Only
the financial authorities can truthful anwer that question. My opinion
is that gold prices can not decrease much more for a long period of time
(months and longer) That is an opinion, not the right answer. To
understand me, read my long answer please.
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The
answers have been written for other topics. You have to “translate” it
to your question. Not everything is meant for your question. Do yourself
a favor, read until
It
is not that simple to answer this question in a few words, because
there are a two oposite forces that influance the price of gold.
I will mix old answers with new written words to win time.
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There
is a differance between the price and the purchasing power. The
purchasing power of gold stays more or less the same over the period of
thousands of years. The purchasing power of fiat currencies like $$$ or
€€€ or every odther fiat currency looses its purchasing power over time.
The answer have been written for an other topic. You have to “translate” it to your question.
Which would you take if you were given a choice of either $1,000,000 in cash or $1,000,000 in gold?
To be honest, I do not hesitate for one second. I would go for the gold. I explain why.
$1,000,000 is so large that it would takes yearssss to spend the money if one live frugal.
In
the 1970’s there was a soap that was called “the six million dollar
man”. It was a astronaut that had a terrible accident, but with the help
of advanced technology and loads of money, he was rebuild and changed
in a superstrong man that worked for the government.
What
I want to say is that six million dollar was in those days an
astronomic high number, a bit like six billion is today. Now it is
“just” a big number.
The inflation eats the purchase power of the $1,000,000 in cash.
On
the other hand, no matter what they say about gold. In Roman time, in
the 19e century and today, one can buy a handmade suit for one ounce of
gold. Inflation have no effect on the purchase power of gold in the long
run.
Let
us say that I could buy about 770 ounces of gold with the $1,000,000
and I estimate that I will use 100 years to spend that gold. That means
that I allow myself to sell every year 7.7 ounces of gold per year and
there will be still a lot of gold when I die. By the way, I am old
enough to make that 50 years and spend 15 ounces of gold every year.
If
inflation hits at a rate of 10% for ten years or so, like in the 1970’s
was the case, I can still have the same lifestyle of today. With the
$1,000,000 in cash, it will be impossible.
I do not give financial advice. You have to act on your own responsibility.
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The finanacial authorities knows the fact I talked about above, but do not want Joe Sixpac to own gold.
And that gives us the second main power that influance the price of gold.
Again follows an “old” answer.
To
my great regret (and that is true !!) I have to conclude that I am
right again in my statement that technical (and fundamental) analyzes in
precious metals are completely worthless.
Please
note that the people who perform and publish the analyzes are often
competent and reliable people. I respect those people and their great
efforts. I therefore ask those involved not to feel "accused" or "bad".
Where silver still cost € 430 a few days or weeks ago, the price has dropped to € 418 at the time of writing.
As
far as I believe, it are the financial authorities who, with loads of
money, control the price of precious metals. That happens in the futures
market.
By
making clever use of technical analysis, they can make people hope (and
I did hope to) that the price of precious metals will finally pick up,
and then turn that hope into despair by artificially reducing the price.
.
The
reason is that the financial authorities would rather not have the
small investor own precious metals. It is better for them that the small
investor puts his money in debt paper that hardly yields any interest.
But there are signs that gold has great value within their closed circle
and plays an important role in the financial system.
The best way to hunt people out of precious metals is to first give hope for higher prices and then to lower the price.
One
and a half billion dollars with one go is sometimes used to discourage
people from investing even more in precious metals. No small investor
can compete with that.
The
only thing that the small investor can do is monthly (or yearly)
purchase a small amount of precious metal and wisely "forget" that it
was bought.
But
don't get caught. Never let yourself be convinced that silver is "worth
nothing". Whether gold is worth anything. The financial authorities are
making too much effort to controle the price to believe that it is
"worth nothing." And if you believe it would be worth nothing, send it
to me. I will gladly pay the shipping costs.
—————————————————-
Those
two facts makes people wonder if they should buy gold or not. Gold
holds its purchasing power over thousands of years, but the price goes
down. Has gold lost its ability to keep its purchasing power?
I do not believe that gold looses its purchasing power over the long run. However one should know how en especialy what to buy.
Do
not buy any gold that one can not hold in ones hands ! No ETF’s as an
example. No goldaccount in a bank, etc. Non of those possibilities hold
real gold, but only futures on gold. Futures are promisses, but there
are 100 times more promisses sold, than there is real gold avalible.
If
you have a family member or a friend that promisse so much, that he or
she never can commite to those promisses, do you still take those
promisses seriously? I do not.
So you should own only PHYSICAL precious metals.
————————————-
Again an “old” answer
Who say it is a bad idea ?
Let me suggest that you make your own study. Let me put you on the way with the study I made with silver.
—————————————————————-
You can replace the word “silver” by the word “gold”.
4.
Another piece of advice I always give is to buy 1 ounce of PHYSICAL
silver each month and keep it until the day you retire. In the long run
you will have profits. You will not easily sell the silver for other
purposes (very important), so you will have your own retirement capital,
even if it is a relatively small sum of money. If you are 20 years of
age, you have lived for 240 months and you should have 240 ounces of
physical silver. One ounce of silver costs now more or less $20, so you
should not feel the buy in your budget, even if you have to buy two
ounces for the next 240 months, because you started too late with that
idea.
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About
the price of silver I can say, that I made a study that anybody can
make for oneself and I can asure you that in the long run the changes on
profit are bigger than the changes on loss.
I
pretend to buy every year 12 onces of silver at the end of the year (to
make it more visual understandable). I pretend to start in 1979,
because silver hit a price of $50 to drop with 90% a few years later and
to never hit the price of $50 again for the next 30 years or so. Will
there be profit, yes or no?
From
1979 until 1999 I use USD ($). Later on I use EUR (€) Up to you to use
your currency or to pretend that €1 equals $1. This will not infuence
the overall result of the study.
Even in this exceptionally bad situation one hits finally profits.
One
should not be too worried about the value of ones silver investment in
the long run if one buy every month 1 or more ounce(s) of silver.
(As you can read, I prefere silver over gold, but that is of no importance for you)
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Remember
the saying: “Gold is the money of kings, silver is the money of noble
men, fiat currencies like dollar or euro is the money of ordinary men,
debt is the money of slaves.“
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I do not give financial advice. You have to act on your own responsibility.
Author:
Lives in Brugge, Belgium (1960-present)
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