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Gold/Mining/Energy : Gold Price Monitor
GDXJ 117.61+3.0%Dec 19 4:00 PM EST
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To: Greg Ford who wrote (3381)11/21/1997 11:08:00 PM
From: John Barendrecht  Read Replies (2) of 116815
 
Greg, several things bother me about this article and others like it. First he is comparing gold and the stock market. This is comparing apples and oranges. Why not compare gold stocks and the stock market. The other is that gold is not a store of value. Tell that to the Asians. If they held gold, they now have 35% more purchasing power than if they held local currency. Not a bad return over 3 to 4 months. Certainly better than the Asian or American stock market over the last 3 to 4 months.
If you had invested the $100 in bonds, after 10 yrs you would have $170. But I bought a mini-van in 1987 and priced on in 1997 - it has almost doubled. So, I would need $190 for every $100, I had in 1987. So after all those years of saving my money, I would not be able to buy the same minivan. Yes, it's true that gold has not kept its value over the last 10 yrs. But I can show you a 10 year period that if you held some of the blue chips stocks like IBM, you would have gone from $100 to $50. Does that mean we should shut down IBM or Chrysler?
As for countries making more interest by holding bonds rather gold, in Japan the interest rate is 0.5% but the gold lease rate is around 2 to 3%. Switzerland had a negative interest rate for a while.
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