TonyCinTX

The Bedrock Case for the Return of the Gold Bull

It is funny how many ideologues rail against fiat currency. Well, guess what? You are wasting your time, and anything you want you can buy with that currency. Wake up, dudes. Thomas Jefferson was wrong, I own clear title to real property, stocks, bonds, gold, diamonds, cars, electronics and more, all bought with my "fiat currency", funny money, whatever you want to call it. The fact is that stores take twenties in exchange for their goods without question. So what's the point of all this conspiracy theory that is never going to lead to anything important?

The Bedrock Case for the Return of the Gold Bull

Litle: Wow, I love this article.

Jakedeez: The point of owning gold is the point of any stock; owning a share of Dell doesn't give you any trading rights to property or equipment or product, you can't go collect on your share whenever you want. You own the stock because you think the *stock* will go up. All these people arguing about whether gold can be used as currency are fools. Stocks can't be used as currency either!

In the case of Gold (IAU for instance), there is a tendency for the price to move counter to the international buying power of the dollar. It also runs counter to some stocks (but tends to move in the same direction as the S&P overall). So for some investments, you can reduce risk by making Gold a part of the mix.

The point has nothing to do with inflation or long term investment, the point has to do with the short term moves of stocks and gold and other commodities, and overall volatility. The advantage of controlling volatility is predictability, at the cost of greater upside. At an extreme for controlling volatility we just buy bonds, but even that doesn't protect you against the dollar sliding; gold does.

Personally, I keep 20-25% of my investments in gold (currently, IAU) since 2005, rebalancing every quarter. I do this because of national debt concerns, the value of the dollar is sliding and I don't think the long term outlook for that is good. If my opinion changes, so will my gold investment. Recently, gold has been tracking energy costs and those seem likely to rise long term as well.

Cramer vs. Buffett: An ETF Perspective

I am a Berkshire holder. Buffet doesn't hold-and-hope. He buys solid profitable companies, and you will note he sells them when he no longer likes they way they are going. He makes a distinction between cyclical downturns and stock market pessimism and the fundamentals of the business, so he is only selling when there is something better to buy. There is need to "hope", we already know these businesses have a long track record of beating their competition and making money and we have a dozen solid reasons to believe that will continue. If the environment changes, technology changes, the market changes, the moat disappears or competition finds a way to kick our butt or demand permanently declines, it is time to get out, and Buffet does that. Note that he shut down the original textile business that was Berkshire Hathaway when it stopped making a profit.

Cramer is just a hyperactive amnesiac with a 50/50 record (and some decent insights, but still a good number of boneheaded recommendations) that does not admit his mistakes or spins the losses by claiming he was iffy. It is a rhetorical trick used by politicians, if you always put a qualifier and a condition or two into your recommendations so they sound thoughtfully expert, you can always spin it into an escape hatch later and claim victory.