Investing in precious metals 101

Brett Arends says Gold as a safe haven is mostly bogus

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  • Wed, Feb 17, 2016 - 11:51am



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    Brett Arends says Gold as a safe haven is mostly bogus

I bought a coin a few years ago at 480. Am I crazy or is there a serious gravity wave in the vicinity? Anyone want to take him on?

• Gold was “de-monetized” in 1973, when the United States government formally abandoned the gold standard. (Though Switzerland retained a version of a gold standard until 2000.) So any arguments for gold as a “safe haven” that depend on data from before 1973 are based on a flawed premise.

• I’ve run the numbers using data from FactSet, and if you’ve bought gold bullion at any time since it began trading freely in 1975, you’ve lost money over the following 12 months about 45% of the time. That’s right: Nearly half the time, gold has fallen in price year-on-year.

• If you’ve held on for longer, it hasn’t helped much, either. Gold has lost value 41% of the time over three years, and even 34% of the time for five years. Someone buying gold and hanging on for five years has lost money a third of time. And that’s in purely nominal terms — before counting inflation.

• Gold lost 23% of its value during the 1980s, even in nominal terms, before counting inflation.

• Gold lost 29% of its value during the 1990s, also before inflation.

Heres the rest of his commentary:

  • Sat, Feb 20, 2016 - 10:19am



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Brett Arends says Gold as a safe haven is mostly bogus


never heard of such a person, and no idea what his qualifications are to speak on such a subject.

but, the date given of 1973 is incorrect, so that already makes me think he's not credible.

August 15, 1971 – Richard Nixon Closes the Gold Window

the best time to buy something, if you're buying for long term, is when everyone else hates what you're buying, and it's out of favor.

if gold had been going up strongly all this time, that would be more likely a signal to sell, rather than to buy.

if you look at gold in the long term, one frequent anecdote given is that an ounce of gold has always bought a fine mens' suit/outfit, since roman times, and has always preserved value for the long term.

times like these, when it has not had strong recent showing, is exactly the right time to buy it, with the understanding that it will revert to the mean, performance wise.

unfortunately, herd mentality is, when something is going up, you should hop on the bandwagon, and when something is falling, you should sell, sell, sell. that's often exactly the wrong mentality, and how sheep get fleeced.

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