3 ms·

Just to pick some other dates: 100 ounces of gold in 2000 was worth ~$28k which wouldn't buy much house anywhere. Also, comparing gold @ ~$20/oz in 1913 to a d

by fr0sty 14y ago

Just to pick some other dates: 100 ounces of gold in 2000 was worth ~$28k which wouldn't buy much house anywhere. Also, comparing gold @ ~$20/oz in 1913 to a dollar stuffed under a mattress in the same year is a bit of a false comparison. The Compounding the same $20 in 10year Tbonds (a decent 'risk free rate' starting in 1928 (the first year I could find data) would yield ~$679 in 2000 (outperforming gold by over 2x) and ~$1385 in 2012 (underperforming slightly, but with almost no volatility).

willurd 14y ago
You can't compare gold just sitting there with USD gaining interest in an investment for 90 years. Well you can, but then you'd be making a ridiculous comparison.
- fr0sty 14y ago
  What is ridiculous about that? Tbonds are pretty much the definition of the "risk free rate of return" for USD. Is there an alternate (non-zero) "risk free rate" for gold that you would like use instead to make comparisons?
  - willurd 14y ago
    Because you're comparing the value of one thing over time against the rate at which you would gain value in a different investment over time. I can see an argument for why you might say tbonds have been a better investment than gold, per se, but that's not what I'm talking about. I'm talking about the necessary volatility of fiat money because it's not backed by anything of real, unchanging value. I'm talking about the purchasing power of the same amount of gold and USD over time.
    - fr0sty 14y ago
      > it's not backed by anything of real, unchanging value. Are you actually arguing that gold's value does not change? Also, what are you using to measure the "volatility" you claim fiat money has so much of?
      - willurd 14y ago
        "what are you using to measure the "volatility" you claim fiat money has so much of" Inflation. And 'unchanging' wasn't the best choice of words, but my point is that gold is not subject to the whims of monetary policy makers because you can't create more gold. Gold's value only changes when more gold is discovered.

by fr0sty 14y ago

willurd 14y ago

You can't compare gold just sitting there with USD gaining interest in an investment for 90 years. Well you can, but then you'd be making a ridiculous comparison.

fr0sty 14y ago
What is ridiculous about that? Tbonds are pretty much the definition of the "risk free rate of return" for USD. Is there an alternate (non-zero) "risk free rate" for gold that you would like use instead to make comparisons?
- willurd 14y ago
  Because you're comparing the value of one thing over time against the rate at which you would gain value in a different investment over time. I can see an argument for why you might say tbonds have been a better investment than gold, per se, but that's not what I'm talking about. I'm talking about the necessary volatility of fiat money because it's not backed by anything of real, unchanging value. I'm talking about the purchasing power of the same amount of gold and USD over time.
  - fr0sty 14y ago
    > it's not backed by anything of real, unchanging value. Are you actually arguing that gold's value does not change? Also, what are you using to measure the "volatility" you claim fiat money has so much of?
    - willurd 14y ago
      "what are you using to measure the "volatility" you claim fiat money has so much of" Inflation. And 'unchanging' wasn't the best choice of words, but my point is that gold is not subject to the whims of monetary policy makers because you can't create more gold. Gold's value only changes when more gold is discovered.