For someone claiming to have a better understanding than “people”, you sure miss a number of things:People don't seem to have much understanding of gold. Show me a correlation with inflation. Gold doesn't diversify a portfolio, it skews it towards a sector. If you own a broad market index fund, you are exposed to gold in an appropriate proportion. Costs to buy and sell are insanely high compared to conventional investments. Cost/risk to store is high. Chance of being scammed is real. Gold has a tendency to disappear upon death, and not end up in the intended hands. People look at the cost per ounce chart over time and believe that historical performance is good. In reality, this is ignoring inflation and there are no dividends to reinvest. Gold is nowhere near its inflation adjusted all time high, yet uninformed pundits keep saying so.
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Gold prices are near an all-time high around $2,400 per ounce, reflecting a “crisis of confidence,” Sahagian said. “People are looking at other assets that will hold up in the wake of uncertainties and upheaval.” They’re dissatisfied with government and monetary policy after the highest inflation in four decades and concurrent wars in Ukraine and Palestine, advisers said.
1) Anyone can buy GLD/SGOL via an ETF and have little to no costs, especially inside an IRA. Furthermore, most people don’t trade gold. You buy and hold like an index fund.
You can hold physical for 20-40 years and incur no costs, just like an ibond, it is tax deferred until the year you sell. The same cannot be said of any dividend paying ETF outside of retirement account. For some, the lack of taxes until selling is a feature, not a disadvantage.
2) Why does a dividend matter? I’m not buying gold for a dividend. I have numerous stocks that pay no dividend that are doing fine. Not every asset class serves the same function, nor should it. If a dividend is your measure, then you’d remove a lot of stocks out of VTI. Bonds pay a yield and they get bashed for “not keeping up with inflation”…so, there is that.
3) You don’t look at gold in isolation, you look at it in the context of a portfolio. Try reviewing Sortino ratios with gold in a portfolio via portfoliovisualizer. For a large part of history it has increased risk adjusted returns. So, no, it isn’t just a skew to a sector. Which “sector” is gold in? Industrials?
4) Gold is not directly correlated with inflation. Inflation is a poor argument for holding gold. Kind of like people that thought bonds always move opposite of equities. It’s not the strongest argument for holding gold.
5) Equities are equities, any portion of gold you own via some minuscule mining companies via an index fund makes zero difference. Gold is another asset class, by the definition.
Statistics: Posted by Capster1 — Sun May 26, 2024 6:44 pm — Replies 40 — Views 1441