Why didnt you just compare the price of gold with the stock price of Microsoft in 1987? sarcasm
As I said before, if you are going to cherry pick, then I pick the time, and you must include ALL!!! companies that had stock publicly traded at the time, even if they went out of business.
Grab a list of all stock prices out of the financial section from 1929 and pick 100 companies by throwing darts at it, and then do a comparison of those 100 companies against gold.
It’s hard to argue with you because you keep skipping between arguments, rather than address specific points made by your opponents. In the meantime, you realized that the perishability argument you used above to support the idea that gold is money doesn’t work, since there are many other non-perishable commodities that are clearly not money.
You are now changing to a value-density argument: You argue that copper is not money, whereas gold is, because a given quantity of gold has a higher value than the same quantity of copper. The premise is true, but the conclusion doesn’t hold, since nowhere in the definition of money does it say anything about a required minimum value density (cf. here). The argument is also historically inaccurate, since copper has in many eras of the past been used as money just like gold; in fact, the Romans used a Latin term for copper, aes, as a synonym for money because the earliest Roman coinage consisted of copper ingots. The arguments also fails to address other commodities with an even higher value-per-ounce-of-weight or value-per-cubic-feet-of volume, such as diamonds or rare postal stamps. Are these money simply because they crystallize value very densely? I doubt it.
As to your cherry-picking argument: Well, I’ve presented figures, so it’s now up to you to present some of yours. I grant you that there are lots of companies that failed, whose stock became worthless. Does that mean that gold performs better than stocks in general? No, by your own token: Comparing gold against failed shares is just as much cherry-picking (just in the other direction) as comparing gold against successful shares is. My point is: Major share indexes such as the Dow Jones or the DAX I used give a fair impression of the overall development of a particular stock market and are thus suitable to make statements about shares “in general” – certainly much better than all the talk you presented so far without backing it up with any historical evidence whatsoever.
When I win the big one, I plan on dividing it up amongst a number of managers, each unknown to the others, and let them compete against each other. Weed out the dogs after a couple of years, but never put it all in one place.
When I hit the big one, I’m going to go into McDonalds, order a Big Mac and try to pay for it with a gold bar.
And then bitch about these worthless bottom-dwellers who can’t make change with dubloons.
I dug up more data, this time historical performance of the S&P 500 (containing a broader selection of American shares rather than just the ver big corporations). There is a total return version of the S&P 500, accounting for dividends much the same way as the DAX technique described above. According to this page, the total return version of the S&P 500 grew at a factor of about 500 since 1950. The gold price, OTOH, rose from an annual average of slightly below $35 an ounce (same source as above - that’s unsurprising, btw, since the Bretton Woods regime with its statutory gold price of $35 an ounce was in effect in 1950) to its present value of $1360 an ounce. That’s an increase of just a factor of 39.
I’d like to add that it makes intuitive sense to assume that shares outperform gold. When you hold shares, you are the owner of a part of a company, an economic entity that actively produces something. Gold, OTOH, is just dead matter lying around unproductively. How could that outperform economic activity on the long run?
The obvious answer is to have a giant vault built, and fill it with the money for swimming in. All I’d need is another regular sized house to store it in.
Start your own bank.
Then, other people give you money!
I think both sides of this specific argument have valid points.
It probably(?) is true that indexes like Dow or SP500 outperform a naive monkey; yet this is often overlooked. The reason is that The DJIA is adjusted every few years by selling a loser and buying a winner, and thus indexes do outperform “average” stocks.
But what Susanann seems to overlook is that it is easy to perform as well as an Index, especially today: you just buy an index fund!
On the topic of the stock market “always performing well in the long term” it should be noted that this refers to U.S. stocks, and U.S. has never lost a major war. If one did a study of German stocks over a certain long time frame, one would conclude “the stock market always performs badly in the long term.” :smack:
This is not true. The German industry recovered quite rapidly from the WWII destructions, for reasons currently discussed in another thread. What is more: The big corporations dominating the German economy before WWII were mostly the same as the ones dominating it afterwards. Sure, there were a few companies that literally collapsed - I.G. Farben, once the world’s largest chemical conglomerate, is a prime example. But even to this day, you find a lot of companies on the list of Germany’s leading companies that were around before, either under the same name or in the form of some predecessor corporation under a different name. Deutsche Bank, Commerzbank, Daimler, BMW - they were all big names pre-1939 and are still around. E.ON is the successor to VEBA and VIAG, both founded in the 1920s. This applies quite similarly to other corporations. It’s simply not true that the German industry, or industrial property, was wiped out by WWII.
Sorry if my quote was unusually cryptic. I certainly expected Dopers to deduce that the “certain long time frame” did not include Germany’s post-WWII recovery.
At, for example, this page, you can see that for any 30-year period beginning anywhere in the range 1885-1920, German stocks did lose value, if held for 30 years exactly. This is in stark contrast to statements about U.S. stock market, where it is asserted stocks always rise over 30 years.
I’d draw an obvious conclusion, but we seem to be having some trouble with the obvious these days here.
Still not right. YOU are comparing trading, with buy and hold.
People who trade are always going to be getting different results regardless of what is bought and held… against…something bought and sold a hundred times. YOu cant objectively compare a buy and hold strategy against a trading strategy.
Either compare buy and hold by doing the dart throwing at a 1929 newspaper and keep those SAME exact stocks from 1929 for 80 years against 20 ounces of gold, …
or…
If you are going to be buying and selling stocks during a time period/index funds, etc, then be fair and compare a stock trader to a gold trader. Compare stock index returns to someone who trades gold, who buys and sells gold. Buy gold at $36, sell gold at $800, then buy back at $250, then sell it at $1000, buy gold back at $700 and sell gold at $1380, etc, etc. Include stock dividends as well as income taxes on the stock sales since taxes are required and monitored on stock sales, but do not include taxes on the gold trades since gold trades are not reported to IRS.
Even “I” did not buy and hold gold all my life. I sold out when gold was about $800 when I thought Reagan would get elected , and bought it back when bush got elected and gold was $300…then I bought more gold when obama got elected.
If you wanted to buy 100 goats and needed advice on where to get fencing to keep them penned in, Susanann would tell you to get gold instead of fencing, because no one in Tanzania will let you buy food for fencing, whereas you can walk into any store on Earth and barter in gold - because most point of sale systems are designed to accept gold.
FWIW, www.albinogoatfinder.com is still available.
Invest in soy beans, trust me. I have inside information
Is that so? Have you actually tried and carried a gold bar into your local Starbucks in exchange for a latte? Have you bartered a gold bar for a Barbie doll at your local Toys ‘R’ Us, or for a book at your local bookstore?
I haven’t, and I’m not going to try because even if they accepted it (which I doubt a lot), the transaction costs of me exchanging my money into gold and the merchant exchanging it back into euros would make this most inefficient. But you’re welcome to do the experiment and report the results back to us.
Actually, his post is saying just the opposite, how ridiculous it is to assert that "you can walk into any store on Earth and barter in gold ", he is mocking another poster’s claim that gold can be used as currency.
Obviously, it can’t. Sure, there are bullion exchanges where you can sell your gold bar. But no other business would accept it as a medium of exchange (you have to get it weighed and assayed). OTOH, you would actually have a better chance of selling a bar of copper- in a brief search, I found 4 bullion dealers in SF, and 12 scrap dealers. Of course, a gold *coin *could be sold at many coin shops and pawn dealers, perhaps even a jeweler.
You also get some pills to make your bowel movements smell like freshly baked cinnamon rolls.
\
You have been inside a soybean?
What’s it like?
That is a misleading analogy. You are describing a system based on perfect hindsight, that’s not how stock market indexes work.
Originally Posted by Susanann
If you are going to be buying and selling stocks during a time period/index funds, etc, then be fair and compare a stock trader to a gold trader. Compare stock index returns to someone who trades gold, who buys and sells gold. Buy gold at $36, sell gold at $800, then buy back at $250, then sell it at $1000, buy gold back at $700 and sell gold at $1380, etc, etc. Include stock dividends as well as income taxes on the stock sales since taxes are required and monitored on stock sales, but do not include taxes on the gold trades since gold trades are not reported to IRS.
Even “I” did not buy and hold gold all my life. I sold out when gold was about $800 when I thought Reagan would get elected , and bought it back when bush got elected and gold was $300…then I bought more gold when obama got elected.
First of all…NO! I actually did it, and it was NOT “hindsight” at the time that I did it. I thought Reagan would get elected and better times were ahead. I thought it was wrong for Nixon to take us off the gold standard and that the price of gold in dollars would go up. I also believed that bush and obama would spend and borrow worse than drunken sailors and drive our country deep into debt. It was not “hindsight”, but it also was really not that hard to figure out what was going to happen to the price of gold at those big turning points.
As far as stocks, the “safety” of stocks, I would guess that most of the “stocks” issued and bought in the last 100 years in the United States are now completely worthless and just pieces of paper with pretty pictures on them.
Anyways, you guys are so off the subject. The OP wanted a safe place to put his billion dollars, the goal of the OP is to PRESERVE his capital with the least risk, he is not interested in risking his/losing billion dollars in the stock market with a chance the companies he buys will go bankrupt with worthless stock certificates.
Gold is/was/will never!!! be worthless.
Gold has been worthless before, and it can be worthless in many of the worst situations which people dream gold would be especially valuable in. I notice an unsettling and historical association between gold hoarders and survivalists. Even in Cormac McCarthy’s The Road he writes about the father/son finding some gold coins in an underground bomb shelter that some person (presumably long since dead) had stashed away for just the very apocalypse that happened in that book. In truth, when humans are fighting over scraps of food to survive, no amount of gold will be traded for food (which = life.)
You argue that people should just blindly buy gold because it is always worth something. Yet, in this same thread you admit that in your personal life you have approached investing in gold just like any first year commodities broker would: you buy when it is likely to be profitable and sell when it is likely to be profitable.
You consistently refuse to be clear when talking about gold. Do you think people should always buy gold? Or are you saying “buy sometimes” and “sell sometimes?” Why would you ever sell gold for dollars, under your world view? Since “gold is money” why have you ever sold gold? Why didn’t you just use it to buy the things that you needed, and avoid exposing yourself to the dollar. Even the 5 minutes it might take to transport your money that you have just received in return for some of your gold, to make a planned purchase, could see the entire U.S. economy fail and those dollars become no more valuable than the paper on which they are printed. If gold truly is money, there is no reason to actually ever sell gold, only exchange it for goods and services.
You also refuse to ever accept clear examples where people will show you how you can see vastly superior increases in real wealth (meaning investment returns adjusted for inflation) in various other forms of investment versus investing purely in gold. So, please define for me a thirty year period, any thirty year period, in which someone would be better served investing in gold every single one of those thirty years and then cashing out at the end to retire, versus a general investment in the market.