ananda77, that analysis you posted is so full of holes I hardly know where to begin, so let's just start at the top . . .
Quote:
Originally Posted by
ananda77
In Fortune magazine a while back, David Rynecki wrote:
Gold investors are notoriously bad forecasters. From 1985 to 1987, for example, a collapse in the dollar boosted gold 76% and had many metalheads predicting an extended rally. Instead, the price fell 15% the very next year. ...
Fortune Magazine . . . a truly unbiased source of financial mainstream media. A two year snap shot - very scientific. That temporary gold rally was related to the market crash in October '87. He calls gold investors "metalheads" - does that sound like the author has an even bias . . ?
David Rynecki . . . the same hack who wrote "Deals On The Green: Lessons On Business and Golf From America's Top Executives".
Impressive source!
http://www.amazon.com/s?ie=UTF8&sear...Rynecki&page=1
Quote:
Originally Posted by
ananda77
put no more than 5% of a total portfolio into gold-related holdings and say it's safest to invest through funds
In case you haven't noticed, people who have put their entire life savings in "funds" over the past few years are getting wiped out whereas people who have invested in gold are doing rather well.
Quote:
Originally Posted by
ananda77
In his seminal book Stocks for the Long Run, University of Pennsylvania finance professor Jeremy Siegel revealed what a dollar invested in various things would have grown to, from 1802 to 2001 -- yes, just about 200 years! (Amounts have been adjusted for inflation.)
* Stocks: $599,605
* Bonds: $952
* Bills: $304
* Gold: $0.98
Did you catch that? You would have lost two cents of your dollar in gold -- over 200 years.
OK. Jeremy Siegel. He's written only 2 books in his 42 year career. Taught at University of Chicago, Wharton School of Business and 15 years as head of economics training at JP Morgan . . . since 1988 as academic director of the U.S. Securities Institute, and is currently Senior Investment Strategy Advisor to Wisdom Tree Investments . . . so why would anyone believe research from someone who A) is a Keynsian Economist through and through and B) has a clear vested interest in selling stocks and ETF's (and books on stocks and ETF's). I guarantee you this "Phd" is staring at a bleeding portfolio, still scratching his head wondering how this crisis has come about . . .
Of course he hates gold he's a paper guy and his ridiculous study shows it . . . this is as disingenuous as studies get.
ananda77, are you honestly asking us to believe that ANY study over a 200 year period where 3 out of the 4 asset classes are valued to market and the 4th (gold) is FIXED at US$20.67oz for 131 years, then raised to US$35oz for the following 38 years before finally being allowed to "float" against the other assets for only 30 years is fair and honest? . . . and let's not even talk about Robert Rubin and the US "Strong Dollar Policy" of the 1990's, which was of course to sell and lease central bank gold allowing the US Fed & Treasury to "manage" the price of gold in order to artificially keep US interest rates low while propping up the USD. This is a policy that continues to this day and the evidence for it is overwhelming.
To further destroy the credibility of Siegel's woefully biased analysis, consider how extraordinarily convenient it is that his timeframe ends "just" before the start of gold's current secular bull market in 2002, so gold's 8 year, 4 fold gain is not included, nor is the Dow's 18 month 50% decline!!!
So let me get this straight, the net result of this study is that Stocks, Bonds and Bills are allowed to be worked by the market for 170 years while gold is artificially shackled in the $20-$35 range and you believe this is a credible comparison and a reason not to invest in gold in todays economic environment?
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Now let's look at some REAL facts . . .
Starting with the value of the USD since 1792 . . . of which it has lost 96%! A picture does say a thousand words.
Attachment 1275
Next a comparison between the DJIA and gold from 1971 till present.
1971 DJIA (937-7365) = 786% gain
1971 Gold (35-995)= 2,842%
I know which one I prefer.
The following chart shows the DJIA priced in gold ounces.
Attachment 1274
Note that it is only charted through October '08 at 13 ounces. A current chart would show the Gold/Dow ratio at a stunning 7.365 ounces that's a whopping 40%+ drop in 6 months - and with a surging US dollar to boot! This chart will drop through the floor when the USD starts actually falling.
How are those stock values looking now when valued in real money?
Quote:
Originally Posted by
ananda77
...I think people still think in inflationary (scare) mode and underestimate deflationary forces building unstoppable momentum;
Deflationary forces are winning for now, but in the near future a change will come. Do not forget that the $Trillions that have been pumped into global banks have so far not been loaned ie: they have not been multiplied many times over by the magic of fractional reserve banking at the retail level.
Money is now slowly gaining more purchasing power over economic goods. That won’t last. The period of devaluing sales is likely to ebb by mid summer in the US. It will ebb with the arrival of a lesser stream of consumer goods because fewer factories are still producing them. With a falling increase in imports of consumer goods, the increased scarcity will then lead to higher prices. Do we think that $30 oil is here to stay with production decreasing, wells being capped, cap ex drying up and exploration shelved . . . I don't think so.
Do not be deceived, rabid inflation is coming.