Gold, Silver, Real Estate and Crypto

[Carolinian]

About 70 years ago when I was 17 I bought a publication titled The Price of Gold Must Go Up. At the time gold was $35 oz. I have owned gold and silver ever since. Today the price of gold and silver are under pressure. I think what is happening is that many are switching from gold and silver to Real Estate, Bitcoin and other Crypto as their stores of value...

George

Compare precious metals with stocks and crypto since the first of the year. Precious metals is the winner. Real estate depends a lot in the local maeket you are in. We have residential rental properties and the market we are in is hot, with both significant increases in property values and rents.

From the experts I read, many of the Comex speculators on paper gold and silver have shifted to crypto and they are welcome to it, and their getting out of the Comex is a positive for gold and silver. Paper gold and silver involves speculators buying contracts, either long or short, with 4% down and the rest on margin. When someone wants to manipulate the gold and silver markets, it is almost always done in the paper gold and silver speculators markets by doing something to spook speculators. The most common day to do that is Sunday, which is a thinly traded market so such moves can have more impact. Most paper gold markets have moved into compliance with the Basel III standards which makes it harder to manipulate gold prices through the paper markets, with the Comex in NY waiting until the end to come into compliance this July. Basel III does not apply to silver, making it easier to manipulate through the paper makets.

As the speculators are falling away, the market is being driven now mostly by central bank buying, which has been setting records over the last three years. There is also an increase in the use of gold by investors for hedging, and, at least in Europe in institutional buying.

As to crypto, I personally have zero interest in buying air. I agree with the leading investors who have called it "rat poison" and a "digital Ponzi scheme".

 

[Brett]

Compare precious metals with stocks and crypto since the first of the year. Precious metals is the winner. Real estate depends a lot in the local maeket you are in. We have residential rental properties and the market we are in is hot, with both significant increases in property values and rents.

From the experts I read, many of the Comex speculators on paper gold and silver have shifted to crypto and they are welcome to it, and their getting out of the Comex is a positive for gold and silver. Paper gold and silver involves speculators buying contracts, either long or short, with 4% down and the rest on margin. When someone wants to manipulate the gold and silver markets, it is almost always done in the paper gold and silver speculators markets by doing something to spook speculators. The most common day to do that is Sunday, which is a thinly traded market so such moves can have more impact. Most paper gold markets have moved into compliance with the Basel III standards which makes it harder to manipulate gold prices through the paper markets, with the Comex in NY waiting until the end to come into compliance this July. Basel III does not apply to silver, making it easier to manipulate through the paper makets.

As the speculators are falling away, the market is being driven now mostly by central bank buying, which has been setting records over the last three years. There is also an increase in the use of gold by investors for hedging, and, at least in Europe in institutional buying.

As to crypto, I personally have zero interest in buying air. I agree with the leading investors who have called it "rat poison" and a "digital Ponzi scheme".

https://www.longtermtrends.net/stocks-vs-gold-comparison/

 

[Ralph Sir Edward]

View attachment 107507
https://www.longtermtrends.net/stocks-vs-gold-comparison/

Of course these stock indexes do not take account of "survivor bias". They are"actively" selected.

It would be interesting to see, say, 10 year, 20 year, and 30 year S&P 500 baskets without any change in selection from the time of purchase, and see what they are worth today. Why? If you buy a lump of metal, there is no change in the asset over the same period. Put both in a box and see what they are worth at the end of the period.

To cherry pick a period, the S&P 500 had many dotcoms in it in 1999, the vast majority went broke in a few years. Other stock were put in as a replacement, but that is "actively" managing the mix.

 

[Carolinian]

Central banks buy gold to protect the values of their currencies. Curiously the one instance I am aware of when a cental bank bought stocks, it was for the express purpose of depressing the rise in their currency. Around 15 years ago, Swiss exports were suffereing in their largest market area, the EU because of the rapid appreciation of the Swiss franc agaainst the euro. The strategy of the Swiss central bank to stop the rise of their currency was interesting, to say the least. They digitally created a bunch of Swiss francs out of the air and used them to buy American stocks. That brought an end to the rise in their currency's value. I well remember when that happened as I was working in Europe at the time and had a big pile of Swiss francs in my safe deposit box.

 

[Brett]

Of course these stock indexes do not take account of "survivor bias". They are"actively" selected.

It would be interesting to see, say, 10 year, 20 year, and 30 year S&P 500 baskets without any change in selection from the time of purchase, and see what they are worth today. Why? If you buy a lump of metal, there is no change in the asset over the same period. Put both in a box and see what they are worth at the end of the period.

To cherry pick a period, the S&P 500 had many dotcoms in it in 1999, the vast majority went broke in a few years. Other stock were put in as a replacement, but that is "actively" managing the mix.

And that's why a stock index mutual fund has much higher rate of return.

Holding stocks like GE, Bethlehem Steel, International Telegraph and Telephone and never selling them isn't like holding a share of Vanguard 500 or Schwab 500 fund where the index changes slightly each year. The survivor "bias" is the person holding the share and consequently they hold shares of companies like Amazon, Apple and Amgen and not for example the U.S. Rubber Co. which was big in 1935


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https://www.longtermtrends.net/stocks-vs-gold-comparison/

 

[Ralph Sir Edward]

And that's why a stock index mutual fund has much higher rate of return.

Holding stocks like GE, Bethlehem Steel, International Telegraph and Telephone and never selling them isn't like holding a share of Vanguard 500 or Schwab 500 fund where the index changes slightly each year. The survivor "bias" is the person holding the share and consequently they hold shares of companies like Amazon, Apple and Amgen and not for example the U.S. Rubber Co. which was big in 1935


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https://www.longtermtrends.net/stocks-vs-gold-comparison/

My point is that buying and holding a real asset, metals, real estate, collectibles, ect., is a buy once and hold manner, never changing the position; so the best comparison is with buying and holding the same stock position in a " once and done" manner as well. Otherwise, you are comparing a "one and done" method with with active management method.

 

[PigsDad]

My point is that buying and holding a real asset, metals, real estate, collectibles, ect., is a buy once and hold manner, never changing the position; so the best comparison is with buying and holding the same stock position in a " once and done" manner as well. Otherwise, you are comparing a "one and done" method with with active management method.

I don't think anyone with any credibility would consider an S&P 500 index fund an "active management" fund.

Kurt

 

[Brett]

My point is that buying and holding a real asset, metals, real estate, collectibles, ect., is a buy once and hold manner, never changing the position; so the best comparison is with buying and holding the same stock position in a " once and done" manner as well. Otherwise, you are comparing a "one and done" method with with active management method.

Well yes, your Beanie Baby and stamp collection are not in the same league as holding shares in a Vanguard 500 index fund.

But the point (my point) is holding stock index funds during the past 40 years is a better investment "value" than gold or silver. But the nest 40 years - maybe - or maybe not!

https://www.longtermtrends.net/stocks-vs-gold-comparison/

 

[Ralph Sir Edward]

Well yes, your Beanie Baby and stamp collection are not in the same league as holding shares in a Vanguard 500 index fund.

But the point (my point) is holding stock index funds during the past 40 years is a better investment "value" than gold or silver. But the nest 40 years - maybe - or maybe not!

https://www.longtermtrends.net/stocks-vs-gold-comparison/

My point is not whether real assets are a better investment than stocks. My point is that if you are going to do an "apples-to-apples" comparison, that you actual compare apples on both sides.
In the 1980's and 90's I bought stocks as Object d'art (for the fancy engraved certificate). Around 30% of those stocks went broke, another 30% were bought out, and only 40% or so remain as the stocks I bought. (I'm looking at the 1987 Apple certificate (with the Apple II on the certificate and the multi-color apple as well) and the Walt Disney certificate (with Walt and the color characters as well) both over the computer where I'm typing this. The value of my collection - as stocks - must include the money lost from the companies that went broke along the way. I couldn't just add another stock to replace the broke one, any more than I could buy some more "gold" when the price went down, and use that as part of the comparison.

I know I'm speaking to a brick wall, but I'm only interested in a fair "apples-to-apples" comparison, and let the chips fall where they may. . .

 

[Ralph Sir Edward]

I don't think anyone with any credibility would consider an S&P 500 index fund an "active management" fund.

Kurt

Why not? Consider. . .

An "actively managed" fund has a person deciding what stocks to hold and when a stock should be sold and replaced with another stock.

An index is a group of stocks, selected for a reason (the index criteria), usually with a mechanical set of rules for the selection. But stocks are replaced over time, as they no longer meet the criteria of the index and other stocks that now meet the criteria are substituted for them. Isn't that the same? One is using a mechanistic rule instead of human "judgement", but in both cases, the stocks are added and dropped over time; in the end, the contents of the index (fund) doesn't look like the index (fund) that was there 10, 20. 30 or more years ago.

"A rose by any other name would smell as sweet. . ."

 

[Brett]

My point is not whether real assets are a better investment than stocks. My point is that if you are going to do an "apples-to-apples" comparison, that you actual compare apples on both sides.
In the 1980's and 90's I bought stocks as Object d'art (for the fancy engraved certificate). Around 30% of those stocks went broke, another 30% were bought out, and only 40% or so remain as the stocks I bought. (I'm looking at the 1987 Apple certificate (with the Apple II on the certificate and the multi-color apple as well) and the Walt Disney certificate (with Walt and the color characters as well) both over the computer where I'm typing this. The value of my collection - as stocks - must include the money lost from the companies that went broke along the way. I couldn't just add another stock to replace the broke one, any more than I could buy some more "gold" when the price went down, and use that as part of the comparison.

I know I'm speaking to a brick wall, but I'm only interested in a fair "apples-to-apples" comparison, and let the chips fall where they may. . .

Yeah, it's a brick wall.
If, for example, Apple Corp. goes bankrupt then the proportionate share in the Vanguard 500 index fund would decrease and another company would be added to the the other 499 so it would still be "500". And you would not get the actual stock certificate to hang on the brick wall.
Correct, that's not equivalent to the value of a gold bar you keep in your basement for 40 years.

https://www.longtermtrends.net/stocks-vs-gold-comparison/

 

[TolmiePeak]

Correct, that's not equivalent to the value of a gold bar you keep in your basement for 40 years.


View attachment 107566
https://www.longtermtrends.net/stocks-vs-gold-comparison/

I keep my gold bars in various sectors. I sell the winners and buy the losing sectors. So obvious that it works and only fools here don't understand it...

 

[Carolinian]

View attachment 107507
https://www.longtermtrends.net/stocks-vs-gold-comparison/

Year to Date:
Gold up 14%
Silver up 16%
Stock Market DOWN 5%

Gold is at an all time high of $3,000 (glad I bought some more US Liberty pre-33 Eagles this morning at $2,970 per ounce, but even happier about all the gold in my safe deposit boxes I bought in the $1600 to $1800 range)
Silver is over $34.00

 

[easyrider]

My point is not whether real assets are a better investment than stocks. My point is that if you are going to do an "apples-to-apples" comparison, that you actual compare apples on both sides.
In the 1980's and 90's I bought stocks as Object d'art (for the fancy engraved certificate). Around 30% of those stocks went broke, another 30% were bought out, and only 40% or so remain as the stocks I bought. (I'm looking at the 1987 Apple certificate (with the Apple II on the certificate and the multi-color apple as well) and the Walt Disney certificate (with Walt and the color characters as well) both over the computer where I'm typing this. The value of my collection - as stocks - must include the money lost from the companies that went broke along the way. I couldn't just add another stock to replace the broke one, any more than I could buy some more "gold" when the price went down, and use that as part of the comparison.

I know I'm speaking to a brick wall, but I'm only interested in a fair "apples-to-apples" comparison, and let the chips fall where they may. . .

To do the comparison in the way that stock funds adjust it would be comparing buying and selling real estate to funds adjusting. Fund adjustments are buying and selling. In this case, buying and selling real estate is often more profitable than holding a fund.

Bill

 

[Brett]

Year to Date:
Gold up 14%
Silver up 16%
Stock Market DOWN 5%

Gold is at an all time high of $3,000 (glad I bought some more US Liberty pre-33 Eagles this morning at $2,970 per ounce, but even happier about all the gold in my safe deposit boxes I bought in the $1600 to $1800 range)
Silver is over $34.00

Stocks are for the long term. Most people also have CD's, bonds and other fixed income investments. And real estate
And yes, a few gold coins will help with anxiety for next four years !

I'm happy I bought stock index funds during the past 40 years

Gold vs Stocks

 

[Carolinian]

The question on stocks is whether they are overpriced against the fundamentals and thus in bubble territory. For obvious reasons, your comparison chart did not include the years around 1929.

The central banks have been on a gold buying spree for the last few years, other than the Fed, and I suspect they know something about where all the markets are headed.

That said, the largest part of our invetments are in residential rental real estate. Last year, we earned slightly over 20% of the capital invested on rental income after expenses and our property values probably went up ten percent during the year. Barring some major repairs, our rental income should continue in that ballpark, and in the market we are in we do not have much risk in decline in property value but how much it will increase is unknown. Precious metals is our diversification.

 

[emeryjre]

Residential Rental Real Estate has generally been a good investment
It does require time and energy to manage unless you find a great property manager and can handle the cost to cash flow the management fee adds to the investment return
A major risk is the "Tenant from Hell"
Significantly destroys the home
Fails to pay rent for an extended period before being removed from the home
Costs tons in legal fees to remove the home
Doesn't happen often
But when it does........

 

[Brett]

Residential Rental Real Estate has generally been a good investment
It does require time and energy to manage unless you find a great property manager and can handle the cost to cash flow the management fee adds to the investment return
A major risk is the "Tenant from Hell"
Significantly destroys the home
Fails to pay rent for an extended period before being removed from the home
Costs tons in legal fees to remove the home
Doesn't happen often
But when it does........

Or buy mutual funds and/or REIT's that hold real estate rentals

 

[Carolinian]

Or buy mutual funds and/or REIT's that hold real estate rentals

View attachment 107624

View attachment 107625

It is the residential rental real estate market that offers the best stability. Commercial real estate has been more problematic lately. Many people can buy a rental house or two and finance it if needed. It is a much smaller group that can buy a hotel or office building on their own.

 

[Brett]

It is the residential rental real estate market that offers the best stability. Commercial real estate has been more problematic lately. Many people can buy a rental house or two and finance it if needed. It is a much smaller group that can buy a hotel or office building on their own.

Perhaps, -- but there is a reason most 401k's don't offer residential real estate rental income

 

[Carolinian]

Perhaps, -- but there is a reason most 401k's don't offer residential real estate rental income

View attachment 107671

There are ways to use an IRA to invest in residential rental real estate.

The commercial real estate market right now is a big headache for banks worried about the value of the collateral on their commercial real estate loans.

 

[easyrider]

It is the residential rental real estate market that offers the best stability. Commercial real estate has been more problematic lately. Many people can buy a rental house or two and finance it if needed. It is a much smaller group that can buy a hotel or office building on their own.

Comercial real estate is currently going
through some hiccups.

Bill

 

[Ralph Sir Edward]

Back again. My internet has been down since Thursday.

 

[Carolinian]

Bank of America and Goldman-Sachs have come out with new projections on gold. Bank of America's price target is $3,500 by year end. Gold,am-Sachs says conservatively it will be $3.300 by year end, but lays out a plausible scenario that could see gold go to $4,500 in 12 months. They are looking at the liklihood of central banks continuing and likely expanding their gold purchases, expanded Chinese buying now that Chinese insurance companies are allowed to buy gold and are piling in, and increased western investor buying. Gold jumped $35 today to $3.071

 

[Brett]

Bank of America and Goldman-Sachs have come out with new projections on gold. Bank of America's price target is $3,500 by year end. Gold,am-Sachs says conservatively it will be $3.300 by year end, but lays out a plausible scenario that could see gold go to $4,500 in 12 months. They are looking at the liklihood of central banks continuing and likely expanding their gold purchases, expanded Chinese buying now that Chinese insurance companies are allowed to buy gold and are piling in, and increased western investor buying. Gold jumped $35 today to $3.071

We'll see how those projections turn out - the crazy times of fear and uncertainty have to stop at some point, right?

Gold vs Stocks

https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart