[quote=4plexowner]”The value of the vast majority of tangible assets has gone down”
excellent point (since it leads into a point that I want to make)
WHAT have these values gone down AGAINST?
the easy answer is, “the US dollar”
but wait, the US dollar has gone down too
perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row
its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic
something to think about …[/quote]
Since 1833 gold has increased in value by 2.3% annually in nominal dollars (http://www.nma.org/pdf/gold/his_gold_prices.pdf). [That’s using today’s gold price.] In inflation-adjusted (that is, “real”) terms, it has approximately held its value (it’s slightly ahead of inflation in real dollars) since 1833. Which is my problem with gold over the long term. At any given time gold might be a good speculative play (and this might be one of them). And it has certainly been a good store of value in real terms over a very long period of time. But…
You’re unlikely to come ahead in real terms owning gold over a long period of time. Over the LONG long term it’s a pure inflation hedge. [Currently it’s likely also serving as an Armageddon hedge.] Which is not a bad thing. But…
Personally, I’d rather own real assets that come out ahead of inflation over the long term if I can purchase them at reasonable prices. I’m not a real estate bull generically right now, but some real estate currently available fits the bill. Also, I’m not an equities bull generically, but some equities also currently fit the bill. Over the long term, I’m not interested in assets that merely keep up with inflation, I want to come out ahead of inflation, and I’m willing to accept the volatility associated with such assets. And I’m not saying that’s easy – and certainly not right now. But gold – while it might prove to be a great speculation for some period – is unlikely to provide good long-term real returns. And that’s my problem with it – it’s less predictable over the long term than assets that throw off cash and tend to throw off more cash as the general price level rises. But that’s just me.
I would not describe gold as a “barbarous relic.” Nor would I assume it will lead to LONG-term riches (short-term speculation aside). It’s just a decent tangible hedge against inflation and financial chaos.
