms of returns. If you look back to 1940, you'll see that gold has returned about 1.2% in real value, which is significantly less than bank interest. Gold has been losing money, on balance, in the power-war world. See: https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-... It's a volatile asset, so you can always play games with dates to make it look like a good thing. But it's not. It's a sucker's bet, and I stand by that. Buy a mutual fund.

by ajross 3y ago

ortusdux 3y ago

Yep. The key is to buy it 6 months ago, and then do everything you can to get others to continue buying in.

AnimalMuppet 3y ago

1979/80 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 ago

Since 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.

ajross 3y ago
You're probably being downvoted unfairly because of the reference to the fiat currency conspiracism. But to treat your actual point: That's an extremely cherry-picked date. 1970 was the bottom a deep trough in gold prices. If you look just a few years in either direction, it was 50% higher. You would have had to aim your investment with shocking precision to even get close to stocks in terms of returns. If you look back to 1940, you'll see that gold has returned about 1.2% in real value, which is significantly less than bank interest. Gold has been losing money, on balance, in the power-war world. See: https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-... It's a volatile asset, so you can always play games with dates to make it look like a good thing. But it's not. It's a sucker's bet, and I stand by that. Buy a mutual fund.