It's refreshing to hear some common sense about gold. Most financial planners online can't make any money on gold, so they rail against it. I don't think most gold buyers are looking for it to beat, or even equal, market returns. It does okay, but it's mainly incredibly reliable insurance against market or world calamity. Plus, it's very cool stuff. :-)
OMG I needed to hear this 40 years ago! Your generation is fortunate to hear your videos. Today’s lessons make so much sense I wish I had learned much earlier. You’re great to bring history into/with your explanations.
Thank you, James. I actually understood this! As always, I appreciate how you relay information in a simplified manner that I, and others like myself, can understand.
A lot of decent information about gold in this video. However, the one key aspect I'm missing is how gold performs in relation to other assets. Gold in itself is an utterly horrible investment. However, if you add gold to an otherwise stock-bond portfolio, gold makes the portfolio perform much more reliably than without gold. Including a portion of gold of up to 20% dramatically reduces volatility of the portfolio while not sacrificing long term performance (in the long run both the stock market and gold on average track M2 money supply).
I think you’ve set up a phony role for gold, comparing it to stocks. When planners set up a portfolio, they generally recommend a portion in cash, and a portion in bonds. They don’t emphasize how poorly those compare to the stock market, but instead, praise their roles in diversifying the overall portfolio. Currently, thanks to inflation, the dollar is losing purchasing power at a rate (officially) close to or (actually) exceeding 10 percent per year. And that loss of value by cash is persistent over time. If you look at the cost of food, housing, or a gallon of gas, you can see that decline in value extending back for decades. So, do you recommend that clients keep this persistently poor investment in their portfolio? And a bond is nothing more than a dollar that pays interest. That interest offsets to some extent the loss in value from inflation. So, how much interest do bonds pay? Over the last 20 years, less and less and less. The Fed prints dollars out of thin air to purchase Treasuries, ensuring that interest rates are kept artificially below what a truly open market would require. Retirees (like my father) who used certificates of deposit to generate income saw their budgets squeezed tighter and tighter every year. Gold can fill a savings role in a portfolio, and do it well. It has been recognized as a means of preserving wealth for 4000 years, and it fully backed the dollar until the government sought to spend more than it could truly afford and converted our money to fiat. Even now, central banks around the world are acquiring gold. If you look at the pricedingold website, it’s astonishing to see how stable the price of housing had been for decades, when measured in grams of gold. (Turning that around, if you saved in gold to buy a house, you wouldn’t experience the cost of a house suddenly running away from you.) Gold has a role in portfolios, both physical and paper. And of course, if you must have a stock angle, there are royalty streamers who fund mine development, and gold miners. There are dividends and capital appreciation both available. Personally, I like the ETF GOAU, which holds royalty streamers and miners, and pays a dividend. It’s down along with gold over the last several months, but that just means it’s on sale. And of course, as a net buyer, I’d rather have a lower price than a higher one.
"gold can fill a savings roll in a portfolio" Savings goal? As in your money keeps its value at all times? No gold cannot do that Gold can provide diversification as you mentioned
@@johngill2853 Dollars don't keep their value at ANY time; the drop is just more pronounced during periods of higher inflation. If you keep savings in dollars, your money is absolutely not keeping its value. The Fed's definition of stable prices (half of their dual mandate) is that prices increase 2-3 percent per year. That doesn't sound stable to me!
Gold is basically an alternative to bonds and cash (cash being a zero-term and zero-coupon bond). If you look at the gold price over the past fifty years you'll see the gold price does particularly well during times of negative real yields (coupon minus inflation rate). In other words: during the few times bonds fail to perform, gold generally does perform. What also is interesting about gold over the past fifty years is that is has a correlation to the S&P500 of -0.64 (both the gold price in USD and the S&P500 can be linearly regressed to the M2 money supply). So, if you combine stocks, bonds and gold in a portfolio, the long term performance isn't affected negatively compared to a stock-bond portfolio, but the volatility and maximum drawdown (and the duration of that drawdown) are dramatically reduced. You'll see this result when back testing a Golden Butterfly Portfolio. Gold as a sole investment is an utterly horrible investment, but indeed as a diversifier it performs very effectively. This, by the way, is also corroborated by the research Chris Cole has done with his CWARP-metric he developed.
1972 to 1979 is the period when gold was seeking its true value after decades of being artificially compressed. It’s rise during that period probably makes analyses using that data unreliable.
You've just demonstrated why CFPs are generally amongst the lousiest type of investors - can't smell past their own bullshit of stocks and fixed income
It's refreshing to hear some common sense about gold. Most financial planners online can't make any money on gold, so they rail against it. I don't think most gold buyers are looking for it to beat, or even equal, market returns. It does okay, but it's mainly incredibly reliable insurance against market or world calamity. Plus, it's very cool stuff. :-)
OMG I needed to hear this 40 years ago! Your generation is fortunate to hear your videos. Today’s lessons make so much sense I wish I had learned much earlier. You’re great to bring history into/with your explanations.
Thanks, Lyn!
Thank you, James. I actually understood this! As always, I appreciate how you relay information in a simplified manner that I, and others like myself, can understand.
You’re welcome!
Insurance against an insane gov and currency crisis not investment
What would be the difference against silver?
I’ll take 6 month treasury bonds rn instead ✅
How about GOLD STOCKS?
The beanie baby example explains why I avoid crypto
A lot of decent information about gold in this video. However, the one key aspect I'm missing is how gold performs in relation to other assets.
Gold in itself is an utterly horrible investment. However, if you add gold to an otherwise stock-bond portfolio, gold makes the portfolio perform much more reliably than without gold. Including a portion of gold of up to 20% dramatically reduces volatility of the portfolio while not sacrificing long term performance (in the long run both the stock market and gold on average track M2 money supply).
& gold has reached its ATHs in every currency but USD.
Hold is not an investment. It is savings and an inflation hedge. Never count on more than spot price for a return.
I think you’ve set up a phony role for gold, comparing it to stocks. When planners set up a portfolio, they generally recommend a portion in cash, and a portion in bonds. They don’t emphasize how poorly those compare to the stock market, but instead, praise their roles in diversifying the overall portfolio. Currently, thanks to inflation, the dollar is losing purchasing power at a rate (officially) close to or (actually) exceeding 10 percent per year. And that loss of value by cash is persistent over time. If you look at the cost of food, housing, or a gallon of gas, you can see that decline in value extending back for decades. So, do you recommend that clients keep this persistently poor investment in their portfolio? And a bond is nothing more than a dollar that pays interest. That interest offsets to some extent the loss in value from inflation. So, how much interest do bonds pay? Over the last 20 years, less and less and less. The Fed prints dollars out of thin air to purchase Treasuries, ensuring that interest rates are kept artificially below what a truly open market would require. Retirees (like my father) who used certificates of deposit to generate income saw their budgets squeezed tighter and tighter every year. Gold can fill a savings role in a portfolio, and do it well. It has been recognized as a means of preserving wealth for 4000 years, and it fully backed the dollar until the government sought to spend more than it could truly afford and converted our money to fiat. Even now, central banks around the world are acquiring gold. If you look at the pricedingold website, it’s astonishing to see how stable the price of housing had been for decades, when measured in grams of gold. (Turning that around, if you saved in gold to buy a house, you wouldn’t experience the cost of a house suddenly running away from you.) Gold has a role in portfolios, both physical and paper. And of course, if you must have a stock angle, there are royalty streamers who fund mine development, and gold miners. There are dividends and capital appreciation both available. Personally, I like the ETF GOAU, which holds royalty streamers and miners, and pays a dividend. It’s down along with gold over the last several months, but that just means it’s on sale. And of course, as a net buyer, I’d rather have a lower price than a higher one.
"gold can fill a savings roll in a portfolio"
Savings goal? As in your money keeps its value at all times? No gold cannot do that
Gold can provide diversification as you mentioned
@@johngill2853 Dollars don't keep their value at ANY time; the drop is just more pronounced during periods of higher inflation. If you keep savings in dollars, your money is absolutely not keeping its value. The Fed's definition of stable prices (half of their dual mandate) is that prices increase 2-3 percent per year. That doesn't sound stable to me!
Gold is basically an alternative to bonds and cash (cash being a zero-term and zero-coupon bond). If you look at the gold price over the past fifty years you'll see the gold price does particularly well during times of negative real yields (coupon minus inflation rate). In other words: during the few times bonds fail to perform, gold generally does perform.
What also is interesting about gold over the past fifty years is that is has a correlation to the S&P500 of -0.64 (both the gold price in USD and the S&P500 can be linearly regressed to the M2 money supply).
So, if you combine stocks, bonds and gold in a portfolio, the long term performance isn't affected negatively compared to a stock-bond portfolio, but the volatility and maximum drawdown (and the duration of that drawdown) are dramatically reduced. You'll see this result when back testing a Golden Butterfly Portfolio.
Gold as a sole investment is an utterly horrible investment, but indeed as a diversifier it performs very effectively. This, by the way, is also corroborated by the research Chris Cole has done with his CWARP-metric he developed.
1972 to 1979 is the period when gold was seeking its true value after decades of being artificially compressed. It’s rise during that period probably makes analyses using that data unreliable.
You've just demonstrated why CFPs are generally amongst the lousiest type of investors - can't smell past their own bullshit of stocks and fixed income
Gold has gone down the least this year. Stocks, bonds, crypto did suck! Listen to John Paulson!
Your analysis is deceiving. It took 17 years for Microsoft to get back to the same share price after dotcom, in nominal terms (before inflation).
I wouldn’t advise investing all in Microsoft
@@RootFP I mentioned that against your gold comparison, as an example.