The U.S. dollar reached its lowest point against the euro this year due to a myriad of forces including rising global stocks and commodities prices, low interest rates, and investors diversifying out of Treasury debt and into other assets including U.S. stocks with the Dow Jones industrial average approaching 9500 in late afternoon trading.
Stocks in Asia and Europe saw big gains, and gold topped $1,000 an ounce. (See "Stocks, Commodities Rally After Long Weekend.") Oil also gained 4.9%, or $3.31, to $71.33, on the New York Mercantile Exchange, due in part to Goldman Sachs affirming its year-long outlook. By midday trading one euro traded for $1.45, meanwhile the Dollar Index, which tracks the greenback against a basket of currencies, fell to its lowest level since September of 2008...............
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Reots said:But Gold has been the best investment to hold since the inflation of the 1970's...except for everything else!
Long term holdings of gold are not designed to out-compete growth-oriented investments. Gold is not a growth oriented investment, so you're comparing apples and oranges. Gold is a hedge, whose primary utility comes in helping you avoid financial armageddon. Gold is much more likely than equities or real estate to retain its value in the event of a major depression, assuming that the government doesn't confiscate it, as did FDR.
Think of gold as insurance against losing it all, not as an aggressive medium for growth.
I love these posts. It's good to know when the general failure-to-understand public gets involved in a meme. Who cares that the world-wide deflation trade was to hide in the dollar? Does it matter that we're returning to status quo from before the crisis? Does it matter that the reflation rally involves people putting additional money in overseas risk assets? ECB rates are at 1%, Fed is at 0 - that is why the euro is valued strongly against the dollar. The general agreement is the the EU is in a much tougher spot than the US in this mess.
Granted the relative strength of the dollar is a concern, but it's not this pogo stick that the whim of traders can demolish. Some of the structural underpinnings of the dollar have come into question, but the dollar has two fundamental pins that cannot be undone in the near future #1 GDP and #1 military. The dollar's relative decline is not a sign of hyper-inflation. Can't people at least wait until we have inflation before getting all worked up about hyper-inflation?
The concept of gold as a hedge or insurance against a financial meltdown is largely an unproven myth, in that, in modern times, there is no evidence it has worked or will ever work. If there was no food to be found anywhere, would you trade your cellar full of food for a few gold coins? I wouldn't.
It has also been shown to be shaky even as an inflation hedge. During some inflationary times, gold has actually performed poorly.
Gold has benefited most from wives' tales and the masses hearing that "gold is a great hedge" for so long that they believe it, akin to "a house is the best investment you can ever make." It's purely a speculative play, no more, no less. I would never buy it in any situation other than to attempt to sell it later for profit.
geebeebee said:The concept of gold as a hedge or insurance against a financial meltdown is largely an unproven myth, in that, in modern times, there is no evidence it has worked or will ever work. If there was no food to be found anywhere, would you trade your cellar full of food for a few gold coins? I wouldn't.
It has also been shown to be shaky even as an inflation hedge. During some inflationary times, gold has actually performed poorly.
Gold has benefited most from wives' tales and the masses hearing that "gold is a great hedge" for so long that they believe it, akin to "a house is the best investment you can ever make." It's purely a speculative play, no more, no less. I would never buy it in any situation other than to attempt to sell it later for profit.Here's a graph that agrees with you, and it can be found on any cover for the book Stocks For the Long Run:
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geebeebee said:The concept of gold as a hedge or insurance against a financial meltdown is largely an unproven myth, in that, in modern times, there is no evidence it has worked or will ever work. If there was no food to be found anywhere, would you trade your cellar full of food for a few gold coins? I wouldn't.
It has also been shown to be shaky even as an inflation hedge. During some inflationary times, gold has actually performed poorly.
Gold has benefited most from wives' tales and the masses hearing that "gold is a great hedge" for so long that they believe it, akin to "a house is the best investment you can ever make." It's purely a speculative play, no more, no less. I would never buy it in any situation other than to attempt to sell it later for profit. You have disproven your own point with your post. Gold is valuable as a hedge because everyone believes it is valuable as a hedge, as has been the case since before recorded history. Gold is not a fundamentally useful commodity (as far as common citizens are concerned); it is a medium of exchange, one which cannot be manipulated by governments or banks during times of financial chaos, in which nobody trusts governments or banks.
Your argument pertaining to trading a cellar full of food for gold coins is specious. No rational person is going to trade away their very survival for something not necessary for survival. However, during those times of uncertainty, farmers and grocers will trade away their extra food for gold, much more readily than they will trade it away for an untrusted and heavily inflated fiat currency.
Why do you think FDR confiscated gold during the Great Depression? The answer is simple: the bartering of gold posed a threat to the government's control over the money supply. The government knew it could never retain control over the money supply and fight the depression if citizens placed their confidence in a non-governmental medium of exchange.
Show me one medium of exchange more trusted than gold, throughout the course of human history, and I will concede my point.
staci86 said:Show me one medium of exchange more trusted than gold, throughout the course of human history, and I will concede my point.
Sex.
But you know, they call prostitution the world's 'oldest' profession, and that just can't be true. The first John needed something with which to pay the first prostitute, and from that I infer that he had a profession. Another urban legend bites the dust.
WalStMonky said:staci86 said:Show me one medium of exchange more trusted than gold, throughout the course of human history, and I will concede my point.
Sex.
But you know, they call prostitution the world's 'oldest' profession, and that just can't be true. The first John needed something with which to pay the first prostitute, and from that I infer that he had a profession. Another urban legend bites the dust.
Subsistence (or even better, sustenance) is not a profession.
The first "John" was a farmer, eeking out enough to live on. Some poor girl (who couldn't farm, and had no family (lived on the "trails")) asked for some of his "extra" food...
He said I have no extra, but I could let you eat here, and SLEEP HERE! Girl was so happy to be fed she "put out". John said come back tomorrow, and I'll feed you again, as long I get the same "happy ending".
Thus PROSTITUTION was born.... and soon after, girl quit giving "repayment", and thus DATING was born..... and after that, girl wouldn't leave, ate more than her share, got pregnant, and complained all the time... thus MARRIAGE was born!!!
WalStMonky said:staci86 said:Show me one medium of exchange more trusted than gold, throughout the course of human history, and I will concede my point.
Sex.
But you know, they call prostitution the world's 'oldest' profession, and that just can't be true. The first John needed something with which to pay the first prostitute, and from that I infer that he had a profession. Another urban legend bites the dust. If prostitution is a medium of exchange, then how would a merchant go about making change? That just seems awkward.
Is that the adult pervert's equivalent to kids trading baseball cards?
No more awkward than making change with gold chunks. A gold-backed paper currency and credit system is another story. But nothing says there can't be a sex based credit card.
Message edited by: nycll on 2009-09-09 21:55:17 CDT
But you know, they call prostitution the world's 'oldest' profession, and that just can't be true.The version I heard is prostitution is the "second" oldest profession. The oldest is killing another human being.
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