Gold, Silver and Other PMs

Top 2. Feb 22, 1999 4:16 PM

» Kirk_Johnson - Gold

My father would like to know how stable the value of gold is. Is it worth as much now in terms of purchasing power as it was a century ago? He has
heard that a century ago an ounce of gold would buy a good man's suit, and that it will still buy a good man's suit, is this correct?

-- posted by Kirk_Johnson

Top 3. Feb 22, 1999 4:28 PM

» KirkL - Gold has NO GAIN over 194 yrs in buying power!

Contrarian Investment Strategies on pg 280 has a table of inflation adjusted asset class returns from 1802 to 1996.

Gold is flat over that time period with a peak of about $5 in 1979. A dollar of gold bought the same suit in 1996 as it did in 1802 so the answer is yes to your father's question. The funny thing, a dollar invested in stocks in 1802 would now be worth so much that you could purchase the store where you bought that suit giving your father hundreds of suits!

$1 in stock in 1802 is worth $512,232 adjusted for inflation in 1996. As an asset class, stocks outperformed Gold by 512232 to 1!

What is interesting that the chart doesn't show is the price of a suit has fallen dramatically in my lifetime. Of course, the hand made jobs from Italy sold at Neiman Marcus will keep up with inflation, but the suits at Men's Wharehouse are probably cheaper in absolute dollars than 20 yrs ago since we can have them made so cheaply in China and other low producer cost countries.... Just ask those employees at Levi Strause...8(

Buying your books here Kirk's work on this website

<img src=http://www.amazon.com/covers/0/68/481/350/0684813505.m.gif>	by David N. Dreman: Click picture to order
	Review All stock-market investors embrace the motto "Buy low, sell high." Few act accordingly. This book teaches you how. Your job is to execute!

-- posted by KirkL

Which is worth more: The Mother Lode....Or The Mountain?

Top 4. Sep 26, 1999 1:08 PM

» JenL_3 - There's Gold in Them Thar Hills!

This is the frontpage story in today's The Seattle Times:

It's the classic battle between jobs and the environment:

On average, the Battle Mountain mill would process 120,000 pounds of ore to recover 1 ounce of gold. Over a period of 10 years, the company expects to extract 1.6 million ounces of gold. At today's price of $267.90 an ounce, that's a more than $400 million payload.

The company says the project will generate nearly 150 well-paying jobs desperately needed in rural Okanogan County.

And when the mine plays out a decade from now, it will spend millions restoring the site, Battle Mountain says. The company already has posted more than $50 million in bonding to ensure it cleans up after itself.

and on the environmental side:

Opponents are not convinced, and vow to fight on. Battle Mountain essentially proposes to blast the top off a mountain and pollute hundreds of acres - all for "a pickup truck-load of gold," they say.

"To you, this may look like empty land," says Judy Elven, who lives nearby on the rural farm where she raised her children. "But to me, this is paradise, and it's worth fighting for."

Elven is president of the Okanogan Highlands Alliance, which says its membership is equally divided with about 250 from north-central Washington and 250 from Western Washington. That group has enlisted volunteers and lawyers to challenge Battle Mountain's every step and environmental permit.

The mine will permanently scar an entire mountainside, she says. It will pollute local streams and the region's water table. It will bring people, machines and noise to a corner of the woods where locals treasure the absence of people, machines and noise.

....Jen

-- posted by JenL_3

Top 5. Sep 26, 1999 2:28 PM

» KirkL - Gold Quotes

Bold off!

MONEX Precious Metals IMPRESSIVE Free LIVE price quotes for gold / silver / platinum bullion & coins

Hope that turned off the Bold...

-- posted by KirkL

Top 6. Sep 27, 1999 5:49 AM

» RandeS - Looks like the European bankers have decided to put a moratorium

Looks like the European bankers have decided to put a moratorium on additional gold sales over the next five years. Sales already planned by England, Switzerland, etc. to the tune of 400 tons/year (2000 tons total over the five years) will go ahead as planned. Gold got another pretty good bounce on the news, up to low $280s. We're going to hear more and more from the gold bugs now that gold's making a move. Nevertheless, the case for gold remains one of inflationary expectations. Nothing short of renewed inflation will be able to more than temporarily revive this worst performing of assets. Just as the world continues to pay attention to the British pound, more than half a century after it ceased to matter, it seems interest in gold will always be with us no matter how miserable its multi-century performance might be.

-- posted by RandeS

Top 7. Sep 27, 1999 5:52 AM

» Whirlwind - Kirk

You are missing an important ingredient here when saying gold hasn't gained in purchasing power in 194 years. The gold/Dow ratio is what to watch. It goes back and forth like a pendulum. It reached an alltime high of 43-1 in July but has reversed significantly. In the past, when the ratio exceedes 20-1, it returns to 3-1 or less within a few years. 1933 and 1980 are the most recent examples.

-- posted by Whirlwind

Top 8. Sep 27, 1999 7:52 AM

» KirkL - Interesting Al

I guess that makes sense, stocks go up when there is little or no inflation so the ratio is high. Get some inflation and gold goes up and stocks fall and the ratio reverses trend and goes lower.

Do you have a plot of this ratio anywhere? I'd love to see it overlayed with a 2nd Y-axis of inflation.

-- posted by KirkL

Top 9. Sep 27, 1999 11:48 AM

» RandeS - One of the few things I've read lately on gold that makes a lot

One of the few things I've read lately on gold that makes a lot of sense (from Paul Erdman at CBSMarketwatch.com):

"...as the consequences of this coordinated central bank action sink in, the new trading range could well move up to the $300 - $325 range.
Who's behind this action? I think the answer is perfectly clear. It's the Swiss. Their Nationalbank has no choice but to sell 1,300 tons of gold in the coming years. That bank considers itself a profit center. From that point of view, it would be just plain stupid to allow a huge unknown overhang of possible central bank sales to keep pushing down the price. The Swiss want to be able to sell into a rising market. And that's exactly what this move is designed to allow them to do. It will succeed since it has the full backing of Germany's Bundesbank as well as the European Central bank, the two most important central banks in Europe."

-- posted by RandeS