Thoughts on investing in gold/silver

[smstonypoint]

The chances are very good one could find some Breaex Shares at very reasonable prices.

I'm sorry. I don't get it.

Steve

 

[MossRoad]

If you would have bought an ounce of gold in 1975 for $140.00 an ounce and held it for 35 years you could have sold it at around $1000 dollars recently.

Looking at some inflation calculators... $140.00 in 1975 would be worth about $580.00 today. So your gold would have more buying power today than it did in 1975 by a power of about 1.7.

If you would have invested that $140.00 in the stock market and averaged a conservative 8% return for 35 years you would have had over $2000.00.

Running the same inflation calculators backwards, $2000.00 today would have been worth about $480 in 1975. Your buying power would have been 3.4, or twice as much, which pretty much confirms the calculation that the stock market outperformed gold 2:1 over the last 35 years.

( Why did I pick 1975? Because I was 14 years old and my best friend came over all excited that his father bought him an ounce of gold and he wanted to show it to me. That's the first time I ever saw an once of gold. )

The problem is knowing how long to hold something, when to get in and when to get out. Most people do not follow dollar cost averaging when investing and many folks try to time the market. They get in too late and get out too early. They miss out on the "slow and steady wins the race" wisdom of the tortoise VS the hare.

 

[smstonypoint]

<snip>

The problem is knowing how long to hold something, when to get in and when to get out. Most people do not follow dollar cost averaging when investing and many folks try to time the market. They get in too late and get out too early. They miss out on the "slow and steady wins the race" wisdom of the tortoise VS the hare.

Amen!!!

Steve

 

[jinman]

I tend to like mutual fund investments such as Vanguard Precious Metals and Mining Fund (VGPMX). Here is the performance graph for the last five years. If you bought in May 2008, you'd hate this fund. If you bought in May 2009 like I did, you'd love it.

 

[jinman]

If you would have bought an ounce of gold in 1975 for $140.00 an ounce and held it for 35 years you could have sold it at around $1000 dollars recently.

Moss, if you'd bought 1000 shares of Microsoft in 1982, you'd be sittin' pretty today too. Gold is not the only "golden" investment.:thumbsup:

 

[bp fick]

Moss, no argument from me with your basic point, and it's well taken. Timing is awfully difficult to do. But just in fairness, you assumed an 8% return from the stock market during those 3 1/2 decades, in your comparison. Fair enough. But what if the comparison model is different?


Gold Return vs. The Stock Market- The past decade.
Which investment would have netted a better return?


Had you invested $10,000 in gold bullion in 1999, your initial investment would have grown to $38,300 by 12/31/09 a 283% percent increase.

That same $10,000 investment in stocks of the S & P index would have lost $1,400. That is a 14% loss.


Yup, timing is indeed everything. Your "slow and steady" was good advice. Sometimes that isn't precious metals and sometimes it isn't the stock market.

 

[smstonypoint]

<snip>
Yup, timing is indeed everything. Your "slow and steady" was good advice. Sometimes that isn't precious metals and sometimes it isn't the stock market.

That's why professional financial managers recommend a diversified investment portfolio.

Steve

 

[MossRoad]

Moss, if you'd bought 1000 shares of Microsoft in 1982, you'd be sittin' pretty today too. Gold is not the only "golden" investment.:thumbsup:

OOoooo!!! Don't get me started with that one. We had a whacky, goggle glasses chain smoking electronics professor that year that tried to talk the whole class into investing in a little company called Intel and another called Microsoft. AAAAAAAAAaaaaaaarrrrgggghhhhh!!!!!!!

Good old hindsight! :laughing:

 

[niemeyjt]

Didn't FDR confiscate gold on your side of the pond in 1933?

Maybe physical gold under the floorboards is less confiscatable?

Also, I think some of these funds do not actually own all they claim to:

The gold investment fund that doesn't invest in gold - Telegraph

Another reason for holding the physical stuff perhaps?

J

 

[bp fick]

Didn't FDR confiscate gold on your side of the pond in 1933?

Maybe physical gold under the floorboards is less confiscatable?

Also, I think some of these funds do not actually own all they claim to:

The gold investment fund that doesn't invest in gold - Telegraph

Another reason for holding the physical stuff perhaps?

J

From Wiki:
Abrogation and subsequent events


The limitation on gold ownership in the U.S. was repealed after President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress codified in Pub.L. 93-373 [2] [3] which went into effect December 31, 1974.