Why The Gold Price ALMOST Doesn't Matter
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- Опубликовано: 29 июн 2020
- If you're buying gold for the long term, does it really matter what the price is today vs tomorrow? Michael explains. Buy your favourite gold and silver bullion from your favourite bullion dealer at www.bullionnow.com.au
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I think people get stuck seeing gold as a investment when it is insurance against uncertainty.
Tim Lester I initially thought of it as an investment, and I partially still believe that, however I now understand that it is much more used as a preservation of wealth and a hedge against inflation
Gold is money. Think of the saying “Cold hard cash”. Gold is essentially a FX hedge to your local currency except unlike your local currency it isn’t fiat and hence doesn’t lose its purchasing power over time.
Over the long run it’s generally not an investment. Which is why it should only make up 5% -10% of your portfolio. In times of uncertainty this may increase to as high as 25% of your portfolio.
It is also much more beautiful than fiat cash and a lot more fun to collect in my opinion.
@@InvestingforKids Remember my comment on the 'hot chicken dinner' from one of your earlier videos? That is the same as this, just the time frame is different. Keep up the good vids.
Lord Knightyme that was the most helpful analogy evr
Hi Michael. Great info for a newbie collector like me. Thanks. PS it was great meeting you in Wgl the other day at A. Gdns. How fortuitous and a shame it was such a brief chat. 😀
JP Morgan 'GOLD and SILVER is money, everything else is credit.'
Average Salaries in America priced in gold
average Salary 2020 america
$40000 / Price of gold USD 1,724.51 = 23. ounces of gold per year
Average wage 1920 america
$3,269.40 / Price of gold USD $20 = 163.47 ounces of gold per year
The Average America is only paid in gold 14% of what they were paid in 1920,
A 86% decrease in real salary.
If American's were paid as much gold as they were in 1920
The average salary would be $282803.1 USD per year.
I feel that nothing has contributed more to wealth inequality, decreasing birthrates in the west and social conflict than giving unaccountable central bankers total control over the entire worlds monetary system. But at least Silver is cheap, it's probably the only real opportunity young people have at getting ahead is by buying thousands of ounces of silver and waiting for it to moon against fiat currency.
Boomer Plays Games this is a really insightful comment. Thank you for sharing. That’s crazy!
The mean (average) salary in 1920 may have been $3,269.40, but the median salary was under a $1,000 a year. Median, meaning that this was what most people earned. The reason that the mean is much higher is because the ultra-rich cause an imbalance in the calculation. If you have 10 people, 9 of them earn $100 and one earns $5,000, together they would have earned $5,900. Their mean salary is $5,900 / 10 = $590. The median salary would be $100, since 9 out of 10 people earn $100. Thus, the average worker in 1920 would have probably earned the equivalent of about 40 ounces of gold per year. You also have to think of the buying power of the dollar. In 1920 the buying power of the US dollar was about 20-30 times greater than it is now. So, someone having earned $1,000 back then would be comparable to someone earning $20,000-$30,000 today. Based on that, you could say that we're actually better off today than we were back then. Gold just spiked since we went off the gold standard, plus when its price was raised in the 1930's by FDR. If gold would have stayed $20 an ounce adjusted for inflation, even if we multiply that by 30, that would mean that it should be worth $600 an ounce today - whereas it's worth 3 times that much now.
Now does/did the gold standard and removal of effect this calculation?
How*
What a great comment. This is how a certain race has controlled the European races birth rate through banking. 35 years ago my wife to be said she would like 5 children I nearly choked as my first thought was how are we going to pay and feed them? I should of listened.
I genuinely really enjoyed this video ALOT
If you invested $15K into the S&P500 back in 1971 it would be now worth approx $1,174,851.09. There is no right or wrong way to invest but what fit's your personal style and psychology. I don't believe one should have all their egg's in one basket but a bit of everything, stocks, gold, silver, bonds, etc... But Australia's housing is a major issue, extremely over inflated especially with 200% debt to income thing's has to come down...
Great Video.
Ricky Smith very true. I’ve owned some S&P 500 and the growth is great. I got around 14% for the year I held it
Yes but the neat future is going to be very much a bear market. Gold wins.
I totally agree with you great time to be in the s&p now i feel it time for gold ,then dig it up later and buy some very deprecated assets
Agreed. So many things can be a good investment/wealth preservation over time. I hoped my real take away from this video was people get a grasp on the effects of time and inflation on hard assets compared to paper.
These almost flawless examples are great! I’m sending this one out to family and friends.
They need to see this kind of stuff because there’s so much distraction from financial preservation.
Been to your shop and purchased a 20 grams perth minted bar.. Your staff is awesome and helpful. Product is fantastic too.. I got it's purity and weight tested on spot and it was perfect. Looking forward to buy more from you :)
Thankyou Michael, you put that so well!! And so you should, being a very reputable bullion dealer!!
I was sold on that same mentality, and to hear it put so clearly on this vid..... SOLD!!!
Great work!!!
If people had known that, they wouldn’t end up gambling their hard earned cash in stock market.
Sometimes perspective is needed.
Stick to ETFs and its not different to gold with regards to ups and downs. Its very much worth holding stocks, to say otherwise is silly. Stocks also are long term and you only lose when you sell. Your pension will be in stocks...
Gold doesnt yield any dividends. Many stocks do. Gold has outperformed every other asset class in capital appreciation on 100 year charts. So luck and timing can play a big part. Gold is not really an investment but more a safe haven.
Great work guys. Always making it accessible for Main Street. Love your work.
I just came here for the "if don't hold it, you don't own it" & " gold/silver is money, everything else is credit" comments.
You are very good at explaining, excellent advice mate , keep up the good work you do , wish I was on Australian, I would see you in person
100% great video, great description of currency vs money mate 👍
Boys...one of the best episodes I have ever watched...Hands down!! Thank you.
mitch bradford agreed
I have to say... looking at all that gold makes me drool. It is my actual dream to have that much gold
Your user name sums up the reason I stack gold and silver.
When I am gone, my Children will benefit from my precious metals
TheTorkerman-Adam that’s awesome! My channel is about helping kids to invest, not investing for your kids, but still an awesome motivation! Check out the channel!
Cool, will do, My son has some small share parcel and a small metal stack, we’ll both check it out
TheTorkerman-Adam thanks, that means a lot to me
Your reaction to the 1kilo Au bar we gave you still cracks me up!!! 😁😁
Excellent explanation. Easy to understand. I’m older then Michael but I remember the first time I ever checked gold prices it was $440 an ounce. About my weeks wages back then. Now gold is twice my wage approx.
What year was this ? Thanks
@@user-ot7jd9dt7t I think around 1997/98?
@@sticustom thanks for getting back
Always a no brainer. Always good to hear it demonstrated again.
This video is amazing. So much value and easy to understand. Thank you!
😌
Great presentation Michael.
Well done.
Great way to explain this and easy to understand. Thank you.
Some great analogies in this. Imagine if person A had kept 100 grand instead of 5 and person B kept 2600 ounces of gold. That would leave person A with $100,000 and person B with 6 and a half million - $6,500,000.
Perspective 👓
Real perspective is measuring fiat with gold rather then measuring gold with fiat.
Boomer Plays Games huh
Imagine if they put it in a broad market index fund with an annual return of 7%... you'd have the 6.5 million with change left over to buy some extra gold.
👍
Wow! Amazingly informative.
Well done Michael great description..
Really good video there Michael. Enjoyed it.
Glad you enjoyed it!
So many people and youtubers in America are laser focused on dollar cost averaging because they are flipping . I accumulate regardless of prices because gold and silver are better than paper . good video
Thanks
I'm not sure if I'm doubling up. My comment isn't showing but great video especially for a newbie like me. Thanks Michael.
PS : It was great to meet you at A. Gdns in Wgl the other day. How fortuitous. A shame we didn't have time for a longer chat.
i need to rewatch this once a year.
Thank you this is a great video and very well explained 👍good job
It's quite an old post now but still of great interest and so very relevant in 2022 with surging inflation and a possible recession in the wings. Thanks.
Great video. Cash is a toxic asset over the long term with a guaranteed negative return. Gold and silver is the way to go.
good point....but you need to factor in the transaction cast, i.e. the spread, which ranges between 6-12%.....as we know, dealers set the buying price lower than the selling price... this is how they make money.... so, the price does matter....
Great presentation thank you cheers❤❤
Brilliant video thank you.
Well said!
I bought gold from you in last 3 years and I have 30% growth in average.
I could gain same growth if I bought a house (of course I own a house).
I think you made the point absolutely clear🙂
Great video 👍🏼👍🏼 love the zero fs approach 🤣
Great vid
Xy GT will always be my favorite car
I loved the comparison ratio from back then until now and it still makes me wonder why people still believe in saving fiat currency instead of gold and silver as before long silver will out perform gold as long as history repeat's it's self like it hss in the past.
Cheers for the insite.
I generally agree. However there has certainly been times where speculating would of paid off bigtime. Like gold in aud in a short time going from $100 to $300. Also in a short time going from.$300 to $1000. However even then stressing small changes day to day or week to week wouldnt of affected that much either so yes good advice
It's like a lot of hard assets - you can trade them, invest in them for the short or long term, see them as a hedge or even a legacy. It's persepctive.
Watching from South Florida, USA and wish an example like this was taught in high school in both the US as well as where you are in Australia.
Agreed! Monetary eduction is sorely needed in schools.
I believe monetary education is purposely not taught in the educational system because the masses cannot have financial freedom as they have to be a slave to the corporate system to continue making the elite richer and more powerful.
Good explanation of how it is with gold. Protecting your wealth from inflation!!
great explanation... well done
Excellent explanation thank you Michael
Excellent video but it still hurts buying at this new over inflated prices but i can't stop buying the shiny lovely yellow gold
I'm completely new to buying gold and I'm more a gold coin collector but I enjoyed this video and learned something 🙂🙂🙂🙂
What a well put together video! It's like a long term battery of wealth. Perhaps we could go so far as to say that Gold is free from the effects of inflation and depreciation. It remains universally valuable, which has been proven since the beginning.
Well put.
Excellent video spent a fortune worried it will go down in the next 6 years high primiums no cheap gold In the uk its put my mind too ease love the videos 💯
Nice video, just goes to show how much of a scam fiat currency is...
Oh yeah!
Buy bitcoin that is simulated gold that can’t be corrupted.
Very relevant to my life cycle! Thank you.
Yep. In 1965 a Dutch one guilder coin contained 4,68 grams of silver. That guilder bought you about one liter of gasoline in 1965. The silver value of that one guilder coin.....still buys you about one liter of gasoline today.
If one is trying to assess whether gold is under-, fair or overvalued it is indeed better to not look at the price, but at the ratio between different assets: gold/oil, gold/average house, gold/stock market index or gold/classic cars. Two ratios that are particularly interesting are (market value of US Treasury gold)/(US currency in circulation) and gold price/(M2 money supply per capita). The latter ratio you can just focus on the gold price per ounce as the amount of gold per person on earth is relatively stable at 1 troy ounce.
Would love to see some charts of these that you mentioned if you have them available
Wow, I'm loving that example 👍
Brilliant analogy! I’m showing this video to my kids
Thanks Rochelle!
Yes the price / worth of gold increases over long term the longer you hold it so hopefully that will outperform both inflation and any loss due to premiums . Riight now at about spot price $1784- $1793 an oz but say you sell at several times that price in 5 , 10 or more years ..are there expenses ? Storage costs , assays etc ? Seems so
Really good video!
Great analogy !!
Thanks guys this is great
So would the same stand true of silver? I'm holding a mix of gold and silver at about 60/40 ration of silver to gold.
I'm buying to use to retire earlier than UK Govt might want me too (70 currently!) I've also brought a house myself and doing it all solo without family or friends of partner to help.
I'd rather invest in precious metals with a view to it over time increasing in worth. I plan to sell it over time using eBay etc and (some of the prices being asked and achieved is silly but I guess it'll help me when I come to selling my stacks.)
So does silver show same precious performance per gold or do you feel (as some do) that silvers likely to take off and play catch up with gold (can't see it myself).....
Very well said! Kudos. I agree with the devaluation of currency. The problem stems from people looking at Au/Ag as an investment.
It is a wealth preservation tool. NOT an investment. Hence, the disenchantment with the "poor" ROI when purchasing physical.
"Exter's Pyramid" comes to mind. It's funny, a few years ago, Mike Maloney said (ref to Ag) "First, Unobtainium. Then, Unaffordium!"
As we speak, here in the royal plantation of Kanada, Ag is sporadic in it's availability! One day single Maples are available, next day gone! One day Monster Boxes are available, next day gone! NO Buffalo available. Only high premium limited mint stuff. Hmm?
Is "Unaffordium" coming??
Great video again ,I agree when I first started working in the early nineties I have seen a massive change. It shows how weak fiat has become.😀
Well explained.
Thanks!
Yes appreciate the way you broke down the investment in future 🙏🏾
Today 11 April 2021
What is your advice ? Do you advise me to buy small grams whatever was the price
Buy what you can afford. In general, larger sizes cost less premium, small sizes cost more premium over spot price. Therefore it's "cheaper" to buy in larger sizes, but there are advantages to owning smaller sizes. Here's a great video on this topic: ruclips.net/video/b_WBd0Gk6dg/видео.html
@@BullionNow thank you very much for your advice, I appreciate it a lot ♥️♥️
Gold is definitely a preservation of purchasing power. 🥰 Not so sure about silver in this regard.
One should hold gold, silver, and platinum alike. Matter of preference for how much of each one holds. Not to mention matter of available funds to invest, or budget to toward them as well.
Mate, thanks for the full meal of common sense, with a side order of valuable shared experience. I get it now 👍
Excellent inflation examples!
Your a good man,
Walk forward!
Great video 🤙🏻
Thanks 👍
So inflation is less of a problem and the devaluation of our currency is the major problem.
I use this example to any NEW or uneducated investors or just people that are interested in learning about gold and it isnt as powerful with silver using this same time frame lol ( thanks hunt brothers lol) HOWEVER over thousands of years you can clearly see, and even up to 1964 it still works, (USA gold standard.) but whenever using this with gold I love to see people eyes light up! thanks BullionNow!
As a car fan myself, that very much depends on the model. For cars that were the same amount new, can now be very different. A 4-door saloon Ford (e.g. Cortina) is worth less than similarly price Capris and Escorts of the same year. At the extremes, some are practically worthless even today. A Ferrari 365 Daytona is pushing into the millions.
Way back then I bought a 2nd hand XT GT Ford Michael for $2,850. It was a V8 with 3 speed auto, 4 barrel carbs & extractors.
Performance on the night I took possession of it was (holding it in MANUALLY) 1st gear 60 Miles per hour. 2nd gear 90 M.p.h. 3rd gear was 115 Miles per hour.on the trip down to the Gold Coast from Brisbane to do some POSING (Sshhh, don't tell anyone)🆗😂😂😂 LOVED THAT MUSCLE CAR.💚
It would be interesting to see what difference that inflation and interest rates make if the fiat currency had been invested over the period.
Well said and accurate
Do u ship to malaysia?
The Ford Falcon GT is a nice car for sure but you forgot to mention in your comparison the up keep costs, maintenance, insurance etc.
Where as with bullion all you need is a hole to hide it in....lol
A fair comparison would include the compounding interest from the cash sitting in the bank.
Very true - we cover that with this video here ruclips.net/video/_CVnK-XGmSs/видео.html
Good analogies....great examples. Cash is not King anymore 😉
I agree with everything you have said! But an important piece of information is missing.
What was the average salary in Australia in 1971? What percentage of an average salary would you have to pay to buy an ounce of gold in 1971?
Same question for 2020...
That is why i love Silver ! I can buy alot of Silver for my wages compair to my wages in 1971 how much Silver would I have been able to buy! Just for the fun of it I like to have 200 oz of Silver!
Where can i find a stack of those foreign banknotes?
Anyone here have an unhealthy obsession with cars ?
I know about the ford falcon's of the day. The coupe and sedan versions are still really nice to own today and are priced at the premiums of premiums .
Holden torana's are nice as well .
great job....you explained it in a way that my wife now understands......I could never get through to her .......good job
Glad we could help!
So let's get really honest is it a good time two invest in Silver?
BRilliant. 2 questions. 1. Can you do more enlightening videos like this? 2. Can i have that bag of 70 oz cast bars?
Haha. 1. Yes! 2. HELL NO! It's ours...... ALLLLLLL OUUUUUURRRRS!!!!
Good video, did you calculate compounding interest on that 15k in the bank for 49 years? @ 7% interest over that time it would have returned a total of 527k still not as good as gold but a steady return. 2008 onwards cash in the bank is dead money as you are lucky to get 1.5% and soon to be negative rates. so the same 15k over 49 years @1.5% would now only return 31k (allowing for years of negative rates you would be lucky to even break even).
The main reason the banks are pushing a cashless society, it will allow them to charge a negative rate, they can not do it while there is physical cash as the second they applied negative rates they would be a run on the bank and there would not be enough physical cash, in fact we are lucky if we have 10-12% of cash for the total amount of money there is in the system.
We certainly did! ruclips.net/video/_CVnK-XGmSs/видео.html
Gold is our past, present, and future. It's history in the form of a beautiful cosmic element. The builder and the destroyer of empires. It's the physical embodiment of the human spirit. It's weight is unique as if mother earth herself demands it's return. It's immoral money -BlaufussBullion
James Turk used the petrol analogy where in the 60's it would cost two silver dollars to buy a full tank. Today that same two silver dollars would also buy a full tank of petrol.
Works better with a small fuel tank
👍
Not in the UK mate 2 silver dollars is around £30, it costs me £80 to fill my Land rover.
Gold is multi-generational wealth. Ancient cultures like China and India have known this for thousands of years.
Gold explanation of the year! It holds true value over time while cash lost value.
Thanks Michael, great video! There is another angle on this. If you bought that house in the 70s and then sold it in 2005 for $528,000 it would have bought you 936 ounces of gold at the 2005 price of $564/ounce. In 2020 that would buy you two houses at median price of $1,030,000. If you'd kept the house you would still have just one house. Mike Maloney covers this well in his video on "wealth cycles".
more of a comment about the property market than the bullion market
"The trend is your friend", you've just gotta be patient.
1000% agree
Physical gold bars best way to Stack True saving money. Excellent Wealth preservation
If you're buying gold for the long term, does it really matter what the price is today vs tomorrow? Michael explains. Buy your favourite gold and silver bullion from your favourite bullion dealer at www.bullionnow.com.au
if you save the "stuff". if you use it and spend it is all the same at that moment. Also now you make a couple of thousands in average salary.
If I'd bought that house in 1970 with my spare cash, then rented it out, it would be worth what it's worth now, equivalent to the gold, but I would also have additionally drawn 50 years worth of rent from the property, minus tax deductible maintenance expenses of course. The return is several times more than if I'd bought gold.
Great point... What a way to get rich...i like your thinking
100%.
But Gold is not an investment. Its a store of value.
"A store of value is any commodity or asset that would normally retain purchasing power into the future and is the function of the asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved."
Whenever the time doubts appear in my mind about other investments, I play this video again to remind me that gold allways wins.
Thats so awesome to hear!
Boom! So good! Go GOLD!!
SUCH A GREAT EXPLANATION
Great points! I wouldn't use cars as an example though. Most cars depreciate and never appreciate again.
True - but I did select a particular type of car (special edition sports muscle car) not just a plain average everyday runabout.
This video needs revisiting to remind everyone 😊👍
I saw gold and silver scattered on the streets and nobody picked it up, but I saw someone picked up the bread.
Let me know where it was you saw that, I'm sure our customers (and me) want to know of such a place!
In my opinion gold is more towards wealth preservation rather than investment, exactly as what he mentioned in the video. Fiat currency values drops thru time.
I do understand one thing, so it doesn't matter if I will buy a house or gold, both assets will preserve my dollars over the years, however the house can provide me an accommodation just for me or for the tenant ( source of income) opposite to gold, the gold needs to be in safe or in bank deposit and will not generate any income until the time of sale. So definitely the house is more practical investment than gold.
but can you buy a house a square inch at a time? say banks don't want to lend you money.
The reasoning for short term fluctuations in the purchase price of gold not mattering, when the asset holding period is a long one, as laid out in the video is correct. If you were going to buy the gold anyway, then it being tens or even a few hundred $ either way of today's spot does not matter much.
However, to truly gauge how gold has performed as a store of value/investment, it needs to be compared to other asset classes. As others have pointed out, the scenario in the video is based on the cash not being invested, which would have a negative return due to inflation.
A US$15,000 investment for a time period of 1971 to 2019 would have resulted in the following returns as per financial-calculator dot com:
Gold: $525,000 - An annualized return of 7.7%
S&P 500: $475,000 - An annualized return of 7.5% -not including dividends
DJIA: $480,000 - An annualized return of 7.5% -not including dividends
NASDAQ index: $1,000,000 - An annualized return of 9.4% -not including dividends
I feel asset allocation is the key and a good balance between investment vs wealth preservation vehicles, is the road to financial freedom and success
The gold is worth roughly what the real estate is, but you got the use or rent from the house over the 50 years. Had you invested in good stocks they would be worth even more plus dividends. Good definitely has a place for savings though.