Keep in my that my whole point is that Gold is good at facing the biggest Social and Economic upheaval of all (the once in a century kind of event), not that people should be going into it during the good times with no clouds in the sky and with a time horizont of a few years.
Putting money in an appreciating savings account is a great way to earn passive income.
I guess you haven’t seen the interest rates on those since 2008. That advice is almost 2 decades out of date. Also they’re tightly couple to USD.
But gold did not outperform the S&P 500 until this last year, and even then only barely.
Absolutelly, stocks (as an asset, rather than any specific individual stocks) perform better outside major economic upheavals. Since we seem well on track for one, this isn’t exactly a good time for going into Stocks IMHO so I didn’t advise a nice index tracker investment or similar - when an entire economy goes down the drain, those go too.
As for that statistic you quoted, keep in mind that the S&P 500’s historical performance doesn’t include stocks which were taken out of the index, so it’s not a real image of the market but rather distorted on the upside since all the “bad” stock get removed from the index, something which matters in a long term comparison, so over the long term it’s less clear which asset performs best.
Theoretically a properly diversified stock portfolio should outperform Gold over the long term, but there is some amount of management needed (anybody who had GE in their portfolio going into the 90s would’ve wanted to offload some of it in the 00s) and stocks are often a lot more tightly couple to the currency and Economy of the country they’re listed in (unless we’re talking about companies which make all their money abroad and just happen to be listed in a major exchange in a different country).
Gold just works it’s “magic” - literally of requiring nothing and doing nothing and still somehow holding value - even if burried in one’s backyard.
Commodities are a highly speculative and historically underperforming asset class
Well, that’s the thing, Gold doesn’t tend to perform as commodity because it has very little in the way of industrial uses.
It’s mainly an historical form of currency, which is why its volatility tends to be in between currencies and major stock market indexes.
If you look at Silver - which is much more sought for its industrial uses - it’s a totally different story.
[Since the question was about how to protect oneself of the upheavals in the US]
The answer there tends to be utilities and treasuries.
Those things are tightly coupled to the value of the a country’s currency and economy. If the objective is to protect oneself from upheavals in those, those two investments aren’t at all effective.
I’ll give you an example of my own: my savings were originally in British Pounds. I moved most of them to Gold in the aftermath of the 2008 Crash. Years later, there was the Leave Referendum in Britain and the British Pound tanked almost 20% in value when the results came out. The impact on my savings: Gold went up in British Pounds as much as the British Pound tanked - Gold didn’t became any more appealing in Britain, it just held its value as all things Britain and British became less valuable for the rest of the World. Similarly I did not feel any of the subsequent slow devaluation of the GBP.
Had I invested in Gilts (British Treasuries) or British Utilities, I would’ve been fully hit by the loss of value of the British Pound versus other currencies.
Mind you, some of my savings back then were in Euros and they had almost the same behaviour versus the British Pound, though the Euro was also dragged a little down by the Leave Referedum result versus Gold and the Dollar.
The point being that to protect one’s US Dollar savings right now one should probably exit the Dollar and assets denominated in Dollars, for different currencies, and Gold just happens to be currency-like (a traditional currency even and still held by Central banks as reserves) whilst not really tightly coupled to the politics or Economics of any one country.
Just switching savings to a different currency or assets denominated in other currencies (say, ETFs on major stock indices in markets outside one’s home market) would probably do most of the same, though if a big country like the US really goes down the shithole, other economies will also be dragged down at least a bit, and of course any currency or assets denominated in that currency you hold are at the mercy of governmental mismanagement in that country.
Gold, meanwhile, just sits there and does nothing being controller by nobody.
It’s the ultimate passive isolationist investment, IMHO, and as I said way back in my first post, having been hit directly by the last to biggest economic crashes plus Brexit, I’m biased towards passive isolationist long term holding of value.
Gold is good at facing the biggest Social and Economic upheaval of all
It’s not. It’s still a commodity (and not a particularly useful one). Again, if you pick any given market crash and you invest in a telecom or energy giant at the outset, you’re going to outperform gold as a commodity over the intervening years. Gold only pays out when you can time the market and sell during a surge in demand. Outside of those boom cycles, the commodity trades flat or declining.
It is, at best, a short cycle hedge against sudden drops in price. And at that point, your play is to sell the gold and buy into an undervalued equity.
Well, as I explained for me it has been pretty good at just passivelly avoiding the consequences of nation-sized bullshit like Brexit without me doing anything at all.
At the risk of repeating myself, my whole point is that it’s good as a passive investment, not that it can’t easilly be beaten by active trade strategies by somebody with good market knowledge (who is entering and exiting positions and can spot those “undervalued equities”)
Hence my expectation that for the ignorant investor or those who can’t be arsed to follow the markets, it’s probably a suitable passive zero-knowledge-needed way to bypass the consequences of whatever shit the US seems to be diving into as well as on a grander scale the transition from America as the top power to China as the top power, all things with a scope of at least one or two decades.
Keep in my that my whole point is that Gold is good at facing the biggest Social and Economic upheaval of all (the once in a century kind of event), not that people should be going into it during the good times with no clouds in the sky and with a time horizont of a few years.
I guess you haven’t seen the interest rates on those since 2008. That advice is almost 2 decades out of date. Also they’re tightly couple to USD.
Absolutelly, stocks (as an asset, rather than any specific individual stocks) perform better outside major economic upheavals. Since we seem well on track for one, this isn’t exactly a good time for going into Stocks IMHO so I didn’t advise a nice index tracker investment or similar - when an entire economy goes down the drain, those go too.
As for that statistic you quoted, keep in mind that the S&P 500’s historical performance doesn’t include stocks which were taken out of the index, so it’s not a real image of the market but rather distorted on the upside since all the “bad” stock get removed from the index, something which matters in a long term comparison, so over the long term it’s less clear which asset performs best.
Theoretically a properly diversified stock portfolio should outperform Gold over the long term, but there is some amount of management needed (anybody who had GE in their portfolio going into the 90s would’ve wanted to offload some of it in the 00s) and stocks are often a lot more tightly couple to the currency and Economy of the country they’re listed in (unless we’re talking about companies which make all their money abroad and just happen to be listed in a major exchange in a different country).
Gold just works it’s “magic” - literally of requiring nothing and doing nothing and still somehow holding value - even if burried in one’s backyard.
Well, that’s the thing, Gold doesn’t tend to perform as commodity because it has very little in the way of industrial uses.
It’s mainly an historical form of currency, which is why its volatility tends to be in between currencies and major stock market indexes.
If you look at Silver - which is much more sought for its industrial uses - it’s a totally different story.
Those things are tightly coupled to the value of the a country’s currency and economy. If the objective is to protect oneself from upheavals in those, those two investments aren’t at all effective.
I’ll give you an example of my own: my savings were originally in British Pounds. I moved most of them to Gold in the aftermath of the 2008 Crash. Years later, there was the Leave Referendum in Britain and the British Pound tanked almost 20% in value when the results came out. The impact on my savings: Gold went up in British Pounds as much as the British Pound tanked - Gold didn’t became any more appealing in Britain, it just held its value as all things Britain and British became less valuable for the rest of the World. Similarly I did not feel any of the subsequent slow devaluation of the GBP.
Had I invested in Gilts (British Treasuries) or British Utilities, I would’ve been fully hit by the loss of value of the British Pound versus other currencies.
Mind you, some of my savings back then were in Euros and they had almost the same behaviour versus the British Pound, though the Euro was also dragged a little down by the Leave Referedum result versus Gold and the Dollar.
The point being that to protect one’s US Dollar savings right now one should probably exit the Dollar and assets denominated in Dollars, for different currencies, and Gold just happens to be currency-like (a traditional currency even and still held by Central banks as reserves) whilst not really tightly coupled to the politics or Economics of any one country.
Just switching savings to a different currency or assets denominated in other currencies (say, ETFs on major stock indices in markets outside one’s home market) would probably do most of the same, though if a big country like the US really goes down the shithole, other economies will also be dragged down at least a bit, and of course any currency or assets denominated in that currency you hold are at the mercy of governmental mismanagement in that country.
Gold, meanwhile, just sits there and does nothing being controller by nobody.
It’s the ultimate passive isolationist investment, IMHO, and as I said way back in my first post, having been hit directly by the last to biggest economic crashes plus Brexit, I’m biased towards passive isolationist long term holding of value.
It’s not. It’s still a commodity (and not a particularly useful one). Again, if you pick any given market crash and you invest in a telecom or energy giant at the outset, you’re going to outperform gold as a commodity over the intervening years. Gold only pays out when you can time the market and sell during a surge in demand. Outside of those boom cycles, the commodity trades flat or declining.
It is, at best, a short cycle hedge against sudden drops in price. And at that point, your play is to sell the gold and buy into an undervalued equity.
:-|
Well, as I explained for me it has been pretty good at just passivelly avoiding the consequences of nation-sized bullshit like Brexit without me doing anything at all.
At the risk of repeating myself, my whole point is that it’s good as a passive investment, not that it can’t easilly be beaten by active trade strategies by somebody with good market knowledge (who is entering and exiting positions and can spot those “undervalued equities”)
Hence my expectation that for the ignorant investor or those who can’t be arsed to follow the markets, it’s probably a suitable passive zero-knowledge-needed way to bypass the consequences of whatever shit the US seems to be diving into as well as on a grander scale the transition from America as the top power to China as the top power, all things with a scope of at least one or two decades.