How much Gold do you own and why?

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dukeblue219
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Re: How much Gold do you own and why?

Post by dukeblue219 »

59Gibson wrote: Thu Oct 21, 2021 4:26 pm
dukeblue219 wrote: Thu Oct 21, 2021 3:47 pm I don't because I have trouble envisioning a world where a gold coin is more widely accepted than a crisp $100 bill. If inflation is high but manageable I'd rather be in equities than gold. If the USD collapses outright then I don't expect to survive long enough to care. Yes, that's bleak, but in that apocalyptic world the guy who pulls out gold to buy food will get killed by the gangs and cartels that take over the power vacuum anyway.
Peter Thiel recently purchased another $50 million in gold. He also recently said " it's a complete bankruptcy moment for the central banks" regarding crypto. He is a billionaire with much different strategies as compared to a BHer, but he did turn a $2,000 Roth IRA in 1999 into $5 billion in 2021. Who knows?

https://www.yahoo.com/now/peter-thiel-t ... 00754.html
My personal thoughts on Thiel aside, if I was a billionaire I would buy every asset class possible under the logic that some baseline level of wealth preservation was paramount. If you can buy $50MM in gold, silver, crypto, real estate, and a desert island without noticing it in your budget then of course you do it to address those one in a million outcomes.

I can't buy enough gold to matter in a Really Bad Decade without dramatically reducing my expected return for the 99% of cases that will likely happen, so I don't try
abc132
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Re: How much Gold do you own and why?

Post by abc132 »

000 wrote: Thu Oct 21, 2021 4:07 pm
abc132 wrote: Wed Oct 20, 2021 11:30 pm The reason to invest or not invest in stocks is not done by looking at stocks past history. It is accomplished by looking at the characteristics of stocks, including risks. The same should be done for gold and the multiple over its intrinsic value is a cost, not a benefit. I am hoping people will stop projecting the past into the future and come up with a list of features, risks, and qualities for their asset selection. We have very good reasons why companies will continue to grow and they include population growth and efficiency increases over time. That's the argument for stocks and why they deserve a price multiple over their earnings. Bonds provide a guaranteed future payment, real or nominal depending on the type.
There have been long stretches where various national stock markets (US, UK, etc.) have provided no equity premium, at least not above corporate bonds.

In 1800s America I think the average bond investor received better returns than the average stock investor?

Only over the 50 - 100 years has the notion of equity premium and passive investment in stocks really been widely accepted though the first stock market opened in the 1600s. Maybe everything that has happened since fractional reserve banking is really the exception not the rule?
A premium is always expected over bonds by those buying and selling and setting the prices, even if that premium does not show up.

Gold is based on perception of value and certainly not independent of the same type of premium expectation.

I would look to guaranteed income from bonds if you are looking for some sort of guarantee.

Luckily a diversified portfolio is a mix of assets, and not subject entirely to the single country or single asset risks. They are pretty easy to mitigate.
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HanSolo
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Re: How much Gold do you own and why?

Post by HanSolo »

abc132 wrote: Thu Oct 21, 2021 3:38 pm Venezuelan's would certainly benefit from owning a diversified international portfolio.
I think your idea has some first-world assumptions built into it. This might not be feasible for a lot of people in Venezuela, for a variety of reasons. They might not have those kinds of investments available. Or they might have high fees. Or, from the Bloomberg article, "Internet reception that's so shoddy that digital transactions are nearly impossible". Then there's the question of whether the average person even has enough money to establish an investment portfolio to begin with. On that last point, short of going there and inquiring, you might get a sense of what their situation is if you ask, say, the janitors in your office building whether they're internationally diversified, and if not, why not.
dukeblue219 wrote: Thu Oct 21, 2021 3:47 pm If the USD collapses outright then I don't expect to survive long enough to care.
I have every intention of surviving regardless of whether the Fed is in business or not.
Yes, that's bleak, but in that apocalyptic world the guy who pulls out gold to buy food will get killed by the gangs and cartels that take over the power vacuum anyway.
Is that what's happening to everyone paying for stuff with gold in Venezuela right now? The Bloomberg article mentioned gangs, but that doesn't seem to stop people from buying groceries.

Are you sure you understand how these things actually play out in real life?
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nigel_ht
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Re: How much Gold do you own and why?

Post by nigel_ht »

abc132 wrote: Wed Oct 20, 2021 5:43 pm
secondopinion wrote: Wed Oct 20, 2021 5:27 pm The only projection I make is the thousands of years of valuing gold as a commodity will continue into the future long enough for me to live my life.
Yes, that is exactly the kind of projection that is largely without merit.

It is absent of any fundamental reasoning other than past=future.
Same for your assertions. Tomorrow will be different just because I think so.

At least the projection that gold will retain value is supported by a bunch of central banks holding gold…
dukeblue219
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Re: How much Gold do you own and why?

Post by dukeblue219 »

Venezuela can function on some weird gold barter because there is still a global economy chugging along. If the USD collapses there's won't be a global economy, there won't be products manufactured, gas refined, or food harvested to buy with gold. There won't be international law, foreign aid, or anything like that.

That's my assumption for planning purposes, anyway.
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Re: How much Gold do you own and why?

Post by nigel_ht »

abc132 wrote: Thu Oct 21, 2021 3:38 pm
BHawks87 wrote: Thu Oct 21, 2021 3:06 pm The situation in Venezuela is interesting. Most Bogleheads that brush gold off as a "doomsday" currency state they would rather have guns and bullets in that scenario but it seems there is an in between. Venezuelans are paying for haircuts and hotel rooms with grams or micrograms of gold. I just read an article that a hotel charges half a gram of gold for a nights stay and pays all of its staff in grams of gold. The owner states that 3/4 of customers are paying with gold but some still pay with Bolivars or Dollars. The owner states that by law he still has to accept Bolivars but he unloads them ASAP. I'm sure there is higher crime than normal but far from the Mad Max scenario that most picture gold being used in.
Venezuelan's would certainly benefit from owning a diversified international portfolio. I would be interested in knowing in the US under such a situation why I wouldn't be able to sell some international stocks and walk down to the barber with some US currency.
Because the barber doesn’t want to be paid in dollars.
This seems to be an argument for international diversification as the gold is not needed, or for holding TIPS or I-Bonds for those of us in US currency. Preferential over cash, sure, but my I-Bonds should do just fine in this situation. Using this example, why exactly do I need gold?
What is the value of a confederate dollar? How about Confederate bonds?
The guns and ammo situation is for when I can't purchase gold, and only gold is accepted.
Guns and ammo generally can’t get you out of a country. Ask former soldiers of various failed regimes.

I have no idea why folks think they can shoot their way out of any scenario.
That is exactly the same time when I either need gold or the ability to meet and protect all of my own necessities.
Has the thought that you don’t gave a monopoly of “guns and ammo” ever occurred to you?
Fast forward to 2025 to 2030, and why wouldn't I just be using digital currency not pegged to my local currency directly from my phone?
Digital currency can be traceable. Some will be designed with that in mind. The rest could be treasonous to hold.

For sure the digital yuan is going to be tracked.
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Re: How much Gold do you own and why?

Post by nigel_ht »

dukeblue219 wrote: Thu Oct 21, 2021 5:28 pm Venezuela can function on some weird gold barter because there is still a global economy chugging along. If the USD collapses there's won't be a global economy, there won't be products manufactured, gas refined, or food harvested to buy with gold. There won't be international law, foreign aid, or anything like that.

That's my assumption for planning purposes, anyway.
Why? When the pound lost reserve currency status there was still a global economy. When the British Empire fell from Superpower status during the Suez Crisis the financial world didn’t end.

Someone else would take our place... Just like the British Empire, the Spanish Empire, The Holy Roman Empire, etc…
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HanSolo
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Re: How much Gold do you own and why?

Post by HanSolo »

dukeblue219 wrote: Thu Oct 21, 2021 5:28 pm Venezuela can function on some weird gold barter because there is still a global economy chugging along. If the USD collapses there's won't be a global economy, there won't be products manufactured, gas refined, or food harvested to buy with gold. There won't be international law, foreign aid, or anything like that.

That's my assumption for planning purposes, anyway.
My assumption is that if people have the choice between jumping off a building and doing non-monetary exchanges, most will find a way to do the latter. Our ancestors did it, and we still have some of their DNA in us.
Last edited by HanSolo on Thu Oct 21, 2021 6:12 pm, edited 1 time in total.
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dukeblue219
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Re: How much Gold do you own and why?

Post by dukeblue219 »

nigel_ht wrote: Thu Oct 21, 2021 5:40 pmWhen the pound lost reserve currency status there was still a global economy. When the British Empire fell from Superpower status during the Suez Crisis the financial world didn’t end.

Someone else would take our place... Just like the British Empire, the Spanish Empire, The Holy Roman Empire, etc…
Sure, but the pound didn't cease to be useful. We're talking about a scenario where someone laughs at a $100 bill but takes a gold coin. Nobody was rejecting pounds and asking for payment in barter for dinner.
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Re: How much Gold do you own and why?

Post by Nicolas »

I think I'll go to sleep and dream about piles of gold getting bigger and bigger and bigger. — Fred C. Dobbs
dharrythomas
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Re: How much Gold do you own and why?

Post by dharrythomas »

1 gold coin and some jewelry, also own a few silver coins.
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G12
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Re: How much Gold do you own and why?

Post by G12 »

I don't have any gold but have just under 70 lbs of silver, it was a PITA moving ~ 1500 miles November 2020, staying in hotels and a tiny casita, buying a new house, etc worried about safe keeping and finally having to find a sizable new bank deposit box during covid. Perhaps I will sell it when it is time for a new vehicle. I currently need a gun/ammo safe more than physical gold or silver, and the firearms were a concern during all the moving, too. YMMV.
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Re: How much Gold do you own and why?

Post by nigel_ht »

dukeblue219 wrote: Thu Oct 21, 2021 6:12 pm
nigel_ht wrote: Thu Oct 21, 2021 5:40 pmWhen the pound lost reserve currency status there was still a global economy. When the British Empire fell from Superpower status during the Suez Crisis the financial world didn’t end.

Someone else would take our place... Just like the British Empire, the Spanish Empire, The Holy Roman Empire, etc…
Sure, but the pound didn't cease to be useful. We're talking about a scenario where someone laughs at a $100 bill but takes a gold coin. Nobody was rejecting pounds and asking for payment in barter for dinner.
If we enter a hyperinflation they could. And gold isn’t barter but a form of money…especially if they come in the form of 1/10 oz eagles. The purity, weight and content are guaranteed by the USG and is actual legal tender.

The scenario that a $100 is rejected in favor of gold coins is unlikely but possible if we had deep civil unrest and folks didn’t expect the survival of the United States as a functioning political entity.

We’re up to what? The Fifth French Republic? While we may be the oldest democracy it isn’t automatic that we continue indefinitely.

While that would be a bad day for most of us in this forum it doesn’t imply that there “won't be a global economy, there won't be products manufactured, gas refined, or food harvested to buy with gold. There won't be international law, foreign aid, or anything like that.”
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Re: How much Gold do you own and why?

Post by 59Gibson »

nigel_ht wrote: Thu Oct 21, 2021 7:48 pm
dukeblue219 wrote: Thu Oct 21, 2021 6:12 pm
nigel_ht wrote: Thu Oct 21, 2021 5:40 pmWhen the pound lost reserve currency status there was still a global economy. When the British Empire fell from Superpower status during the Suez Crisis the financial world didn’t end.

Someone else would take our place... Just like the British Empire, the Spanish Empire, The Holy Roman Empire, etc…
Sure, but the pound didn't cease to be useful. We're talking about a scenario where someone laughs at a $100 bill but takes a gold coin. Nobody was rejecting pounds and asking for payment in barter for dinner.
If we enter a hyperinflation they could. And gold isn’t barter but a form of money…especially if they come in the form of 1/10 oz eagles. The purity, weight and content are guaranteed by the USG and is actual legal tender.

The scenario that a $100 is rejected in favor of gold coins is unlikely but possible if we had deep civil unrest and folks didn’t expect the survival of the United States as a functioning political entity.

We’re up to what? The Fifth French Republic? While we may be the oldest democracy it isn’t automatic that we continue indefinitely.

While that would be a bad day for most of us in this forum it doesn’t imply that there “won't be a global economy, there won't be products manufactured, gas refined, or food harvested to buy with gold. There won't be international law, foreign aid, or anything like that.”
nigel_ht wrote: Thu Oct 21, 2021 7:48 pm
dukeblue219 wrote: Thu Oct 21, 2021 6:12 pm
nigel_ht wrote: Thu Oct 21, 2021 5:40 pmWhen the pound lost reserve currency status there was still a global economy. When the British Empire fell from Superpower status during the Suez Crisis the financial world didn’t end.

Someone else would take our place... Just like the British Empire, the Spanish Empire, The Holy Roman Empire, etc…
Sure, but the pound didn't cease to be useful. We're talking about a scenario where someone laughs at a $100 bill but takes a gold coin. Nobody was rejecting pounds and asking for payment in barter for dinner.
If we enter a hyperinflation they could. And gold isn’t barter but a form of money…especially if they come in the form of 1/10 oz eagles. The purity, weight and content are guaranteed by the USG and is actual legal tender.

The scenario that a $100 is rejected in favor of gold coins is unlikely but possible if we had deep civil unrest and folks didn’t expect the survival of the United States as a functioning political entity.

We’re up to what? The Fifth French Republic? While we may be the oldest democracy it isn’t automatic that we continue indefinitely.

While that would be a bad day for most of us in this forum it doesn’t imply that there “won't be a global economy, there won't be products manufactured, gas refined, or food harvested to buy with gold. There won't be international law, foreign aid, or anything like that.”
True. There would be an economy- trade/barter til another currency is established. This forum will no longer have Can I affords, retire w/100x, backdoor Roth ..etc
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Re: How much Gold do you own and why?

Post by nigel_ht »

G12 wrote: Thu Oct 21, 2021 7:14 pm I don't have any gold but have just under 70 lbs of silver, it was a PITA moving ~ 1500 miles November 2020, staying in hotels and a tiny casita, buying a new house, etc worried about safe keeping and finally having to find a sizable new bank deposit box during covid. Perhaps I will sell it when it is time for a new vehicle. I currently need a gun/ammo safe more than physical gold or silver, and the firearms were a concern during all the moving, too. YMMV.
Sounds like it fits in a couple ammo boxes…a 1000oz silver bar is 62lbs and is 5”x12”x3.25”. Coins would take more room…so 2 cans?

Of course that’s only like 15oz of gold…
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Re: How much Gold do you own and why?

Post by nigel_ht »

59Gibson wrote: Thu Oct 21, 2021 8:05 pm True. There would be an economy- trade/barter til another currency is established. This forum will no longer have Can I affords
Lol…the folks with Permanent or Golden Butterfly portfolios will be asking “Can I afford to buy this really nice wake boat for 10 oz?”
abc132
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Re: How much Gold do you own and why?

Post by abc132 »

HanSolo wrote: Thu Oct 21, 2021 5:10 pm
abc132 wrote: Thu Oct 21, 2021 3:38 pm Venezuelan's would certainly benefit from owning a diversified international portfolio.
I think your idea has some first-world assumptions built into it.
It should be very clear from my post I'm talking about high inflation in the US, and whether we would need gold.

Our situation would be quite a bit different, and the comment is intended to get the reader to extend what is happening in Venezuela to the discussion about what we should do with respect to international diversification if we are worried about inflation.

If you took this as a hand waving solution to Venezuela's problems, I apologize for not being clearer. One thing they would benefit from is not being tied to their home currency. This is actionable for the type of person having significant assets and deciding what to do with them. Like the people that are discussing how to protect a portfolio on Bogleheads.
Last edited by abc132 on Fri Oct 22, 2021 10:58 am, edited 3 times in total.
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Re: How much Gold do you own and why?

Post by abc132 »

nigel_ht wrote: Thu Oct 21, 2021 5:21 pm
abc132 wrote: Wed Oct 20, 2021 5:43 pm
secondopinion wrote: Wed Oct 20, 2021 5:27 pm The only projection I make is the thousands of years of valuing gold as a commodity will continue into the future long enough for me to live my life.
Yes, that is exactly the kind of projection that is largely without merit.

It is absent of any fundamental reasoning other than past=future.
Same for your assertions. Tomorrow will be different just because I think so.

At least the projection that gold will retain value is supported by a bunch of central banks holding gold…
I stated that gold may repeat its past performance, which is nothing like the above misrepresentation.

I took the time to talk about my logic and reasoning and there is plenty to disagree with in a civil manner.
Last edited by abc132 on Fri Oct 22, 2021 10:50 am, edited 1 time in total.
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Re: How much Gold do you own and why?

Post by abc132 »

nigel_ht wrote: Thu Oct 21, 2021 5:33 pm Because the barber doesn’t want to be paid in dollars.
They are required to take local currency, so need is a strong and even inappropriate word when one could get by without the gold.

One can always go buy a bit of gold when they need it, absent the guns and ammo situation. This is the same way we get cash, when needed.

Why store it ahead of time in our investment portfolio?

By their own statement, the barber is clearly able to convert that cash right back into gold.
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Re: How much Gold do you own and why?

Post by nigel_ht »

abc132 wrote: Fri Oct 22, 2021 10:41 am
nigel_ht wrote: Thu Oct 21, 2021 5:21 pm
abc132 wrote: Wed Oct 20, 2021 5:43 pm
secondopinion wrote: Wed Oct 20, 2021 5:27 pm The only projection I make is the thousands of years of valuing gold as a commodity will continue into the future long enough for me to live my life.
Yes, that is exactly the kind of projection that is largely without merit.

It is absent of any fundamental reasoning other than past=future.
Same for your assertions. Tomorrow will be different just because I think so.

At least the projection that gold will retain value is supported by a bunch of central banks holding gold…
I stated that gold may repeat its past performance, which is nothing like the above misrepresentation.

I took the time to talk about my logic and reasoning and there is plenty to disagree with in a civil manner.
It's civil to say that opposing view is largely without merit? All I'm saying is your assertion is no better supported than the other...
Last edited by nigel_ht on Fri Oct 22, 2021 11:14 am, edited 1 time in total.
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Re: How much Gold do you own and why?

Post by nigel_ht »

abc132 wrote: Fri Oct 22, 2021 10:49 am
nigel_ht wrote: Thu Oct 21, 2021 5:33 pm Because the barber doesn’t want to be paid in dollars.
They are required to take local currency, so need is a strong and even inappropriate word when one could get by without the gold.

One can always go buy a bit of gold when they need it, absent the guns and ammo situation. This is the same way we get cash, when needed.

Why store it ahead of time in our investment portfolio?

By their own statement, the barber is clearly able to convert that cash right back into gold.
Required and will are sometimes two different things. Or the local currency price will be highly inflated with a significant discount for a currency that doesn't suck. I've been in many places where if you paid in dollars you got a much better deal.

Buying gold with Boliviars probably gets you a very bad exchange rate.

As to why store it ahead of time it's part of that "Buy Low, Sell High" strategy...buy a hedge AFTER your portfolio craters doesn't do you much good.
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Re: How much Gold do you own and why?

Post by abc132 »

nigel_ht wrote: Fri Oct 22, 2021 11:09 am
abc132 wrote: Fri Oct 22, 2021 10:41 am
nigel_ht wrote: Thu Oct 21, 2021 5:21 pm
abc132 wrote: Wed Oct 20, 2021 5:43 pm
secondopinion wrote: Wed Oct 20, 2021 5:27 pm The only projection I make is the thousands of years of valuing gold as a commodity will continue into the future long enough for me to live my life.
Yes, that is exactly the kind of projection that is largely without merit.

It is absent of any fundamental reasoning other than past=future.
Same for your assertions. Tomorrow will be different just because I think so.

At least the projection that gold will retain value is supported by a bunch of central banks holding gold…
I stated that gold may repeat its past performance, which is nothing like the above misrepresentation.

I took the time to talk about my logic and reasoning and there is plenty to disagree with in a civil manner.
It's civil to say that opposing view is largely without merit?
If you could elicit what you specifically disagree with, and even better why, then value is added to the thread.

Disagreeing with something I didn't say is unlikely to be productive, and limiting yourself to your position rather than mine may be necessary.
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Re: How much Gold do you own and why?

Post by abc132 »

nigel_ht wrote: Fri Oct 22, 2021 11:13 am Required and will are sometimes two different things. Or the local currency price will be highly inflated with a significant discount for a currency that doesn't suck. I've been in many places where if you paid in dollars you got a much better deal.
So why not do this instead of gold?

The option is not strictly gold or local currency.

You seem to be making my point.

I assume here in the US I will have some other option other than gold that is not tied nominally to my local currency.

It is a very good assumption given that I own such instruments.
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Re: How much Gold do you own and why?

Post by nigel_ht »

abc132 wrote: Fri Oct 22, 2021 11:15 am
nigel_ht wrote: Fri Oct 22, 2021 11:09 am
abc132 wrote: Fri Oct 22, 2021 10:41 am
nigel_ht wrote: Thu Oct 21, 2021 5:21 pm
abc132 wrote: Wed Oct 20, 2021 5:43 pm

Yes, that is exactly the kind of projection that is largely without merit.

It is absent of any fundamental reasoning other than past=future.
Same for your assertions. Tomorrow will be different just because I think so.

At least the projection that gold will retain value is supported by a bunch of central banks holding gold…
I stated that gold may repeat its past performance, which is nothing like the above misrepresentation.

I took the time to talk about my logic and reasoning and there is plenty to disagree with in a civil manner.
It's civil to say that opposing view is largely without merit?
If you could elicit what you specifically disagree with, and even better why, then value is added to the thread.

Disagreeing with something I didn't say is unlikely to be productive, and limiting yourself to your position rather than mine may be necessary.
I disagree with you calling opposing positions "without merit" and "foolish".
abc132 wrote: Wed Oct 20, 2021 10:52 am
Expecting the same correlation as the past is just plain foolishness.
Expecting that gold will retain value as a reserve of wealth within secondopinion's lifetime isn't "without merit"...especially given that central banks believe the same thing or gold wouldn't be sitting in their vaults.

And then making pronouncements that your position is obvious and we should all simply agree.

Gold has been a store of wealth in the past. You have provided nothing more than handwaving that there are better alternatives today even though these aren't time tested in any sort of significant financial crisis. And no, 2020 wasn't a significant financial crisis.

ALL you have done is asserted "golds position as THE reserve of wealth is likely diminished" and "It may do just fine in a portfolio, but a repeat of the past is unlikely. Even rhyming with the past is unlikely."

Why? Because you say so and some blog belonging to a some random fund dude says so?
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Re: How much Gold do you own and why?

Post by dukeblue219 »

I still think there's a tendency to overlook how the global economy is structured in 2021 vs 1821. In the event of widespread financial collapse in 1821 your neighborhood blacksmith, the farmer down the road, and the mill powered by waterwheel could trade services with one another using an arbitrary store of value.

I don't think I'm being overly pessimistic to suggest that in a global economy this isn't possible. If the farmer can't get replacement CPUs for his tractor, the factory in your town can't run robots without an internet connection to a license server that wasn't paid for, and the grocery store relies on daily refrigerated deliveries from another continent, it won't matter if you have a store of gold. The system is too complex now to allow a failure.

Happy Friday all ;)
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Re: How much Gold do you own and why?

Post by nigel_ht »

abc132 wrote: Fri Oct 22, 2021 11:16 am
nigel_ht wrote: Fri Oct 22, 2021 11:13 am Required and will are sometimes two different things. Or the local currency price will be highly inflated with a significant discount for a currency that doesn't suck. I've been in many places where if you paid in dollars you got a much better deal.
So why not do this instead of gold?
Because I don't know what that currency should be if not the dollar. At my level of wealth a tiny bit of gold is sufficient.

I think I have a 100 Euro bill left over from some trip somewhere.

And no, I don't expect the Currencies That Shall Not be Named are the no-brainer alternatives to gold as a store of wealth even if I own some...
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Re: How much Gold do you own and why?

Post by Activesloth »

I invested in physical gold in 2014. I allotted over half a million dollars. I even put some in my IRA. Biggest investment mistake. You pay a premium when you buy gold coins, but when you try to sell it, you only get to sell close to spot prices. So you end up losing money going in and coming out. Then there’s the problem of storage. It’s not safe in a safety deposit box. If you keep it at home you worry about a home invasion. If you keep it in an IRA, you pay maintenance fees plus vault fees. It takes forever to sell it, and I had to deliver it personally to a Brinks office to ship it to a precious metals dealer. From 2014 to 2019, the price of gold went sideways while the S and P returned an average of 16%. Finally sold everything in 2019 and invested in stocks. Told my kids to never invest in gold. That’s my experience, maybe others fared better. If you must, try a gold etf.
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Re: How much Gold do you own and why?

Post by willthrill81 »

Activesloth wrote: Fri Oct 22, 2021 12:15 pm I invested in physical gold in 2014. I allotted over half a million dollars. I even put some in my IRA. Biggest investment mistake. You pay a premium when you buy gold coins, but when you try to sell it, you only get to sell close to spot prices. So you end up losing money going in and coming out. Then there’s the problem of storage. It’s not safe in a safety deposit box. If you keep it at home you worry about a home invasion. If you keep it in an IRA, you pay maintenance fees plus vault fees. It takes forever to sell it, and I had to deliver it personally to a Brinks office to ship it to a precious metals dealer. From 2014 to 2019, the price of gold went sideways while the S and P returned an average of 16%. Finally sold everything in 2019 and invested in stocks. Told my kids to never invest in gold. That’s my experience, maybe others fared better. If you must, try a gold etf.
As you note, a gold ETF is far simpler for large quantities involved.

But pronouncing gold as a mistake because it didn't go anywhere for 5 years is not appropriate. There have been times when U.S. stocks had a 0% real return over a 20 year period, and U.S. bonds lost 1.6% annually to inflation from 1941-1981.
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Re: How much Gold do you own and why?

Post by nigel_ht »

Activesloth wrote: Fri Oct 22, 2021 12:15 pm I invested in physical gold in 2014. I allotted over half a million dollars. I even put some in my IRA. Biggest investment mistake. You pay a premium when you buy gold coins, but when you try to sell it, you only get to sell close to spot prices. So you end up losing money going in and coming out. Then there’s the problem of storage. It’s not safe in a safety deposit box. If you keep it at home you worry about a home invasion. If you keep it in an IRA, you pay maintenance fees plus vault fees. It takes forever to sell it, and I had to deliver it personally to a Brinks office to ship it to a precious metals dealer. From 2014 to 2019, the price of gold went sideways while the S and P returned an average of 16%. Finally sold everything in 2019 and invested in stocks. Told my kids to never invest in gold. That’s my experience, maybe others fared better. If you must, try a gold etf.
Well in 2020 it hit $2000 an ounce right around when the S&P 500 tanked…
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Re: How much Gold do you own and why?

Post by abc132 »

nigel_ht wrote: Fri Oct 22, 2021 11:56 am Expecting that gold will retain value as a reserve of wealth within secondopinion's lifetime isn't "without merit"...especially given that central banks believe the same thing or gold wouldn't be sitting in their vaults.
It is if the merits are not explained or well reasoned. The million dollar question is what multiple of intrinsic value gold will continue to hold, not if it will have intrinsic value. I claimed 25% intrinsic value so my reasoning must be based on gold having some intrinsic value. I used a specific number to see if anyone in the thread was both capable and willing to think about the actual intrinsic value of gold. The answer was no.
nigel_ht wrote: Fri Oct 22, 2021 11:56 am And then making pronouncements that your position is obvious and we should all simply agree.
Actually, I encouraged you to disagree. I recommended providing specific points of disagreements and your rational for a different opinion.
nigel_ht wrote: Fri Oct 22, 2021 11:56 am Gold has been a store of wealth in the past. You have provided nothing more than handwaving that there are better alternatives today even though these aren't time tested in any sort of significant financial crisis. And no, 2020 wasn't a significant financial crisis.
You are correct, I was careful not to provide a specific winner, although I-Bonds and TIPs were obvious and mentioned instruments. My position is more general that there will be more liquid alternatives that will eventually win out to gold as a value reserve. It is a similar argument to showing that in Venezuela I can purchase gold with nominal currency on a daily basis, spend nominal currency, and use your own experience of spending US dollars and that this is proof that there are alternatives to pre-storing gold. I suggest that in any US future I will also have such alternatives, and that things like I-Bonds and TIPS already exist without needing to go to that which shall not be named and without needing gold. I don't need to predict the exact future or winner to declare the likelihood that these instruments will continue to exist.

Gold is a play on its value increasing relative to stocks and real currency (currency with a real return of 0) in a way that improves a portfolio. Simply retaining value is not enough, as we can guarantee to do that with either TIPS (when real return>0) and/or I-Bonds (any time).

nigel_ht wrote: Fri Oct 22, 2021 11:56 am ALL you have done is asserted "golds position as THE reserve of wealth is likely diminished" and "It may do just fine in a portfolio, but a repeat of the past is unlikely. Even rhyming with the past is unlikely."

Why? Because you say so and some blog belonging to a some random fund dude says so?
We all fall under that category minus the gender reference. Why do you participate here if that is the basis for rejection of ideas?

Why are you misstating my ideas instead of presenting your own?
Last edited by abc132 on Fri Oct 22, 2021 2:22 pm, edited 1 time in total.
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Re: How much Gold do you own and why?

Post by Activesloth »

nigel_ht wrote: Fri Oct 22, 2021 12:45 pm
Activesloth wrote: Fri Oct 22, 2021 12:15 pm I invested in physical gold in 2014. I allotted over half a million dollars. I even put some in my IRA. Biggest investment mistake. You pay a premium when you buy gold coins, but when you try to sell it, you only get to sell close to spot prices. So you end up losing money going in and coming out. Then there’s the problem of storage. It’s not safe in a safety deposit box. If you keep it at home you worry about a home invasion. If you keep it in an IRA, you pay maintenance fees plus vault fees. It takes forever to sell it, and I had to deliver it personally to a Brinks office to ship it to a precious metals dealer. From 2014 to 2019, the price of gold went sideways while the S and P returned an average of 16%. Finally sold everything in 2019 and invested in stocks. Told my kids to never invest in gold. That’s my experience, maybe others fared better. If you must, try a gold etf.
Well in 2020 it hit $2000 an ounce right around when the S&P 500 tanked…
Actually, it turned out well for me. I got my money out in 2019. Then covid happened, and I found myself sitting on a pile of cash while the S and P was on sale at a 30% discount. Dumb luck I guess.
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Re: How much Gold do you own and why?

Post by HanSolo »

abc132 wrote: Fri Oct 22, 2021 1:23 pm The million dollar question is what multiple of intrinsic value gold will continue to hold, not if it will have intrinsic value. I claimed 25% intrinsic value so my reasoning must be based on gold having some intrinsic value. I used a specific number to see if anyone in the thread was both capable and willing to think about the actual intrinsic value of gold. The answer was no.
Since I don't know what the intrinsic value of gold is, I'll go with your estimate.

That being said, I agree that your "million dollar question" is kind of interesting.

I also think it's interesting if we ask the exact same question about US stocks. I think that's the "billion dollar question" (but off-topic for this thread, I guess).
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Re: How much Gold do you own and why?

Post by abc132 »

HanSolo wrote: Fri Oct 22, 2021 1:39 pm
abc132 wrote: Fri Oct 22, 2021 1:23 pm The million dollar question is what multiple of intrinsic value gold will continue to hold, not if it will have intrinsic value. I claimed 25% intrinsic value so my reasoning must be based on gold having some intrinsic value. I used a specific number to see if anyone in the thread was both capable and willing to think about the actual intrinsic value of gold. The answer was no.
Since I don't know what the intrinsic value of gold is, I'll go with your estimate.

That being said, I agree that your "million dollar question" is kind of interesting.

I also think it's interesting if we ask the exact same question about US stocks. I think that's the "billion dollar question" (but off-topic for this thread, I guess).
Agreed.

Bogle divided stocks into two components, one of which is speculative. The same can be done for gold, and it is a good way to approach our understanding of gold in a portfolio.

If the intrinsic value (think real dollars, not percentage) is not going up or down substantially, then the price fluctuations in gold are of a speculative nature.

The past benefit of gold in a portfolio is based on that speculation of how gold was perceived through time. I suggest that gold may have benefitted prior to alternatives such as I-Bonds and TIPS in a way that it will not now that there are these other alternatives. Digital currency is yet another alternative, regardless of it's long term future.
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Re: How much Gold do you own and why?

Post by HanSolo »

abc132 wrote: Fri Oct 22, 2021 1:43 pm Agreed.

Bogle divided stocks into two components, one of which is speculative. The same can be done for gold, and it is a good way to approach our understanding of gold in a portfolio.

If the intrinsic value (think real dollars, not percentage) is not going up or down substantially, then the price fluctuations in gold are of a speculative nature.

The past benefit of gold in a portfolio is based on that speculation of how gold was perceived through time.
That's part of the past benefit. Since you mentioned that intrinsic value doesn't change much relative to real dollars, then that's the other part of the past benefit, that it actually did that (unlike cash or T-Bills). For some people, that benefit might matter. And then they have to accept fluctuations in the speculative component of price, just like stock investors do.

In that case, I'm not seeing a problem.
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Re: How much Gold do you own and why?

Post by abc132 »

HanSolo wrote: Fri Oct 22, 2021 1:56 pm
abc132 wrote: Fri Oct 22, 2021 1:43 pm Agreed.

Bogle divided stocks into two components, one of which is speculative. The same can be done for gold, and it is a good way to approach our understanding of gold in a portfolio.

If the intrinsic value (think real dollars, not percentage) is not going up or down substantially, then the price fluctuations in gold are of a speculative nature.

The past benefit of gold in a portfolio is based on that speculation of how gold was perceived through time.
That's part of the past benefit. Since you mentioned that intrinsic value doesn't change much relative to real dollars, then that's the other part of the past benefit, that it actually did that (unlike cash or T-Bills). For some people, that benefit might matter. And then they have to accept fluctuations in the speculative component of price, just like stock investors do.

In that case, I'm not seeing a problem.
For stocks we generally understand they can lose value, but if we invest in them we expect/hope that the growth in companies real value will win out over time, regardless of the short term.

Gold has no such expected growth in real value. Beating nominal dollars was certainly a past benefit, but it is not guaranteed in the future.

I feel that declaring a problem is going to far.

It is simply a question of the best available alternatives, and gold has additional diversification going for it at the cost of not being able to promise anything other than retaining 25% of it's value. How likely it is to lose or gain value and how much is up to the interpretation of the reader. I think that understanding the price change is speculative is helpful in making that decision.

You can figure out if you think owning gold in your portfolio is a positive or negative.
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Re: How much Gold do you own and why?

Post by 59Gibson »

dukeblue219 wrote: Fri Oct 22, 2021 12:08 pm I still think there's a tendency to overlook how the global economy is structured in 2021 vs 1821. In the event of widespread financial collapse in 1821 your neighborhood blacksmith, the farmer down the road, and the mill powered by waterwheel could trade services with one another using an arbitrary store of value.

I don't think I'm being overly pessimistic to suggest that in a global economy this isn't possible. If the farmer can't get replacement CPUs for his tractor, the factory in your town can't run robots without an internet connection to a license server that wasn't paid for, and the grocery store relies on daily refrigerated deliveries from another continent, it won't matter if you have a store of gold. The system is too complex now to allow a failure.

Happy Friday all ;)
All true. I look at gold as insurance. If the things above happen wouldn't you at least want a fighting chance to leave and survive, maybe it's the same everywhere, maybe not- who knows. I don't look at gold as something to goose portfolio returns or go all in on. A few% for the 1 in 10,000 chance it all goes kaput.
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Re: How much Gold do you own and why?

Post by HanSolo »

abc132 wrote: Fri Oct 22, 2021 2:07 pm For stocks we generally understand they can lose value, but if we invest in them we expect/hope that the growth in companies real value will win out over time, regardless of the short term.

Gold has no such expected growth in real value. Beating nominal dollars was certainly a past benefit, but it is not guaranteed in the future.

I feel that declaring a problem is going to far.
If I understand correctly... while the intrinsic value of stocks and gold are determined by different things, what they have in common is that the expectation of the continuation of their respective intrinsic value trends are largely a matter of hope, as in neither case is there a guarantee. (In other words, we can't predict what the intrinsic value component of price will be.)

I'm OK with that (for both stocks and gold).
It is simply a question of the best available alternatives, and gold has additional diversification going for it at the cost of not being able to promise anything other than retaining 25% of it's value. How likely it is to lose or gain value and how much is up to the interpretation of the reader. I think that understanding the price change is speculative is helpful in making that decision.

You can figure out of you think owning gold in your portfolio is a positive or negative.
If I understand correctly... investors in both stocks and gold have to put up with a fluctuating speculative component in the price... which can sometimes go to extremes, and maybe stay there for a long time. (In other words, we can't predict what the speculative component of price will be.)

I'm OK with that (for both stocks and gold).
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Re: How much Gold do you own and why?

Post by abc132 »

HanSolo wrote: Fri Oct 22, 2021 2:18 pm If I understand correctly... while the intrinsic value of stocks and gold are determined by different things, what they have in common is that the expectation of the continuation of their respective intrinsic value trends are a largely a matter of hope, as in neither case is there a guarantee.
I'm OK with that (for both stocks and gold).
The important distinction is that stocks are expected to generate real growth, which makes them nowhere near equivalent.

Stocks are expected to outgrow any speculative losses over time. (read the thread on the worst market timer).

Gold is dependent on you winning that speculative guess. It won in the past because of how it was viewed in the past, and how it was viewed relative to the alternatives of stocks and (mostly nominal) bonds at those times. It will be viewed vs the additional alternatives of the present/future and you get to judge the likelihood the response will be similar enough to repeat or rhyme with the past.
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Re: How much Gold do you own and why?

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abc132 wrote: Fri Oct 22, 2021 2:28 pm The important distinction is that stocks are expected to generate real growth, which makes them no where near equivalent.
I already made that distinction (that the hope for stocks is to increase real intrinsic value, while the hope for gold is to maintain real intrinsic value). I said that this part is a difference.
Stocks are expected to outgrow any speculative losses over time. (read the thread on the worst market timer).
And I think we agreed that expectations are based on hope... and therefore can either succeed or fail (e.g., ask the Japanese). Again, no guarantees. And we live with that.
Gold is dependent on you winning that speculative guess.
Yes. Stocks are as well. They could lose 75% of their value and we're back to the same market-cap-to-GDP ratio as in 1984 (a time affectionately known as "morning in America"). As long as people are OK with the speculative component being wiped out once in a while (and maybe staying that way for a long time), in either gold or stocks, then we're good.

I'm OK with it, anyway.
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Re: How much Gold do you own and why?

Post by nigel_ht »

HanSolo wrote: Fri Oct 22, 2021 1:39 pm
abc132 wrote: Fri Oct 22, 2021 1:23 pm The million dollar question is what multiple of intrinsic value gold will continue to hold, not if it will have intrinsic value. I claimed 25% intrinsic value so my reasoning must be based on gold having some intrinsic value. I used a specific number to see if anyone in the thread was both capable and willing to think about the actual intrinsic value of gold. The answer was no.
Since I don't know what the intrinsic value of gold is, I'll go with your estimate.

That being said, I agree that your "million dollar question" is kind of interesting.

I also think it's interesting if we ask the exact same question about US stocks. I think that's the "billion dollar question" (but off-topic for this thread, I guess).
What’s the intrinsic value of the USD? The intrinsic value of VTI? The intrinsic value of a 20 year treasury? The intrinsic value of The Currency That Must Not Be Named?

The “intrinsic value” of gold is a red herring.
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Re: How much Gold do you own and why?

Post by HanSolo »

nigel_ht wrote: Fri Oct 22, 2021 2:47 pm What’s the intrinsic value of the USD? The intrinsic value of VTI? The intrinsic value of a 20 year treasury? The intrinsic value of The Currency That Must Not Be Named?

The “intrinsic value” of gold is a red herring.
Intrinsic value has some meaning in finance. I guess that's what Bogle was referring to, as being a component of price (as referenced below). If you think Bogle had some other meaning, or you don't believe in the concept, that's OK.
abc132 wrote: Fri Oct 22, 2021 1:43 pm Bogle divided stocks into two components, one of which is speculative.
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Re: How much Gold do you own and why?

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HanSolo wrote: Fri Oct 22, 2021 2:38 pm
abc132 wrote: Fri Oct 22, 2021 2:28 pm The important distinction is that stocks are expected to generate real growth, which makes them no where near equivalent.
I already made that distinction (that the hope for stocks is to increase real intrinsic value, while the hope for gold is to maintain real intrinsic value). I said that this part is a difference.
Stocks are expected to outgrow any speculative losses over time. (read the thread on the worst market timer).
And I think we agreed that expectations are based on hope... and therefore can either succeed or fail (e.g., ask the Japanese). Again, no guarantees. And we live with that.
Gold is dependent on you winning that speculative guess.
Yes. Stocks are as well. They could lose 75% of their value and we're back to the same market-cap-to-GDP ratio as in 1984 (a time affectionately known as "morning in America"). As long as people are OK with the speculative component being wiped out once in a while (and maybe staying that way for a long time), in either gold or stocks, then we're good.

I'm OK with it, anyway.
I will add that those individual features are not what matter most for a portfolio. It is the correlation between when the various assets rise and fall that matters, particularly near the major market lows for your investment horizon.

REITS go up and down, so do stocks. They each have different characteristics.

If they both go down at the same time in 2008, we probably would have liked to have avoided REITS, at least in 2008.

All investments carry risks, but that doesn't make asset allocation arbitrary. Correlation is extremely important.

The correlation during a few declines (the ones that matter most to your timeline) is what you are betting on historically, not the individual performance of each asset. It is of course fine to invest or not invest for this correlation.
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Re: How much Gold do you own and why?

Post by nigel_ht »

abc132 wrote: Fri Oct 22, 2021 2:07 pm It is simply a question of the best available alternatives, and gold has additional diversification going for it at the cost of not being able to promise anything other than retaining 25% of it's value.
25% is a random number you picked…
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Re: How much Gold do you own and why?

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abc132 wrote: Fri Oct 22, 2021 2:56 pm I will add that those individual features are not what matter most for a portfolio. It is the correlation between when the various assets rise and fall that matters, particularly near the major market lows for your investment horizon.
Assuming that the issues you raised above matter, I think I addressed them pretty well.

If there are additional issues regarding correlation of asset classes, then I'm not sure what the question is. Perhaps it's different things for different people, as some people care about correlation more than others, or are trying to do different things with it. Some people don't even rebalance.
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Re: How much Gold do you own and why?

Post by nigel_ht »

HanSolo wrote: Fri Oct 22, 2021 2:51 pm
nigel_ht wrote: Fri Oct 22, 2021 2:47 pm What’s the intrinsic value of the USD? The intrinsic value of VTI? The intrinsic value of a 20 year treasury? The intrinsic value of The Currency That Must Not Be Named?

The “intrinsic value” of gold is a red herring.
Intrinsic value has some meaning in finance. I guess that's what Bogle was referring to, as being a component of price (as referenced below). If you think Bogle had some other meaning, or you don't believe in the concept, that's OK.
abc132 wrote: Fri Oct 22, 2021 1:43 pm Bogle divided stocks into two components, one of which is speculative.
What is the intrinsic value of AAPL? The book value? What if the value of the dollar collapsed? The massive cash horde would likewise be devalued. How about discounted cash flow which is a better metric…how does one estimate that with a collapsed USD?

The phrase intrinsic value, in the context of gold objects, is the melt value. Not overly helpful.

So, “intrinsic value” in the context of gold is a red herring.
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Re: How much Gold do you own and why?

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HanSolo wrote: Fri Oct 22, 2021 3:08 pm
abc132 wrote: Fri Oct 22, 2021 2:56 pm I will add that those individual features are not what matter most for a portfolio. It is the correlation between when the various assets rise and fall that matters, particularly near the major market lows for your investment horizon.
Assuming that the issues you raised above matter, I think I addressed them pretty well.

If there are additional issues regarding correlation of asset classes, then I'm not sure what the question is. Perhaps it's different things for different people, as some people care about correlation more than others, or are trying to do different things with it. Some people don't even rebalance.
Yes, I just wanted to finish off with a reminder of correlation being important for anyone reading.

Thanks for your thoughts!
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Re: How much Gold do you own and why?

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nigel_ht wrote: Fri Oct 22, 2021 3:24 pm So, “intrinsic value” in the context of gold is a red herring.
You said that already. Regarding the questions you asked on intrinsic value, a finance textbook will help.

"red herring: n. something, especially a clue, that is or is intended to be misleading or distracting"
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Re: How much Gold do you own and why?

Post by nigel_ht »

HanSolo wrote: Fri Oct 22, 2021 4:15 pm
nigel_ht wrote: Fri Oct 22, 2021 3:24 pm So, “intrinsic value” in the context of gold is a red herring.
You said that already. Regarding the questions you asked on intrinsic value, a finance textbook will help.

"red herring: n. something, especially a clue, that is or is intended to be misleading or distracting"
Gold has no "intrinsic value" from a finance textbook perspective.

It has no cash flow so FCFE doesn't apply so you can't compute "intrinsic value". Hence it is a red herring in the discussion of "How much Gold do you won and why?".
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Re: How much Gold do you own and why?

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nigel_ht wrote: Fri Oct 22, 2021 4:48 pm Gold has no "intrinsic value" from a finance textbook perspective.

It has no cash flow so FCFE doesn't apply so you can't compute "intrinsic value". Hence it is a red herring in the discussion of "How much Gold do you won and why?".
That's what it means in the context of securities valuation. Even in that context, gold contributes to such value:

"When analysts calculate a company's intrinsic value, a portion of this underlying value is derived from the value of its hard assets." (source: Investopedia).

In the broader context (outside of just securities valuation), it includes hard assets directly:

"Hard assets are non-perishable and possess intrinsic value." It goes on to give gold as an example. (source: Corporate Finance Institute)
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Re: How much Gold do you own and why?

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abc132 wrote: Thu Oct 21, 2021 3:38 pm Venezuelan's would certainly benefit from owning a diversified international portfolio.
Wow.
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