4 ms·

Well gold and land both have a resale value that is pretty much exactly what you paid for it, assuming other things are equal. The point of the article is that

Well gold and land both have a resale value that is pretty much exactly what you paid for it, assuming other things are equal. The point of the article is that diamonds (as used in jewellery) really don't, and therefore are not suited to investment (or currency, or some other store of value) as gold and land might be. If you buy gold or land in a fair auction, you can flip it in a day or two for roughly the same price minus fees. You can't do that with a diamond ring.

Retric 12y ago
Gold jewelry generally resells for ~1/2 of its initial purchase price +/- whatever the gold market did. Land also has a high transfer cost (Real Estate Agent etc) and it's often paid for with a loan which also inflates the purchase price, not to mention taxes, none of which is reflected in the sale price. Generally, if you’re moving in less than 5 years it's better to rent.
- 300bps 12y ago
  This was addressed in the first page of the article. Gold in the form of coins or bullion is a commodity with high resale value. Gold in the form of jewelry is a luxury item with extremely low resale value. You can't compare the two. You can even hoard gold under your bed and buy gold coins and bullion (albeit at a ~10% premium to market rates). If you want to hoard gold jewelry however, there is typically a 100-400% retail markup so that’s probably not a wise investment. Your comments on land are closer to accurate but neglect to point out the massive leverage common in such an investment. You can effectively buy a $200,000 asset with only putting $40,000 (or even less) down. If you get a 20% appreciation in the asset over a period of time you've doubled your money. You also get a tax deduction on the interest from the loan and rates are ridiculously low right now.
  - bradleyjg 12y ago
    > You can effectively buy a $200,000 asset with only putting $40,000 (or even less) down. If you get a 20% appreciation in the asset over a period of time you've doubled your money. If the price goes down 20% over a period of time, you've wiped out your investment. Free leverage is neutral to expected value, and leverage with interest has a negative impact on expected value. The real value in residential real estate is the fact that the US government is prepared to spend unlimited amounts of money to make sure you don't lose your shirt. Because something something yeoman farmers. However, that means there's also a unique risk to bear. Just as the goldbug needs a greater fool to want his shiny, so to the real estate owner needs a government in place that will continue to massively subsidize the individual ownership of residential real estate. The US government, today and for the last 7 years, has issued, bought, or guaranteed the lion's share of residential mortgages. Take that away and prices fall dramatically.
- hueving 12y ago
  The real estate sale cost does not eat half of the value. The loan interest has nothing to do with real estate. That's just what happens when you take a loan for anything. Jewelry is nothing like real estate. If it was, you would see billion dollar hedge funds buying up all of the jewelry.
  - Retric 12y ago
    Few people pay cash for the full price of a home. Most people get a loan a do a 3-20% down payment and can easily lose 1/2 or even all of that on a quick sale.

Retric 12y ago

Gold jewelry generally resells for ~1/2 of its initial purchase price +/- whatever the gold market did. Land also has a high transfer cost (Real Estate Agent etc) and it's often paid for with a loan which also inflates the purchase price, not to mention taxes, none of which is reflected in the sale price. Generally, if you’re moving in less than 5 years it's better to rent.

300bps 12y ago
This was addressed in the first page of the article. Gold in the form of coins or bullion is a commodity with high resale value. Gold in the form of jewelry is a luxury item with extremely low resale value. You can't compare the two. You can even hoard gold under your bed and buy gold coins and bullion (albeit at a ~10% premium to market rates). If you want to hoard gold jewelry however, there is typically a 100-400% retail markup so that’s probably not a wise investment. Your comments on land are closer to accurate but neglect to point out the massive leverage common in such an investment. You can effectively buy a $200,000 asset with only putting $40,000 (or even less) down. If you get a 20% appreciation in the asset over a period of time you've doubled your money. You also get a tax deduction on the interest from the loan and rates are ridiculously low right now.
- bradleyjg 12y ago
  > You can effectively buy a $200,000 asset with only putting $40,000 (or even less) down. If you get a 20% appreciation in the asset over a period of time you've doubled your money. If the price goes down 20% over a period of time, you've wiped out your investment. Free leverage is neutral to expected value, and leverage with interest has a negative impact on expected value. The real value in residential real estate is the fact that the US government is prepared to spend unlimited amounts of money to make sure you don't lose your shirt. Because something something yeoman farmers. However, that means there's also a unique risk to bear. Just as the goldbug needs a greater fool to want his shiny, so to the real estate owner needs a government in place that will continue to massively subsidize the individual ownership of residential real estate. The US government, today and for the last 7 years, has issued, bought, or guaranteed the lion's share of residential mortgages. Take that away and prices fall dramatically.
hueving 12y ago
The real estate sale cost does not eat half of the value. The loan interest has nothing to do with real estate. That's just what happens when you take a loan for anything. Jewelry is nothing like real estate. If it was, you would see billion dollar hedge funds buying up all of the jewelry.
- Retric 12y ago
  Few people pay cash for the full price of a home. Most people get a loan a do a 3-20% down payment and can easily lose 1/2 or even all of that on a quick sale.