Then short it. But keep in mind: Central Banks are now net buyers of gold. There's a reason for that. If you want to bet against the house - good luck.
As opposed to a guy who bought 1 ounce of gold in 1980 for $800/ounce and in 1985 the gold is worth $300? Anyway, if you do some real historical analysis, gold has been a pretty lousy store of value. Simple test - lets take workers compensation (skilled/manufacturing labor per hour) and see how many hours a worker would have to work to buy an ounce of gold: Year Gold (US$/oz) Hourly Wage (US$) Hours To Buy 1oz 1800 19.39 0.04 485 1825 19.39 0.05 388 1850 20.67 0.06 345 1875 23.75 0.12 198 1900 20.67 0.14 148 1925 20.67 0.5 41 1950 35 1.55 23 1975 161.49 6.02 27 2000 280.1 19.36 14 2010 1270 26.79 47 Labor cost, in general, is the best indicator of inflation and gold did not do too hot as an inflation hedge over that period. You could do other tests (check gold vs CPI, gold vs real estate prices etc) and the results come out the same. So, my conclusions are (a) gold is an instrument just like any other and (b) while it has it's uses against currency debasement, it could easily fail.
USD was a very very very strong currency since world war 2 many fiat currencies have become obsolete currencies. Preserving the 'value of the currency' is the job of the central bank and the central banks mandate. you have to understand that fiat money is just paper.
Huh? What does USD have to do with hourly wage/price of gold? Think about what sle said a bit, I'm sure you'll figure it out.
Not true. Since 1970 (the index inception), DXY has lost (with a shortish bumps in the 80s and late 90s) about 40% of it's value. You could, if you want, use synthetic DXY do the same analysis over the last 60 years to reach similar conclusions.
Whether or not payments in gold is recognized by governments is irrelevant. What you're describing is an asset. Technically, I can sell my house for "legal tender", and then pay my bills with it. Does that make my house a currency? Surely you are smart enough to figure this out. A currency is a medium of exchange. Gold is not currently a medium of exchange. Go try to negotiate with someone an exchange of goods/services for a set amount of gold. They will tell you you are nuts.
========== T007; Well thats an easy pop quiz; Dave [FOX ]Ramsey doesnt like it also.So as i wrote some time ago; i guess gold will have to trend without them.Not a prediction. Frankly i like gold & silver & farmland.....................; & since most of us will never buy ''all the framland in the US'', flood /drought/hail never hurt gold much, plenty of farmers get flooded XOM does have a nice dividend /yield
Why do Central Banks still hold gold in their reserves, if there is not a currency component? Gold has been used as money for thousands of years, even though today's fiat system bars it from being used as legal tender.
Yeah. It is like the currency behind the currency. Or the value. In England on our notes there is a strip of metal to denote value. It is not full value but it indicates the backing of the reserve. Promisary notes are currency because they are easy to use. However the value and security of the promisary note comes from the reserve in most cases gold or stirling.