The point is exactly that. Gold has stayed the same, but not the fiat paper money that has been unhinged from the standard. And almost all of that inflation has been in my lifetime since Nixon (and those behind him) cut the final ties of gold backed currency. So, actually the buying power of the "value of currency" has changed immensely and not for the better. Very predictable.

I remember reading some Ken Fisher writings a number of years ago. Long forgotten who the rep was. Sounds like you're affiliated with Fisher Investments. Edward Jones runs the same argument by falling for the "just a commodity" scam.

Fisher sales rep or your contact there or Ken Fisher's writings?

If an ounce of gold has the same purchasing power today as in 1790, what's your point, other than it's kept the same 'value' for over 200 years?

I used to track the cost of a Corvette versus my gross pay, and it tracked very nicely. Same for a loaf of bread or quart of milk, relative to average hourly pay.

We've been on and off the gold standard, and in the terms we've both just quoted, the "value of the currency" may vary all over the map but its buying power doesn't, so what's the point?

What the Fisher representative could not get a grasp on is that expressing the value of gold in paper money is not setting the value of the gold, only that of the fiat paper money. Pegging your currency to a gold and silver standard not only serves to stabilize the value of the currency but also to keep the reckless printing and spending an out of control government will engage in. This is why the founders expressed the currency in grains of gold and silver. They had just seen the Continental dollar go worthless. Just as we are seeing global currencies in a race to the bottom today.

Look at it this way, an ounce of gold in 1790 could buy you a nice suit and a pair of shoes. Today an ounce of gold can buy you.......a nice suit and a pair of shoes. The dollar and any dollar denominated investment has lost 97% of its purchasing power.

Note that Ayn Rand revered the sign of the dollar - when it was set to a gold standard.

:)
An excellent medium of exchange, in part because it doesn't rust or corrode except under the most dire circumstances!
:)

http://www.macrotrends.net/1333/histo...

Good luck timing that one... You might win over ten or twenty or forty years, but if you get the wrong part of the cycle, you're screwed.

Ten or twenty or fifty-year 'returns' don't predict anything. It's still a commodity, driven by economics.

Or you can deny that and follow your own beliefs.

I wonder what you 'asked Fisher' and what their answer was... or who answered it. Did you ever read Ken's writings on the subject? Did you find errors in his logic?

Just curious...

And what many investors don't know is that unless you are actually in physical possession of the gold, you have nothing but paper in the first place, as most real gold is committed 50+ times to separate buyers. Tell me how that is any different than our fiat currency.

Now I view things completely different when talking about gold as currency, but as an investment, it's purpose is as a hedge and/or portfolio diversification.

I have both. I'm still working on that transmutation formula from my alchemy set, though. ;)

As an inflation hedge, gold is so-so at best. Now...as a hyperinflation hedge...now we're talking. Might we experience hyperinflation?

The correct interpretation from looking at the plot of gold value is that gold prices are generally flat when relatively fiscal conservatives are in presidential office (Reagan, Bush I?, Clinton), and when spendthrifts like Carter, Bush II, and Obama get into office, hitch your ride on the gold train. I applied that wisdom on the day after Obama got elected, and my Au is worth $1230/oz. now vs. $880 then. That is only a 5% return on investment, but compared to everything else in this era of no reward for risk taken, that's not bad.

Yes, Au prices did go down over the last several years. This was the result of a very clear, stated interference by the Federal Reserve to attempt to keep Au prices at $1200/oz. One thing that any investor should learn is that fighting the Fed is a losing battle.

And more. Even setting aside the obvious fundamental argument of metals versus fiat paper money, consider even this within the limited debate that gold is only another commodity:

http://www.mining.com/50-years-gold-p...

Ah, the old repeated schtick that gold is only another commodity. Totally ignoring 5000 years of monetary history where every society that has tried this failed argument - by definition also economically failed - along with their paper currency inflating out of viable existence. Every time. And with huge upheavals of society.

Fisher Investment's very existence is dependent on keeping people believing their rhetoric that gold is just another commodity. They faltered when I questioned them upon this. They could not answer why any metal coinage, be it gold, silver, copper, nickel, platinum or even aluminum has a melt value. If you so much want to consider it a commodity then explain why it is the commodity that has an expressed value rather than the fiat paper money. And guess what happens when you disconnect the value of the paper money from the substance that actually does have value.

Unless your belief system decides differently...
:)))
And I completely agree with what you said!

Gold has no more intrinsic value, or marginal utility than tulip bulbs and is subject to the same market forces.

Thanks, CB... my point, exactly.
Well-said!
(Actually, Better-Said)!

The fun thing is, when I get them and some silver rounds out, we "play" poker with them. When you toss a 1 oz gold or silver coin on the table to "bet" and hear the clinks, it is sooooo satisfying.....

As I see it, there are four gold markets: 1. The short term speculator, 2. The long term hedgers, 3. Industrial users, 4. The SHTF crowd. With 1 and 2 it all depends on how good your crystal ball is. You can make, or lose a lot of money. The industrial users probably don't affect the market as much as the speculators who trade mass amounts of gold on paper. The industrial users are going to use what they will use to fill demand for their products. The SHTF crowd are the ones who really need to change their thinking. They buy it as a future medium of exchange. However, in an SHTF situation gold's utility is not high. If you believe in SHTF, it would be much better to invest in productive land, old fashioned farm implements, long term food storage, lead and powder, etc. In an SHTF situation, if you are hungry and have a pound of gold and I have guns, ammo and a pallet load of poptarts I think I will probably come out better in the negotiation.

I know it's very little, but when you add that up over a million boards, it adds up. If consumer electronics sales drop, that demand for gold plating drops.

see above for some potentially valid numbers...
:)

http://www.gold.org/supply-and-demand...

for some numbers on Demand for gold.
Technology: about 9%
Jewellry: about 50%
Central Banks: about 14% as of 2014 or so.
Investors: about 33%

So, you investors and jewellry makers drive most of the price of gold!
Gee, when investors drive the values of their investments, does that tell you something?
Nah, not likely. Avoid Friedman on Economics... stick with your old buddies like Keynes... :))))))))))

Check the quantities used... there's gold all over the place in electronic parts' plating, but the thickness, mass and hence weight is very tiny.
Even if you multiply by large quantities.

Let me know if that's not correct. I've been in 'electronics' since about 1965 and seen lots of gold-plated stuff.

I did some of my early investing on my own, then tried the 401k options offered by my employer. The initial selection was limited and I was ignorant. They broadened the selection after a few wasted years, but I still had no real clue how to invest.
I then tried a name-brand low-cost firm which did help me understand goals and allocations, but then left me on my own after making some static suggestions.
I then moved to Smith Barney which lost me a LOT of money until I realized that the broker was driving around in her new Lexus SUV when I was trying to figure out how to buy a used corporate car Ford Taurus.
Finally heard about Fisher Investments, went 'up the mountain' (literally, in the Santa Cruz Mountains of CA) to interview them and concluded that they were worth a try.
Signed over our IRAs to them to manage about 12 years ago, drank the kool-aid, read Ken's books (at least a half dozen of them) and never looked back.
From my last notes, as a fraction of initial investments in my IRA plus my wife's IRA...

Time from 06/03/2004 to Today 11 years 11 months
Total w/d's & Fees = ($759,467.29) 69.43%
Avg. % Change/Year (0.91)
Total net gain = $640,514.81 58.56%
"Years to empty" (at current withdrawal rate)= 110

Keep in mind that those results include the "Crash of '07, too! We never bailed or did any major reallocations during that time, although we did tweak our portfolios to increase bond holdings from about ten to up to 20% or so. In hindsight, we should have been 100% equities All The Time. We'd have about 5% more money there now if we had.

That's why I'm happy with my kool-aid and I'm a Believer.
And why I keep asking why anyone publishes a financial newsletter... Why the hell would they invite competition in the markets against their own selections?!
Unless they're just looking for extra income beyond their own investment returns?
Which, again, begs the same question of "WHY"?!

Socrates is my hero. Warren Buffet or Steve Forbes or Donald Trump is not.
They're in a different league. I don't/can't buy companies outright... just tiny parts of them via the managed IRAs.

A very good friend of mine used to pass investment suggestions to me and most of them were great. Then he suddenly stopped sending me suggestions. When I asked why, he responded that it was taking too much time and energy to beat the market by a few percentage points and he'd found a company that could do as well or better then he could. His new resource was Fisher Investments, and that's when my wife and I decided to investigate them.
They have a $500k minimum now, although it was $1M when we joined (and just squeaked in). But they also manage many cities' and companies' retirement investments, too, and have many Billions under their management.
At one point, they implied they had more compute power under their roof than Fidelity.
Who knows? Who cares?
They've done well by us and for us.
If anyone doesn't like the flavor of the kool-aid, they don't have to invest through them.
Although they do offer a choice of three or so firms to handle the trades in your account, and I opened my own account with our selected firm and all equity trades are about $8.00 or so. I trade rarely in that tiny account. It's just a small playground for me... although if it gets big enough, I'm buying a classic Corvette with the money. If I live long enough...

Happy investing and motoring!

$5Au never claimed gold was the "best" investment. However, as part of a DIVERSIFIED portfolio, it has a place. You can purchase it easily through an exchange traded fund such as GLD or IAU. You can also buy shares in gold mining stocks, some of which pay a dividend, if you like. Some people prefer to buy gold coins. Or hunt for it yourself. $5Au has spent pleasant hours panning for it, but quite honestly, more as recreation than as a money maker. $5Au generally keeps 5 to 10 percent of his portfolio in various forms of this beautiful metal.

That's more than I can say.
Most Money Managers I have used know the lingo but not much more than me. When I was young and just starting to make real money, I used a friend who was also recommended by other friends. A real nice guy and a good racquetball partner, but I lost money using his advice. Life is a learning experience.

the value in gold (coinage) is for preppers after the collapse...or to tie politicians to prevent the devaluation of a paper currency...

And if grocery stuff availability plummets, the 'value' of gold (or circuit boards) required to trade for 'em skyrockets, too.
So, how much is 'enough' in any scenario?
I wouldn't want to guess.
Perhaps skills will be most valuable, like vehicle repair, carpentry, plumbing...?
:) How's THAT for an alternative?
AR used gold coins in the Gulch, but they were used, as normal, where skills needed to be monetarized for trade so you wouldn't have to trade an hour of carpentry for a carton of apples at the grocery.
:)