Author Topic: Gold is a Terrible Investment - According to Dave Ramsey  (Read 91566 times)

Offline HelenWheels

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #30 on: October 15, 2009, 01:17:35 PM »
One thing occurred to me the other day.  Dave tells people that it's OK to buy jewelry and have hobbies after everything is paid off.  In fact he tells people that if they want some gold, why not save up for a nice gold watch and some good cuff links?  Just be sure to pay cash.

Okay, so we have zero debt and a reasonable emergency fund...  I checked prices on gold watches.  Dang expensive.  Also useless to me, since my $20 watch tells time just fine and is less of a mugger magnet.  Don't need any cuff links right now either.

What if I just put the same kind of money into gold and silver coins and call it a hobby?  Cheap and low-key, too, compared to boats and Harleys and jet skis.  No reason for Dave to offer any complaint there.  If it was any of his concern in the first place.

Just a thought...

I live in Nashville, the home of Dave Ramsey... and on the local radio station where his show is broadcast, he also does sales promos for a local jewelry company.

In fact, that company shows that "Dave Ramsey endorses us"...

http://berrysjewelryco.com/

And the markup on jewelry is astounding... in the triple digits, easily...

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #31 on: October 15, 2009, 01:20:22 PM »

One thing occurred to me the other day.  Dave tells people that it's OK to buy jewelry and have hobbies after everything is paid off.  In fact he tells people that if they want some gold, why not save up for a nice gold watch and some good cuff links?  Just be sure to pay cash.
Telling people to buy gold jewelry to satisfy their desire to invest in gold is pretty much the equivalent of telling people to buy whole life insurance instead of  term life because whole life has an investment value. I bet Dave doesn't recommend that.

Offline evilphish

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #32 on: October 15, 2009, 01:45:15 PM »
Quote
Telling people to buy gold jewelry to satisfy their desire to invest in gold

he makes statements like that as a sarcastic joke. 

but who cares what he thinks?  just do what feels right for you and your family

Offline dudekrtr

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #33 on: October 15, 2009, 05:55:26 PM »
he makes statements like that as a sarcastic joke. 

but who cares what he thinks?  just do what feels right for you and your family

I think the problem comes in when we've followed his teachings through all 12 sessions of his Financial Peace University, realizing along the way that this is the best program of it's kind; even better than we expected. He covers more than we imagined, including things like insurance. Then, when we get to the end, we get some funds together to invest, and he says "stock market". Huh? Makes no sense, we know the stock market is going down the tubes. What gives? Well, he gets a paycheck, too, and he can't really come out so much against the overall powers that be, or, he'll be off the air.  (can you say "Derry Brownfield"?-the one who got booted for coming out against GMO food)

Maybe Dave should seize the opportunity, switch to podcasting, hold nothing back, and really start making some waves. [sounds like one of the answers that Jack gave about starting up a business  ;) ]

Offline ModernSurvival

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #34 on: October 21, 2009, 12:46:13 PM »
The gold/no gold argument will go on forever.  One can cherry-pick dates to make a point either way.  For example, I could bring up that someone who bought for $800 an ounce in 1979 would be pretty unhappy selling at $300 twenty years later. 

Yea but I cherry picked nothing.  I had a buy date every 10 years and gold lost in 2 of the 4 measured decades.  But I will tell you this total BS that no one can time the market is nonsense.  Here is what you can time,

When a market is at an all time high and every ones says there is nothing to worry about just keep buying more, it is time to get out.  Again this is why I am not buying gold at over 1K an ounce right now.  I am also not just buying more mutual funds either.  The point is gold is a single commodity that at times makes sense to buy, at times makes sense to hold, at times makes sense to sell and at times should be left alone.  Just because an individual (no matter how wise about other topics) doesn't have the necessary knowledge to use gold as investment doesn't make him right to say it is terrible.

And yes we can time the market, come see me in about 2014, I am on record out that far, we can talk about me being right or wrong then.

Offline Stein

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #35 on: November 02, 2009, 02:47:02 PM »
Jack,
Two people can be opposite and correct about the same topic provided their viewpoint and assumptions are different.  If you look at gold in a 10 year paradigm and a 100 year paradigm you will see two completely different pictures.  Both you and Dave can be correct and opposite.  Pull up his stats and they are as correct as yours.  Both statistics paint an accurate picture given the assumptions.

By cherry-picking I meant that your analysis was not typical of the average investor.  How many people buy only four times in 40 years?  Most people invest small amounts monthly over 40 or more years.  The best analysis I have seen tracked 40 year trailing returns assuming fixed monthly investments indexed to inflation.  It was then graphed to show you what starting years produced what return.  The morale was that it totally depended on what year you entered the workforce.  Fate or whatever you call it - your return had more to do with when you were born then anything else given the same investment track.

The problem is that human beings aren't logical and nobody EVER gets the market return.  Who has the balls to short oil at $120 when it was skyrocketing?  Who is buying houses in Detroit for $6k right now?  They either act too soon or too late or don't act at all.  Right now, nobody knows what is going to happen, Congress' willingness to borrow hundreds of billions (or not) is just too big a ripple in the lake to know where I need to be.  My strategy is to find something that works reasonably well over long periods of time without requiring 100 hours of research a month.  I would rather go make $1 then spend 10 hours trying to get $1 in investment income.  Obviously, there are traders with the opposite viewpoint.

At the end of the day, I can't picture gold going up very far - relative to the dollar.  The suit story will always overlay the price to a certain degree.  Buying gold appears to be nothing less or more than getting out of dollars, which may be a good strategy at times.  The sad part is there are tons and tons of gold bugs that plan on buying gold and becoming very wealthy in a short period of time.  I know you aren't in that group, but many outside here are.  I'm not in gold because it doesn't have a track record of fitting my strategy, risk tolerance or goals.

The morale of the whole story is to look at what research has been done and figure out what you as an individual want to do.  Nobody has the same goals, circumstances, birth date, available funds and tolerance for risk.  Short of a Ponzi scheme, there really isn't an investment I can think of (within reason) that is a poor choice for 100% of the people 100% of the time.  Even with a Ponzi, you can get in and out and do well sometimes.  If that is your point with DR then we totally agree.

Offline dudekrtr

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #36 on: November 02, 2009, 05:04:06 PM »
Just look at the stock market from the late 20s through the 30s. There were 5 or 6 sucker rallies. If you want to try to time these things over the next couple of years, go for it. Those will be the times that the real stock players will clean the general public's clock. Short or long, they'll make money when it goes up AND when it goes down.

Wait till next year when Congress  does another bailout and steals some more trillions from your children and grandchildren. Some of the funds will finally be made available to make some businesses bottom lines look way better than they are, the market will pop up a couple thousand points, and we'll have another great election year rally. Enough to make you  puke  :P

This is a good deal more about the study of history than investment strategies. Never have we seen the forces at play in the economy as we have now. NO ONE knows where this will go, but it will definitely not be good. It will be something to tell your grandchildren about, hopefully without too much of an apologetic attitude.

There are people in the government and their banker cronies who will do anything to maintain, and, grow their power structure and money. Diddling the price of gold and silver, just so things will look better than they are, is all part of the method they use. "Gold and silver aren't that high, and neither is oil [that is, gas pump prices], so things can't be that bad, right?"

The DJIA is high, so business must be good, right? Never mind about the P/E ratio, which is currently at a ridiculous level, even though they use creative accounting techniques to boost the bottom line. How about asking, "Are your gross sales actually increasing? No? Didn't think so."

I'll stick with Jack and precious metals, matter of fact, I'll probably buy more; just picked up more silver eagles at $17.90.

See you in 2014.

Offline dudekrtr

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #38 on: November 19, 2009, 10:30:58 PM »
i don't think there's any question that gold/silver is the way to go today.  you'd have to be a moron not to know/understand that the dollar is doomed and that the avg standard of living is going to drop in half.


Offline 13F10

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #39 on: December 06, 2009, 09:56:09 AM »
Bringing the thread up to date .... Friday was a heck of a day!  You want to buy on the dip, do it now.  IMHO, Gold will recover Friday's loss by week's end, next week max. Silver will test 19 again as well. Questionable timing on the dollar spike, Unemployment numbers on Friday, to say the least, Ben needs to be reappointed...

I've read with interest the posts in this thread and generally agree with most of them, will add a couple of thoughts.

1) As mentioned, the USD is done. At this point it's all about some time for those holding it to diversify.
2) The Treasury/Fed has NO CHOICE but to devalue the dollar, no way to pay-back our debt.
3) So far it's a fairly controlled devaluation, when the bottom does fall out, it will happen over night.
4) I can't see how this controlled slide lasts more than another 12-18 months.
5) The next major hit is the rumor that Japan will NOT be buying our debt at historic levels; ie., "we don't want your dollars anymore".

I'm way heavy in Silver with just a few ounces of Gold ... BTW, agree completely that Silver will likely continue out-perform gold in a big way.
I have everything from 90% to bars in Bank TerraFirma. Love the pre-65 coins. I keep very little cash in the bank... I trust none of them. I do miss the .00000025% they would pay me to keep it there though :)

Fiat currencies (competitive devaluation), hidden toxic assets, commercial real estate & unemployment will all have a huge impact during 2010.  It's going to be a bumpy ride. Beans, Bullets, BandAides & Bullion.





Offline dudekrtr

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #40 on: December 06, 2009, 04:46:18 PM »
13F10, I'm with you, up to a point. Silver will lead gold up, but there will a time when gold will take over and you should move the ratio in the opposite direction. Always keep the pre-64 for practical use, but for wealth storage, we have to be careful and watch. And watch. And watch.

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #41 on: December 07, 2009, 12:13:03 AM »
Yes I feel confident they will go up too, and silver more so.  At the end of the day the coins will still be in our pockets and as Jim Rodgers once said, "Enron can go to zero, but your gold and silver can never go to zero"

Offline hanzel

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #42 on: December 26, 2009, 10:53:45 AM »
Just my personal opinion that I tell others.  One should never "invest" in gold and silver because they are not investments, gold and silver is money ( and a stable one at that).  In 1999 I purchased a Silver Eagle ( one dollar ) for about $5 FRN ( Federal Reserve Notes) today in 2009 you can look on Kitco and see the same Eagle listed at a little over $20 FRN.  Wow you would say, I "profited". You made 400% !!!  Look at it this way, with silver as the "money", in 1999, I had 31.1 grams of pure silver, in 2009 I have..... 31.1 grams of silver not 124.4 grams ( a 400% increase if as you say I profited in silver from my Silver Eagle ) In 1999 a barrel of oil cost 3.5 to 4 US Silver Eagles, in 2009 a barrel of oil cost ... 3.5 to 4 Silver Eagles.  An investment is something that increases ( or decreases ) in an amount.  I buy a US treasury bond for $1000 FRN and I expect to have an return of $1010 ( 1% interest ).  I buy a US Silver Eagle or US Gold Eagle that weighs 31.1 grams of silver or gold and I will have.... 31.1 grams of Silver or Gold, today, tomorrow, or 10  years from now.  No increase equal no return, no return ( either +/- ) equal no investment. I only have money.

 After they finish saying all their "but, but, but" I remind them, it is the US Constitution, and not me, that states " No State shall.. make any Thing but gold and silver Coin a Tender in Payment of Debts" ( ever notice that "T" is capitalized ? Seems like they were trying to emphasize that word).

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #43 on: January 16, 2010, 07:53:11 AM »
I agree.

However, Gold is a different animal than almost any other investment vehicle, and especially stocks. I find it slightly disconcerting that Gold continues at record highs, while the market and many of the talking heads are indicating that the "correction" is over. What are the hard-core gold bugs thinking? Is this a sideways indicator of inflation? These are indeed strange times with mixed signals.

I'm with Jack on the silver; I think there's more upside, less risk, more versatility and, frankly, gold is for the big dogs who won't give a hoot about a $100-$150 an ounce correction in the short term.

YMMV

I think Gold in 2010 will have some modest gains with a few interesting ups n downs to keep us on our toes.I do however see Gold as out performaing stocks by quite a margin over the next 3 years.We are no where near a genunine recovery which I suspect,given current events , could be many many years away.

Offline KYdoomer

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #44 on: January 16, 2010, 11:43:33 AM »
Just my personal opinion that I tell others.  One should never "invest" in gold and silver because they are not investments, gold and silver is money ( and a stable one at that).  In 1999 I purchased a Silver Eagle ( one dollar ) for about $5 FRN ( Federal Reserve Notes) today in 2009 you can look on Kitco and see the same Eagle listed at a little over $20 FRN.  Wow you would say, I "profited". You made 400% !!!  Look at it this way, with silver as the "money", in 1999, I had 31.1 grams of pure silver, in 2009 I have..... 31.1 grams of silver not 124.4 grams ( a 400% increase if as you say I profited in silver from my Silver Eagle ) In 1999 a barrel of oil cost 3.5 to 4 US Silver Eagles, in 2009 a barrel of oil cost ... 3.5 to 4 Silver Eagles.  An investment is something that increases ( or decreases ) in an amount.  I buy a US treasury bond for $1000 FRN and I expect to have an return of $1010 ( 1% interest ).  I buy a US Silver Eagle or US Gold Eagle that weighs 31.1 grams of silver or gold and I will have.... 31.1 grams of Silver or Gold, today, tomorrow, or 10  years from now.  No increase equal no return, no return ( either +/- ) equal no investment. I only have money.

 After they finish saying all their "but, but, but" I remind them, it is the US Constitution, and not me, that states " No State shall.. make any Thing but gold and silver Coin a Tender in Payment of Debts" ( ever notice that "T" is capitalized ? Seems like they were trying to emphasize that word).

That's a very good summary!  Another way of saying that gold and silver are gold and silver long after the facade is gone from all else.

J

Offline BIG-TARGET

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #45 on: February 16, 2010, 05:02:42 PM »
Jack

I agree.

However, do you think now is the right time to buy gold?  I actually think we are at the top of a spike.  I think it will come back down to probably 850-900 before it begins the quick rise to probably 1500-1700 middle of next year.  I think gold moves with the value of the dollar but the false recovery as you call it will probably drive it back down a bit.

But yeah all those guys want a quick return with a risky investment.  Gold is wayyyyy safer.

Thoughts?

J

But gold was never meant to be a "quick return" type of investment. It is primarily a CYA, if you inbestment and /finances totally tank :-\

Offline fndrbndr

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #46 on: February 16, 2010, 05:42:36 PM »
Even with the discrepancy there is a strong corellation between the value of the two metals.



Interesting isn't it, notice how you never see them presented this way, I had to use my jedi MS paint skills  ;D to create this one.

Jack, where did you get these charts? I would like to start keeping track of this stuff.

Offline dudekrtr

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #47 on: February 16, 2010, 10:57:30 PM »
You can make one up at www.stockcharts.com . It's free. Where you input the stock symbol, just put in the gold and silver prices like this for the ratio:

$GOLD:$SILVER

It cracked the 70:1 line the other day; today it dropped back down to under 69. Pretty wild territory.

Offline Rorschach

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #48 on: March 11, 2010, 10:01:11 PM »
Gary North wrote an analysis of this on his web site: 'Paul Farrell vs. Dave Ramsey on How to Invest' (http://www.garynorth.com/members/6179.cfm).  The most damaging point he makes, at least in my mind is that if you bought and held stocks from 1801 they would not exist today; there price would be worth nothing since few if any companies continue to exist over time. 

Offline Morgan96

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #49 on: April 02, 2010, 05:54:29 AM »
I listened to maybe 20 or so Dave Ramsey podcasts, and stopped after I heard his opinion on gold.  He dispenses good advice to his callers, but the message gets repetitive after a while.  Physical gold is a store of value, a hedge, an insurance policy, it is "cash" under the mattress.....  what it is not is an investment.

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #50 on: April 02, 2010, 07:15:02 AM »
I listened to maybe 20 or so Dave Ramsey podcasts, and stopped after I heard his opinion on gold.  He dispenses good advice to his callers, but the message gets repetitive after a while.  Physical gold is a store of value, a hedge, an insurance policy, it is "cash" under the mattress.....  what it is not is an investment.
Well said.

I'm not sure if he still does it or not, but the accusation that chased him away from his newspaper column and some of his early radio work was that his write-in questions and some of his call-ins are staged by his staff.
Either way, he does seem to be a one trick pony.

Offline tamo42

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #51 on: April 02, 2010, 09:11:41 AM »
Well said.

I'm not sure if he still does it or not, but the accusation that chased him away from his newspaper column and some of his early radio work was that his write-in questions and some of his call-ins are staged by his staff.
Either way, he does seem to be a one trick pony.

Fair enough, but it's a trick most people refuse to learn :).  I listen to his podcast on occasion when I feel the need to refocus on my finances.

Of course, I've heard him say, "Gold is a stupid investment."  And I agree.  Investments are things that produce value.  Gold stores value.

A chicken is an investment.  A small piece of gold to buy a chicken is a store of value that will later be converted to an investment.

Offline Morgan96

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #52 on: April 03, 2010, 05:48:25 AM »
Fair enough, but it's a trick most people refuse to learn :).  I listen to his podcast on occasion when I feel the need to refocus on my finances.

Of course, I've heard him say, "Gold is a stupid investment."  And I agree.  Investments are things that produce value.  Gold stores value.

A chicken is an investment.  A small piece of gold to buy a chicken is a store of value that will later be converted to an investment.


No problem with him saying that gold is not an investment, is that his advice in this case is unbalanced and ill-informed.  But as you say, some of his ideas on personal finance are worthwhile to listen from time to time.  For our part, we're some ways down the road, we've straightened ourselves out to a large part, paid off all debts except mortage, watch our expenses, etc., so the need to listen is not there.   I used  to get some entertainment value in marveling at the financial pickles some folks got themselves into ("hee hee, what idiots"), but lately listening to stories of hardship, however ill-advised the protagonists were, just make me sad.   Folks like Dave Ramsey would not have had an audience a couple generations ago, when government-facilitated credit was NOT as easy to get as today.  just my $0.02.

H of C, I had not thought about some of Dave's calls being staged before.  In retrspect, it sure sounds plausible.

Offline koyote

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #53 on: April 30, 2010, 12:47:12 AM »
I'd love a revisit of this now.

We've had the "strong dollar", which isn't strong- just the rest of the global economy is sucking vaccuum.

Save Haven moved haven't stopped.

Gold isn't at $800. Not even close.

Silver is still way below what it should be, but I'm honestly happy about that since I need time to get into the game. I have this ranch out in nevada to buy.....

Interesting datum:

The demand for gold bullion in coined form from the US mint is down this year, enough that they will be able to print proof sets.

But the demand for silver (ASEs, in this case) from the mint is still spiking, and they don't look like they'll be producing proof or other collectible sets of silver bullion coinage this year.

What this says to me isn't that gold is done, because I really think we'll see a few hundred more this year. WHat it is saying to me is that silver is undervalued (probably due to extreme off the wall short positions by market 'manager' firms) and that people who have money, got their gold- and people who don't have a lot of money- can't afford the gold but are buying the silver.

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #54 on: April 30, 2010, 07:24:36 AM »
Gold Hits 2010 High Amidst Debt Turmoil In Europe


  
Quote
Gold bullion reached a 2010 high today following concerns over euro zone sovereign debt levels after Greece, Spain and Portugal were hit with disastrous credit rating downgrades, with analysts now predicting that prices are set to move back towards their December high when gold peaked at $1,226.10 an ounce.


http://www.prisonplanet.com/gold-hits-2010-high-amidst-debt-turmoil-in-europe.html

Edited by SW, due to copyright issues -- please see here for Fair Use info.
  
« Last Edit: September 08, 2010, 12:50:35 PM by Sister Wolf »

Offline dudekrtr

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #55 on: April 30, 2010, 07:51:03 AM »
It's really nowhere near the end. I, too, am glad that the price is manipulated downward, so I can accumulate more.

http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=11299:the-silver-price-spiral-part-i-today&catid=49:silver-commentary&Itemid=130

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #56 on: April 30, 2010, 08:06:51 AM »
The folks at GATA are adamant that Gold will hit 3/4000 in the not so distant future.Still a good time to buy.Silver margins are likely to be even better.

  http://www.gata.org/
« Last Edit: April 30, 2010, 08:10:55 AM by Son_of_the_Republic »

Offline koyote

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #57 on: April 30, 2010, 08:32:53 AM »
Just my personal opinion that I tell others.  One should never "invest" in gold and silver because they are not investments, gold and silver is money ( and a stable one at that).  In 1999 I purchased a Silver Eagle ( one dollar ) for about $5 FRN ( Federal Reserve Notes) today in 2009 you can look on Kitco and see the same Eagle listed at a little over $20 FRN.  Wow you would say, I "profited". You made 400% !!!  Look at it this way, with silver as the "money", in 1999, I had 31.1 grams of pure silver, in 2009 I have..... 31.1 grams of silver not 124.4 grams ( a 400% increase if as you say I profited in silver from my Silver Eagle ) In 1999 a barrel of oil cost 3.5 to 4 US Silver Eagles, in 2009 a barrel of oil cost ... 3.5 to 4 Silver Eagles.  An investment is something that increases ( or decreases ) in an amount.  I buy a US treasury bond for $1000 FRN and I expect to have an return of $1010 ( 1% interest ).  I buy a US Silver Eagle or US Gold Eagle that weighs 31.1 grams of silver or gold and I will have.... 31.1 grams of Silver or Gold, today, tomorrow, or 10  years from now.  No increase equal no return, no return ( either +/- ) equal no investment. I only have money.


I'm sort of in a state of agreement/disagreement here. It would seem that by this basic (fundamental, not base) logic, savings accounts, CDs, money markets and certain types of bonds are all not investments, as the interest paid can never exceed (for more than a very short period) the infationary losses of an interest (debt servicing) fiat money system.

But, even though a barrel of oil is roughly equivalent to x/ounce of silver or x/ounce of gold over time (there will be some variation due to supply and demand of oil)- the investment value of PMs cna be tracked in other ways.

The simple logic is that to be an investment in the pure sense you seem to be leading towards- you have to either make money from rental (I loan you 100 ounces of gold today to build a business or buy trade stock, you pay me 105 ounces in a year) - or you have in invest directly in something that increases wealth (research, manufacturing, etc).

But, but, but- If I buy a house and have payments of $800 a month, and my PMs "investment" growth outstrips the interest of the loan, then the metal is "turning a profit". And thus is an investment by some measure.

Additionally, while gold is a low use metal in terms of industrial applications, silver isn't. So silver, in addition to being a stable coinage, has a value fluctuation, like copper, based on supply and demand in the "market". It's a commodity on some level. People can and do invest in commodites, whether stored or futures.


so, while PMs are a store of value intrinsically, I think that in relation to other goods, services, and exchange methods (fiat money, currencies), the buying and selling can be timed and they can be invested in on that basis.

Offline Morgan96

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #58 on: May 01, 2010, 05:16:27 AM »
Another way to consider, gold and silver are a medium of exchange *and* a store of value, no different than a money market fund account denominated in Australian dollars or Brazilian Reais (*) .  By purchasing gold and silver, we are engaging in a form of currency arbitrage.  Gold is money, and silver is money,  they are passive inert stores of value, same as a wad of cash.  But at the end of the day, we are betting that their  purchasing power , relative to other stores of value, will remain stable.  Not an investment as such, but a defensive strategy. 

One other great advantage of gold and silver as money is their limited supply, which can only grow as fast as they can be mined --- or, according to the good folks at GATA, as a fast as London traders and banksters can manufacture fraudulent contracts of deposit.    ;)

(*)  I know, who woulda thunk it that the Brazilian currency would be seen as a "hard" currency these days.

Offline wdrobins

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Re: Gold is a Terrible Investment - According to Dave Ramsey
« Reply #59 on: May 17, 2010, 01:48:49 PM »
OK, I decided to put my 2 cents worth into the pot.

First, I agree almost 100% with Jack.  So far, no body's commet in this post has convinced me otherwise.

Second, I, likewise, have listened to "King" Ramsey for a long time.  I agree 100% with his position on debt, but disagree with much of his other financial advise.  He has a tremendous cult following.  Unfortunately, as with all cults, there are a lot of members who never question their leader.  They just blindly do what they are told.  I don't fault Dave Ramsey for this.  He is a terrific entrepreneur and has found a way to make millions off telling people what they already ought to know concerning debt.  The problem is that many of his followers have gotten the extreme warm fuzzes for their leader and enjoy holding hands and singing kum-bah-ya instead of spending sufficient time educating themselves.

As of several months ago, I don't listen to Ramsey much anymore.  I finally got tired of listening to him say the obvious over and over.  I know what advice he's going to give before he gives it.  I would rather listen to Jack's podcast 6 or 7 times on how money works, because I'm actually learning something new, which is fundamental to the way the world's economy works.  As a matter of fact, he has inspired me to do some more reading and research on this issue.

Third, everyone in this thread, with the possible exception of dukekrtr, seems to think primarily in terms of long term buy-and-hold strategies.  The only question seems to be which investment -- gold, silver, stocks, etc.  And, that's just fine, as long as you're comfortable with it, and you KNOW what you're doing.  It's your damn money and you are free to reap the rewards or lose it the best way you see fit.  Likewise, my damn money is MY money, and I will accept full responsibility for it.  If I lose it all, that's my business.  At that point, maybe you guys could place an ounce or two of silver into my begging cup.  :)

My personal style of investing is shorter term for those moneys that are currently trapped inside a scam IRA or 401k.  As of the writing of this post, I am long gold, short the Euro, and short the S&P500 index in my self-directed IRA.  I used ETFs to construct this portfolio.  I have also been long silver, but took my profits.  I am waiting for another entry point on silver.  All positions are with a profit, and I will not give back much of that profit, because I know exactly when I will exit those positions (barring any catastrophic market event).  I have automatic stop loss orders placed with my broker.  So, for example, if gold starts falling, there is a point where I will get out of gold (with a profit).  I will not hold it long term.  However, if gold falls, and eventually reverses trend again, I will enter a gold position again, with the proper protective stops in place.  In addition, if the S&P500 trend reverses, I will close the short position (sell the inverse ETF) and go long the S&P500.  I have a strategy with proper risk management and protection of capital that is proven to work long term.  So, it does not matter to me what the long term prognostication of gold and silver is, at least with respect to my IRA.  I intend to be on the correct side of the trend.  My 401k is a little different because I don't have complete control of it.  I am forced into dumb ass mutual funds as the only alternative, although I have access to an extremely large selection of funds.  Currently, most of the account is in cash, but some of it is in a particular fund that has good exposure to gold, silver, and US treasuries.

Now, this strategy is not complicated, and it does not take much effort to do.  However, it does take some education to learn how, as well as having some self discipline.  In addition, this is strictly for my so-called tax advantaged IRA.  Strategies may vary in other environments.

The point of my post is not to convince anyone that what I'm doing is "right," and that they should be doing it the same way.  The point is that I don't just follow Dave Ramsey's (or anyone else's) advice without using my own brain.  However, I do try to have an open mind, listen to and weigh opinions against mine, and change my opinion from time to time when it makes sense to do so.  And, I would like to convince everyone that I am at least "right" about that part!  :)