What happened to all of the gold bugs?

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Clive
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Re: What happened to all of the gold bugs?

Post by Clive » Tue Apr 02, 2013 1:25 pm

Clearly_Irrational wrote:
wshang wrote:The two world currencies I mentioned were in their time universal, now replaced by the dollar. The Spanish empire and the British empire, well we need not say more. (FWIW, I am 5% gold)


While the British Pound is no longer the reserve currency I don't think it's a good example in this case since it's still around.

+1

The dollar hasn't replaced the pound down my high street. It's much less of a reserve currency than it was historically http://en.wikipedia.org/wiki/Reserve_cu ... d_sterling but hasn't been replaced by anything since Anglo Saxon times when it was first introduced (and worth a pound weight of silver http://en.wikipedia.org/wiki/Pound_sterling#Anglo-Saxon) 1250+ years ago.

Wasn't gold 'confiscated' in the US in 1933. Bought at face value, only to ramp the price 60% or 70% once it was out of circulation. Just when you needed its protection the most!

Dulocracy
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Re: What happened to all of the gold bugs?

Post by Dulocracy » Tue Apr 02, 2013 1:43 pm

First, let me say that some Bogleheads in this group seem angry that others in the group own gold. Why? Why the ad hominem attacks?

Second, explaining the reasons that you believe that gold would not add diversity to a portfolio is more constructive than personal criticism to those of us who are reading to learn something. Quite frankly, I think that gold and bonds are a bad buy right now because of market timing issues. Of course, that goes into market timing. Rules of diversification say that I should buy something other than stock right now. What I have not seen is a discussion about why a gold fund would be bad diversification (say 15% bonds, 5% gold or some such).

Third, as to bitcoins: I am assuming that is gold that you buy to keep in your home. I plan on buying some someday with my "play money" so I can either A) pretend to be a pirate around the house (my wife will love it... maybe) or B) Relive my childhood by watching the Rudolph the Red Nosed Reindeer movie and sing the "Silver and Gold" song. That being said, if it makes someone happy for the above reasons or because it makes them feel more secure, why is it bad for them to buy if they have a fully funded 401k with index funds. What if their hobby was buying art? Also an investment of questionable results. What about having firearms for hunting? Meat is your profit. What about having a Playstation 3 for entertainment? We spend money on lots of things. If someone first invests into a diversified index portfolio (as I am assuming they would on this site), why the harsh criticism for buying the coins? I am certain we all have frivolous purchases. My wife spends hundreds of dollars on makeup and fashion. If I spend my portion of the play money on gold coins, is that bad? What about the BioSolar stock I bought with play money? (Current value is approximately 8% of the purchase price I paid). Gold would be a better investment than that.

Long story short: why is a gold fund not ok for some diversification (Or metals fund)? Why is everyone so angry that some people buy pirate treasure?

EDIT: For the record, this post has both a serious question and a "lighten up guys" humorous portion. It is not designed to offend anyone. I hope that was clear. 8-)
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

Jfet
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Re: What happened to all of the gold bugs?

Post by Jfet » Tue Apr 02, 2013 1:46 pm

Epsilon Delta wrote:
wshang wrote:
Epsilon Delta wrote:
wshang wrote:1) No fiat currency has ever lasted. Three centuries ago, we might be talking Spanish reales, two centuries, the British pound.

As far as I'm concerned the defining characteristic of a "gold bug" is that they make statements that are not only untrue, but so utterly and deeply untrue that believing them requires ignoring obvious facts. And when they are called on it they start twisting and turning like a twisty turny thing.

I'm not sure what is your point.
Are you saying you can cite a fiat currency which has endured?
The two world currencies I mentioned were in their time universal, now replaced by the dollar. The Spanish empire and the British empire, well we need not say more. (FWIW, I am 5% gold)

The Dollar is a fiat currency and still exists.
The Pound is a fiat currency and still exists.
The Yen is a fiat currency and still exists.
The Zloty is a fiat currency and still exists.
The Euro is a fiat currency and still exists (as of April 2, 2013 2:20PM EST :shock: )
Keep twisting.


these are all kind of recent though. I think he was wanting a fiat currency on par with the length of time gold has been valuable....so, say 5000 years, give or take a century.

I can't think of one that has lasted that long....how old is the Yen?

I can think of a few that have failed. The mark, the Confederate dollar, the denarius, the list kind of goes on and on.

I actually think that because of inflation they are all doomed to fail eventually. Maybe bitcoins will be the one that survives the next 5000 years because it has a fixed upper limit...

STC
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Re: What happened to all of the gold bugs?

Post by STC » Tue Apr 02, 2013 1:52 pm

Jfet wrote: Maybe bitcoins will be the one that survives the next 5000 years because it has a fixed upper limit...



Until someone hacks the algorithm... :oops:

The illusion of safety is such an intoxicating elixir.

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wshang
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Re: What happened to all of the gold bugs?

Post by wshang » Tue Apr 02, 2013 2:18 pm

Epsilon Delta wrote:The Dollar is a fiat currency and still exists. - dates from Federal taxation and destruction of individual State currencies in mid 1800's
The Pound is a fiat currency and still exists. - Hmmm, seems to have lost purchasing power after the Boar War and GB's loss of ascendency after Lend Lease
The Yen is a fiat currency and still exists. - post crash from MacArthur's rule
The Zloty is a fiat currency and still exists - 4th round from 1995 redenomination following destruction from previous hyperinflation
The Euro is a fiat currency and still exists (as of April 2, 2013 2:20PM EST :shock: - seriously now, listing this??? )
Keep twisting.

Are you making my point or yours?
My examples were over a longer reach of history and true for humankind up to the Industrial Era. I annotated your citations to demonstrate recency bias.

Who is making bets on the future of the dollar and the natural historical tendency of those who control money supply to inflate fiat currency? Why not take some of that BH dogma of diversification and consider diversifying out the the dollar? Why is buying an index fund smart but not protecting oneself from home country single currency devaluation not smart?

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wshang
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Re: What happened to all of the gold bugs?

Post by wshang » Tue Apr 02, 2013 2:26 pm

STC wrote:Pray tell. What are your credentials across:

Again, another argument from logical fallacy. Stay on discussion. What does my credentials have to do with the line of reasoning?

Please, you are only on your second of a long "List Of Fallacious Arguments" - the list is too long . . . . and you are only showing illogic.
1) Straw Man (Fallacy Of Extension)
2) Appeal from Authority

http://www.don-lindsay-archive.org/skep ... ments.html

If you have something other than of-topic, ad hominem statements, I welcome a fruitful discussion.

aac74
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Re: What happened to all of the gold bugs?

Post by aac74 » Tue Apr 02, 2013 3:39 pm

Why is no one talking about gold stocks ?

Image

They can still be had for the same price as 7 years ago. Looks like a bargain and the place to be rebalancing into.
Defiantly no bubble here, they are only up about 3% a year over the last 20 years.

If gold was in a bubble it would be at many multiples of its cost of production and gold stocks would thus be rising not falling.
It's hard to get accurate data but $1200/oz seems to be the current 'all in' cost of production that includes all exploration and setup costs.
Price of gold is just below $1600.

Plus they pay dividends and can make new highs long after a future gold bubble is over, just like they did in the 80s.

I'm rebalancing into my gold index ETF, currently 6% of my portfolio:
http://uk.ishares.com/en/rc/products/SPGP/holdings

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LadyGeek
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Re: What happened to all of the gold bugs?

Post by LadyGeek » Tue Apr 02, 2013 4:38 pm

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