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As analysts debate where gold prices are headed, what's the metal worth as an investment?...

As analysts debate where gold prices are headed, what's the metal worth as an investment? A Credit Suisse study says 1% a year since 1900 - a bit higher than Treasury bills, lower than Treasury bonds; stocks have averaged 5.4% during the period. To make matters worse, gold’s volatility is 2.5x that of bills, two percentage points higher than bonds and about two-thirds of stocks.
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Comments (19)
  • anthonymaw
    , contributor
    Comments (40) | Send Message
    The nominal cost to mine and refine an ounce of gold, in some cases involving mining, crushing, cyanide leaching and refining up to 30 TONS of ore to produce a shiny yellow 9999 gold ounce, costs about 700 fiat US dollars. This sets a reasonably lower limit, below which the producers would shut down thereby curtailing supply creating an equilibrium as it was bak in the 90s when central banks were dumping their gold stocks. Today the sophisticated western capitalist systems, in their mad quest screw each other out of their goods and services, have resorted to using a fiat currency and fractional reserve banking system which, coupled with paper derivatives, seriously puts invidual's fiat currency demoniated life savings at serious risk. In the current circumstance, it is obvious that lots of private citizens around the globe, from Chinese to Indians to "westerners", still instinctively believe in the intrinsic tradeability of gold for goods and services essential to living, and are willing to line up to trade 1400 US fiat dollars for it while the Western Capitalist jerks ditch their certificate gold thereby depressing the dollar value. So who's smarter ?????
    18 Apr 2013, 06:59 PM Reply Like
  • bertrandrighi2
    , contributor
    Comments (37) | Send Message
    Anthony, you are very smart and wise :-)
    18 Apr 2013, 09:34 PM Reply Like
  • kvatchik
    , contributor
    Comments (499) | Send Message
    > The geometric average return for the precious metal is 1% from 1900 through 2011


    Why pick 1900? Why not 1933? Here is why


    And supplementary question, what is the return on honesty and integrity among bank "economists"?
    18 Apr 2013, 07:17 PM Reply Like
  • smarton
    , contributor
    Comments (51) | Send Message
    Wtf are you saying? According to that graph, gold appreciated a lot more since 1900 than since 1930! Read it again. Starting in 1930 would give a LOWER geometric appreciation, bolstering the authors' position that gold appreciates slowly.


    But the two sources are at odds. At 1% depreciation since 1900, the dollar should only have lost 66% of its value relative to gold, not 98%.
    18 Apr 2013, 11:19 PM Reply Like
  • kvatchik
    , contributor
    Comments (499) | Send Message
    I'm saying, you should measure from the date USD is been removed from gold standard, that should be the case for study.


    In the case of "manipulation" the idea is, which interval we choose to prove your point, got it?


    You are politically motivated? How do you explain president Obama seems more preoccupied with so called assault rifles then with national debt and deficit?
    19 Apr 2013, 02:25 AM Reply Like
  • smarton
    , contributor
    Comments (51) | Send Message
    Sorry, I needed to check on the history. The dollar was devalued 40% in 1934. I thought it was earlier. So you're trying to take out the flat period between 1900 and 1930. That would in fact increase the nominal appreciation of gold by 1.4% per annum.


    But that's not really fair. A 40% devaluation overnight was a reflection of pent-up devaluation. It could be argued just as well that the period to measure should be from around 1880 when, according to your chart, gold had the same nominal value as in 1933. Counting from 1880 would reduce the nominal appreciation of gold per annum by 0.5%, reducing the real appreciation figure to something negligible.


    Many other periods can be chosen when gold actually depreciated greatly in real terms. That generally happens after a secular peak in appreciation is reached, such as the one we reached in 2011. How much higher can we go than a 100 year peak? Nobody knows, but I would not throw my money on top of the pile.


    Correction: the source article cited real appreciation of gold, not nominal, so disregard my comment about 1% appreciation sounding too low.
    20 Apr 2013, 06:30 PM Reply Like
  • huntingforwhatisreal
    , contributor
    Comment (1) | Send Message
    Volatility is opportunity. Take advantage of the weak and build real wealth.
    18 Apr 2013, 08:54 PM Reply Like
  • ddearborn
    , contributor
    Comments (130) | Send Message


    I often wonder whether or not the media even cares that its complete lack of credibility is no longer questioned. It is now assumed that the main stream media and its offshoots on the net are paid hacks for the elite. Slowly but surely the web is evolving as people filter out propaganda and disinformation.


    It is interesting to watch and read the ongoing covert attacks on gold and silver by the Western Media. Clearly the only real benficiaries of such attacks are the people that employ the media. Precious metals price supression and manipulation does great harm to the common man. The problem the elites have today is that Joe six pack has finally begun to figure out they have been had.


    I wonder how much longer it will take before the media figures out they have been had as well?
    18 Apr 2013, 09:01 PM Reply Like
  • Be Here Now
    , contributor
    Comments (4369) | Send Message
    This is not surprising in the least. Gold is an unproductive lump of metal with almost no industrial use. It is only worth what the highest bidder is willing to pay. It produces no income and costs to store. What's to like?
    18 Apr 2013, 09:08 PM Reply Like
  • bertrandrighi2
    , contributor
    Comments (37) | Send Message
    Hello Kvatchick, the chart showd the LOSS of purchasing power of the US $ vs Gold. 99 % between 1900 and today.
    On the other hand, anyone knows the US $ lost 98% of its value since the FED was created in 1913, under President Wilson, right.
    So the 2 sources are approving.


    I do not quite understand the dude from Credit Suisse. What I am just stating above are figures proving the US $, fiat currency is almost worth nothing, today. Nothing, absolutely NOTHING soon, as there is NO REASON the trend to fall would suddenly reverse North. Even even printing from thin air 85 billion US $ per month, is certainly liable to ACCELERATE the crash...


    Means if you made a wonderfulf profit with a stock quoted in US $, that you bought in 1900, the value today may look impressive. Big number, wonderful. Say number N, in US $.


    Do the maths, it comes as hereafter:
    N x 0 ( zero) = zero.
    Could N tend to infinity, the result is exactly the same : ZERO.


    Thank you for reading Mister Credit Suisse. Sometimes it does not need complicated algorythms...
    18 Apr 2013, 09:55 PM Reply Like
  • bertrandrighi2
    , contributor
    Comments (37) | Send Message
    ANYTHING gets the value PEOPLE do agree it worths. There is no such INTRISINC value.
    In the 16th century in Holland, people agreed that some tulip onions were so valuable that they worth enough to buy 5 or 6 HOUSES. And then you sold or exchange the onion, and you could REALLY buy 5 or 6 houses, most of them probably still inhabited in the Netherlands, and worth an average of 1/2 million US $, each. So one tulip onion made you that much wealthy: 3 million US $. That gives you today 2000 Oz of Gold. Possibly 1500 Oz ONLY, if the price of Gold GETS BACK within latitude 2000 US $ / Oz, say NEXT year for instance...Just to say... I don't care a dam Gold would not have any industrial use at all, which is less and less true everyday by the way... Storage is sure NOT expensive, outside the US, at least...


    Are you a parrot to report what Mr. BUFFET quoted ? And that we may have heard a thousand of times. Then better DO what he does than repete what he says...If so, you should be filthy rich by now, are you ?
    18 Apr 2013, 10:10 PM Reply Like
  • alphacostadamos
    , contributor
    Comments (13) | Send Message
    Gold is the sun on earth.Has many many many lovers....
    18 Apr 2013, 09:38 PM Reply Like
  • ziggysdad
    , contributor
    Comments (41) | Send Message
    Gold has been a store of value for several thousand years and will remain so. Gold's value can change due to many factors, but right now I think its price is being covertly influenced by the FED and their big bank buddies. They have to keep the dollar up and stocks inflated.
    18 Apr 2013, 09:39 PM Reply Like
  • evan.prospect
    , contributor
    Comments (694) | Send Message
    Wouldn't surprise me based on this analysis:

    18 Apr 2013, 10:30 PM Reply Like
  • gwallot
    , contributor
    Comment (1) | Send Message
    When the dollar collapses, those with the gold will be king. With gold you can buy food, housing, etc. It has always been that way and though it may take some ups and downs, it will rule when the currency fails.
    19 Apr 2013, 12:59 AM Reply Like
  • Pffffft
    , contributor
    Comments (5) | Send Message
    Measure the return of gold starting when a currency goes fiat and get back to me.
    19 Apr 2013, 01:32 AM Reply Like
  • sid18
    , contributor
    Comments (323) | Send Message
    If you believe volatility equals risk...
    19 Apr 2013, 04:53 AM Reply Like
  • p_w_smith
    , contributor
    Comments (4) | Send Message
    Any gold graph showing the value of gold should begin in 1974 when Americans were able to own gold again.


    If you take the time to assemble such a graph take the daily numbers and make a weekly low-avg-high set of data. From that data one can then make a movement chart (range). With that value (range) divide it by the average price and you will find the movement percentage. Amazingly, the percentage movement per week typically falls between 0.5% and 5%. There are numerous abnormal weeks where the movement was 10% or greater from 1973 until 1983 and then again in 2008. The maximum change was 21.7% in 1980. Since ownership of gold became legal (my data begins Jan 01, 1973) the price of gold was $65 per ounce.


    Arguing about the price of gold in the 1900 - 1933 is foolhardy as it was established by the government. In 1934 after outlawing the private ownership of gold by US citizens (domestic or abroad), FDR proclaimed the price would now be set at $35 per ounce after taking it all in the previous year at 20.78 per ounce. Abuse of power at its best.


    Thus take simple interest... 1365 per ounce / 65 per ounce equals 2100%. Now use 2100% / 40 years (2013 - 1973) and
    one finds that gold has appreciated an average of 52.5% per year
    (simple). If we are in a "bubble" then take the run from 1973 until
    2000 as the "norm". On Jan 1, 2000, Gold was $290.30 per ounce, an appreciation of 447% or 16.5% per year.


    Since January 1, 2000, gold has appreciated 471% or an average of about 36% per year (end point to end point). However, globalization has changed how the world sees gold as a protective agent against governmental meddling in one's financial security. Gold is not a short term investment. Gold should be viewed as money off the table and hidden away as an insurance policy against the coming day of reconciliation for the "fiat" currencies of one's choice.


    Admittedly, I am long on gold. I did not lose any money from gold going down as I did not sell any. I also did not bother to "book" any profits as gold escalated in price. I use my gold ownership to sleep comfortably at night.
    19 Apr 2013, 02:09 PM Reply Like
  • Muddy
    , contributor
    Comments (16) | Send Message
    Gold's usage: makes great jewelry because it is rare. People don't want steel throw-away jewelry.


    Cost to produce gold is closer to $1000 per ounce. $700/ounce is an old number and only the most efficient mines can do it at that level.
    19 Apr 2013, 07:04 PM Reply Like
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