really james, "sitting there and existing" makes it a good investable asset ?That's a beautiful thing about gold. It sits there and exists ...
Well, gold does fit that definition of companies that make things people really need and useas warren buffet has proven all too well, buy companies that make things people really need and use
well yes, gold bugs will always get their day in the sun and i agree, there is a demand for gold, but it is mostly elastic since most of the demand by far, comes for jewelry and jewelry will always take a back seat to toilet paper (so to speak !) soap and bread for which the demand is inelastic (relatively)Well, gold does fit that definition of companies that make things people really need and use
There is undeniably a demand for gold.
And there are companies that "produce" gold.
So, by that definition, it does fit Buffet's criteria.
However, unlike other companies that "make things people really need and use", gold producers have been a singularly bad investment over the years.
Except for a period of few months during 2010 - 2011 when gold was going gangbusters and went from $1,200 to $1,900.
During that time, the gold producer stocks did well.
But outside of that, gold producers have (by and large) been dead money.
The XGD has lost 40% value in the last 5 years, and lost 17% value in past 10 years.
IMO, Buffet's rule doesn't apply in this case.
If you ask Canadians what their biggest asset they would say it is their home. Does it pay anything?it doesn't pay anything, you can't earn anything
could be ... but there needs to be a reason, there needs to be something that will drive gold up relative to other assetsThis discussion only confirms my theory that gold is under-owned and cheap relative to stocks.
Money supply is the reason. Read The Death of Money: The Coming Collapse of the International Monetary System or listen to this interview with the author.but there needs to be a reason, there needs to be something that will drive gold up relative to other assets
he is quoted on Amazon as sayingMoney supply is the reason. Read The Death of Money: The Coming Collapse of the International Monetary System or listen to this interview with the author.
i would argue that holding shares in corporations that produce useful goods and services are better stores of value than gold, art, land or currency ... they may lose value in a correction but will always come backFortunately, it’s not too late to prepare for the coming death of money. Rickards explains the power of converting unreliable money into real wealth: gold, land, fine art, and other long-term stores of value. As he writes: “The coming collapse of the dollar and the international monetary system is entirely foreseeable. . . . Only nations and individuals who make provision today will survive the maelstrom to come.”
Next thing to look at is the dollar adjustment. Those of you who bought gold earlier this physical year, when the dollar was at par, lost about $10% of your investment as the dollar fell...not to mention the drop in the price of gold???Canadians lost twice.
I don't think this is so at least as far as physical gold goes. Gold is expressed in US dollars and settled in the home currency, therefore if you sold your ounce worth $1300 USD, you would be paid $1430 CAD.
Agree with your last sentence. For many years portfolio theory advocated 5% of your assets in gold. I think this is still prudent. Couple this with the still enormous appetite for gold in India and China, as well as the supply problems due to "peak gold" then I think you still have a worthwhile asset class.
BTW please tell me where this affordable real estate is!