You gold detractors miss the point. Robust stores of wealth have always required rarity. That is why a virtuous woman is worth any price. We are now in the era of Peak Gold. Increasingly, as in antiquity, gold intended as a store of wealth is being fashioned into works of art, as in the case of the Pamp Suisse gold bar or the Buffalo coin or the Gold Philharmonic. I have always bought gold for beauty, never imagining when gold was in the high-$200's that it would break $1000 in my lifetime. Gold is art. And art is timeless value. Also it will buy more virtuous women now than it did earlier at one-quarter the current price.
Again a presumption toward the gold bulls that can easily be said about 'retail investors' in any asset class. Global losses worldwide both on an institutional level as on a retail level have been mind boggling this crisis so I see no reason to frown upon goldbulls for their supposed passive attitude in comparison with others. As far as the naive retail gold bulls goes I'll have you know they have been big sellers these last months in my country taking advantage of the high prices outnumbering buyers substantially according to all data. Time will tell if they did the right thing. As far as the Paulson reference goes obviously he is a logical target because of his extremely succesfull track record as of late but one could easily point out the bullishness on gold of other big names such as George Soros or Paul Tudor Jones, just pick any name out there . That's just the timeframe we are living in. All the fat cats are bullish on gold, and if they are not they won't admit it in public cause why would you admit you have been missing out on such an easy trade? Like Hugh Hendry talking about gold when it was at 900$ and he expected it to go to 700$ at which point he would consider buying it. These lousy calls kill reputations, you know that makloda.
Worse is the tax treatment. In the US all forms of Gold, excluding US Mint gold coins, are taxed as a collectible, which is fixed at 28% for all holdings in excess of one year. Holding for less than one year are taxed at your ordinary income rate. Those rates also apply to GLD shares, since it's a bullion-backed ETF.
Is this the same John Paulson who held onto his entire CDS positions when the ABX rallied 50% in his face in spring 2007? So much for deferring to price action. Retail investors buy into all kinds of assets. One could make exactly the same argument about bonds, real estate, stocks etc. When there's a bear market, retailers will get hosed, as they always do. What's your point?
Oh goodness another one of these silly threads. Who bought S&P back then and held it? What were the costs of doing that? This is a contrived example. If you accumulated gold since then at various price points, then how'd you do? Again, this is silliness. I love the gold bashing though, it's amusing.
Yeah exactly. The only legit comparison is to look at a basket of investments and see its performance over each 5-20 year time horizon over the last 50-100 years. If one with say 5-10% of gold showed a greater risk-adjusted return than one without, then gold is a legitimate investment for any portfolio investors. If gold has some hedging properties against financial crises, capital controls, wars or other disasters, then it has insurance value. That is all. People wanking on about what joe dentist and a bunch of gogo momentum funds are doing in December 2009 has nothing whatsoever to do with the investment case for gold or any other asset.
Just like being long a put option, a CDS contract has a built in stop loss. The maximum loss is defined by the premium paid. Your argument is obviously completely misplaced.
Regarding gold as a asset allocation element, I found Harry Browne's Permanent Portfolio quite interesting. I believe he established the basic asset allocation with 25% in gold sometime in the mid to late 80s, i.e. the results from that point on are a forward walk as are the returns of his mutual fund. http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-historical-returns/
It's strange but in my country (which is top 5 tax pressure worldwide) gold is free from any taxes when buying nor do we have capital gain taxes on gold or stocks of any kind. I guess you can't have it both ways.