True, gold and silver are a saving technique to hedge against inflation.
They also beat the average returns of most other investments, like stocks, which even by your logic proves my point that most investments are actually negative yielding in terms of inflation.
No. Not even close. Over the long term, gold does almost exactly the same as inflation: http://en.m.wikipedia.org/wiki/Stocks_for_the_Long_Run#Principles
Stocks have much higher returns than gold, and again, it's not even close.
If you really have some investment vehicle that makes 15% annually, that may be your best bet for high returns. If you want additional safety, you might consider stocks and bonds. Gold will protect you from inflation over the long term, but that's all it will do.
Why does everyone always say this?
Did ABSOLUTELY EVERYONE forget that we pay taxes on stock?
I have 1000 dollars, I buy one ounce of gold.
I have 1000 dollars, I buy one set of stock. (10 shares, 100 each). Yay magical numbers.
I make less than 18,000, I pay 15%.
I have 1k in stocks. Average business ranges crash out at ~80% over their lifetimes. Means only 20% of businesses survive.
Well assume, I did buffet level magic, and I invested in all winners, 10% across the board, the entire time, for 5 years.
Heres the math:
My gold, increasing in value equal to that of stock, rises at 4% per year, due to the increasing demands in electronics and inflation. I pay no taxes on gold, becuase I bought at 1000, I sell at 1000. I "didnt profit" therefore, I pay no taxes.
My stock, paying me a dividend of 10%, gets taxed several times.
source:
http://www.irs.gov/publications/p550/ch01.html#en_US_2013_publink100010066"Ordinary dividends are the most common type of distribution from a corporation or a mutual fund. They are paid out of earnings and profits and are ordinary income to you. "
"Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. They should be shown in box 1b of the Form 1099-DIV you receive.
The maximum rate of tax on qualified dividends is:
0% on any amount that otherwise would be taxed at a 10% or 15% rate.
15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39.6%.
20% on any amount that otherwise would be taxed at a 39.6% rate."
This means that you get nailed for up to 20% (The average is 15), and then you get nailed again because it counts as standard income.
This is why so many were against the dividend tax.
So lets see.
We made 10%, so 100, but then we lose, 15%, so down to 85, and then well assume we are a standard american, so we make 55k, so we lose an additional 20% more.
So thats 100/100=1*15=15, 100-15=85, 85/100=.85, .85*20=17, 85-17=68.
So, of all the TOTAL ACTUALS, we only made 68 dollars AFTER taxes. Remember, we paid no taxes on our gold.
So in actual effect, with a 10% annual dividend, we only actually made 68 dollars off of, which is 68/1000, or 6.8%.
Now thats also assuming we of course, got paid 10% on dividends, which we don't in reality, we usually make 2% less than that at best realistically. So we'll say we made a realistic return, 8%.
We are still looking at the same market standards, taxes, etc, so its simply minus 2%. So we actually only made 4.8% realistically. Now, that sounds great still, but then you forget, inflation exists, and ooops, buying power dropped, 4%. So we only make, in the HIGHEST realistic projections, 0.8%.
AT very best. That's also assuming absolutely everything goes well, nothing goes wrong, the market will NEVER decrease, and our dividend will ALWAYS pay out, ANNNND, annnd, that the dividend stock itself will never decrease in value.
All of which, is unrealistic.
Ultimately, people buy gold because they want to avoid the losses incurred by inflation, they want to decrease their taxes (gold helps you do this surprisingly enough),
