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Old 09-01-2019, 12:38 PM
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Originally Posted by ForgedInTheFlame View Post
If you're responsible with diversifying your portfolio, you'll hold at least 10% of it in gold bars. Not coins. Never coins.

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Bullion exchange traded funds (ETFs) such as SPDR Gold Shares which trade like stocks on an exchange are another option. They have very low transaction costs, are easy to buy and sell and have a high correlation to bullion gold.

Of course if you're prepping for TEOTWAWKI or a prolonged SHTF situation those electrons on a defunct computer in NYC won't help you much.
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Old 09-01-2019, 12:54 PM
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The CPI wheel was reinvented during the Clinton era. "Substitution." That is, if the price of Charmin goes up, Mrs. Housewife will buy John Wayne* toilet paper. If the price of steak goes up, she'll happily buy hamburger--and thus still eat beef.

Similarly, that new, faster but cheaper computer somehow means your cost of living went down, or you became more productive, even though its use is mostly for emails and Fakebook. "Cow flop!" sez me.

* John Wayne toilet paper: "It's rough, it's tough, it don't take no (bleep) off nobody."
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Old 09-01-2019, 04:37 PM
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Quote:
Originally Posted by PalmettoTree View Post
I do not know which you are more wrong or ignorant but for sure you are both.

Inflation has many definitions all amounting to the same thing. Inflation is a reduction of purchasing power of money over time. Inflation has an almost infinite number of causes. None of which are relevant to the common man when it comes to using money and its ability to buy his needs.
So here we go where you dont even understand basics. The definition of inflation is to expand or add to. In economics they often use the word inflation interchangeably with a rise in price so no you are wrong again. Inflation is the expansion of currency and the result is a rise in prices.

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Originally Posted by PalmettoTree View Post
A hedge economically is a guard against loss. Therefore an inflation hedge is a guard against the loss of purchasing power of money over any time continuum. Mind you a time continuum not point to point. A hedge against inflation buying power of money must address each common man’s needs starting and stopping at anytime over differing personal need periods.
Mostly agree here yet you use the word money for currency and they are not the same. The USD is not money as there is no gold standard that is why they call it a note, or a debt. 99.999% of people do not understand this and think money is wealth. I hear this all the time and when I ask people if a barter society has no wealth they are confused. This point is critical to understand money, credit, wealth, and currency. We are being fleeced by our education system.

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Originally Posted by PalmettoTree View Post
Zero risk is considered the return of a 90-day T-Bill. So a zero risk inflation hedge would give you the average 90 T-Bill returns plus whatever inflation might be over that period.

The difference for this point is irrelevant. I only point it out to eliminate confusion. Although one should be mindful that buying gold has price risk so a gold investor would want to include that element in risk/reward calculations.

The fact is for any financial instrument (stock, bond, insurance, CD, money market, T-bill, or PM) to be a true inflation hedge it must follow (correlate) with inflation. That correlation must work from any point in time to any future point in time.
Ok and nothing keeps perfect track of inflation unless you use TIPS and buy the government numbers about CPI hook line and sinker. The government has an incentive to lie about inflation and apparently its working on you.


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Originally Posted by PalmettoTree View Post
It is not enough to say or show that a particular financial investment purchased at one point in time has increased in value in excess of inflation 100 years later. What about the times in between? Gold is just such an example.

A look a 51 years period gold has returned a negative change 20 of those years. That can hardly be considered a hedge of inflation. Even in the positive return years the return did not track with inflation.
Yes and if you use the cost or every day item and not the government manipulated CPI, and you look at the price of say cars or housing you see gold, silver, and property keep track quite well.


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Originally Posted by PalmettoTree View Post
I took the change in the average monthly CPI index from 1970 through 2018 and graphed a correlation with the average daily price close of gold, change over each annual period. I used this method to average out the huge highs and some lows, for example gold high in 2011, and other special cause events in both matrices. The R squared (R^2) for gold being an inflation hedge is 0.21875. A zero (0.00) R^2 value of two variables means they are completely random. An R^2 value of one (1.00) means there is a perfect correlation. One would expect a reliable inflation hedge to have an R^2 value around 0.9 given nothing is perfect either way.

By the way I understand correlation and R^2 values.

Oh and here it is the CPI, yes the government school you attended showed you how to use government number to prove there point to you. LMFAO right now. We all know they would never lie about the inflation rate or anything else because they are doing Gods works right. In the 1970's gold was ~$36.00 an ounce using the government CPI it should be about $238.00 an ounce where today it is ~$1500.00 an once. The CPI is crap. Just look at the rate for treasuries. Do you believe the real rate is 1% or less while congress applies a 5.75% rate to student loans?

Is gold or silver a perfect inflation hedge? No but the government cannot devalue and would play hell trying to confiscate it as PVC can be put int he ground and remain air tight for hundreds of years. And over time it does keep with inflation relatively well especially in a hyper inflation environment where today gold and silver can be used to purchase items such as food in Venezuela and Zimbabwe.

People are holding precious metal as a hedge against money printing, an economic crash, and a preservation of wealth. Gold is not an IOU like the dollar it is a real asset with intrinsic value. The definition of money per text book.
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Old 09-01-2019, 05:22 PM
OldDesertrat OldDesertrat is offline
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The word I couldn't dredge up in my earlier post about the CPI is "hedonics". Its usage is explained here:

https://priceillusion.wordpress.com/...y-adjustments/

The manipulation is why the CPI offered by the BLS is a giant shuck. Less than reality.
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Old 09-01-2019, 05:26 PM
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One comment Regarding all of our government's numbers.

They exist only to make the government feel good. Those that trust government financial numbers have been drinking the koolaid, and far too much of it.
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Old 09-01-2019, 05:53 PM
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Originally Posted by stinger5900 View Post
So here we go where you dont even understand basics. The definition of inflation is to expand or add to. In economics they often use the word inflation interchangeably with a rise in price so no you are wrong again. Inflation is the expansion of currency and the result is a rise in prices.
In economic terms inflation is the a general increase in prices and fall in the purchasing value of money. Money is what is generally accepted at the mode of exchange of goods and services. Gold is not money because it is not generally accepted.

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Originally Posted by stinger5900 View Post
Mostly agree here yet you use the word money for currency and they are not the same. The USD is not money as there is no gold standard that is why they call it a note, or a debt. 99.999% of people do not understand this and think money is wealth. I hear this all the time and when I ask people if a barter society has no wealth they are confused. This point is critical to understand money, credit, wealth, and currency. We are being fleeced by our education system.
It does not matter what you call the USD or what it is backed by. The USD is money in the USA and other places because it is generally accepted at a mode of exchange for goods and services. Sometimes one can be in a country and a merchant will offer to accept US dollars as payment even at a discount to the money of that country. I have done this in both Mexico [Mexico City not just across the border.] and Japan.

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Originally Posted by stinger5900 View Post
Ok and nothing keeps perfect track of inflation unless you use TIPS and buy the government numbers about CPI hook line and sinker. The government has an incentive to lie about inflation and apparently its working on you.
Gold does not even come close to tracking inflation regardless if compared to an index or an individual product.

Quote:
Originally Posted by stinger5900 View Post
Yes and if you use the cost or every day item and not the government manipulated CPI, and you look at the price of say cars or housing you see gold, silver, and property keep track quite well.
No gold, silver and property do not track well with "every day items" or even each other. I do not even need to do a correlation to know gold and silver do not track with each other because of the GSR. I have owned enough property over the last almost 50 years to know property does not track with anything. Property values are a function of location, location, location.

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Originally Posted by stinger5900 View Post
By the way I understand correlation and R^2 values.
Good so you know intellectually if not emotionally what you post is BS.

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Originally Posted by stinger5900 View Post
Oh and here it is the CPI, yes the government school you attended showed you how to use government number to prove there point to you. LMFAO right now. We all know they would never lie about the inflation rate or anything else because they are doing Gods works right. In the 1970's gold was ~$36.00 an ounce using the government CPI it should be about $238.00 an ounce where today it is ~$1500.00 an once. The CPI is crap. Just look at the rate for treasuries. Do you believe the real rate is 1% or less while congress applies a 5.75% rate to student loans?
Gold does not track with the CPI because gold is a single commodity. Gold if a finite commodity. Gold is a scarce commodity. Gold is a metal. Gold has been used as money but is not money.

If gold is money because it was used as money so is bronze, copper, brass, dried fish, sea shells, and many other things. They are not in and of themselves money just because they were once used as money.

Gold has never been a money used by the common man because there has never been enough in circulation.

Quote:
Originally Posted by stinger5900 View Post
Is gold or silver a perfect inflation hedge? No but the government cannot devalue and would play hell trying to confiscate it as PVC can be put int he ground and remain air tight for hundreds of years. And over time it does keep with inflation relatively well especially in a hyper inflation environment where today gold and silver can be used to purchase items such as food in Venezuela and Zimbabwe.
What was the price of a loaf of bread in Venezuela and Zimbabwe five year ago and what is the price of a loaf of bread today in GOLD? Please post the prices then and now for 10 common items used by the common man. If you cannot the gold is not money there either.

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Originally Posted by stinger5900 View Post
People are holding precious metal as a hedge against money printing, an economic crash, and a preservation of wealth. Gold is not an IOU like the dollar it is a real asset with intrinsic value. The definition of money per text book.
NO as stated above gold is not a hedge. Gold is a valuable asset that will with an almost certainty have an increasing value relative to most things. Gold is likely a good investment for the very rich. The common man will do better to buy silver.
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Old 09-01-2019, 08:26 PM
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Quote:
Originally Posted by stinger5900 View Post
So here we go where you dont even understand basics. The definition of inflation is to expand or add to. In economics they often use the word inflation interchangeably with a rise in price so no you are wrong again. Inflation is the expansion of currency and the result is a rise in prices.



Mostly agree here yet you use the word money for currency and they are not the same. The USD is not money as there is no gold standard that is why they call it a note, or a debt. 99.999% of people do not understand this and think money is wealth. I hear this all the time and when I ask people if a barter society has no wealth they are confused. This point is critical to understand money, credit, wealth, and currency. We are being fleeced by our education system.



Ok and nothing keeps perfect track of inflation unless you use TIPS and buy the government numbers about CPI hook line and sinker. The government has an incentive to lie about inflation and apparently its working on you.




Yes and if you use the cost or every day item and not the government manipulated CPI, and you look at the price of say cars or housing you see gold, silver, and property keep track quite well.





By the way I understand correlation and R^2 values.

Oh and here it is the CPI, yes the government school you attended showed you how to use government number to prove there point to you. LMFAO right now. We all know they would never lie about the inflation rate or anything else because they are doing Gods works right. In the 1970's gold was ~$36.00 an ounce using the government CPI it should be about $238.00 an ounce where today it is ~$1500.00 an once. The CPI is crap. Just look at the rate for treasuries. Do you believe the real rate is 1% or less while congress applies a 5.75% rate to student loans?

Is gold or silver a perfect inflation hedge? No but the government cannot devalue and would play hell trying to confiscate it as PVC can be put int he ground and remain air tight for hundreds of years. And over time it does keep with inflation relatively well especially in a hyper inflation environment where today gold and silver can be used to purchase items such as food in Venezuela and Zimbabwe.

People are holding precious metal as a hedge against money printing, an economic crash, and a preservation of wealth. Gold is not an IOU like the dollar it is a real asset with intrinsic value. The definition of money per text book.
Great post.

Sent from my Note 8 using Tapatalk
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