It is ironic you're saying that because it was you who was making statements without numbers to back them up. Purchasing power of $1 US plus LIBOR interest rate minus CPI. Monthly compounded series, 1980 - 2009. The real annualized short term interest rate over the last 30 years has been approx. 2% but negative over the last 10 years:
The reasoning is plausible, but the genuine purpose is that big boys are shorting gold, want the rest do so too.
You are an idiot. YOUR graph PROVES MY point, near $1.80 today equates to $1.00 purchasing power in 1980!! LOL. Plus YOU have forgotten to include the affect of taxes on that checking account interest and-or those S&P dividends, reinvested or distributed doesn't matter. Besides all that YOU clearly don't read very well. Excerpt from MY original post...
You are the idiot. I included CPI (a measure for purchasing power) in the equation. Google "real interest rates", you might get a clue.
You are the idiot-king if you believe todays $1 has 80% MORE purchasing power than it did in 1980. LOL. I don't need google to know that is not accurate!
I wonder how a purchase of the Dow at the 1929 peak would have done 30 years later, compared to a checking account. Or a purchase of the nasdaq at 5000...where will that be in another 21 years? Or let's consider UK consols bought in 1913, lol. Basically, this article was written by a moron. Bloomberg is plumbing new depths in its race to become as ridiculous as CNBS. Gold does have one advantage. Unlike many national stock markets, national government bonds, national t-bills, gold has never become worthless. An investor in Russia, France, Japan, Austria, or Germany who in 1910 only had his money in stocks, bonds, and a local bank account would have gotten wiped out. One who had 10-20% in gold would have survived financially. There is a reason why gold is popular in a lot of the 2nd and 3rd world. I'm sure late 19th century Argentines thought gold was no longer necessary when they could invest in the assets of a very rich, prosperous capitalist country.
It's not complicated. Gold goes up (against your currency of choice) and gold goes down. Up, down, up down, roughly maintaining its purchasing power but it doesn't go to zero. Everything else can go to zero. Equities, bonds, the dollar, real estate, sports cars - you name it. It's the one asset class that has several millenia of track record showing it doesn't go to zero. Historical Note: if we find a way to synthesize gold, all bets are off. The natural pearl was once upon a time the most precious substance on planet earth. A Roman caeser could finance a military invasion with a pair of pearl earrings. But once Mikimoto figured out how to get oysters to cough up pearls at will, the value of pearls plummeted.
The cost to find, permit, develop and mine an additional ounce of gold these days is well over $1000 and takes about 10 years, and every year it gets harder to do. Cash cost numbers mean nothing when it takes $2 billion and 2 or 3 years, just to put in the power line to the mine, and the projects capital cost is $5 billion, and thats for a mine that can only operate 5 months a year, where everything will need to be flown in by chopper. Real gold, already mined, doesn't have any of those problems.
Let's make a list of all the banks that went under since that time. What kind of counterparty/credit risk are we looking at vs. gold? These things are never so simple.