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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Seeker of Truth who wrote (35504)	6/29/2003 10:08:01 AM
From: Ilaine	Respond to of 74559

I admit to being a total apostate when it comes to gold, which some apparently worship as the one true thing of value. The FMV of my house almost doubled in the last 4 1/2 years - if you look at the equity alone and not the amount secured by the note, that has tripled. But, the goldbugs will say, housing prices are in a bubble. If gold prices had tripled in the last three years, they wouldn't call that a bubble, would they? Go figure.

To: Seeker of Truth who wrote (35504)	6/29/2003 2:26:51 PM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 74559

Hi Malcolm, I'm not so sure that gold has done all that well, relatively speaking. If one looks at the price of gold as measured in the US$, then it appears obvious that gold has appreciated significantly, from somewhere less than $300 an ounce to as high as near $390 an ounce. But appearances can be deceptive. If one takes into account the decline of the value of the US$ versus the rest of the worlds' currencies, then the real purchasing power of holding gold bullion (as measured in the US$) has only budged a little bit since the price of gold moved from about $275 to about $300. This lesser movement in gold is more easily demonstrated by measuring the price of gold in a currency other than the US$. Using Euros, it can be seen that gold has appreciated far less than the 20% figure often attributed to it by using the US$ as the unit of measurement. And indeed, if we look, the Euro has appreciated something like 20%+ versus the US$, so any increase in the purchasing value of the price of gold has been largely offset by the decline of the US$. What can be said to be true is that gold has retained its value relative to the US$. So, for the average JoeSixPack living in the USA, s/he would be much better off by having kept some portion of his/her finances in gold bullion (which stayed relatively stable) as opposed to cash (where the purchasing power diminished). (And once the gains in the value of the bullion were realized, ordinary income taxes would reduce any gains by the holder's tax percentage, thereby guaranteeing no real gains!) If one were European though, then there would not have been as much a difference between owning cash (in Euros) or gold (in bullion). Now, in all fairness, I'm not a gold bug, nor am I anywhere near as expert in all things gold as many of the other posters here on SI. Other people may express different opinions. And in the end, that's all it is... Someone's opinion... Best wishes to you... KJC