4XTrader
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I'm sorry, but Rick B and Rolande de Haye are the typical posters that haven't got the first clue what they're talking about. First of all Rick B, do you know what the average real rate of return on the Dow has been since 1924? A lousy 1.64% per year. Let that sink in, a measley 1.64% average inflation adjusted return over the last 83 years. And if you had a clue, you'd know that to compare stocks to gold prior to 1971 was useless as gold prices were fixed at $35 per ounce. So then, how can you accurately compare one investment (stocks) that are allowed to trade and grow against an investment (gold) that wasn't? You can't.
Then you've got Rolande's typical answer that I hear so many times from the largely clueless populace - gold has been a lousy investment for the last 25 years. Of course it was, gold was in a 22 year secular bear market. But, answer me this Rolande, what were stocks doing for the 16 years from 1966 to 1982 genius? During that 16 year period, stocks were in a brutal bear market - the Dow went sideways for 16 years and was actually down 22% when it ended in August 1982. Yet from 1971 when Nixon closed the gold window to 1980, gold rocketed from $35/oz. to $850/oz. - a return of 2,329%.
Look at that again Rick & Rolande, The Dow was DOWN 22% and gold was UP 2,329% - so which investment had a better return.
And what you amateurs fail to realize is that every asset class has it's bull and bear cycles and you need to go where the money is being made. Yes, from 1980 to 2002, gold was in a very brutal bear market and stocks were the place to be, but now gold is the place to be. I can prove it:
In 2000 the stock market topped at 11722. as of July 19, 2007 the Dow hit 14,000 for a return of 19.43%. From the 2002 bottom at 7198 to the top at 14,000 in July the Dow was up 94.5%. Now, let's take a look at gold during that same time. In 2000, gold was trading at $280 per oz. It's currently trading at $671 per oz. - a return of 140%. Gold bottomed in 2002 at $250 per oz. and with it currently trading at $671 per oz. that's a return of 168.4%.
From the beginning of the stock bull market in Aug. 1982 at Dow 772 to the top of 14,000, stocks are up 1,713.5% over a period of 25 years, yet in golds previous bull market it returned 2,329% in just 9 years.
So let's break it down:
Stocks: from 1982 to July 2007, up 1,713.5% in 25 years, up 19.43% from 2000 to July 2007 and up 94.5% from 2002 to July 2007.
Gold: from 1971 to 1980, up 2,329% in 9 years, up 140% from 2000 to July 2007, up 168.4% from 2002 to July 2007.
So genius, which one has been producing better returns during their bull cycles?
And Rolande, if prices go up inflation will erode golds value? Gold is a hedge against inflation genius. In 1963 the median home price in the United States was about $18,000 and the average car was about $5000. So, with gold fixed (at that time) at $35/oz, it would have taken 515 oz. of gold to buy a house and 143 oz. of gold to buy a car. Today, the median house price in the US is $246,000 and the average car is about $29,000. With gold trading at $671 per oz. it would take 367 oz. of gold to buy a house and 44 oz. of gold to buy a car. After 44 years of inflation and it takes less gold today to buy a car and house than it did 44 years ago, so how then is inflation eroding the price of gold?
Like so many of the other amateurs, you fail to take into consideration the previous bear market in stocks and the previous bull market in gold. The average person has about 30-35 years in their investing lifetime, so you need to go where the money is being made. Yes, from 1982 to 2000 stock was the place to be, but from 1971 to 1980, gold was the place to be. That's what distinguishes the amateurs, novices and neophytes from the pros. Pros don't get married to an asset class, they go where the money is being made. It's the novices that get so attached to an asset class that they miss out on the money being made elsewhere when the asset their married to is getting it's behind spanked.
True, gold doesn't earn income, but answer me this, how many stocks listed on the exchanges pay a dividend?
Fedup, you are correct. Look for the stock market to rally for the next 1-2 weeks and then turn down and experience a very violent sell off in October to around 11,000. Then, look for prices to stabilize and probably rally through late 2007/early 2008, but then turn again and continue down. Look for this bear market to last till at least 2017 to possibly 2022/24 and the Dow bottoming in the 1,000 point range, possibly in the 700 point range. The initial effects of this bear market won't be felt till probably 2009 and look for a banking crisis, record breaking bankruptcies, rampant unemployment and poverty. This economic collapse is going to make the Great Depression look like a picnic in comparison. If this results in a deflationary cycle, gold will probably suffer, but if they hyperinflate, look for gold to break above $2,000 per oz.
Rick and Rolande are obviously amateurs and only tell half the story (which is what the amateurs always do). They tell you about the poor returns of gold for the past 25 years, but fail to tell you about the 2300% return in the previous bull market. They tout the superiority of stocks, but fail to tell you that for 16 years, stocks went nowhere and actually declined 22% in value.
Guys, if your going to do analysis like this, at least do your homework.
The reason most people don't invest in gold, silver and the PGM's is because they're clueless. They have no clue as to secular market cycles, they talk to some wall street whiz kid that never traded through a single bear market and automatically label them as reliable. Any moron or trained monkey can make money during a raging stock bull market, but let's see how these geniuses do when they have to trade a full blown bear market.
I wish people like Rick and Rolande wouldn't answer questions like this when they don't have the first clue what they're talking about. |
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