Author Topic: Should I add a precious metals mining fund to my investments?  (Read 14248 times)

joer1212

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Should I add a precious metals mining fund to my investments?
« on: September 28, 2012, 01:58:32 PM »
I currently have the following asset allocation:

In my employee 457b:

10% stable value fund
30% total bond index fund
25% large-cap index fund
9% mid-cap index fund
8% small-cap index fund
18% total international (ex-U.S.) index fund


In my Roth IRA:

50% total REIT index fund
50% TIPS


Should I add a precious metals mining fund to my asset allocation? I am considering the Vanguard Precious Metals Mining Fund (VGPMX), or a similar fund that I would add to my ROTH IRA. Would there be any advantage to doing this?
Does anyone think there is something missing from my asset allocation, or is it good the way it is?

*I plan on taking distributions from my 401k and Roth IRA in 7-9 years.
*I am 43 years-old.
*A few months ago, I was also considering a micro-cap fund; a global bond fund, and a junk bond fund to add to the above investments. However, I didn't get the micro-cap fund because there is no "true" micro-cap fund in existence, and the fees, loads, and expenses are too high, anyway.
I decided to not get a global bond fund, or junk bond fund, because this would defeat the purpose of bonds in the first place-- to stabilize your portfolio.
So, now the last question I have is whether a precious metals mining fund would be a good addition to my portfolio.
*I pay some of the lowest costs ever for my funds, especially for the ones that are in my employee 457b (between 0.03% to 0.17%).

AdrianM

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Re: Should I add a precious metals mining fund to my investments?
« Reply #1 on: September 28, 2012, 06:52:24 PM »
As a self confessed gold bug I would say yes.

I will temper that with what is your plan with a PM Fund?
Do you plan to hold it to eternity or are you planing to sell it at a higher price?

I think there should be a nice run up in Gold and Silver, and associated mining stocks now that the 14 month bear market is ending and a new bull is starting.

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #2 on: September 28, 2012, 11:47:00 PM »
I am planning on keeping my PM fund as a permanent part of my asset allocation. In fact, all the funds you see in my asset allocation will be there forever. This is for the long haul.

Kriegsspiel

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Re: Should I add a precious metals mining fund to my investments?
« Reply #3 on: September 29, 2012, 04:56:25 PM »
Why is this a specific question?  It's just a company's stock, not actual precious metals, so why do you consider a mining company separate from the rest of your stock holdings companies?

grantmeaname

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Re: Should I add a precious metals mining fund to my investments?
« Reply #4 on: September 30, 2012, 09:23:38 AM »
Should I add a precious metals mining fund to my asset allocation? I am considering the Vanguard Precious Metals Mining Fund (VGPMX), or a similar fund that I would add to my ROTH IRA. Would there be any advantage to doing this?
VGPMX holds 48 stocks and no bonds or commodities. Unless you have reason to think that they will outperform the market indices as a whole over the next 7-9 years, you probably should not hold them. (In fact, you need to think about whether they'll outperform the market on a risk-adjusted basis, since you're going from thousands of stocks to less than 50, all in one sector. My bet is they won't.)

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I decided to not get a global bond fund, or junk bond fund, because this would defeat the purpose of bonds in the first place-- to stabilize your portfolio.
While your reasoning makes intuitive sense, holding multiple asset classes to stabilize your portfolio does not work primarily through holding asset classes that are less volatile than your most volatile asset. The stock market as a whole is more volatile than the market for bonds (compare beta or standard deviation of VTSMX and VBSMX, for example), so even if this were the case, holding bonds would help.

But the primary reason to hold multiple asset classes is that different asset classes are imperfectly correlated, so big swings in part of your portfolio are accompanied by little changes in other parts. This was established with modern portfolio theory, though the ghost of smedleyb tells me that in fairness I should mention that MPT has some faultyish assumptions. To view asset class correlations, I like this table. Take AGG, Barclay's aggregate bond iShares, and VV, Vanguard's big-cap ETF. They've got a -.4 correlation, meaning that they'll counteract each other to some extent. Even if the correlation is a small positive, like the gold commodity as represented by GLD and VV, you'll get a much higher return relative to your volatility and risk by holding a bit of each. This works even if each individual asset is volatile. Does that make sense?

I am not yet a CPA, and not a CFP, and this advice is worth what you paid for it. YMMV...

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So, now the last question I have is whether a precious metals mining fund would be a good addition to my portfolio.
I think it looks good. Exposure to several asset classes, reasonable risk, miniscule fees. But I could be missing something.

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #5 on: October 01, 2012, 02:03:04 AM »
I don't necessarily think that VGPMX will outperform the market, but this isn't the only reason to hold an asset class. Otherwise, I would just own 100% small-caps and emerging market stocks in my portfolio.
Adding a precious metals fund--even one with just 48 stocks--might be good for diversification in a well-balanced portfolio.
   
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So, now the last question I have is whether a precious metals mining fund would be a good addition to my portfolio.

Quote
I think it looks good. Exposure to several asset classes, reasonable risk, miniscule fees. But I could be missing something.
« Last Edit: July 08, 2014, 11:36:04 PM by joer1212 »

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #6 on: October 01, 2012, 02:10:06 AM »
Why is this a specific question?  It's just a company's stock, not actual precious metals, so why do you consider a mining company separate from the rest of your stock holdings companies?

Because, even though they are still stocks, they represent a different sector. Often the stock prices move with the price of the underlying metals, but you have the added benefit (and risk) of the stock price of the companies involved in the mining.

I considered long and hard buying a gold or precious metals only fund, but it seems that this does not beat inflation over the long term. 

Honest Abe

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Re: Should I add a precious metals mining fund to my investments?
« Reply #7 on: October 01, 2012, 04:02:19 AM »
At those expense levels it's not a bad idea to add it as 5% IMO... There's an Oppenheimer PM fund in my 457 that I wouldn't go near at a 1% expense ratio. I would prefer that these fund only invest in pure commodities such as GLD and SLV, but meh.

However if you're looking at PM as an insurance policy of some sort then getting the physical stuff is the only way to go.

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #8 on: October 01, 2012, 11:14:23 AM »
Yes, I was thinking of investing in the physical stuff, too. But, after reading several books, and countless articles, I came to the conclusion that it is not worth including in my portfolio because it seems that gold, and other precious metals, don't outpace inflation over the long run. The one criterion I have for any fund is that it must, at the very least, beat inflation in the long run. Heck, even my lowly stable value fund does that!
Ditto for commodities.

grantmeaname

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Re: Should I add a precious metals mining fund to my investments?
« Reply #9 on: October 01, 2012, 11:55:27 AM »
I don't necessarily think that VGPMX will outperform the market, but this isn't the only reason to hold an asset class. Otherwise, I would just own 100% small-caps and emerging market stocks in my portfolio.
That's what the "on a risk-adjusted basis" clause was for.
   
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Are you referring to my asset allocation? I was asking if I should add a precious metals fund (like VGPMX) to the asset allocation I have.
Yes, I was referring to your asset allocation. A "precious metals fund" could be useful as the sector doesn't correlate closely with equities' performance, which is the main driver of your returns; this is what I was trying to highlight above. But VGPMX is not a precious metals fund, really. It's behaving much more like a mid-cap stock fund, as you can clearly see from the historical data if you compare it with a mid-cap fund and a precious metal indicator like GLD. If you want more mid-cap equities, by all means buy more mid-cap equities. But if you want precious metals, don't buy mid-cap equities.

Kriegsspiel

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Re: Should I add a precious metals mining fund to my investments?
« Reply #10 on: October 01, 2012, 03:22:29 PM »
I think the PP makes a lot of sense, here's a bit from the FAQ on Craig Rowland's site that talks about gold vs. gold mining:

Quote
Can I hold gold mining and metal mining stocks instead of gold?

No you canít. Stocks are not the same as owning the actual gold bullion asset. Mining stocks are subjected to the same market pressures that affect all other companies. High inflation can impact mining stock company prices as it does other parts of the economy.

When the markets are doing poorly due to bad inflation or financial crises you want to own hard assets like gold directly.  You cannot substitute mining companies for gold bullion.

In 2008 when the banking sector was on the brink of total implosion, and we experienced a record market decline, the price of gold showed a slight gain of 4-5% for the year (in Blue). The precious metals and mining index however posted a devastating loss of -62% (in Red)!



Above chart courtesy of www.stockcharts.com

It is clear from the above that gold and metal mining companies did not provide the diversification against catastrophic loss that gold bullion itself did.

Thoughts?

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #11 on: October 02, 2012, 01:02:51 AM »
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It is clear from the above that gold and metal mining companies did not provide the diversification against catastrophic loss that gold bullion itself did.
Thoughts?

Thanks for this very revealing piece of info. I never considered this angle, and it makes me want to shy away from funds such as VGPMX.
It seems that I would not be owning a different sector at all by purchasing this fund. As "grantmeaname" above states, it is like adding another mid-cap stock fund to my portfolio.
However, there still remains the problem that actually owning gold does not outpace inflation. Believe me, I wanted to purchase gold directly, as it would have represented a completely different asset class that has a low correlation to what I have now. I would just love to purchase a pure precious metals index fund, add it to my Roth IRA, and forget about it. Alas.

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Re: Should I add a precious metals mining fund to my investments?
« Reply #12 on: October 02, 2012, 08:00:07 AM »
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It is clear from the above that gold and metal mining companies did not provide the diversification against catastrophic loss that gold bullion itself did.
Thoughts?

There are two reason why metal stocks didn't do well - (i) most metals other than gold have productive purposes and that is ultimately the driver of its value so when industry sputters so does demand for the metals and so does the value of those metals, (ii) many of these mining companies leveraged up significantly during the boom and EBITDA valuations were sky high so that also worked itself out.

Look at the SPDR chart today, the ETF is down 15% YTD - even with all the QE the chart suggests that a recession is looming.  Could be a good time to buy this ETF though.

BTW I am in the minority about gold - I don't like it or anything else that has know productive value and costs money to store to boot and is controlled largely by just a few firms. 

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #13 on: October 02, 2012, 10:24:13 AM »
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That's what the "on a risk-adjusted basis" clause was for.

Ah, yes. Sorry that I didn't take these words into consideration. This is a very good point.
In other words, you are saying that holding VGPMX in my diversified portfolio would not be a good "bang for buck", as the risks outweigh the rewards that that this fund could potentially yield?
I can especially understand your reasoning, given that VGPMX only has 48 stocks, and in the same sector.

 
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Yes, I was referring to your asset allocation. A "precious metals fund" could be useful as the sector doesn't correlate closely with equities' performance, which is the main driver of your returns; this is what I was trying to highlight above. But VGPMX is not a precious metals fund, really. It's behaving much more like a mid-cap stock fund, as you can clearly see from the historical data if you compare it with a mid-cap fund and a precious metal indicator like GLD. If you want more mid-cap equities, by all means buy more mid-cap equities. But if you want precious metals, don't buy mid-cap equities.

Another great point, and one that did cross my mind once or twice.
But, there are two things:

(1) Couldn't the same be said about VGSIX (Vanguard REIT index fund)? Investing in this fund is also not owning real estate directly, but owning the stocks of companies that own real estate. Yet, I find this fund included in many popular portfolios, and eventually I included it in mine.

(2) If I must own a precious metals fund that invests in the actual metal in order to enjoy the benefits of investing in a different sector, is it worth it, since precious metals do not outpace inflation in the long run? That's the whole reason I was looking for a precious metals mining fund. I'm beginning to think that, perhaps, my AA is fine as it is, and I shouldn't include anything more.

AdrianM

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Re: Should I add a precious metals mining fund to my investments?
« Reply #14 on: October 02, 2012, 03:07:46 PM »
BTW I am in the minority about gold - I don't like it or anything else that has know productive value and costs money to store to boot and is controlled largely by just a few firms.

Lol, a great reason to own it, unless of course you think they are colluding to drive the price up????


Kriegsspiel

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Re: Should I add a precious metals mining fund to my investments?
« Reply #15 on: October 02, 2012, 04:13:22 PM »

However, there still remains the problem that actually owning gold does not outpace inflation. Believe me, I wanted to purchase gold directly, as it would have represented a completely different asset class that has a low correlation to what I have now.

Well, I wouldn't consider myself knowledgable enough yet to comment on gold not outpacing (I would say "keeping pace with") inflation but... what does?  Like, what is a better choice than gold?

 
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I would just love to purchase a pure precious metals index fund, add it to my Roth IRA, and forget about it. Alas.

I think the most common advice is to hold a gold fund (or just gold) outside of a Roth, since it doesn't kick off dividends or an expense ratio (well, gold ETFs do, but they're all pretty low, almost on par with Vanguard funds).

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #16 on: October 02, 2012, 05:08:31 PM »
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Well, I wouldn't consider myself knowledgable enough yet to comment on gold not outpacing (I would say "keeping pace with") inflation but... what does?  Like, what is a better choice than gold?

Well, stocks and real estate are better than gold. They have provided a real return over inflation in the long term.

Kriegsspiel

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Re: Should I add a precious metals mining fund to my investments?
« Reply #17 on: October 02, 2012, 06:34:22 PM »
What are you basing that on?

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #18 on: October 02, 2012, 08:36:33 PM »
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What are you basing that on?

On superior returns for stocks and real estate in the past century over gold.

AdrianM

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Re: Should I add a precious metals mining fund to my investments?
« Reply #19 on: October 03, 2012, 01:00:46 AM »
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What are you basing that on?

On superior returns for stocks and real estate in the past century over gold.

ROFLMAO

Monetary Inflation = Dow UP


grantmeaname

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Re: Should I add a precious metals mining fund to my investments?
« Reply #20 on: October 03, 2012, 06:25:28 AM »
Adrian, I don't know what you argument you think you just supported, but I can tell you this: If the most reputable source you have to argue that stocks don't outpace inflation has cherubi and poor font alignment thanks to powerpoint, maybe  the person espousing that view is a little nuts.

What do you make of this graph, which clearly shows an increase in S&P real value over time?

grantmeaname

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Re: Should I add a precious metals mining fund to my investments?
« Reply #21 on: October 03, 2012, 06:47:52 AM »
In other words, you are saying that holding VGPMX in my diversified portfolio would not be a good "bang for buck", as the risks outweigh the rewards that that this fund could potentially yield?
Essentially, the only reason I can see to hold it is if you had some reason to believe that the mining sector would outperform mid-market indices over your holding period (again, on a risk-adjusted basis). I don't think that you can know that, and the additional sector risk you take on is substantial, so I'd stay away. But I'm firmly in the efficient-market ideological camp, so that's my view on most everything.

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(1) Couldn't the same be said about VGSIX (Vanguard REIT index fund)? Investing in this fund is also not owning real estate directly, but owning the stocks of companies that own real estate. Yet, I find this fund included in many popular portfolios, and eventually I included it in mine.
Compare it to the Case-Shiller index and the Vanguard mid-cap index in Google Finance, and eyeball it to see how much it correlates to one or the other (use the CPI if GF doesn't have Case-Shiller, maybe). That may be as close as you get with index investing. You could consider owning an actual house, instead, and count it as part of your portfolio-- it is you allocating your net worth to real estate, in a sense. Oh, and assetcorrelation.com suggests that REITs provide only moderate diversification to stocks, so you're likely on to something.

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(2) If I must own a precious metals fund that invests in the actual metal in order to enjoy the benefits of investing in a different sector, is it worth it, since precious metals do not outpace inflation in the long run? That's the whole reason I was looking for a precious metals mining fund. I'm beginning to think that, perhaps, my AA is fine as it is, and I shouldn't include anything more.
That's my view. But I'm still working out what I want to invest in long term, and I'm not an expert so much as an effective reader of persuasive things other people have written on the internet. But here's my reasoning: if you don't have reason to believe that it'll perform well, why would you include it in your portfolio? The only time it comes in handy is in a recession horrible enough to scare people into selling their stocks for it, and since I'm young I'd prefer to withdraw less (or none) from my portfolio in that event rather than handicap my earnings the other 9.5 years out of ten by including gold.

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #22 on: October 03, 2012, 02:47:50 PM »
In other words, you are saying that holding VGPMX in my diversified portfolio would not be a good "bang for buck", as the risks outweigh the rewards that that this fund could potentially yield?
Essentially, the only reason I can see to hold it is if you had some reason to believe that the mining sector would outperform mid-market indices over your holding period (again, on a risk-adjusted basis). I don't think that you can know that, and the additional sector risk you take on is substantial, so I'd stay away. But I'm firmly in the efficient-market ideological camp, so that's my view on most everything.

Quote
(1) Couldn't the same be said about VGSIX (Vanguard REIT index fund)? Investing in this fund is also not owning real estate directly, but owning the stocks of companies that own real estate. Yet, I find this fund included in many popular portfolios, and eventually I included it in mine.
Compare it to the Case-Shiller index and the Vanguard mid-cap index in Google Finance, and eyeball it to see how much it correlates to one or the other (use the CPI if GF doesn't have Case-Shiller, maybe). That may be as close as you get with index investing. You could consider owning an actual house, instead, and count it as part of your portfolio-- it is you allocating your net worth to real estate, in a sense. Oh, and assetcorrelation.com suggests that REITs provide only moderate diversification to stocks, so you're likely on to something.

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(2) If I must own a precious metals fund that invests in the actual metal in order to enjoy the benefits of investing in a different sector, is it worth it, since precious metals do not outpace inflation in the long run? That's the whole reason I was looking for a precious metals mining fund. I'm beginning to think that, perhaps, my AA is fine as it is, and I shouldn't include anything more.
That's my view. But I'm still working out what I want to invest in long term, and I'm not an expert so much as an effective reader of persuasive things other people have written on the internet. But here's my reasoning: if you don't have reason to believe that it'll perform well, why would you include it in your portfolio? The only time it comes in handy is in a recession horrible enough to scare people into selling their stocks for it, and since I'm young I'd prefer to withdraw less (or none) from my portfolio in that event rather than handicap my earnings the other 9.5 years out of ten by including gold.

I think I'll just stay away from precious metals anything.
So far it's a no-go for precious metals; a no-go for a global bond fund or junk bond fund, and a no-go for a commodities fund.
What's left?
I just discovered that my international index fund (State Street Advisers MSCI ACWI ex U.S.)  consists of just 23% emerging markets. Since I allocated 18% of my 457b portfolio to international stocks, this means that roughly 4% of my holdings is in emerging markets.
Since you sound like you know what you're talking about, do you think this allocation to emerging markets is too low? Should I purchase a separate emerging markets index fund to overweigh in this sector? Or should I also leave this alone?

AdrianM

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Re: Should I add a precious metals mining fund to my investments?
« Reply #23 on: October 03, 2012, 03:12:30 PM »
My argument is this.

Monetary inflation drives the Dow up or down.

Increase in the supply of money the Dow goes up.
Decrease the supply of money and the Dow goes down.


Kriegsspiel

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Re: Should I add a precious metals mining fund to my investments?
« Reply #24 on: October 03, 2012, 03:42:52 PM »
My argument is this.

Monetary inflation drives the Dow up or down.

Increase in the supply of money the Dow goes up.
Decrease the supply of money and the Dow goes down.

Yea that's what I had seen too.  Not so much that inflation drives stock prices, but that they are correlated.  I will try to find some of the articles, but I think the jist of the thought was that CAGR from stocks (and maybe bonds) just keeps up with inflation. 

Maybe that's why I gravitated towards the modern portfolio theory before I knew it existed (or, at least what I think MPT entails)?  I mean, if gold rises in price rapidly during periods of high inflation, or much faster than stocks, why not hold some gold in addition to stocks, so that when it spikes, you can employ rebalancing and take advantage of that?  Same with stocks, when stocks are rising rapidly and gold is not, you do the same thing.

PP just makes sense.  I'll try to find some of the things I read about stock/bond/gold prices WRT inflation.

joer1212

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Re: Should I add a precious metals mining fund to my investments?
« Reply #25 on: October 03, 2012, 04:57:09 PM »
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I mean, if gold rises in price rapidly during periods of high inflation, or much faster than stocks, why not hold some gold in addition to stocks, so that when it spikes, you can employ rebalancing and take advantage of that?  Same with stocks, when stocks are rising rapidly and gold is not, you do the same thing.

PP just makes sense.  I'll try to find some of the things I read about stock/bond/gold prices WRT inflation.

I think it's because gold, in the long run, barely keeps up with inflation, whereas all the other traditional asset classes beat inflation in the long run.

capital

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Re: Should I add a precious metals mining fund to my investments?
« Reply #26 on: October 24, 2012, 05:26:36 PM »
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What are you basing that on?

On superior returns for stocks and real estate in the past century over gold.

ROFLMAO

Monetary Inflation = Dow UP


Most people define "inflation" as the increase in the general price level, not as the increase in the money supply. If you choose to use a different definition (apparently one espoused by the unpopular Austrian school of economics), it would be useful to make that clear.

That graph shows the total currency in circulation has increased over the past ninety years more than the Dow Jones Industrial Average has. That implies that a trust holding ownership of shares representing a portion of the Dow would gain more value over that time period than the same stock of United States Dollars, holding everything else equal.

Of course, one couldn't possibly hold all else equal over that time period, with its massive increases in the real wealth of humanity (what with airplanes, mass electrification, automobiles, widespread adoption of mass production, computers & the internet, modern medecine, and so on) and the heightened worldwide influence of the United States, both of which increase demand for United States Dollars.

AdrianM

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Re: Should I add a precious metals mining fund to my investments?
« Reply #27 on: October 29, 2012, 11:38:32 PM »
Most people define "inflation" as the increase in the general price level, not as the increase in the money supply. If you choose to use a different definition (apparently one espoused by the unpopular Austrian school of economics), it would be useful to make that clear.

For an eductation in the differance between the Austrian school and Keynesian economics

Watch and learn
http://www.youtube.com/watch?v=d0nERTFo-Sk

then Watch
http://www.youtube.com/watch?v=GTQnarzmTOc

Keynesian is the favoured policy of politians as it places no control on their spending

And one more
http://www.youtube.com/watch?v=oWItkj0X_wo&feature=relmfu
« Last Edit: October 29, 2012, 11:50:34 PM by AdrianM »

grantmeaname

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Re: Should I add a precious metals mining fund to my investments?
« Reply #28 on: October 30, 2012, 06:09:07 AM »
Keynesian is the favoured policy of politians as it places no control on their spending
First off, yes, it does. Second off, at least in the US, it's only the favored school of half the political world.

AdrianM

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Re: Should I add a precious metals mining fund to my investments?
« Reply #29 on: October 30, 2012, 02:19:25 PM »
Grant enlighten me to how Keynesian economics controls government spending?

Also which half of the political world favours Austrian economics?

grantmeaname

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Re: Should I add a precious metals mining fund to my investments?
« Reply #30 on: October 30, 2012, 02:34:36 PM »
Keynesianism suggests that government spending is increased in recessions and decreased in prosperity. The right has soundly rejected Keynesianism.

AdrianM

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Re: Should I add a precious metals mining fund to my investments?
« Reply #31 on: October 30, 2012, 04:00:55 PM »
Keynesianism suggests that government spending is increased in recessions and decreased in prosperity. The right has soundly rejected Keynesianism.
You are mistaken. Don't belive what they say belive what they do.

Here are the ratios of deficit to GDP for the past five presidents:

Ronald Reagan
 1981-88 4.2 %
 1982-89 4.2
 Average 4.2

George H. W. Bush
 1989-92 4.0
 1990-93 4.3
 Average 4.2

Bill Clinton
 1993-2000 0.8
 1994-2001 0.1
 Average 0.5

George W. Bush
 2001-08 2.0
 2002-09 3.4
 Average 2.7

Barack Obama
 2009-12* 9.1
 2010-12 8.7
 Average 8.9

The full article. http://www.forbes.com/sites/jamesglassman/2012/07/11/the-facts-about-budget-deficits-how-the-presidents-truly-rank/

All governemts are Keynesian some just play lip service to Austrian Economics so as to get voted in.

grantmeaname

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Re: Should I add a precious metals mining fund to my investments?
« Reply #32 on: October 30, 2012, 06:31:58 PM »
Ever heard of the "no true scotsman" fallacy?

arebelspy

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Re: Should I add a precious metals mining fund to my investments?
« Reply #33 on: October 30, 2012, 06:40:16 PM »
Ever heard of the "no true scotsman" fallacy?

It's one of my favorites.

But no true philosopher cites that fallacy.
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capital

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Re: Should I add a precious metals mining fund to my investments?
« Reply #34 on: October 31, 2012, 10:27:44 PM »
Grant enlighten me to how Keynesian economics controls government spending?

Also which half of the political world favours Austrian economics?
Economics doesn't control government spending. Politicians control government spending, and politicians generally do what is most politically expedient, rather than what any particular economic theory tells them to.

Keynesian economics suggests that the government should spend more money when private-sector demand is weak and there are idle resources (during recessions) and less when private-sector demand is strong (during expansions) to avoid crowding out.