precious metals

[gonebroke]

Hello,

Does anyone invest in precious metals or precious metal shares? Gold, Silver, etc.

Just looking to exchange ideas on this sector.

[gull]

Investing in a few metals is usually stupid. The historical risk-adjusted return is really low. Take silver, for instance. Historically, it has had a return of about 4%, less than T-bills. Yet its price has varied with an annualized standard deviation of 55%. Even look at gold: its historical annualized return is about 5% and its annualized standard deviation has been around 25%.

Nevertheless, commodity futures funds are a valuable asset class to include in your portfolio because they don't really correlate with stocks.

[Brainwalter]

Barclays has filed the forms to purchase for their ETF an amount of silver equivalent to one year's worth of production.

[tripper]

If you were to track the Dow versus Gold from '71 (after Nixon eliminated all remaining backing of the US Dollar by Gold) you'll find the appreciation to be equal.

[Mr. Now]

Yes, investing in metals can be very stupid.

Yet the very stats that make gold a lousy investment make it a perfect trading vehicle for disciplined and systematic non-discretionary traders. For example gold was recently over $700-- and just 2 or 3 weeks ago was below $570.

From time to time investment vehicles start acting like trading vehicles, and vice versa. We may very well be entering into one of those rare investment periods for gold.

[BigBiceps]

VGPMX

[maxtower]

Gold is a hedge against inflation. Its not that great of an investment. Kinda like a high yield savings account but with more risk. [img]/images/graemlins/smile.gif[/img]

Max

[gull]

Gold is not the best hedge against inflation.

[scotchnrocks]

[ QUOTE ]
We may very well be entering into one of those rare investment periods for gold.

[/ QUOTE ]

I think that bus has already left.

Though the historical returns may be low, it seems around the year 2000 it was an obvious buy trading at a 20-year low in the high 200's/ounce.

[gull]

[ QUOTE ]
So what is? TIPS? Soybeans?

[/ QUOTE ]
Commodity futures funds. You get stock-like returns that are correlated with inflation and slightly negatively correlated with stocks.

http://altruistfa.com/readingroomart...tm#Commodities


[ QUOTE ]
it seems around the year 2000 it was an obvious buy trading at a 20-year low in the high 200's/ounce.

[/ QUOTE ]

I heartily disagree with this statement for a number of reasons.

1)What is special about 20 years? That is, what made this logic applicable at 20 years but not 10 years?

2)If it was obvious, why didn't intelligent investors immedietely invest in it, boosting the price up to its "real" value?

3)Why can you discount the history of gold prices?