Gold regains its Sparkle

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• 1 - Kitchen Fresh Chicken

  Jul 08, 2004 at 2:35 pm

  The reason gold is "shunned" is because it has little practical value. You can't eat it, it doesn't keep you warm, it's not that crucial of an ingredient in most consumer items. It's value is held up by tradition and continuously getting more suckers to buy in on the largest ponzi scheme ever. The illusion of value is so great that even governments buy up gold when the world looks unstable. Great, during the nuclear winter they can starve to death looking at great mounds of gold. Whoopee!!!
  
  Note: Many other currencies such as the dollar have the same lack of value. A stack of hundreds doesn't do you much good in a crisis either. But at least the dollar has the backing of the US government. Gold could be dumped at any time and replaced by platinum, diamonds, seashells, or four leaf clovers as it's value is totally arbitrary.

• 2 - Nyx

  Jul 08, 2004 at 4:19 pm

  Actually gold is very pratical, just too expensive to use. It would be the best possible conductor for electricity. All copper wires should be replaced with gold but because of the price no one can afford this.
  
  Then there are uses where the non-corrosive properties of gold would be useful. It doesn't rust, ever.

• 3 - Phillip Winn

  Jul 08, 2004 at 6:16 pm

  Nyx, your first statement is simply incorrect. The conductivity of silver actually exceeds gold, which is slightly *less* conductive than copper.
  
  However, it is non-corrosive, which matters in some cases and not others. It also has several other interesting features that make it useful, but the arbitrary value assigned to it in the past keeps the price higher than it should be based on scarcity.
  
  For kicks, sometime, pick nearly any starting date and compare the price of gold over time with the price of the S&P 500 index over the same period. I haven't updated my spreadsheet since November 2003, but as I recall it, Gold and Silver did not do very well in the comparison, aside from the bubble in the 1980s.
  
  Of course, if you pick both the starting date and the ending date, you can make any one of the three work out favorably, which is why I tend to insist on comparisons through today, or from January 1950 (when the S&P started), or 1973 (when the US went off the gold standard). Something firm at one end or the other.

• 4 - Phillip Winn

  Jul 08, 2004 at 6:17 pm

  Oh yeah, a source.

• 5 - Nyx

  Jul 09, 2004 at 12:36 am

  You can take any stock or commodity and compare it to the S&P and the S&P will come out ahead, given enough time.
  
  Which is why I'm invested in spdr's.

• 6 - Phillip Winn

  Jul 09, 2004 at 9:45 am

  Some people don't realize that, though, and professional investors and brokers are not at all interested in long-term buy-and-hold strategies, because they usually result in no income for the broker and don't take any effort at all.
  
  But you're right. The S&P 500 Index is the best investing value there is, long-term, and it is easy.
  
  I've received an email disagreeing with me, so I'll post a response up here later, or maybe my own post, detailing the value of the S&P 500.

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