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It is interesting that today the USD and metals are going up at the same time, bucking the inverse relationship normal.
At the time of this post
Gold price Decrease due to Strengthening of USD -5.30
Gold price Change due to Predominant Buyers +11.20
Gold Price: Total Change +5.90
https://www.kitco.com/kitco-gold-index.html
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Gold as a replacement for large cash and savings
Gold is always good to invest. Within this year or next should break the all time record high. Gold even tops palladium and platinum. Gap between gold and palladium hit almost $1000.00. And today looks like palladium might fall below $1000.00 an ounce within next few days. Well, hopefully silver will start to move higher.
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My intellectual preferences against inflation are gold an stocks, but stocks are not my thing for several reasons, and the main reason is that it is nowadays more a kind of casinogame ( The ratios stockcapiytal to earnings has grown too high ).Originally Posted by motocat
It can also be said also from gold. The goldprice is nowadays much higher than the productionprice including a reinvestment allowance, but there is a strong point speaking for gold: the purchasingpowerloss of all Fiat in the whole world ( which also erodes stockcapital ). And that trend is accelerating and difficult to be stemmed due to the inbuilt flaws in our governmental systems, ( be they " democratic" or " tyrannical" systems.
It is in the ADN of all big companies and governmental systems to expand their budgets over that of last year, it is a survival necessity for them, because when they would budget less, the PTB which rules over them would tend to abolish them as unnecessary, and all organisations want to survive.
It means that stopping inflation is impossible, because nobody will allow the systems to commit suicide. They always have gone to the extreme and either impoloded in war or gone bankrupt, so gold will always be a good hedge against inflation whatever they may say.
Golditiki2+++
Member
Here is an interesting observation.
I have always bought long bonds individually and laddered them each year for all my tax sheltered savings until I could not purchase them at at least a 5% rate. ( average 6.5%)
They were either provincial government strips or A rated corporate's. Obviously that was difficult from 2010 to 2022, so I purchased other assets including PMs
The reason is that it was harder to screw you in bonds you held until maturity of strong credit. You received your principal and all the coupons ( lots of cash flow and liquidity came from laddering)
The amazing thing is the LT return on gold comes out almost exactly to the LT return of long bonds if bought individually and held to maturity. This makes some sense as LT bonds should approximate the increase in nominal GDP over time. ( whether that is all inflation or actual increase in productivity ) I use inflation of 4% and productivity of 1%. So lets say 5%
We can dicker over a half percent or so one way or another. .
So lets look at Gold - lets take its average price from 1972 when it could reasonably be considered marketable for a short period to 1979. It is 182$ - lets call the average year half way through 1975. So lets call it 48 years.
Rule of 72 for compounding makes 72 / 5 or 14.4 years. So that is 3.333 times. So $182 doubled is 364 doubled is 728 doubled is 1456 x 1.05 x 1.05 x 1.05 is 1685.50 and add atouch.
so lets say 1700. If you use 5.25% for a return on long bonds you will easily surpass the current gold price.
An interesting experiment that shows the gold price - LT bonds and the economy (nominal GDP) are not that far off each other over a long time horizon, even with current distortions.
Nominal GDP is a slightly above this but less than a % by government figures.
This is as it should be in a rational market ( give or take) over an extended period. The future of this assumes it continues which is a big assumption.
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I have compared how the value of gold has held up vs a basket of long term bonds for various time periods, and have myself found that gold generally does better. Probably I've posted on that on this forum before, however do not have the time to look up now. Of course, if you pick certain dates and periods, long bonds have done as well or even better. Pretty much, one will find what they are looking for on this subject -- though I do believe an extensive and neutral comparison will find gold does better if one does not cherry pick dates.
However, the biggest advantage of gold -- is not in such head to head comparison. It is in the discreet nature of holding gold vs bonds based on fiat units, and we know what historically has always happened to fiat. The masters like you to hold bonds vs gold, because they can control and keep tract of such bonds. That's the big one folks, you like the masters to know all you save in or not??
Trading is another matter, however I have known many who foolishly run to bonds when they fear their stocks are collapsing, somehow having been brainwashed by standard financial advisor into believing bonds are a safe haven in such times -- and then they see their bond values collapse as interest rates increase. Most people are to slow to be good traders. I say keep it simple, and keep a solid core of gold, what everyone with a good amount of savings should have. The only reason standard financial advisors don't say this is that they are captives of what is essentially a system based on sin (i.e. usury), slavishly imagining that if they prostrate themselves to their digital masters, that they will be rewarded.
“Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.”Daniel Webster (1782-1852)
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I am in complete agreement with your 2nd paragraph
I am in agreement with keeping a portion of your savings in gold bullion, like many Central banks do. Also some in other PM`s as well and perhaps a portion in Natural Resource stocks, which include PM stocks.
I am in disagreement about gold outperforming LT bonds ( bought individually)and held to maturity over a significant historical period. Say 50 or 100 years. That takes away all the varied swings in both. I only used the average price of gold in the 70`s as it never freely traded until 70`s and US citizens were not even allowed to own gold until mid 70`s. So it was not cherry picking. In fact I greatly understated LT bonds as a basket of 50/50 LT government bond and triple A bonds would have to be at least 7% as for all of the years between the mid 70`s and late 90`s they were between 7% and 15%, and even until 2007 they were in the 4.5 to 7.5% range.
Gold on other hand would never average 6% no matter what year you used for average since it went marketable near middle 70`s. If you used the fixed amount before that it would not be applicable. It would make the gold price gain look better in the 60`s and 70`s but worse any further back. ( So again you need to average if you take that route.)
I am in total agreement that if you just use this century ( last 23 years) then gold has outperformed most things.
The trick is easy with bonds. ( If you believe that they will be repaid) Pick a number that you think will collapse the current system if maintained ( mine was a yield of 6%) and until you can buy beyond that, do not buy anymore and let the others run off. Buy gold with the money or some other asset until that changes ( I doubt it will) . Have the bonds laddered and only buy individually and only high quality. Only in tax deferred accounts ( which obviously restricts the amount in the portfolio). So although I have discussed bonds a fair bit it is no where near the majority of my assets. I would certainly not recommend bonds on a PM site, and I have not bought a bond in many years ( since I could get 6%+) - oops I did buy a Canadian equivalent of TLT but only 2% of portfolio but it is barely down now and pays nearly 4.5% dividend ( see when you go against your system poor results sometimes happen)
It has worked very well for me, as I am usually right, but have horrible timing, as one poster keeps pointing out, so I like to keep things simple and what I know best.
I suspect one could do this with gold or many other assets but I find it easier with bonds.
Only way you are going to lose money is the whole system is going down with you, and you will still have some gold and silver and cash.
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First, I want it to be clear, I have myself traded bonds, and still hold some bond funds, and a couple years ago, this time of year, bought I Series U.S. savings bonds, as I recommended on other posts during that time here. I'm no purist.
However this thread was in opposition to the mindless stock-bonds mix that is so commonly repeated, with the silly notion that bonds are stable and less risky, flee to them during time of stress (like when interest rates are low and their values high). Many many people have been hurt by this bad advice that paid financial advisors like to repeat. These same people will shun gold, we who have found our way here need not wonder why.
Now, in regards to how well bonds have done vs gold over time, over a time we as Americans could get gold bullion, let's look at bonds that the common person could easily get, like the E series Treasury bond (30 year maturity) and EE series bond later on, starting from the year 1974, when it become legal again to own gold bullion (though the smart ones knew how to get them as "collectibles" before then):
Look here, https://treasurydirect.gov/BC/SBCPrice at the Treasury Direct Site: A $100 E bond purchased on January 1974, and final maturity on January 2004, has $513 in value. Then, you purchase a $500 EE bond on Jan. 2004, and today it is worth $1038.
Look at the value of an ounce of gold on Jan. 1974: https://www.usagold.com/daily-gold-p.../?ddYears=1974 : about $116. Value today? Almost $2000.
So basically, gold has done about twice as well as these 30 year bonds you could have purchased: 100 to 1,000 vs 100 to 2,000. And you can get all cash for that 1 oz coin, while the bond gains get reported to big G, maybe 25% of that gain you never keep, so it's even worse. Now I know, there are all kinds of bonds more sophisticated investors could have purchased, some that did better than the 30 Year U.S. treasuries. However, how many people could do that? Much in the same way, you could have purchased gold coins with numismatic value that could also have done better, some much better. However let's stick to real dates and real product that most people could get.
For the common man, gold is a good balance with stocks (if stocks is a must, and it seems to be for many). I'm not talking the fast acting traders (who can make a buck on anything). Lets repeat, instead of stocks and bond, stocks and gold, simple as that, it's not crazy, crazy is to see big banks going down because they had so many of their highly paid professionals buying bonds at their peak (you can find better advice here for free); crazy is all those poor folks who went all into bonds at all time high valuations (and near zero interest) because they feared stocks were more risky, and now are down 30% and need to sell to make ends meet. Contrary to popular myth, it not us gold bugs who are crazy, we are doing quite well. Rather, it is all these well manicured lady-men in suits, repeating for the umpteenth time what seem to have been drilled into their heads, who are nuts, and really do not deserve the respect, trust, or pay that so many provide them.
Turn away from the dark side, Gold is a basic God created element, shiny and pure, it is real money. Bonds, under so many names, are a scam, a fake product with no measure in the physical world, only a system of well crafted trickery, that our masters need us to continue to believe in, such that they can continue living the high life that comes with their power. The day that their bonds are rejected, is the day that their Empire of Lies will come crumbling down. If "Stocks and Gold" becomes the standard way of thinking "Instead of Stock and Bond", that day will come.
(Note - I'm not a big believer in stocks either, however at least some of them represent bits of ownership in some real companies that produce desired product, while bonds represent what - the promise to steal from the people?).
Last edited by motocat; 11-11-2023 at 07:49 PM.
“Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.”Daniel Webster (1782-1852)
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I always preached against bonds ( i mean governmental or Fed issued) because they are debtrecognition paper and i have on the flee market seen hundreds of govermental bonds they pledged to repay and never did or did with decimated fiat. So I out of principle ama against bonds. I also mistrust corporate bonds even when they lure people with big rents, the bigger they are the riskier. I have heard people who boasted owning highpaying bonds moan afterwards, one has only to remember those facts.
Moreover there is the taxman, he creams off his chunk of bondearnings and usually nobody talks about that part of the coin.
Stocks are ok because they represent in principle a part of a company, but nowadays it is difficult to know if the reward is worth the investment because a lot of them are hollow cymbals and their idea more to get wellpaid themselves than paying the stockowner for his investment. Moreover stocks are modeitems, everybody flocks to them and overbids in boomtimes, but gets fleeced in busttimes. Actually we are in a concealed busttime, the doorgates of the in and out movements are regulated like the locks of the Panama canal and things go well until like the panamacanal the system runs out of money / water.
It means that there are really not many very good alternatives for the moment. Maybe the golden times will come back, but i believe that we first have to shed the froth and our populations get a better grip on the essentials of life before we can once more start throwing money out of the windows...
Golditiki2+++
Member
I always preached against bonds ( i mean governmental or Fed issued) because they are debtrecognition paper and i have on the flee market seen hundreds of govermental bonds they pledged to repay and never did or did with decimated fiat. So I out of principle ama against bonds. I also mistrust corporate bonds even when they lure people with big rents, the bigger they are the riskier. I have heard people who boasted owning highpaying bonds moan afterwards, one has only to remember those facts.
Moreover there is the taxman, he creams off his chunk of bondearnings and usually nobody talks about that part of the coin.
Stocks are ok because they represent in principle a part of a company, but nowadays it is difficult to know if the reward is worth the investment because a lot of them are hollow cymbals and their idea more to get wellpaid themselves than paying the stockowner for his investment. Moreover stocks are modeitems, everybody flocks to them and overbids in boomtimes, but gets fleeced in busttimes. Actually we are in a concealed busttime, the doorgates of the in and out movements are regulated like the locks of the Panama canal and things go well until like the panamacanal the system runs out of money / water.
It means that there are really not many very good alternatives for the moment. Maybe the golden times will come back, but i believe that we first have to shed the froth and our populations get a better grip on the essentials of life before we can once more start throwing money out of the windows...
Golditiki2+++
Member
I will answer both you, motocat and Goldtiki on this response.
1) If the intent of this thread is to advise unsophisticated investors against strictly a stock bond mix, with the assumption it is reasonably safe, you are correct.
2) If both of you feel government paper ( cash and treasuries and bonds etc ( yes cash is a treasury with out a term or a return) is suspect, I tend to agree, especially into the future.
I long ago, when I bought bonds, bought almost all Corporate high quality bonds as the default risk was negligible vs the extra return.
3) Stocks are far more riskier than bonds, certainly shorter duration bonds and if you have any sophistication in all types. If you are looking for long term return, stocks have outperformed by far, both gold and bonds. ( say the time period we are looking at). This does not mean this will continue, but in probability it will as you must be compensated for the extra risk.
4) Corporate Aaa longer term bonds have outperformed gold since the beginning of 1974. I provide you with the below chart that only goes to 2010, but they have already outperformed gold, even by then. If you take beginning of year gold price of 114.75 and a Corporate Aaa bond of same amount and time, you would finish with a gold price of 1,939 and a bond return of
2,183.12 just until 2010 ( the chart below) It would easily grow to over 3,250 by today even if you assume that the Corporate bond yield over the next almost 13 years averaged 3%.
(probably higher but possible as rates were really low hence why I stopped purchasing ).
5) Corporate bonds are a necessary part of a large business, much like mortgages. As long as they are issued prudently and the return generated is greater than the interest paid, it is
good for the economy. Shareholders do not like share issuance to acquire the financing in many cases, as it dilutes their return. The shareholders will be wiped out in their entirety before a bond holder will lose his first cent. That is why it has a historically much lower return. Lower rated bonds have more risk so they require a higher rate.
6) I have presented many posts warning of the higher risk of not buying individual bonds. When you buy them in a mutual fund you are at the mercy of the fund buying and selling and it is also marked to market. If you hold your bonds to maturity, you are guaranteed the yield you purchased them at. If you bought the original, that yield will be the coupon.
If you ladder the bonds then you mitigate the liquidity risk, if you buy many you mitigate the almost negligible risk of principal loss. The vast majority of my purchases were of companies that were necessary ( utilities etc.) I do not own financial company bonds or stocks and I generally do not hold government bonds.(except money market which probably have a lot of it) I do not trust Central Banks, or large banks that do more than basic banking, or governments.
7) You can lose money in all assets if you buy high and sell low.
8) Goldtiki brought up a good point in the tax consequences. Something very dear to my heart, living in Canada. That is why I advised in my prior post to purchase in tax deferred accounts
only, assuming you buy any. That equalizes that.
9) I continue to increase my gold and silver holdings ( silver has strangely not done that well in long haul). I still curse when I sold a lot of Palladium bullion for a 2x then proceeded to see it go up 4 fold from there.. I see it is almost back to where I sold it some years ago, so I feel a little better. Not going to sell any more bullion. I have some gold stocks against my better judgement, as they have definitely been an under performing asset, especially when measured against Gold price. This is easy to prove. Perhaps the future will be different.
10) there is no moral problem with assisting in financing your cell towers or electricity etc of good long established, your own currency, companies. You can still buy lots of gold too, from the coupons that pour in, if you do not need the money.
In summary we are in agreement (do not buy LT bonds(corporate's) unless you know what you are doing and have enough capital to buy them properly and in enough quantity to mitigate the risk.
Gold is a great investment and adds great diversification for both risk and reward. Obviously, we all have some.
Even though LT corporate's have outperformed gold in the period addressed, in this century gold has outperformed most assets, including LT bonds.
The LT bonds only did better due to the power of compounding, and the very high rates of the latter part of the previous century.
The future is uncertain, so certainty is not recommended, and at least some diversification is usually warranted.
I am not certainly one to underestimate the dark power that has a strong grip on this world now. 'They' have a lot of tools at their disposal, and 'they' may succeed. If they do not work, who knows what 'they' may do in desperation. Strong diversification in such a situation will hopefully be beneficial. One thing we do know, is that they are not a fan of Gold or individual liberty.
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