User ID posted: " https://www.youtube.com/watch?v=ggjGm8860b8 Is Gold Dead? by Joseph Brown Gold's performance has been less than stellar over the last year. This has caused many to take their losses and look elsewhere to invest their money. Because of the extreme bea"
Gold's performance has been less than stellar over the last year. This has caused many to take their losses and look elsewhere to invest their money. Because of the extreme bearish sentiment surround gold lately, it's important to keep looking at the numbers to determine whether or not gold is still able to perform its function as a store of value.
I am not a CPA, attorney, or licensed financial advisor and the information in these videos shall not be construed as tax, legal, or financial advice from a qualified perspective. Linked items may create a financial benefit for Heresy Financial.
See Full Video Transcript Below
What's up everybody my name is Joe Brown and this is Heresy Financial over the last year gold's performance has been lackluster to say the best this has led many investors to be exasperated and just be fed up and throw in the towel it's also led many financial pundits to be able to run victory laps and declare that gold is dead especially in light of what just regular equity markets have done over the last year and especially assets like bitcoin have done over the last couple of years just these massive mind-blowing returns so today we're not going to look at sentiment we're not going to look at opinions we're just going to look at some numbers so that we can answer the question is gold dead ready let's dive in in today's day and age it is becoming increasingly difficult to accurately categorize gold because with most assets you're either expecting you're going to make money or you're going to lose money this is true if you're selecting stocks this is true if you are holding on to dollars because you're virtually guaranteed to lose purchasing power over time and these two dynamics have led a lot of people to invest in highly speculative highly volatile assets like bitcoin that have had mind-boggling returns over the last couple of years so where does gold land in this mess increasingly especially over the last year many have been placing in the camp of fiat just slowly lose money over time the problem is public perception doesn't exactly line up with hard data so let's look at some numbers both long term and short term to show that gold is still doing its job and that job by the way is savings so first let's look at gold versus the dollar gold carried a legal price of an ounce from 1934 all the way through 1971 when Nixon closed the gold window and the free market was able to determine the price of gold once again as of today the gold price is 1760 per ounce this is a total return of four thousand nine hundred percent over those last fifty years so over the last fifty years gold has outperformed the dollar by four thousand nine hundred percent pretty good start but you say nobody over that time frame especially is comparing gold to the dollar seriously and saying that it would have been better to hold dollars that whole time what they're really looking at is something probably like the S&P 500 which is an asset that makes you money over time right well okay over that same period of time the last 50 years let's compare gold to the S&P 500 oh would you look at that they basically match interesting 50 years ago if you would have had the choice to invest in the S&P 500 or in gold many people would tell you that you would have been far better off by investing in the S&P 500 than gold now you might say that's cherry picking dates because it is so let's look at a different date let's look at the last 20 years instead of last 50 years we go back to august of 2001 gold has had a total return of 560 percent since then and would you look at that this is over double the return of the S&P 500 over the same period of time which is 265 percent total return since then so is this still cherry picking yes of course it is so let's look at another date let's look at the last three years and see how they've compared since august of 2018 gold has returned a total of 48 versus the S&P 500 total of 55 so is this still cherry-picking yes it is but it shatters the perception that gold is dead that gold is a shiny pet rock that does nothing goes nowhere has no place in a portfolio especially in light of the dogmatic religion of index investing I'm not even saying gold is an investment it's not it's money they're different but if you can find periods of time both long term and short term 50 years 20 years and three years where money severely outperforms or matches the return of something that's supposed to be the best investment ever you've got a problem what this really means is that inflation numbers are probably understated and that most returns that we're seeing in the stock market are simply inflation now this also means that stocks are a decent inflation hedge because they've kept up on pace with gold so you've preserved your purchasing power but they've done just about as good as gold over the long term it also means it hasn't made you rich you've maintained your purchasing power which is great now instead of comparing gold which is money against a popular investing vehicle an asset like the stock market let's compare it against inflation to see how well it's done its job over the years so how much purchasing power has the dollar lost over the last three years well obviously depends on who you ask and I'm using the last three years specifically because most people agree that gold has held up pretty well if you look at 20 years 50 years it's had some fantastic returns most people even acknowledge yes gold holds up for inflation if you look back thousands of years because you can look at things that aren't affected by technology like the wages for an army captain are the same as a wage for a roman centurion when you measure it in gold and something like a custom three-piece suit would cost you the same today in gold as it did a couple hundred years ago in gold so things that are not affected by technology typically will cost the same over time when priced in gold but especially recently in light of the emergence of cryptocurrencies especially bitcoin and the alleged manipulation in the gold and precious metal markets like especially silver as well lots of allegations of manipulation there many are saying it's not even worth it because it can't keep up and do its job just look at inflation so we're going to look at three different measures of inflation the first one is obviously we got to look at the official numbers if you go to the BLS the Bureau of Labor Statistics official website you can see what they report for the CP-lie I mean sorry the CPI and you can see that for the last three years they're reporting the cumulative inflation has been 7.82 percent cumulative for all three years if you look at private statistics on the opposite end of the extreme the highest estimation I've been able to find for the last three years is approximately 39 from shadow stats and this uses the same metrics that were officially used in the 1980s before there are a bunch of slimy changes made to how inflation was measured now these are likely two extremes that are both almost certainly incorrect at the far end of the extremes 7.82% cumulative inflation over the last three years versus 39 cumulative inflation over the last three years likely the truth is somewhere in between and as pointed out by Lyn Alden this is partly because there's kind of a cap on what inflation can be and that cap is going to be the broad money supply growth so what has the broad money supply growth been like over the last three years well it again depends on who you ask there are many different ways to measure the broad money supply but one of the most widely accepted measurements is called M2, M2 has had a cumulative growth of about 30 percent over the last three years so inflation is likely closer to the private estimates in my opinion which is at 39% than it is to the official estimates at 7.82 percent but there's really not a high chance that it's above that 30% because really you've kind of got a cap on how much inflation you can see which is the growth and the supply of money so in light of all this information how has gold held up against inflation how has it held up as a store of value because remember gold is savings the point of gold is to make sure that you can still buy the same amount of things regardless of how much time goes on regardless of whether there's inflation or deflation it's a store of value it's a savings vehicle that's its goal that's its point that's why you would buy it so if gold has held its own against inflation it would need if the official numbers are true it would need to have returned at least eight percent cumulatively over the last three years and if the worst estimates of inflation are true it would need to have returned 39% over the last three years and do you remember what gold has returned over the last three years that's right 45% so even if the highest possible inflation numbers from private estimates are true gold has still done its job despite the last year of the price drifting downward and this is why it's important to remember that the point of savings is to retain your purchasing power if everything doubles in price this is inflation gold would follow but if the stock market drops by fifty percent and real estate drops by fifty percent and you wake up tomorrow and gold is trading at nine hundred dollars an ounce did gold do its job yes because it's there to make sure you can still buy the same amount of stuff savings doesn't make you rich savings retains your purchasing power real savings provides you with a sum that you can use to make a purchase regardless of inflation or deflation now contrast this with fiat which actively dwindles in purchasing power over time when you have inflation which we always do and if there's ever deflation you'd get a spike in purchasing power this is not a store of value fiat isn't savings it's much closer to a speculation when you look at how it responds how your purchasing power responds to what goes on in the markets now there's still room for some in a portfolio but fiat is not a store of value and neither is bitcoin yet there's still room for bitcoin in a portfolio but gold is still the pristine savings vehicle it's still a functioning store of value so just like mark twain the report of gold's death has been greatly exaggerated and finally if you'd like to buy gold and you just have no idea where to get started I've got my ultimate guide to buying gold linked in the description below as always I really appreciate you guys thank you so much for watching have a great day
Disclaimer: This article is solely for informational purposes only and it should not be construed as a solicitation or offer to buy or sell on any financial securities/instruments, etc. nor anyone should take the content as an investment advise, any opinion expressed in this article are subject to change without prior notice, eurymanthus.wordpress.com and its author is under no obligation to keep current of the information herein and accepts no liabilities for any gains, losses of any kind arising from any of the material presented on any post/s and/or article/s published.
My Options Course (Beginners) 
My Options Course (Advanced) 
My Ultimate Guide on How to Buy Gold 
My Weekly Newsletter 
Gold/Silver IRA (Get 1st Month Free) 
Buy & Store Gold/Silver (Get $5) 
Best Bitcoin IRA (Get 1st Month Free) 
Best Place to Buy Bitcoin (Get $10 BTC) 
Best Bitcoin Exchange 
Best Bitcoin Wallet 
Best charts (Get $30) 
Best all-around 
Best auto investing 
Best margin rates 
SeedInvest 
Angel List 
Single-Family Rentals 
Borrow for RE Development 
Invest in High-Yield RE Debt 
RE Portfolio Investing 
Life Insurance 
Short-Term Health Insurance 
College Savings Plan 
Book Insights and Summaries 
Learn to Code 
Small Business Bank Account 
Thunderbolt Monitor 
Best WiFi Router 
Speakers 
M1 iPad Pro 12.9inch 
iPad Magic Keyboard 
Apple Pencil 
Patreon 
Merch 
Join as Member 
WordPress.com
No comments:
Post a Comment