TonyCinTX

What's Next for Gold and Silver ETFs?

I am in Gold at 25% of my investment. Although I politically support the government spending that has and will occur on Obama's watch as necessary, I cannot see how it we can possibly pay for it without printing money. Print and spend is fine by me; it deflates our real debt (by paying it off with inflated dollars), but it does mean inflation and that HAS to mean gold rising.

I guess if you think we are going to get out from under the current financial mess by some means OTHER than printing money, Gold is a bad bet for you. But I will remind you that taxes, fees, or reduced government payments of any kind are politically unpopular, and only about 15% of voters care anything about the deficit, and only about 5% understand the ramifications (or are even affected) by the government printing money. So my guess is, the politically easy way out is to start the presses.

The Myth of Gold as an Inflation Hedge

TRELVIN: >>> Would I carry gold and water in the desert for very long?

WHAT? As to water, YES. As to gold, yes. Somebody might trade me food or more water or shelter or transportation for the gold, so I doubt even a pound of gold coins is going to make a huge difference in how far I can go in the desert. If I can only choose one, I'll take the water, but that (as is pointed out in a post above) is a false choice, we can split our investment money pretty finely.

Also, I disagree with the idea that velocity represents the "intrinsic worth" of gold, it's intrinsic worth is in its rarity and as an ingredient in its inherent elemental properties that cannot be duplicated. It is not just jewelry and its value is not entirely due to some sort of psychological quirk of humans. As for velocity, I don't care a whit how often others are trading gold or whether there is an "opportunity" to raise a price, and I don't know any serious investor that does. My only opportunity to raise the price is when **I** sell what I have. I agree that liquidity is an important consideration, and very active trading is a clear indicator of assymetric information (and a bubble when one side of that information is just mistakenly optimistic). But such indicators are not predictive of prices, they just warn you to pay attention and find out what it is you don't know, and correct at least what may be a personal information deficit.

The Myth of Gold as an Inflation Hedge

FYI, look at this CPI chart on wiki. It isn't hard to find this stuff.

en.wikipedia.org/wiki/...

The Myth of Gold as an Inflation Hedge

Well, isn't this ridiculous? Why start in 1980? Why not in 1985, it is up 120% since then. Why not inflation adjusted?

In 1980 we had the most inflation since 1940 or so, and that is why gold was high. The CPI was 100 in 1982-84, and it is currently around twice that, indicating the value of the dollar has HALVED since then. GOLD has indeed been an inflation hedge, you cannot talk about gold as an inflation hedge being a MYTH without taking inflation into account! Nobody is claiming that it is some great investment, the only claim is that it holds it value when dollars are in decline, so it is at least a safe harbor. And if Newmont Mining is to be believed, it is getting harder to find and reduced supply with increased demand is going to make it an even safer harbor.