People do not understand what gold really is. Imagine if your body temperature went from 98.6 to 106 degrees. More is better right??? Gold is a measure of what your currency is perceive to be worth, it is a thermometer.
In the late 60’s, if you had 10% of your savings in gold, at $32/oz you would have doubled your savings when it jumped to $320/oz. Gold moved one decimal point to the right. It wasn’t because gold was perceived a a commodity, the government had been printing too much currency to fund the Viet Nam war and LBJ’s social programs.
Now step ahead, oil has doubled in price. Ask yourself one question: Has oil doubled in price or have we printed so many dollars that they aren’t worth what they use to be. Oil was $4 a barrel in 1965 and a pack of cigarettes was 25 cents.
Gold is not an investment. When you purchase gold, you keep your government honest. If the price of gold shifts one decimal point to the right, you haven’t doubled your savings. Your 10% investment in gold has kept up with inflation. The rest of your portfolio has been raped royally.
If you are buying gold to speculate, you are in a different ballpark. Gold hit $960/oz in the 70’s and silver (if you remember back that far) went to $50/oz.
That was a special case, Mr Howard Hunt cornered the silver market and the Chicago Commodities board screwed him royally by changing the rules. It was a nice play and it shows you that playing by the rules doesn’t work all the time. I think that the Chicago board of commodities traders just about threw him into bankruptcy. It was either them or him–go figure.
Realistically, if you go back in time to 1970 when gold was $300/oz and a house was $52,000 dollars; a house was valued at 175 oz’s of gold. Now go forward to today, by todays standards, gold should be around $1,000 to $3,000 per oz.
Think of it this way, if gold and oil are going up in price and there is no shortage–its your government at work— printing money.
