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Other than rono, who we all know is certifiable, do those of you who invest in gold do it because you think holding some is prudent, or do you just trade it, or collect it because of it's shiny good looks or what? I like the panda's and koala's but I don't see them as a source of investment wealth. They are but that's not why I have a few. What are your reasons?
Many parts of the world still think of gold as money and a form of exchange. I believe that etfs, like GLD, have eroded its scarcity characteristics. We live in a time when modern technology can now synthesize precious metals. I believe we will have new paradigm of how we value things like precious metals and energy resources in the next 100 years as technology helps to efficiently use as well as produce materials and resources.
As an ancient form of exchange gold was tradeable, durable, divisible, scarce and precious. I not sure if the story is still true today with the advent of credit and electronic financing. It's Interesting that an ounce of gold has held it's purchasing power all these years making it a store of value that also acts as an inflation hedge. Not sure what future events will need to happen to cause this truism to be is permanently disrupted.
As an aside and in the meantime,
When countries like China shift their reserves from largely US Treasuries to gold it's probably worth understanding why.
I have been currently 2x short in Gold via GLL for a couple of weeks in play money portfolio. It is a momentum trade. Don't hold any Gold in core portfolio because the volatility is too high and it behaves more like a hedge than an investment.
But I would not compare them to Koala bears, Pandas or Tulips. From a total return perspective, they are no different from Treasuries. They go up in some economic conditions, they go down in others. Same thing with Treasuries in total return. Just that the cycles are much longer in Treasuries. I would not hold long term treasuries in a rising interest environment than I would hold gold in a deflation scenario but you can hold both in uncertain markets for the same reasons, as hedges.
Comments
The end of the Bretton Woods System (1972–81)
Many parts of the world still think of gold as money and a form of exchange. I believe that etfs, like GLD, have eroded its scarcity characteristics. We live in a time when modern technology can now synthesize precious metals. I believe we will have new paradigm of how we value things like precious metals and energy resources in the next 100 years as technology helps to efficiently use as well as produce materials and resources.
en.wikipedia.org/wiki/Synthesis_of_precious_metals
As an ancient form of exchange gold was tradeable, durable, divisible, scarce and precious. I not sure if the story is still true today with the advent of credit and electronic financing. It's Interesting that an ounce of gold has held it's purchasing power all these years making it a store of value that also acts as an inflation hedge. Not sure what future events will need to happen to cause this truism to be is permanently disrupted.
As an aside and in the meantime,
When countries like China shift their reserves from largely US Treasuries to gold it's probably worth understanding why.
But I would not compare them to Koala bears, Pandas or Tulips. From a total return perspective, they are no different from Treasuries. They go up in some economic conditions, they go down in others. Same thing with Treasuries in total return. Just that the cycles are much longer in Treasuries. I would not hold long term treasuries in a rising interest environment than I would hold gold in a deflation scenario but you can hold both in uncertain markets for the same reasons, as hedges.