fnord123 wrote:
MediumTex wrote:Gold always beats every asset if you give it enough time.
While I'm comfortable with gold's role in the PP, I was a bit surprised at this comment. At the risk of sounding like the anti-gold folks, gold is good at preserving wealth, but it is not inherently productive, and does have slightly negative costs (storage/insurance/etc.). While I can see it beating cash (due to cash being devalued by Central Bankers Gone Crazy) and treasuries (due to Politicians Gone Crazy), I don't see why it would beat equities - companies actually tend to produce things that are valuable, don't they?
Companies produce great value while they exist. The problem is that the life expectancy of most companies isn't all that long.
As for bonds, it's the issuer that tends not to last that long.
As for "cash", it's also the issuer that tends not to last that long.
Would you rather have an ancient Egyptian stock certificate or ancient Egyptian gold?
Would you rather have a late Roman empire long term bond, or a gold Roman coin?
Would you rather have fiat currency from the American revolutionary period, or gold coins from that period?
By "enough time" I mean 100+ years in most cases. Sometimes it takes 200 years. Eventually, though, gold turtles past every other human mechanism for storing value, though over shorter periods of time assets like equities can dramatically outperform gold.
The key to understanding what I am saying is to see the inherently transitory nature of all human institutions. During some periods of history, this transitory quality is not a big deal, but the problem is there is no way of knowing whether the period (and place) you happen to be living in is going to be one of long term stability or great transition. These things are only clear in retrospect, and that's not helpful when you need to be able to make prudent real-time decisions.