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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (63317)	6/10/2006 7:54:57 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

Furthermore, taking a high and low of a bear market to make your point is not correct. it is when the argument i'm making is that gold isn't ALWAYS a "given". if gold were truly a "given", it would ALWAYS do great, regardless of the time frame. but people who believed that fairy tale have lost tons of wealth since 1980. context of the message was "fiat currencies" and my statement was comparing gold to fiat currencies. and i said gold lost 95% of its value against the US DOLLAR, so i was comparing apples to apples. yes but, if you want to compare gold to fiat currencies, you have to compare them to those currencies plus the interest they pay, compounded. even 850 plain old dollar bills have killed gold over the last 26 years, with a fraction of the risk. and that's for money in the mattress. money in 25yr zero coupon bonds has been a ten-bagger or so. so gold has just been absolutely PUMMELED by the very fiat currencies naive goldbugs believe are ALWAYS inferior to gold. now, that is not to say that gold will do poorly going forward. obviously it has broken out of its former bear market and i understand why a lot of people like it. my point is that it's naive to think that gold will ALWAYS do better than fiat currencies. in fact, IF a fiat currency is to survive, it needs to have a positive real cash rate over time; otherwise it will get eaten alive by inflation. goldbugs like to point out that all fiats have failed. otoh, there's never been a period in history where all currencies were fiat like today. instead, it was things like the Romans debasing gold and silver, but still pretending they were gold and silver. today, none of the CBs pretend their currencies are backed by anything but "the good faith and credit" of their issuing authorities. and guess what: nobody cares! of course, gold is not going to ZERO in the conceivable future (unless they invent a way to synthesize it from sand or something), so gold is a great alternative if you KNOW your currency is going to die REAL SOON. but people thought that crap back in 1978. they thought it in 1980. and it didn't do much good. my point is that there are plenty of other stores of value out there, so it's not like gold is unique. in fact, gold has never been so insignificant in the global scheme of things as it has become over the past few years (decades). maybe it will all change back to the way it was; but then again, maybe not. Gold will always be there and over time will maintain its puchasing value. i just showed that gold lost 95% of its purchasing power over a significant period of time (2 decades). doesn't that give you a hint that gold doesn't "always" maintain its "purchasing value"? What you do with US dollars is very much different with what are US dollars or Canadian dollars for that matter. sorry, but i have no idea what that sentence is supposed to mean. goldbugs love to talk about Weimar, and pray that the current environment turns out just like Weimar (neglecting to realize that if that really happened, they would have bigger problems than saving their money as their lives would be endangered). but goldbugs hate periods of prosperity, like the last quarter century, when gold does poorly against fiat currencies. therefore, goldbugs are very happy that it looks like the world is in for bad times so that gold has a prayer of doing well. An finally, although the stock markets will always be there and be higher over decades, individual stocks can go bankrupted and disapear. that's why intelligent investors diversify.