Author Topic: Gold-What is it good for?  (Read 1600 times)

brellis1vt

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Gold-What is it good for?
« on: June 15, 2021, 07:51:28 PM »
Through the years I have always heard that you should hold a certain percentage of your net worth in gold in case something awful happens.  I bought some via ETF last year just due to the unknowns of COVID but am rethinking the value of owning it.  I always maintain a 12-month emergency fund so I am covered in most ways.  It can help mitigate risk to the dollar but so can global diversification.  I donít believe it will produce the returns of the stock market but curious if others know of a good reason to keep.

celerystalks

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Re: Gold-What is it good for?
« Reply #1 on: June 15, 2021, 08:27:22 PM »
Gold is portable wealth. It appreciates slowly and keeps pace with inflation. Physical gold plus secrecy produces some interesting results.

Here are just some of the things that might go through someoneís head. Not saying that some arenít gray areas. But still ideas nonetheless..

What happens if the dollar is severely devalued through government spending?
What happens if someone wants to give someone a birth/baptism gift that they can benefit from when older as an adult (savings bonds have effectively been killed)?
What happens if all of someoneís accounts get frozen and credit cards closed?
What happens if someone has a chance of going through a bitter divorce where the ex stands to get most of the paper/titled wealth?
What happens if someone wants to start a treasure hunt?
What happens if someone wants to pass familial wealth to another generation, but doesnít want to do a lot of paperwork that others could see?


Sure. Physical cash could work in some of these instances. But not all. And cash has a way of being spent since there is no obstacle to its use. Gold on OTOH requires being sold first. So folks who have it find they havenít dipped into it without really thinking about it first..



« Last Edit: June 15, 2021, 08:29:19 PM by celerystalks »

BicycleB

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Re: Gold-What is it good for?
« Reply #2 on: June 15, 2021, 10:26:18 PM »
Existing thread: https://forum.mrmoneymustache.com/investor-alley/precious-metals/

Two other angles from a portfolio perspective:

-portfoliocharts.com has examples and calculators
https://portfoliocharts.com/

-gold was an ordinarily effective component of the diversified portfolios in the Idiots vs Gurus thread that got very good results
https://forum.mrmoneymustache.com/investor-alley/portfolio-design-idiots-v-gurus/

ETA: As the "shiny" poster below points out, it's good for jewelry. As I understand it, there's more gold in jewelry than bank vaults, more in bank vaults than industry.
https://www.usgs.gov/faqs/how-much-gold-has-been-found-world?qt-news_science_products=0#qt-news_science_products
https://www.usgs.gov/centers/nmic/gold-statistics-and-information

https://www.bbc.com/news/magazine-21969100 (articles says gold is being consumed for the first time due to use in consumer products that get thrown away; previously it was hoarded/recycled)

Perhaps its most powerful use is to symbolize caring, uniting two people in marriage or expressing human connection?
« Last Edit: June 16, 2021, 09:55:16 AM by BicycleB »

ericrugiero

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Re: Gold-What is it good for?
« Reply #3 on: June 16, 2021, 08:09:50 AM »
On one hand, gold is a terrible investment.  It's value fluctuates but doesn't increase rapidly.  You would be much better putting money in the stock market for growth.  For emergency use, it's tough to spend in an emergency. 

On the other hand, it's the oldest way to store wealth in the world.  Gold has been used as money for many thousands of years.  It will almost certainly be worth something long after the US dollar (or any other currency you can name) is worthless. 

I have a small percentage of my wealth in gold.  At this point, I would have been much better off to invest that money in index funds.  But, I don't plan to sell it any time soon. 

RWD

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Re: Gold-What is it good for?
« Reply #4 on: June 16, 2021, 08:22:58 AM »

bwall

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Re: Gold-What is it good for?
« Reply #5 on: June 16, 2021, 09:04:49 AM »
Gold was a horrible investment from 1980 to around 2007 (or so). That's how long it took to regain it's 1980 peak, adjusted for inflation.

Typical stock market corrections don't take the better part of three decades.

Nevertheless, some people still insist that gold belongs in every portfolio. YMMV.

vand

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Re: Gold-What is it good for?
« Reply #6 on: June 16, 2021, 09:05:37 AM »
It's shiny.

bacchi

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Re: Gold-What is it good for?
« Reply #7 on: June 16, 2021, 09:21:33 AM »
It can be used for electrical contacts.

soccerluvof4

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Re: Gold-What is it good for?
« Reply #8 on: June 17, 2021, 02:31:05 AM »
Gold in some views is going to really be hurt by Bitcoin. Its all about replacing the dollar. I am not sure yet myself on where I feel about it so continue to hold and buy GLD and Just added some GDX 2 days ago as a hedge against inflation. I also own a small percentage of GBTC and ETHE that I picked up on the dip for the same reasons.

Radagast

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Re: Gold-What is it good for?
« Reply #9 on: June 17, 2021, 08:07:37 AM »
You can make a solid sheet of gold thin enough to see through easily.

Gold was a horrible investment from 1980 to around 2007 (or so). That's how long it took to regain it's 1980 peak, adjusted for inflation.

Typical stock market corrections don't take the better part of three decades.

Nevertheless, some people still insist that gold belongs in every portfolio. YMMV.
Actually it took until 2008(?) to regain the nominal price. Inflation adjusted, 1980 is still the all time high ( at least within the past century or two, there may have been some higher prices in days of yore but the economy was so different it is hard to adjust for inflation).

bwall

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Re: Gold-What is it good for?
« Reply #10 on: June 17, 2021, 10:30:53 AM »
You can make a solid sheet of gold thin enough to see through easily.

Gold was a horrible investment from 1980 to around 2007 (or so). That's how long it took to regain it's 1980 peak, adjusted for inflation.

Typical stock market corrections don't take the better part of three decades.

Nevertheless, some people still insist that gold belongs in every portfolio. YMMV.
Actually it took until 2008(?) to regain the nominal price. Inflation adjusted, 1980 is still the all time high ( at least within the past century or two, there may have been some higher prices in days of yore but the economy was so different it is hard to adjust for inflation).

EEK! So it's an even worse investment than I thought.

BicycleB

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Re: Gold-What is it good for?
« Reply #11 on: June 17, 2021, 07:01:03 PM »
You can make a solid sheet of gold thin enough to see through easily.

Gold was a horrible investment from 1980 to around 2007 (or so). That's how long it took to regain it's 1980 peak, adjusted for inflation.

Typical stock market corrections don't take the better part of three decades.

Nevertheless, some people still insist that gold belongs in every portfolio. YMMV.
Actually it took until 2008(?) to regain the nominal price. Inflation adjusted, 1980 is still the all time high ( at least within the past century or two, there may have been some higher prices in days of yore but the economy was so different it is hard to adjust for inflation).

EEK! So it's an even worse investment than I thought.

But it's only going up from here! It's a great investment!!

:)

Radagast

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Re: Gold-What is it good for?
« Reply #12 on: June 17, 2021, 08:50:10 PM »
You can make a solid sheet of gold thin enough to see through easily.

Gold was a horrible investment from 1980 to around 2007 (or so). That's how long it took to regain it's 1980 peak, adjusted for inflation.

Typical stock market corrections don't take the better part of three decades.

Nevertheless, some people still insist that gold belongs in every portfolio. YMMV.
Actually it took until 2008(?) to regain the nominal price. Inflation adjusted, 1980 is still the all time high ( at least within the past century or two, there may have been some higher prices in days of yore but the economy was so different it is hard to adjust for inflation).

EEK! So it's an even worse investment than I thought.
Hilariously, gold advocates often claim that inflation has been systematically understated for decades. If they are right, itís even been worse than what you now think.

Malcat

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Re: Gold-What is it good for?
« Reply #13 on: June 17, 2021, 08:51:46 PM »
What version of "in case something awful happens" do you think having gold will actually help with though?

Also, how much solid gold do you think you would need to get you out of said "awful" situation?

Just think about it rationally. What specific risk are you *actually* trying to hedge against? Are there more likely risks to worry about? And if not, is gold really the best hedge against them?

Having 5 or even 6 figures of solid gold in your possession doesn't actually make an appreciable long term difference in a lot of scenarios, so what is the scenario that you are hoping gold saves you from??

celerystalks

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Re: Gold-What is it good for?
« Reply #14 on: June 17, 2021, 09:36:32 PM »
What version of "in case something awful happens" do you think having gold will actually help with though?

Also, how much solid gold do you think you would need to get you out of said "awful" situation?

Just think about it rationally. What specific risk are you *actually* trying to hedge against? Are there more likely risks to worry about? And if not, is gold really the best hedge against them?

Having 5 or even 6 figures of solid gold in your possession doesn't actually make an appreciable long term difference in a lot of scenarios, so what is the scenario that you are hoping gold saves you from??


Gold is money.

At one point in time this was obvious and everyone knew it. Now not so much.

Civilizations eventually revert to gold.

What if the gold standard was necessary to control economic growth and therefore population growth and therefore energy demand?

theolympians

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Re: Gold-What is it good for?
« Reply #15 on: June 18, 2021, 12:25:33 AM »
What version of "in case something awful happens" do you think having gold will actually help with though?

Also, how much solid gold do you think you would need to get you out of said "awful" situation?

Just think about it rationally. What specific risk are you *actually* trying to hedge against? Are there more likely risks to worry about? And if not, is gold really the best hedge against them?

Having 5 or even 6 figures of solid gold in your possession doesn't actually make an appreciable long term difference in a lot of scenarios, so what is the scenario that you are hoping gold saves you from??

That is an aspect of precious metals that I try to wrap my head around. I understand the speculative aspect of it. That makes some sense.

There are some other posts here that are about gold. I get the owning of  paper related to gold. Having a large amount of physical gold, not so much.

There is talk about the "collapse of the dollar" and a collapse of civil society. I don't think it gets you far. "Hey, let's trade I have a gold coin that I bought for $1000, what will you give me for it?" "I'll give you a loaf of bread...."


dougules

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Re: Gold-What is it good for?
« Reply #16 on: June 18, 2021, 12:52:44 AM »
What version of "in case something awful happens" do you think having gold will actually help with though?

Also, how much solid gold do you think you would need to get you out of said "awful" situation?

Just think about it rationally. What specific risk are you *actually* trying to hedge against? Are there more likely risks to worry about? And if not, is gold really the best hedge against them?

Having 5 or even 6 figures of solid gold in your possession doesn't actually make an appreciable long term difference in a lot of scenarios, so what is the scenario that you are hoping gold saves you from??


Gold is money.

At one point in time this was obvious and everyone knew it. Now not so much.

Civilizations eventually revert to gold.

What if the gold standard was necessary to control economic growth and therefore population growth and therefore energy demand?

Yes exactly.  Gold is money, and most of us don't want to hold money long term.  It's better to hold something like stocks or rental properties that give you an actual return.  Gold doesn't.  It just sits there as a cold lump of metal not making any profit by selling products or services.

seattlecyclone

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Re: Gold-What is it good for?
« Reply #17 on: June 18, 2021, 01:14:29 AM »
What version of "in case something awful happens" do you think having gold will actually help with though?

The most plausible version I can think of is "the state is coming for you, you can't count on your traditional financial accounts being accessible anymore, and you need to GTFO with the clothes on your back and whatever else you can carry." Think Jews in Nazi Germany or any of the similar situations that have occurred throughout history. Gold is nice for this purpose because it has a high value per unit of mass, and is valuable everywhere on the planet. Succeed at sneaking across a border and you may just be able to survive for a while if you have a few ounces of gold to trade for local currency. Gemstones can also be useful here. Paper currency might work if it's a commonly traded currency in your destination, but these things can change quickly. Would you be able to get much for your Reichsmarks in WWII Britain?

Now, I'm not seriously worried about needing gold for this purpose in my life, but for a lot of people in a lot of places their story might be different. I do think the people who expect a return to everyone regularly using gold and silver for everyday commerce are delusional.

WhiteTrashCash

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Re: Gold-What is it good for?
« Reply #18 on: June 18, 2021, 06:30:15 AM »
Gold. Good God. What is it good for? Absolutely nothing. Say it again.

Malcat

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Re: Gold-What is it good for?
« Reply #19 on: June 18, 2021, 06:56:34 AM »
What version of "in case something awful happens" do you think having gold will actually help with though?

The most plausible version I can think of is "the state is coming for you, you can't count on your traditional financial accounts being accessible anymore, and you need to GTFO with the clothes on your back and whatever else you can carry." Think Jews in Nazi Germany or any of the similar situations that have occurred throughout history. Gold is nice for this purpose because it has a high value per unit of mass, and is valuable everywhere on the planet. Succeed at sneaking across a border and you may just be able to survive for a while if you have a few ounces of gold to trade for local currency. Gemstones can also be useful here. Paper currency might work if it's a commonly traded currency in your destination, but these things can change quickly. Would you be able to get much for your Reichsmarks in WWII Britain?

Now, I'm not seriously worried about needing gold for this purpose in my life, but for a lot of people in a lot of places their story might be different. I do think the people who expect a return to everyone regularly using gold and silver for everyday commerce are delusional.

Yeah, exactly.

Gold *may* possibly be of some use in one extremely specific, catastrophic scenario, if multiple factors fall into place in the exact right way.

I can think of countless other hedges that would be useful in countless other crisis situations. If someone wants to put a chunk of resources into hedging against those specific risks, then cool.

But that was the entire point of my post: assess the risks, choose your hedges.

markbike528CBX

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Re: Gold-What is it good for?
« Reply #20 on: June 18, 2021, 07:47:45 AM »
Gold. Good God. What is it good for? Absolutely nothing. Say it again.
Nice paraphrase. 
I have ~1% of NW in gold.  Does that make me a 1percenter?

What is the storyline behind the gold price drop in the last few weeks?
June 2 XAU1900 to now XAU1774

Today I Learned: the phrase  " taper tantrum trade "  I LOVE alliteration.
https://www.marketwatch.com/story/gold-futures-suffer-a-sharp-drop-to-their-lowest-finish-since-late-april-2021-06-17

dougules

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Re: Gold-What is it good for?
« Reply #21 on: June 18, 2021, 07:49:12 AM »
Actually as much as I malign holding gold, it may be of some use as a small hedge against sequence-of-returns risk.  The price of gold goes up when the price of everything else goes down.  I'm only talking a small percentage of your portfolio.  Of course I still maintain my argument that gold is not an investment.  You're still giving up getting actual returns, and it's probably not worth it if you're in the accumulation phase.  Try playing with it in cfiresim. 

Malcat

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Re: Gold-What is it good for?
« Reply #22 on: June 18, 2021, 08:25:07 AM »
Actually as much as I malign holding gold, it may be of some use as a small hedge against sequence-of-returns risk.  The price of gold goes up when the price of everything else goes down.  I'm only talking a small percentage of your portfolio.  Of course I still maintain my argument that gold is not an investment.  You're still giving up getting actual returns, and it's probably not worth it if you're in the accumulation phase.  Try playing with it in cfiresim.

But again, there are many hedges you can make against SORR.

No one is ever going to say that gold isn't useful or valuable. The question is: is gold more useful or valuable than any other possible use of resources as hedges against various risks?

How much friggin' gold would you need to make an appreciable difference, and what's the opportunity cost on holding that much gold?

Psychstache

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Re: Gold-What is it good for?
« Reply #23 on: June 18, 2021, 09:25:13 AM »
Gold. Good God. What is it good for? Absolutely nothing. Say it again.
[/quote
Given the title of the thread, this was the only correct answer and I'm disappointed that to it took so many replies to happen. :)

RWD

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Re: Gold-What is it good for?
« Reply #24 on: June 18, 2021, 09:52:04 AM »
Gold. Good God. What is it good for? Absolutely nothing. Say it again.
Given the title of the thread, this was the only correct answer and I'm disappointed that to it took so many replies to happen. :)
You must have missed reply #4.

brellis1vt

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Re: Gold-What is it good for?
« Reply #25 on: June 18, 2021, 10:08:25 AM »
@RWD you were close but we were actually looking for this version of the song from the classic Small Solders https://youtu.be/8K5Wb9lzcNc.  Thanks everyone for your input.  I think what I've learned is for me it doesn't really make sense to own it except for very small percentage of my net worth <1% but even then I could debate it.  Either way it makes no sense for me to have 5-10% of my net worth in gold like some experts promote.

Malcat

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Re: Gold-What is it good for?
« Reply #26 on: June 18, 2021, 10:22:04 AM »
@RWD you were close but we were actually looking for this version of the song from the classic Small Solders https://youtu.be/8K5Wb9lzcNc.  Thanks everyone for your input.  I think what I've learned is for me it doesn't really make sense to own it except for very small percentage of my net worth <1% but even then I could debate it.  Either way it makes no sense for me to have 5-10% of my net worth in gold like some experts promote.

Experts promote a lot of stupid shit.

Like I said in another thread, rules of thumb are for the intellectually lazy who aren't willing to put in the thought to figure out what's actually best for them.

I'm not saying gold is bad, I'm saying that each person should assess what their own needs are and hedge accordingly.

I would personally much rather have critical skills that are useful no matter what crisis happens than a stockpile of gold. Also a good network of family and friends living in other countries helps. So does having dual citizenship, owning foreign property, and generally being valuable beyond the borders of your own country.

There are TONS of hedges beyond gold.

RWD

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Re: Gold-What is it good for?
« Reply #27 on: June 18, 2021, 11:04:24 AM »
@RWD you were close but we were actually looking for this version of the song from the classic Small Solders https://youtu.be/8K5Wb9lzcNc.
Haha, that's pretty funny. I've never seen that movie.

My personal favorite is from Rush Hour: https://youtu.be/qrZCHVZEV1g

ChpBstrd

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Re: Gold-What is it good for?
« Reply #28 on: June 18, 2021, 11:07:11 AM »
The problem with buying gold as a hedge against local currency devaluation is that you have to bid against the people who want to make jewelry, the people who want to make semiconductors, the steady stream of people who read a Seeking Aloha article and plan to get rich quick, and against the tin-foil hat crowd. Thus the price paid is the sum of all the things itís perceived as useful for, and one cannot isolate and only pay for the one function that is needed. That would be a forex futures strategy.

Will all those functions also be present in the future price when you sell? Maybe, but in a true currency collapse I suspect demand for jewelry and semiconductors will go down faster than demand for everything else, offsetting much of the benefits of the hedge.

celerystalks

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Re: Gold-What is it good for?
« Reply #29 on: June 18, 2021, 12:32:35 PM »
The problem with buying gold as a hedge against local currency devaluation is that you have to bid against the people who want to make jewelry, the people who want to make semiconductors, the steady stream of people who read a Seeking Aloha article and plan to get rich quick, and against the tin-foil hat crowd. Thus the price paid is the sum of all the things itís perceived as useful for, and one cannot isolate and only pay for the one function that is needed. That would be a forex futures strategy.

Exactly.  Jewelry will always be made of gold. and to my knowledge, gold is one of the most corrision resistant conductors and is unlikely to be replaced.  So there is real demand for gold. 

Quote


Will all those functions also be present in the future price when you sell? Maybe, but in a true currency collapse I suspect demand for jewelry and semiconductors will go down faster than demand for everything else, offsetting much of the benefits of the hedge.

And yet, that doesn't seem to happen.  When there is a currency collapse there is demand for tangible, portable, assets.  Look at the Russian currency devaluation of 2014.  What did people buy? Jewelry, Apple products, and appliances that rely heavily on circuitry.


chasesfish

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Re: Gold-What is it good for?
« Reply #30 on: June 20, 2021, 09:28:22 AM »
Just one comment as someone dealing with physical gold and silver as part of a relative to passes away....

It's complete misery to leave to your heirs.  It goes missing, people argue about value, people argue about how much there was, and it is painful to protect and liquidate.

dougules

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Re: Gold-What is it good for?
« Reply #31 on: June 20, 2021, 09:54:23 AM »
Actually as much as I malign holding gold, it may be of some use as a small hedge against sequence-of-returns risk.  The price of gold goes up when the price of everything else goes down.  I'm only talking a small percentage of your portfolio.  Of course I still maintain my argument that gold is not an investment.  You're still giving up getting actual returns, and it's probably not worth it if you're in the accumulation phase.  Try playing with it in cfiresim.

But again, there are many hedges you can make against SORR.

No one is ever going to say that gold isn't useful or valuable. The question is: is gold more useful or valuable than any other possible use of resources as hedges against various risks?

How much friggin' gold would you need to make an appreciable difference, and what's the opportunity cost on holding that much gold?

It looks like about 5% just from running it through cfiresim.  The opportunity cost is that if the market is good, you don't do quite as well as you would have.  It's not a big downside, though.  If you have enough, you have enough.  It's just what I've noticed in running the numbers, so I'm not preaching it as gospel.  It makes intuitive sense, though, since gold is one of the few things that goes up in value during an economic crisis. 

dougules

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Re: Gold-What is it good for?
« Reply #32 on: June 20, 2021, 10:04:33 AM »
Just one comment as someone dealing with physical gold and silver as part of a relative to passes away....

It's complete misery to leave to your heirs.  It goes missing, people argue about value, people argue about how much there was, and it is painful to protect and liquidate.

When I'm not wearing it I hide my wedding ring inside a household item.  If something were to happen to me and DH, there's a decent chance it would get thrown away. 

Malcat

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Re: Gold-What is it good for?
« Reply #33 on: June 20, 2021, 10:05:31 AM »
Actually as much as I malign holding gold, it may be of some use as a small hedge against sequence-of-returns risk.  The price of gold goes up when the price of everything else goes down.  I'm only talking a small percentage of your portfolio.  Of course I still maintain my argument that gold is not an investment.  You're still giving up getting actual returns, and it's probably not worth it if you're in the accumulation phase.  Try playing with it in cfiresim.

But again, there are many hedges you can make against SORR.

No one is ever going to say that gold isn't useful or valuable. The question is: is gold more useful or valuable than any other possible use of resources as hedges against various risks?

How much friggin' gold would you need to make an appreciable difference, and what's the opportunity cost on holding that much gold?

It looks like about 5% just from running it through cfiresim.  The opportunity cost is that if the market is good, you don't do quite as well as you would have.  It's not a big downside, though.  If you have enough, you have enough.  It's just what I've noticed in running the numbers, so I'm not preaching it as gospel.  It makes intuitive sense, though, since gold is one of the few things that goes up in value during an economic crisis.

That is not the only opportunity cost. You can't just compare it to market returns, you have to compare it to every single other hedge possible for every fathomable risk. Some people would rather go all prepper and put that money towards guns, ammo, and medications.

Again, I'm not saying which hedges are best, I'm saying that people should evaluate which risks they most want to hedge against and act accordingly. If gold turns out to be your most attractive hedge, then great, buy gold.

I'm just a HUGE proponent of actually thinking for yourself and evaluating your own, unique risk assessment and risk tolerance, not just buying 5 or 6 figures worth of metal because someone said it was smart.

PDXTabs

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Re: Gold-What is it good for?
« Reply #34 on: June 20, 2021, 10:07:36 AM »
It was very, very, good at shielding you from inflation between Jan 1 1972 and Jan 1 1982.

ETA: as dougules mentions, it may not be the best bet during accumulation (unless it is 1972). I don't own any, but might well after retirement.
« Last Edit: June 20, 2021, 10:09:52 AM by PDXTabs »

RWD

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Re: Gold-What is it good for?
« Reply #35 on: June 20, 2021, 12:06:25 PM »
It was very, very, good at shielding you from inflation between Jan 1 1972 and Jan 1 1982.

ETA: as dougules mentions, it may not be the best bet during accumulation (unless it is 1972). I don't own any, but might well after retirement.
Too bad it was illegal to own gold (coins, bars, certificates) in 1972... Kind of messes with those early numbers.

PDXTabs

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Re: Gold-What is it good for?
« Reply #36 on: June 20, 2021, 12:41:49 PM »
It was very, very, good at shielding you from inflation between Jan 1 1972 and Jan 1 1982.

ETA: as dougules mentions, it may not be the best bet during accumulation (unless it is 1972). I don't own any, but might well after retirement.
Too bad it was illegal to own gold (coins, bars, certificates) in 1972... Kind of messes with those early numbers.

I wasn't born yet and half my family wasn't yet in the USA. I had forgotten that didn't happen until 1974. It was indeed legal to own, AFAIK, where my foreign family was living at the time. But yea, that makes pricing data from the time hard to come by, and quite possibly very local.

dougules

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Re: Gold-What is it good for?
« Reply #37 on: June 21, 2021, 11:11:15 AM »
It looks like about 5% just from running it through cfiresim.  The opportunity cost is that if the market is good, you don't do quite as well as you would have.  It's not a big downside, though.  If you have enough, you have enough.  It's just what I've noticed in running the numbers, so I'm not preaching it as gospel.  It makes intuitive sense, though, since gold is one of the few things that goes up in value during an economic crisis.

That is not the only opportunity cost. You can't just compare it to market returns, you have to compare it to every single other hedge possible for every fathomable risk. Some people would rather go all prepper and put that money towards guns, ammo, and medications.

Again, I'm not saying which hedges are best, I'm saying that people should evaluate which risks they most want to hedge against and act accordingly. If gold turns out to be your most attractive hedge, then great, buy gold.

I'm just a HUGE proponent of actually thinking for yourself and evaluating your own, unique risk assessment and risk tolerance, not just buying 5 or 6 figures worth of metal because someone said it was smart.

I'm not advocating that people should buy a bunch of gold or that it is a good hedge.  I'm anything but a gold bug.  I was just pointing out what I had noticed while playing around with cfiresim.  I wouldn't advocate such a thing unless I had seen a lot more evidence than that, and yes it would have to be compared more thoroughly against a lot of other possible scenarios.  I doubt the benefit would be real big anyway, and I probably won't be bothering much with gold personally.   

MilesTeg

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Re: Gold-What is it good for?
« Reply #38 on: June 21, 2021, 08:07:10 PM »
As long as you understand gold is a store of wealth not an investment you can reasonably add it to your holdings when you are in the phase of wealth maintenance rather than accrual. It's like bonds, but doesn't rely on any particular political or monetary system to have value.

We have about 3% of our holdings in gold.

MilesTeg

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Re: Gold-What is it good for?
« Reply #39 on: June 21, 2021, 08:18:45 PM »
What version of "in case something awful happens" do you think having gold will actually help with though?

Also, how much solid gold do you think you would need to get you out of said "awful" situation?

Just think about it rationally. What specific risk are you *actually* trying to hedge against? Are there more likely risks to worry about? And if not, is gold really the best hedge against them?

Having 5 or even 6 figures of solid gold in your possession doesn't actually make an appreciable long term difference in a lot of scenarios, so what is the scenario that you are hoping gold saves you from??

Hyperinflation, Depressions, Civil War, Poland 1939, etc.

I get nervous when people start to talk like they think nothing horrible will ever happen again. Horrible things happen with disturbing regularity. Having all your eggs in one basket (assets that depend on a particular monetary or political system to have value) is foolhardy.

Does having real physical wealth make you immune to those types of events? Certainly not. But not having them guarantees you are screwed.

Malcat

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Re: Gold-What is it good for?
« Reply #40 on: June 21, 2021, 08:25:55 PM »
What version of "in case something awful happens" do you think having gold will actually help with though?

Also, how much solid gold do you think you would need to get you out of said "awful" situation?

Just think about it rationally. What specific risk are you *actually* trying to hedge against? Are there more likely risks to worry about? And if not, is gold really the best hedge against them?

Having 5 or even 6 figures of solid gold in your possession doesn't actually make an appreciable long term difference in a lot of scenarios, so what is the scenario that you are hoping gold saves you from??

Hyperinflation, Depressions, Civil War, Poland 1939, etc.

I get nervous when people start to talk like they think nothing horrible will ever happen again. Horrible things happen with disturbing regularity. Having all your eggs in one basket (assets that depend on a particular monetary or political system to have value) is foolhardy.

Does having real physical wealth make you immune to those types of events? Certainly not. But not having them guarantees you are screwed.

I wasn't at all implying that horrible things can't or won't happen. I don't even know how you got that from my posts. I've also made it clear that I am not criticizing holding gold.

I've simply said the same thing over and over: assess your particular risk tolerance and plan according to that, not according to what someone else tells you to do.

I'll say it again, I am NOT criticizing holding gold.

MilesTeg

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Re: Gold-What is it good for?
« Reply #41 on: June 21, 2021, 09:48:25 PM »
What version of "in case something awful happens" do you think having gold will actually help with though?

Also, how much solid gold do you think you would need to get you out of said "awful" situation?

Just think about it rationally. What specific risk are you *actually* trying to hedge against? Are there more likely risks to worry about? And if not, is gold really the best hedge against them?

Having 5 or even 6 figures of solid gold in your possession doesn't actually make an appreciable long term difference in a lot of scenarios, so what is the scenario that you are hoping gold saves you from??

Hyperinflation, Depressions, Civil War, Poland 1939, etc.

I get nervous when people start to talk like they think nothing horrible will ever happen again. Horrible things happen with disturbing regularity. Having all your eggs in one basket (assets that depend on a particular monetary or political system to have value) is foolhardy.

Does having real physical wealth make you immune to those types of events? Certainly not. But not having them guarantees you are screwed.

I wasn't at all implying that horrible things can't or won't happen. I don't even know how you got that from my posts. I've also made it clear that I am not criticizing holding gold.

I've simply said the same thing over and over: assess your particular risk tolerance and plan according to that, not according to what someone else tells you to do.

I'll say it again, I am NOT criticizing holding gold.

My misunderstanding. Thanks for clarification.

rmorris50

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Re: Gold-What is it good for?
« Reply #42 on: June 22, 2021, 01:44:18 AM »
If I did my research and math right, my entire net worth is about the equivalent of 5 standard gold bars. Which is about 140lbs. That would be fun to carry around as I try to escape some apocalyptic scenario.


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FLBiker

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Re: Gold-What is it good for?
« Reply #43 on: June 22, 2021, 05:55:14 AM »
Personally, I think that in most of the "what if something really bad happens" scenarios where gold would be useful, having multiple citizenships would be even more useful.  I also feel like our wealth has become much more portable with the internet -- although I suppose folks are imagining scenarios where a US broker wouldn't transfer an account to another country or something like that?

Part of the reason we decided to move to Canada last year is so that our daughter could be a dual citizen.  And I'm certainly open to encouraging her to go to university in a third country and, perhaps, adding another citizenship.  Fundamentally, though, I'm a firm believer in the impossibility of preparing for every possible negative outcome.  And, to bring it back to the thread, I have 0 gold.

Malcat

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Re: Gold-What is it good for?
« Reply #44 on: June 22, 2021, 06:13:50 AM »
Personally, I think that in most of the "what if something really bad happens" scenarios where gold would be useful, having multiple citizenships would be even more useful.  I also feel like our wealth has become much more portable with the internet -- although I suppose folks are imagining scenarios where a US broker wouldn't transfer an account to another country or something like that?

Part of the reason we decided to move to Canada last year is so that our daughter could be a dual citizen.  And I'm certainly open to encouraging her to go to university in a third country and, perhaps, adding another citizenship.  Fundamentally, though, I'm a firm believer in the impossibility of preparing for every possible negative outcome.  And, to bring it back to the thread, I have 0 gold.

Having multiple citizenships, owning property or a business in another country, etc, etc.

Being connected to international aide organizations is a VERY powerful lever in the event of major crises, being ordained clergy or a medical professional connected to an aide organization even moreso.

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Re: Gold-What is it good for?
« Reply #45 on: June 22, 2021, 09:35:16 AM »
If society collapses so quickly that gold is needed as currency then either I'm probably dead from the looting that occured or the nuclear fallout and devastation or I'm trying to live some sort subsistence farming rebuilding a community, gold is useless in all those scenarios. It's more likely technology will develop that requires gold to produce and as a result demand increases and the price goes up. So, i guess suffice to say, i dont hold any gold. It seems like a 1980s investment strategy. Keep gold just in case! Nah.

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Re: Gold-What is it good for?
« Reply #46 on: June 22, 2021, 11:12:59 AM »
I likely wouldn't bother holding physical gold because of the hassle that causes with moving it, securing it, cashing it, etc. and I think the arguments for holding it in case shit hits the fan are silly. Invest in skills and relationships for that. But I do hold a noticeable percentage of my portfolio in paper gold. Even though it may not create any value itself, it is somewhat negatively correlated with stocks and not very correlated with bonds which makes it a good rebalancing tool.

Imagine if you had two asset types with values that swung wildly up and down but never appreciated at all in the long term. If you held either one you would not make any money, but if you had each as 50% of your portfolio and rebalanced each time the prices varied your portfolio value would go up even as the underlying assets stayed flat. This is how gold is useful as part of a portfolio, along with some bonds, RE, cash equivalents, etc. They curb a little of the growth in bull years but they make up for it in bear years, so a well mixed portfolio can have a very similar long term CAGR as pure stocks but with less volatility.

PDXTabs

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Re: Gold-What is it good for?
« Reply #47 on: June 22, 2021, 11:17:31 AM »
Personally, I think that in most of the "what if something really bad happens" scenarios where gold would be useful, having multiple citizenships would be even more useful.  I also feel like our wealth has become much more portable with the internet -- although I suppose folks are imagining scenarios where a US broker wouldn't transfer an account to another country or something like that?

Part of the reason we decided to move to Canada last year is so that our daughter could be a dual citizen.  And I'm certainly open to encouraging her to go to university in a third country and, perhaps, adding another citizenship.  Fundamentally, though, I'm a firm believer in the impossibility of preparing for every possible negative outcome.  And, to bring it back to the thread, I have 0 gold.

Having multiple citizenships, owning property or a business in another country, etc, etc.

I concur. The majority of US mustachians would find it easy to acquire permanent residence in Mexico, FWIW. Mexican PR, a Mexican flat that is paid off, and a savings account with 200,000 pesos in it might be a better hedge that physical gold, depending on which risks you are interested in hedging against.

joe189man

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Re: Gold-What is it good for?
« Reply #48 on: June 22, 2021, 11:25:10 AM »
If you want gold exposure, why not invest in gold miner stocks like Newmont or Barrick or a ETF? They should track gold prices well and pay dividends. i think in an apocalypse type scenario bullets would be worth more than gold

Malcat

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Re: Gold-What is it good for?
« Reply #49 on: June 22, 2021, 12:00:06 PM »
If you want gold exposure, why not invest in gold miner stocks like Newmont or Barrick or a ETF? They should track gold prices well and pay dividends. i think in an apocalypse type scenario bullets would be worth more than gold

Really depends on the scenario.

My DH used to work in federal emergency management planning. The range of emergencies and fallout are astounding.