Gold.

[Zhong Lu + 845]

Tell me why.

 

 

Didn't have a position either way. Just curious.

Also, if gold dumps when the S&P dumps, doesn't this mean that the usual "oh I should buy gold if the markets are in trouble" belief to be wrong? If so, then why do people continue to hold onto it? 

Edited February 29, 2020 by Zhong Lu

[Douglas Buckland + 6,308]

Kryptonite is a much ‘safer haven’ in my opinion...😂

[Douglas Buckland + 6,308]

Zhong, I am sure that you realize that when it comes to trading (among other things) that I generally have no idea what I am talking about...

That said, I will continue to hoard Kryptonite...

[Enthalpic + 1,496]

1 hour ago, Zhong Lu said:

Tell me why.

 

 

Didn't have a position either way. Just curious.

Also, if gold dumps when the S&P dumps, doesn't this mean that the usual "oh I should buy gold if the markets are in trouble" belief to be wrong? If so, then why do people continue to hold onto it? 

20.62% in a year is damn good.

https://goldprice.org/

Edited February 29, 2020 by Enthalpic

[Otis11 + 551]

A fairly sizable and accessible gold deposit was found in India this week. Supply goes up... future value goes down.

 

That's my best guess anyway. 

[Enthalpic + 1,496]

14 minutes ago, Otis11 said:

A fairly sizable and accessible gold deposit was found in India this week. Supply goes up... future value goes down.

 

That's my best guess anyway. 

I think it is more like diamonds; actual supply has little effect on price.  Most "gold" exchanges are just paper or electrons.

Edited February 29, 2020 by Enthalpic

[0R0 + 6,251]

2 hours ago, Zhong Lu said:

Tell me why.

 

Didn't have a position either way. Just curious.

Also, if gold dumps when the S&P dumps, doesn't this mean that the usual "oh I should buy gold if the markets are in trouble" belief to be wrong? If so, then why do people continue to hold onto it? 

It happened in 2008 as well. leveraged long gold positions were sold to cover margin calls from losses on other positions. You sell what is liquid. One of the popular trades was the reflation quadrant trade (Hedgeye) which puts you in oil gold industrials and commodities. Obviously not  a good place to be in covid 19 days. The most liquid portion is gold, so you sell that. 

The other component is that there were no rate cut announcements from central banks as they continue to ignore the fact that the disruption from the pandemic is causing huge demand for credit, particularly the short term credit that the Fed (and other CBs) does affect directly. 

[Douglas Buckland + 6,308]

43 minutes ago, Otis11 said:

A fairly sizable and accessible gold deposit was found in India this week. Supply goes up... future value goes down.

 

That's my best guess anyway. 

That was supposed to be a secret Otis...😖

[Zhong Lu + 845]

10 hours ago, 0R0 said:

It happened in 2008 as well. leveraged long gold positions were sold to cover margin calls from losses on other positions. You sell what is liquid. One of the popular trades was the reflation quadrant trade (Hedgeye) which puts you in oil gold industrials and commodities. Obviously not  a good place to be in covid 19 days. The most liquid portion is gold, so you sell that. 

The other component is that there were no rate cut announcements from central banks as they continue to ignore the fact that the disruption from the pandemic is causing huge demand for credit, particularly the short term credit that the Fed (and other CBs) does affect directly. 

Wondering if the algos played it.  "Oh look, a lot of people think it's going higher.  Ha! Take that suckers!" 

Reverts prices back to mean.

Edited February 29, 2020 by Zhong Lu

[George8944 + 128]

A new discovery of gold would increase gold's volatility in the very near term until the facts are known.  However, not all gold mines are created equal and it boils down to how effeciently can it be mined and refined into pure metal for jewlery and trade.  Conceptually its not to dissimilar than shale oil or better yet, sand tar oil.   We know where it is and how much, but getting it to market economically is challenging.  

 

[George8944 + 128]

Zhong Lu -  you can play Gold like a commodity and many do.  However, it's true vaule is intrinsic.   Over days, weeks or years it's value fluctuates.  If you look over decades and decades it holds its value.  Do this experiment.   Find out the cost of something like a house, car, bicycle, bag or food, etc. and convert the price to an equivelent amount of gold using gold's price at that time.   Now use todays price of gold, convert your quanity of gold back to dollars and try to buy the same stuff you did decades ago.  You will see how gold held its value.  You're probably confused so I'll give you an example.

1938

Gold price:  $34.89 per ounce.
Average cost of a new car:   $860

Cost of car in ounces of gold:    860/ 34.89 =  24.6 ounces.

Put both $860 cash and the 24.6 ounces of gold in your mattress.

----------------------FAST FORWARD to 2020. -----------------------

Remove the $860 cash from the mattress and go buy a car.   You're lucking to get a working clunker. for $860.  You can however buy a very nice bicycle.

Now take your 24.6 ounces of gold from 1938 and convert them to dollars.   Using $1500 for an ounce of gold today, you get  24.6 x 1500= $37,000  ( I'm rounding.) 

Now try to buy a car.   I terms of buying a car,  gold held its value so much better than the dollar over the decades.  $37k buys a nice car! 

 

The bottom line is gold is NOT and investment like stocks.  It's a holder of value.   This is a difficult distinction for most people to wrap their brain around.   The US Dollar, by design and intention, loses 2% of its value each year.

Disclaimer:   I own options on the GLD EFT.  

[Rob Kramer + 696]

24 minutes ago, George8944 said:

Zhong Lu -  you can play Gold like a commodity and many do.  However, it's true vaule is intrinsic.   Over days, weeks or years it's value fluctuates.  If you look over decades and decades it holds its value.  Do this experiment.   Find out the cost of something like a house, car, bicycle, bag or food, etc. and convert the price to an equivelent amount of gold using gold's price at that time.   Now use todays price of gold, convert your quanity of gold back to dollars and try to buy the same stuff you did decades ago.  You will see how gold held its value.  You're probably confused so I'll give you an example.

1938

Gold price:  $34.89 per ounce.
Average cost of a new car:   $860

Cost of car in ounces of gold:    860/ 34.89 =  24.6 ounces.

Put both $860 cash and the 24.6 ounces of gold in your mattress.

----------------------FAST FORWARD to 2020. -----------------------

Remove the $860 cash from the mattress and go buy a car.   You're lucking to get a working clunker. for $860.  You can however buy a very nice bicycle.

Now take your 24.6 ounces of gold from 1938 and convert them to dollars.   Using $1500 for an ounce of gold today, you get  24.6 x 1500= $37,000  ( I'm rounding.) 

Now try to buy a car.   I terms of buying a car,  gold held its value so much better than the dollar over the decades.  $37k buys a nice car! 

 

The bottom line is gold is NOT and investment like stocks.  It's a holder of value.   This is a difficult distinction for most people to wrap their brain around.   The US Dollar, by design and intention, loses 2% of its value each year.

Disclaimer:   I own options on the GLD EFT.  

At the Toronto car show this year it was hard to find a nice vehicle under 50k . If Gold didnt run up it would be lower than 37K but I get the example kinda cool. Well put description of gold not being an investment. I think it's good to buy if you can at a low +  if you can sell it at close to spot price . Same with US / CAD you can use time to exchange back and forth at favorable rates every so often. Certain CDN oil + gold stocks earn in usd and have natural hedges. 

[George8944 + 128]

19 minutes ago, Rob Kramer said:

If Gold didnt run up it would be lower than 37K

Are you talking Canadian or US dollars?   That's a joke.   Your response is typical of those I've shared this analysis with but don't want to believe the money in their pocket is a decaying assett.  OK use  $1100/ ounce.   24.6  x 1100= $27k  and you still have a nice car.  In any case,  you still get far more car than you would by holding dollars over the same period.   

You can't deny a very nice car can be had for $37k.  Are their more expensive cars?  You bet.   I'm partial to the Honda CRV so I will have money left.    The dollar on the other hand loses value each and every year.   

I'm not advocating everyone convert their cash to gold.  However, I think a small percentage of everyones portfolio should be in hard assets like gold.  It's insurance against the unthinkable..  All fiat currency comes to an end because without an peg to something of value, the urge to create more is too great. 

[Rob Kramer + 696]

22 minutes ago, George8944 said:

Are you talking Canadian or US dollars?   That's a joke.   Your response is typical of those I've shared this analysis with but don't want to believe the money in their pocket is a decaying assett.  OK use  $1100/ ounce.   24.6  x 1100= $27k  and you still have a nice car.  In any case,  you still get far more car than you would by holding dollars over the same period.   

You can't deny a very nice car can be had for $37k.  Are their more expensive cars?  You bet.   I'm partial to the Honda CRV so I will have money left.    The dollar on the other hand loses value each and every year.   

I'm not advocating everyone convert their cash to gold.  However, I think a small percentage of everyones portfolio should be in hard assets like gold.  It's insurance against the unthinkable..  All fiat currency comes to an end because without an peg to something of value, the urge to create more is too great. 

No I'm totally in agreement cash is a decaying asset. My dad went through my Grandpa's house purchase files after he passed and found house 1 - 11k CAD (few acres)  house 2 - 89 CAD (200+ acres) house 3- 280 CAD town size lot .2 acre? And sold for 480K once my Grandma passed. All in same town. But at the car show Grand Caravan was 50+ Jeeps, Rams, Audi, Accord, VW'S , MINI any mid size SUV... deliver and tax is inflated also. It's ok to call a base or mass production car nice but in reality 70% or more are above 37k CAD with any options. The Bugatti 'the black car' was there also @ 16M $ lol. 

I found many responses you've given have pre assumptions. Your definition of gold is not hard to follow yet you assume ZU cant follow and you assume I dont understand money or the price of cars or gold. As a mechanic who worked at dealerships and trade my own  stock assets I'm curious if you think anyone knows anything. 

[ronwagn + 6,290]

On 2/29/2020 at 5:35 PM, George8944 said:

Zhong Lu -  you can play Gold like a commodity and many do.  However, it's true vaule is intrinsic.   Over days, weeks or years it's value fluctuates.  If you look over decades and decades it holds its value.  Do this experiment.   Find out the cost of something like a house, car, bicycle, bag or food, etc. and convert the price to an equivelent amount of gold using gold's price at that time.   Now use todays price of gold, convert your quanity of gold back to dollars and try to buy the same stuff you did decades ago.  You will see how gold held its value.  You're probably confused so I'll give you an example.

1938

Gold price:  $34.89 per ounce.
Average cost of a new car:   $860

Cost of car in ounces of gold:    860/ 34.89 =  24.6 ounces.

Put both $860 cash and the 24.6 ounces of gold in your mattress.

----------------------FAST FORWARD to 2020. -----------------------

Remove the $860 cash from the mattress and go buy a car.   You're lucking to get a working clunker. for $860.  You can however buy a very nice bicycle.

Now take your 24.6 ounces of gold from 1938 and convert them to dollars.   Using $1500 for an ounce of gold today, you get  24.6 x 1500= $37,000  ( I'm rounding.) 

Now try to buy a car.   I terms of buying a car,  gold held its value so much better than the dollar over the decades.  $37k buys a nice car! 

 

The bottom line is gold is NOT and investment like stocks.  It's a holder of value.   This is a difficult distinction for most people to wrap their brain around.   The US Dollar, by design and intention, loses 2% of its value each year.

Disclaimer:   I own options on the GLD EFT.  

That is the best example I have seen on why to buy Gold. Not to make money, but to conserve value. 

What do you think of silver as a similar investment? It seems to me that it is overly abundant. 

[George8944 + 128]

1 hour ago, ronwagn said:

What do you think of silver as a similar investment? It seems to me that it is overly abundant.

It is a valuable metal no doubt and it is easily recognizable by the average person so those are two important points for me.  Unlike gold, silver has more industrial uses so it will fluctuate more just based on the supply and demand in the industrial world.  It's holder of value is probably slightly lower than gold.  My preference is to buy silver in coinage form.   My thoughts on holding silver is for end-of-times bartering if the society collapse on itself or a meteor hits the planet disrupting life.   In those conditions I don't think people will believe a silver bar is real silver.  Show them a 1964 Kennedy half dollar and everyone will know it is has silver.  At that point you're in a negotiation for price.   Shotgun shells or antibiotics may be worth more.     I hope I answered your question.   Gold and Silver are close cousins economically speaking.

The one thing I do like about gold is its "value density".  You need a lot of quarters and half dollars (at great weight and size) to equal one gold coin.  Of course the silver is more easily traded in smaller sizes.  It really depends why you're holding it.

[George8944 + 128]

On 2/29/2020 at 8:34 PM, Rob Kramer said:

Your definition of gold is not hard to follow yet you assume ZU cant follow and you assume I dont understand money or the price of cars or gold. As a mechanic who worked at dealerships and trade my own  stock assets I'm curious if you think anyone knows anything. 

Frankly, I'm wondering what kind of life you have that you are bitter much of the time when you respond to people.  I'm glad you found my explanation clear.  I was worried that it wasn't such so I posted the example.  It was more a commentary on  my confidence in communicating clearly than anyone's intelligence.  I tend to use examples a lot, so get used to it.  It seems to help avoid countless iterations of posts. I find it easier to state me point and give an example.  With this style the person has something concrete to respond on.  It moves the conversation forward faster and eliminates confusion. In the future, just skip over the parts you don't find useful.  It's all about communications.

BTW -  Your $50k Canadian for the Grand Caravan converts to $37,456 US.   The 26.4 ounces of gold in my example would almost buy that car!   I think you just like arguing.

[Douglas Buckland + 6,308]

2 hours ago, ronwagn said:

That is the best example I have seen on why to buy Gold. Not to make money, but to conserve value. 

What do you think of silver as a similar investment? It seems to me that it is overly abundant. 

It kind of depends on what car you bought in 1938.

A 1933 Chrysler Imperial 2 door convertible went for USD520,000 at auction in 2013 (just for an example).

😂

[ronwagn + 6,290]

1 hour ago, George8944 said:

Frankly, I'm wondering what kind of life you have that you are bitter much of the time when you respond to people.  I'm glad you found my explanation clear.  I was worried that it wasn't such so I posted the example.  It was more a commentary on  my confidence in communicating clearly than anyone's intelligence.  I tend to use examples a lot, so get used to it.  It seems to help avoid countless iterations of posts. I find it easier to state me point and give an example.  With this style the person has something concrete to respond on.  It moves the conversation forward faster and eliminates confusion. In the future, just skip over the parts you don't find useful.  It's all about communications.

BTW -  Your $50k Canadian for the Grand Caravan converts to $37,456 US.   The 26.4 ounces of gold in my example would almost buy that car!   I think you just like arguing.

That sounds like a sticker price, not a negotiated price. The last one we bought was about $31,000 for a Town and Country with most of the gizmos. That was only four years ago. 

[Rob Kramer + 696]

1 hour ago, George8944 said:

Frankly, I'm wondering what kind of life you have that you are bitter much of the time when you respond to people.  I'm glad you found my explanation clear.  I was worried that it wasn't such so I posted the example.  It was more a commentary on  my confidence in communicating clearly than anyone's intelligence.  I tend to use examples a lot, so get used to it.  It seems to help avoid countless iterations of posts. I find it easier to state me point and give an example.  With this style the person has something concrete to respond on.  It moves the conversation forward faster and eliminates confusion. In the future, just skip over the parts you don't find useful.  It's all about communications.

BTW -  Your $50k Canadian for the Grand Caravan converts to $37,456 US.   The 26.4 ounces of gold in my example would almost buy that car!   I think you just like arguing.

Another assumption ^ . Well I guess you know what I'm gonna say next so I dont have to say it lol jk but to be clear I've agreed with you the entire time . So all you had to say was " ya the usd to cad conversion makes the difference in price" . Mabey you were confused what currency Toronto uses? Or your Joking lol. But being serious now I was just adding to the fact that inflation eats cash . Your post said "average car" so I mentioned with reference to location the average price you assumed i was trying to argue. I also made reference to the example being influenced by spot prices. My apologies if I was unclear. Were in agreement sir. 

[Rob Kramer + 696]

1 hour ago, ronwagn said:

That sounds like a sticker price, not a negotiated price. The last one we bought was about $31,000 for a Town and Country with most of the gizmos. That was only four years ago. 

It was (car show) and was the sport model. The reason I looked was because my dad bought one used for 24k recently (I was surprised). The Pacifica (not even hybrid) was high 60's for a body kit rims leather with plug In's in the seat and built in head rest tvs ect. But vehicles in Canada are expensive! My brothers eco diesel with ALL discounts available was 46k pre tax my other brother just got a 20' Santa fe in the high 40s he wouldn't say the price only the payment so that's an estimate but with all discounts and a friend bought a chev 4x4 5.3L 4 door end of 17 was 62K with a sale on. Neighbors 19' Elantra sport was 40k. (Elantra is Hyundai's second cheapest model mabey tied with veloster). The Mazda miata was close to 50k at the show  .. I'm pretty sure it was close to 10k when it was launched around 1990' so almost 1K /yr inflation... I'd say I'd rather the gold but I had a lowered miata with sticky Toyo's a LSD and a roll cage and can tell you the car is more fun . A not so fun fact... the roof line was below the average truck/astro Van's window so highway driving was super dangerous.  Constant lane chages without people seeing you. GET MIATA HERE! (Story time - cant sleep)

[ronwagn + 6,290]

Lots of info there. My requirements for a large van were met by a Nissan NV3500 5.6 Liter engine with several gears including tow mode. It has Navigation, cruise, Sirius, adjustable lumbar support, leather, etc. $41,000 new. It is the biggest van short of an extra long Mercedes. ( I bought the 12 passenger model with windows and itis 7 foot tall. Supports 700 pounds on the roof. The high roof doesn't come with the seats and window. It rides like a truck, so not comparable to a Suburban for ride, but has far more room. It is half the price of their most luxurious models. 

Edited March 2, 2020 by ronwagn

[Rob Kramer + 696]

25 minutes ago, ronwagn said:

Lots of info there. My requirements for a large van were met by a Nissan NV3500 5.6 Liter engine with several gears including tow mode. It has Navigation, cruise, Sirius, adjustable lumbar support, leather, etc. $41,000 new. It is the biggest van short of an extra long Mercedes. ( I bought the 12 passenger model with windows and itis 7 foot tall. Supports 700 pounds on the roof. The high roof doesn't come with the seats and window. It rides like a truck, so not comparable to a Suburban for ride, but has far more room. It is half the price of their most luxurious models. 

That's a steal! Plus fuel isnt so crazy priced where you are . I saw it for .97c/L on the weekend (3.60$ cad/US Gal?) Now its 1.08$/L again . I think my next vehicle will be a Caravan but I'd want a toyota sienna  if the price was right. 

[ronwagn + 6,290]

The Sienna is probably the best choice. I don't like the looks as much but it has the credentials. If you want it to last for a long time. We love the seats that fold down into the floor in the Chrysler minivans. The problem with them is on rocky roads since they are lower to the ground than some. I am planning a trip through Canada's heartland and mountains and down into Montana. Not sure if I should take the big van because of the high gasoline prices, same question if driving to Alaska. We can sleep well in the big van if my wife would be willing or we can tow a trailer. Hotels and motels are high in the summer, but that is probably the best idea. My wife insists on reservations. 

[Zhong Lu + 845]

On 2/29/2020 at 6:35 PM, George8944 said:

Zhong Lu -  you can play Gold like a commodity and many do.  However, it's true vaule is intrinsic.   Over days, weeks or years it's value fluctuates.  If you look over decades and decades it holds its value.  Do this experiment.   Find out the cost of something like a house, car, bicycle, bag or food, etc. and convert the price to an equivelent amount of gold using gold's price at that time.   Now use todays price of gold, convert your quanity of gold back to dollars and try to buy the same stuff you did decades ago.  You will see how gold held its value.  You're probably confused so I'll give you an example.

1938

Gold price:  $34.89 per ounce.
Average cost of a new car:   $860

Cost of car in ounces of gold:    860/ 34.89 =  24.6 ounces.

Put both $860 cash and the 24.6 ounces of gold in your mattress.

----------------------FAST FORWARD to 2020. -----------------------

Remove the $860 cash from the mattress and go buy a car.   You're lucking to get a working clunker. for $860.  You can however buy a very nice bicycle.

Now take your 24.6 ounces of gold from 1938 and convert them to dollars.   Using $1500 for an ounce of gold today, you get  24.6 x 1500= $37,000  ( I'm rounding.) 

Now try to buy a car.   I terms of buying a car,  gold held its value so much better than the dollar over the decades.  $37k buys a nice car! 

 

The bottom line is gold is NOT and investment like stocks.  It's a holder of value.   This is a difficult distinction for most people to wrap their brain around.   The US Dollar, by design and intention, loses 2% of its value each year.

Disclaimer:   I own options on the GLD EFT.  

Fair enough, but I'm not interested in conserving value.  The problem is the opportunity cost.  While you're holding the gold, what else could you be buying? I mean, if you bought the equivalent of an index fund in 1938 with 800 dollars you'd be wealthier then if you bought gold.