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Discussion Starter #1
Why can't most investors buy gold or gold stocks even when the very world around them is collapsing?

I know gold and gold stocks don't pay much of a dividend and most of the time it is just an investment that just sits there and does nothing.

I agree with everyone that gold is a bad investment most of the time. But what do you say about it when countries continue to borrow until they are bankrupt like today and fiat currencies are collapsing.
 

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My concern would be that upcoming inflation has already been factored into the price of gold. Gold can be a great hedge against inflation over the long term, but can fluctuate wildly over the short term.
 

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Discussion Starter #3
I actually like it for deflation as well because it holds its own in the flight to safety. And because it holds up in dropping prices it makes gold miners more profitable as their costs drop.

But like you said the best reason not to want it is it is extremely hard to hold because of the large price swings.
 

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I hold relatively modest amounts of physical gold and silver for a worst-case scenario but would never buy the metal in paper form as an investment.

There is a large amount of manipulations in those markets. If/when it catches up to them, the paper will be worthless.
 

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Most investors can't buy gold because they don't know anyone else who owns gold. It's wildly unpopular and you've probably never been advised to buy gold from a financial advisor or mainstream personal finance blog/forum. Financial institutions don't promote it because they want you to stay in cash/bonds or other products that can be lent out to others to make more money for themselves. In exchange they promise to give you that little bit of interest.

I wouldn't want to own bonds when the worlds currencies are in a race to devaluation. In order to pay back the bonds, governments have to either issue more debt, use taxpayer money or print the money. Well... then when a country has a huge deficit and the tax revenues are declining, the currency of that nation is going to suffer. Gold will do well in times like this.

Luckily for Canadians, we have (imo) the strongest currency in the world followed by the Swiss and Aussies. But, not nearly as strong as gold.

The entire gold market is tiny~! This means that big buyers can only buy small amounts on the open market at a time or else cause huge price surges. For the same reason, the price of gold is easily manipulated down in the short-term for things like options expiry. The volatility should only matter to you if you're thinking short-term.

Gold is not a hedge against inflation. It is a hedge against the mismanagement of nations.

Instead of the 25-50% that people typically allocate to bonds, I've allocated to physical gold. It's a compact, liability free way of storing massive wealth. If gold did have some industrial use where most of it was consumed, it probably wouldn't have the status it has today (as a universal store of wealth).
 

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Discussion Starter #7
Most investors don't buy gold because of the things $1600 mentioned and the volitiltity thing. You are an idiot on forums and investment circles when you say you invest in gold because paper money is becoming worthless. So most people can't buy gold because they are sheep who do not have a mind of their own.

I for one can't stand buying gold stocks but I know we are reaching an end to the credit cycle and gold is an alternative to this. I trust no one but listen to what people have to say and keep an open mind.
 

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The value of a common share is theoretically the present value of expected future dividends, even if they are many years down the road.
 

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So, a stock is an investment as long as it pays a dividend? Or do you have to assign a valuation before purchasing to classify as an investment? Just trying to understand your point.
 

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The purpose of every stock is to eventually pay a dividend. There is no utility in a piece of paper. The value of a share is the expected value of those dividends in the future. When a company doesn't currently pay dividends, it is usually reinvesting in the business to grow profits and thus future dividends. That's what I meant by the value of future dividends, even if they are many years in the future.
 

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The purpose of every stock is to eventually pay a dividend. There is no utility in a piece of paper. The value of a share is the expected value of those dividends in the future. When a company doesn't currently pay dividends, it is usually reinvesting in the business to grow profits and thus future dividends. That's what I meant by the value of future dividends, even if they are many years in the future.
And how are dividends paid? Reinvested or as paper... or just as paper in the future. Gold is a real item, future dividends are speculation. Now which one is speculating?
 

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Paid in cash, of course, though the real value of the firm (and thus the shares/dividends) may or may not be sensitive to changes in nominal value of the currency (AKA inflation). Sorry, doesn't change the distinction between an investment and a purely speculative vehicle.

For another view, think of gold as being like an antique vase. You buy it purely on speculation that someone else will pay more for it in the future. It has no investment return, and has little economic use other than looking pretty (hence why someone else will hopefully pay more). These things tend to rise in value over time, but there is no guarantee, and there is no yield to put a floor under its fall in value.

For some reason, the FOX News types who get suckered into Goldline's scam are duped into thinking that gold will be a valid currency if there is nuclear war and civilization crumbles. I think you might have a hard time trading an ingot of gold for a few cans of beans if it came to that.

I'll speculate in gold, but I realize that it is just that.
 

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there are some people who are rigidly obsessed with forcing their own personal nomenclature & their own personal definition onto every hybrid, multi-dimensional, ever-shifting, always-evolving, constantly-changing life phenomenon that they encounter. Perhaps this exercise helps them to deal with complexity that they might otherwise find overwhelming.

a possible genetic clue to such anxiety syndromes has yet to be established. But yesterday one of our posters - writing under Chickens - revealed a brilliant strand in the DNA. A rooster of his youth was angry, he said, because it was an incubator chick that had a light bulb for a mother. So we are beginning to see the double helix emerging right here in this forum. Obsessive posters, we might tentatively hypothesize, are the offspring of leslie and an incandescent bulb.

on another subject entirely, there is no demarcation between investment & speculation. They are points on a spectrum. My house, for example, is an investment regardless of whether it pays any cash yields or not.
 

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Discussion Starter #16
Gold has proved itself time and time again that it can be used for trade in the time of crisis. It is far more likely that the EURO or the US dollar will lose most of their values then gold in the coming years. In fact hasn't the US dollar already lost most of its value along side a gold coin since 1900.
 

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I'm not an enthusiastic purchaser of gold, as I find it a rather uninspiring investment with few practical uses. However, enough people believe this to be an alternate currency to necessitate holding at least a small amount in my portfolio. After all, even the value of traditional money is only that which the public subscribe to it. Otherwise, it is just pieces of paper. So holding some gold (in my case I'm working towards 5%), in the most appropriate form for an investor, fits my current motto of being prepared for everything.
 

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there are some people who are rigidly obsessed with forcing their own personal nomenclature & their own personal definition onto every hybrid, multi-dimensional, ever-shifting, always-evolving, constantly-changing life phenomenon that they encounter. Perhaps this exercise helps them to deal with complexity that they might otherwise find overwhelming.

a possible genetic clue to such anxiety syndromes has yet to be established. But yesterday one of our posters - writing under Chickens - revealed a brilliant strand in the DNA. A rooster of his youth was angry, he said, because it was an incubator chick that had a light bulb for a mother. So we are beginning to see the double helix emerging right here in this forum. Obsessive posters, we might tentatively hypothesize, are the offspring of leslie and an incandescent bulb.

on another subject entirely, there is no demarcation between investment & speculation. They are points on a spectrum. My house, for example, is an investment regardless of whether it pays any cash yields or not.
Houses have implied rents. That is, what you could rent it out for, but instead choose not to and consume yourself.

Oh, and don't bother with oblique attacks. It only looks snarky. If you disagree, say so. Writing some rambling gibberish about DNA and lightbulbs as a roundabout insult is not the hallmark of adult conversation.
 

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I used to be really into the idea of gold, but some recent news items and discoveries have made me think that it's not all it's cracked up to be. For instance, some people with gold jewelry were taking their items to gold dealers to sell, and were only being offered between 30-50% of the per ounce value of gold. When I inquired at the bank about buying gold from them, they told me there were fees of like $250 a year if buying less than $50K worth. C'mon. As in so many other situations in life, the only ones benefitting seem to be the middlemen. What good is this precious metal if I can't count on it to produce the value we see advertised in the financials?? Cash in the mattress or even a GIC won't devalue thusly.
 

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Gold mines can give you leveraged exposure to gold prices. If you buy gold stocks you would tie up less of your portfolio, and you would be investing in a business rather than in a chunk of metal. But if you are looking for exposure to gold, you need to look into their hedging practices.
 
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