@wa3more wrote:gold prices and the depression .
In 1925 gold was about 20 an ounce and in 1933 was at 26. In 1934, FDR took gold out of the public's hands and set gold at $35 an ounce. In 1970, gold was $36 an ounce.
Going back to 1830 or so , gold was about 18 bucks , so in 100 years it hardly moved.
I'm not sure of gold in a portfolio and it's value as insurance in case an event such as a great depression happens. But different strokes for different folks.
for me personally i find total bond, total us stock , and total international stock fund is enough diversification for me. I feel thats good enough for me, I know its not for everybody.
@Anonymous wrote:
@wa3more wrote:I didn't mean getting rich with gold but more about putting your money where it will get the best return over the long run.
I would rather use cash than gold as insurance.
If we have another Great Depression, we will have problems that a few onces of gold won't help
I think those who went through the GD would disagree with you. A few ounces of gold would have made a significant difference for them. And the point, again, is that it's a safety net.
I agree with you about getting the best return over the long run. I'm quite an agressive investor right now, trying to make up for lost years of repairing from my first marriage. I would never put more than 10% or less into metals. But I do think that metals are a wise addition. Same as other forms of diversification.
I think Henry Ford Sr. would agree. HF junior was a big player in the stock market and thought he knew everything the old man didn't. Then came October 1929 and he lost his shirt and then some. The old man stepped in with his gold certificates and bailed him out. Often precious metals will operate opposite of stocks and is a definite safeguard that can protect themselves from a crash. The rule of thumb used to be that you should diversify by having 10% in precious metals. Nowadays, the young traders have been spoiled (esp.pre 2008) because stocks have had a good run. Stocks were everything to them and people have forgotten to diversify into PMs. Young traders these days think it is a fool's play but they don't understand history, don't understand cycles, don't understand the impact of the price of oil, don't understand how the economy works and they didn't and won't see the next crash happening.
These days my acid test for an advisor is what % should be in PMs. If they say anything between 5 and 25%, they are good in my books. If they say 0%, I toss the jacka$$ fool out on his keister. If they pass the first question, then we can actually have an intelligent conversation on everything else. I am actually at 10% right now and I want to get to 25% by retirement.
Starting Score: EQ 732 October 2007; Current Score: EQ 839; TU 865, July 2022;
@wa3more wrote:gold prices and the depression .
In 1925 gold was about 20 an ounce and in 1933 was at 26. In 1934, FDR took gold out of the public's hands and set gold at $35 an ounce. In 1970, gold was $36 an ounce.
Going back to 1830 or so , gold was about 18 bucks , so in 100 years it hardly moved.
I'm not sure of gold in a portfolio and it's value as insurance in case an event such as a great depression happens. But different strokes for different folks.
Back then gold was the standard that everything else was based on. The value of gold did not float vs. the US dollar as you would seem to imply.
The amount of gold controled the amount of money supply available. Remember at that time the world's currencies did not float. The value of the dollar and other currencies were directly tied to gold. People called what Roosevelt did a confiscation but that's a lie based on lack of understanding. Back in Roosevelt's time they needed money to pay for the depression and bring the country out of its funk. The only way to increase the money supply was to have the populace turn in their gold and he redeemed their gold for the going price. Then Roosevelt played the 2nd card, this was evil part - he immediately revalued the dollar to gold from $20.67 to $35 /oz. Bang - the US increased its money supply by 69%.and devalued the US dollar at the same time.
Today the dollar is off the gold standard. It is free floating and the rest of the world's fiat currencies are all valued in US dollars. The power of the US dollar controls the price of oil. The world's economy runs on oil and the cost of oil is the key regulator of production of goods. The only way the US can change the money supply is by physically printing more currency or by creating more money electronically with the Feds buying US Treasuries. The giant ponzi scheme that is the US economy is now dependent on the Fed doing this because nobody else buys Treasuries in large amounts any more, including the Chinese. Instead the Chinese are producing and buying gold at record amounts. They are the largest miner of gold on earth and as of last year are now the biggest buyer of physical gold. Europe and the US are busy selling or leasing their gold and the Chinese are the net buyers of the stuff. Sales of physical precious metals are at an all time high by those with the understanding and foresight of the future.
Ignore the paper market for investing, the ETFs of GLD and SLV have next to no physical product backing their funds. The ETF market is however much larger than the physical market, you can make quick money on them if you know what you are doing but don't put too much into them. In the event of an economic collapse the ETF won't be worth the bytes it takes to store on a hard drive.
The rest of the world is afraid, big time afraid, that the next collapse is coming and that it will be worse than the previous one. Their exposure to the US dollar and the fact that oil is transacted for in US dollars means they have less control over their economies. The Middle East countries are trying different things like selling oil for gold. China and Russia who aren't exactly friends just signed a $400B deal for natural gas. Countries are exploring ways of transacting oil and energy without involving the US dollar. Slowly but surely they will succeed. Current attempts are just tiny chips in the iceberg but more and more chips and the iceberg will roll over. And when that day comes, they will begin to ignore the and dump US treasuries. The US may very well become a 3rd world country within your lifetime when that happens.
Please, protect yourself and buy PMs. 25% is my target. But don't put all your chips in one pot, you still need to invest in stocks (preferable dividend paying) and bonds as well. 