precious metals

[shark6]

There was a discussion in this thread about this same topic:

http://forumserver.twoplustwo.com/showfl...rue#Post7953555

[bingobazza]

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

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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.

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By most measures, its still very cheap at todays prices. Its something like 75% off its inflation adjusted high.

[DesertCat]

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By most measures, its still very cheap at todays prices. Its something like 75% off its inflation adjusted high.

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Julian Simon would tell you the long term trend for gold and any commodity is down. Essentially his arguments are that advancing technology makes it easier/cheaper to find/grow more of any commodity, if you track any of them over a 100 year period they get cheaper and cheaper. Since it is almost entirely consumed Julians theory might not hold up for oil over the long run, but it looks like we have 50 years or so to find out.

Julian would tell you (were he still alive) not to get too excited about the current spike in commodities. Much of it has been driven by the declining dollar, and there are better ways to hedge the dollar. Specifically stock and bond investments in foriegn countries that aren't devaluing their currency as fast as we are ours. The advantage is that you'll earn interest and dividends, which commodities lack.

Oh, and that previous post about benchmarking gold's appreciation from when Nixon "freed" gold is misleading. Gold's natural price was far higher than the $35 the US government tried to fix it at. Remember, gold was $35 for about 40 years, that's an appreciation of zero, and a huge loss benchmarked against inflation. Try benchmarking gold from $35 in the early thirties and see what return it's yielded.

[Carl_William]

Yes -- in March 2004; I invested 10K (the min allowed)in Vanguard Precious Metals and Mining (VGPMX) mutual fund (for my wife's IRA account). It more than doubled -- than more recently it has leveled off. I would proceed with caution. I took 8K off this fund and re-balanced into a few other funds. I suggest having about 7 to 10% of an asset allocated IRA in precious metals mutual funds. As you know; the VanGuard Group has fair expenses and is essentially always very honest.

[Baulucky]

Gold is yellow.

Platinum is 20 times scarcer than gold and resembles silver in color. It's density is 21090 Kg/M3 against Gold's 19800 Kg/M3. It's generally priced higher, although aberrations in pricing have set it temporarily below gold.

I'm an [censored] with a lot of money and time to waste.

[gonebroke]

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Gold is yellow.

Platinum is 20 times scarcer than gold and resembles silver in color. It's density is 21090 Kg/M3 against Gold's 19800 Kg/M3. It's generally priced higher, although aberrations in pricing have set it temporarily below gold.

I'm an [censored] with a lot of money and time to waste.

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Platinum is trading at almost twice as much as gold per ounce. Not sure what you were referring to, are you saying platinum should be trading at 20X Gold?

[gonebroke]

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Julian would tell you (were he still alive) not to get too excited about the current spike in commodities. Much of it has been driven by the declining dollar, and there are better ways to hedge the dollar. Specifically stock and bond investments in foriegn countries that aren't devaluing their currency as fast as we are ours. The advantage is that you'll earn interest and dividends, which commodities lack.


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There are alternate ways to play this sector without buying the commodities outright. Take a look at the gold, silver, copper, zinc, and uranium stocks for the past few years and the returns are outrageous. I got some of my money in gold and silver, but most of it in Junior Explortion stocks.

Picked up RR.V at C0.85 and now its C5.50, VGZ at 3USD and now 8USD, SLW at 3USD and now 11USD, URE.TO at C2.00 and now C4.65 and the list goes on and on. Wait until the US Dollar drops another 30 to 40 percent and these stocks will go up another 5 to 10 fold because gold will be at 1500+ and silver 35+.

[maxtower]

I don't think that you should be speculating in gold. It isn't that great an investment for reasons mentioned above. (high volatility, low returns) It is a hedge against inflation, and there is a lot of speculation that the dollar will be undergoing some real inflation. This has made gold and will continue to make gold look like a good investment even though you are really just pacing inflation.

I am interested in hearing better ideas for hedging against the dollar. What countries aren't devaluing their currency as fast as the US? The US appears to be in a huge credit bubble financed by China right now. Is the Euro safe or is it just as unsecured as the dollar? It would seem that countries which are net exporters would offer the best stock/bond options to invest in. Is there an easy way to find out this information for a given country?

Max

[fun160]

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Since it is almost entirely consumed Julians theory might not hold up for oil over the long run, but it looks like we have 50 years or so to find out.

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There is a lot more oil than that. There is a tremendous amount of oil in tar sands. All that's needed are prices high enough to justify recovering it.