GOLD or COMICS - Which will be the better investment?

Aman619 · November 27, 2009

are you saying theres a correlation between the two bubbles? or just that the graphs of each denote each is in a bubble compared to its price history?

showcase22gr1959 · November 27, 2009

Quality vintage comics are acting like gold right now. Gold needs to reach above $2000 (inflation adjusted) to reach the 1980's high. You also have to remember, comics reach a high in early 1980's and consolidated for about five years. I see a correlations here. So, gold and comics still has a long way to go even though comics was a better investment than gold since the 1980's.

VintageComics · November 27, 2009

And there's more than 60 billion worth of gold in the world. I think ft. knox has nearly 200 billion dollars worth of gold or some such number. I think there is around 1 trillion worth of gold in the world.

Or, if you believe Roy, there's no gold left in Ft. Knox.

lol

I wouldn't doubt for a second that it's possible.

:sumo:

kimik · November 27, 2009

And there's more than 60 billion worth of gold in the world. I think ft. knox has nearly 200 billion dollars worth of gold or some such number. I think there is around 1 trillion worth of gold in the world.

Or, if you believe Roy, there's no gold left in Ft. Knox.

I wouldn't doubt for a second that it's possible.

Well, if futures contracts count, then there more than enough gold in Ft. Knox.

Hamlet · November 27, 2009

This is something that the people talking about gold being a "store of value" need to be careful with. The price of gold fluctuates very wildly. People who bought gold in 1980 (average selling price of $1732, inflation adjusted) had the buying power of that gold erode to less than a third of its original buying power by 2005 (down to about $500).

Those people would have been better off sticking cash under their mattress, as a dollar would still have been worth 40 cents, inflation adjusted.

The people buying gold in 2005, though, have had their buying power more than double, since there has not been very much inflation over the last few years.

The speculation in gold causes price peaks and valleys that are very large, dramatically changing its buying power. I would be very reluctant to purchase gold (or high grade comic books for that matter) going forward. This feels an awful lot like a bubble. It may be just the start of a bubble, and the price may well go to $2000+ over the next year or two. But I think there is a real potential for people to end up with less buying power 10 years down the road by buying gold today.

Quality vintage comics are acting like gold right now. Gold needs to reach above $2000 (inflation adjusted) to reach the 1980's high. You also have to remember, comics reach a high in early 1980's and consolidated for about five years. I see a correlations here. So, gold and comics still has a long way to go even though comics was a better investment than gold since the 1980's.

RockMyAmadeus · November 27, 2009

And, just to make it clear to everyone, the measure of gold's liquidity is not whether you can use it to pay for your purchases at Wal-Mart, but rather how quickly you can convert it into cash. Gold is readily convertible into cash practically anywhere.

Well.

Back in the olden days, when gold WAS currency, those two things were one and the same. We've just added more (unnecessary) steps to the process.

qualitycomix · November 27, 2009

This is something that the people talking about gold being a "store of value" need to be careful with. The price of gold fluctuates very wildly. People who bought gold in 1980 (average selling price of $1732, inflation adjusted) had the buying power of that gold erode to less than a third of its original buying power by 2005 (down to about $500).
Those people would have been better off sticking cash under their mattress, as a dollar would still have been worth 40 cents, inflation adjusted.

The people buying gold in 2005, though, have had their buying power more than double, since there has not been very much inflation over the last few years.

The speculation in gold causes price peaks and valleys that are very large, dramatically changing its buying power. I would be very reluctant to purchase gold (or high grade comic books for that matter) going forward. This feels an awful lot like a bubble. It may be just the start of a bubble, and the price may well go to $2000+ over the next year or two. But I think there is a real potential for people to end up with less buying power 10 years down the road by buying gold today.

The value of the US dollar has eroded 80%+ since 1970, right before we came off the gold standard How's that for a great investment? And that assumes that CPI is correct, which I believe is incorrect since CPI disregards energy and food.

A website a periodically visit is shadowstats.com. It tracks the "real" CPI. CPI used to track energy and food as well, but they pulled it out of the index saying that in a tough economy, consumers will switch from steak to chicken (as an example), which will skew the data. I don't really remember the argument behind pulling energy out of the equation as gas and heating has a major impact on cost of living.

RockMyAmadeus · November 27, 2009

This is something that the people talking about gold being a "store of value" need to be careful with.

"Store of wealth", not store of "value"..."value" is not the same thing as "wealth."

The price of gold fluctuates very wildly. People who bought gold in 1980 (average selling price of $1732, inflation adjusted) had the buying power of that gold erode to less than a third of its original buying power by 2005 (down to about $500).

By what inflation measure?

Only fools buy gold at historic highs and then never buy it again. Jan-80 only lasted a couple of weeks. Those who bought before December 1979, and after January 1980 were not subject to that eroded value.

In fact, if you just take out that single month, the performance of gold vastly improves, and beats the dollar, adjusted for inflation. If you take out all of 1980, gold is the far and away winner against the dollar.

The point is not to buy gold at "historic highs" and during "speculative bubbles." The point is to store your wealth...by buying metals consistently throughout the years as a hedge against the erosion of the buying power of the dollar by inflation.

Those people would have been better off sticking cash under their mattress, as a dollar would still have been worth 40 cents, inflation adjusted.

The people buying gold in 2005, though, have had their buying power more than double, since there has not been very much inflation over the last few years.

The speculation in gold causes price peaks and valleys that are very large, dramatically changing its buying power.

The speculation in stocks makes the speculation in gold look like the most placid deep water lake known to man.

It's all relative.

I would be very reluctant to purchase gold (or high grade comic books for that matter) going forward. This feels an awful lot like a bubble. It may be just the start of a bubble, and the price may well go to $2000+ over the next year or two. But I think there is a real potential for people to end up with less buying power 10 years down the road by buying gold today.

If you pick any 10 years period in gold's history...any 10, including Jan 1980....you will find that it beats inflation. Of course, one would have to have bought gold on a consistent basis throughout that time, not just Jan 14, 1980.

And....if you consider inflation from 1973-1983, and gold's performance in that time, gold held far more value than the dollar.

Hamlet · November 27, 2009

CPI still tracks food and energy. They publish a "core CPI" that excludes food and energy, since those are very volatile so it is useful to see their effects excluded, but the CPI itself does not exclude them.

The changes that shadowstats.com shows are for substitution effects (the change from steak to chicken you mentioned), and hedonic effects, which try to measure the fact that things you buy today tend to be better than they were in the past. For example, a car today is more expensive than a car 20 years ago, but it is also likely to last much longer as well.

I tend to agree with the shadowstats.com site that inflation is understated, just not to the degree he thinks. The substitution and hedonic effects are real, but very difficult to measure well.

The value of the US dollar has eroded 80%+ since 1970, right before we came off the gold standard How's that for a great investment? And that assumes that CPI is correct, which I believe is incorrect since CPI disregards energy and food.

A website a periodically visit is shadowstats.com. It tracks the "real" CPI. CPI used to track energy and food as well, but they pulled it out of the index saying that in a tough economy, consumers will switch from steak to chicken (as an example), which will skew the data. I don't really remember the argument behind pulling energy out of the equation as gas and heating has a major impact on cost of living.

Hamlet · November 27, 2009

Only fools buy gold at historic highs and then never buy it again. Jan-80 only lasted a couple of weeks. Those who bought before December 1979, and after January 1980 were not subject to that eroded value.

In fact, if you just take out that single month, the performance of gold vastly improves, and beats the dollar, adjusted for inflation. If you take out all of 1980, gold is the far and away winner against the dollar.

The number I cited was an average for the year 1980, not the specific month of the peak.

http://www.inflationdata.com/inflation/images/charts/Gold/Gold_inflation_chart.htm

The point is not to buy gold at "historic highs" and during "speculative bubbles." The point is to store your wealth...by buying metals consistently throughout the years as a hedge against the erosion of the buying power of the dollar by inflation.

That is a fine plan. Gold can be a useful part of a portfolio as a long term inflation hedge. However, the sudden interest in buying gold by the general public and CNBC crowd does not make me think that this is the best time to start buying gold.

If you pick any 10 years period in gold's history...any 10, including Jan 1980....you will find that it beats inflation. Of course, one would have to have bought gold on a consistent basis throughout that time, not just Jan 14, 1980.

And....if you consider inflation from 1973-1983, and gold's performance in that time, gold held far more value than the dollar.

Sure, but that is true for almost any wildly fluctuating asset. You would be up in the stock market over the last ten years if you dollar cost averaged, even though it is overall pretty much flat for that time period.

My concern is not for people who have been buying gold all along. They will have bought gold cheap over the years. That will protect them from buying some a little high now. My concern is the people who have decided that now is the time to buy. I suspect that they are wrong and likely to get burned.

Here is my general advice--

If you we're buying gold 2 years ago, now is a bad time to start.

showcase22gr1959 · November 27, 2009

Only fools buy gold at historic highs and then never buy it again. Jan-80 only lasted a couple of weeks. Those who bought before December 1979, and after January 1980 were not subject to that eroded value.

In fact, if you just take out that single month, the performance of gold vastly improves, and beats the dollar, adjusted for inflation. If you take out all of 1980, gold is the far and away winner against the dollar.

The number I cited was an average for the year 1980, not the specific month of the peak.

http://www.inflationdata.com/inflation/images/charts/Gold/Gold_inflation_chart.htm

The point is not to buy gold at "historic highs" and during "speculative bubbles." The point is to store your wealth...by buying metals consistently throughout the years as a hedge against the erosion of the buying power of the dollar by inflation.

That is a fine plan. Gold can be a useful part of a portfolio as a long term inflation hedge. However, the sudden interest in buying gold by the general public and CNBC crowd does not make me think that this is the best time to start buying gold.

If you pick any 10 years period in gold's history...any 10, including Jan 1980....you will find that it beats inflation. Of course, one would have to have bought gold on a consistent basis throughout that time, not just Jan 14, 1980.

And....if you consider inflation from 1973-1983, and gold's performance in that time, gold held far more value than the dollar.

Sure, but that is true for almost any wildly fluctuating asset. You would be up in the stock market over the last ten years if you dollar cost averaged, even though it is overall pretty much flat for that time period.

My concern is not for people who have been buying gold all along. They will have bought gold cheap over the years. That will protect them from buying some a little high now. My concern is the people who have decided that now is the time to buy. I suspect that they are wrong and likely to get burned.

Here is my general advice--

If you we're buying gold 2 years ago, now is a bad time to start.

Why not take a chance now and buy around $1175 and sell around $2000 for a trade.

RockMyAmadeus · November 27, 2009

Only fools buy gold at historic highs and then never buy it again. Jan-80 only lasted a couple of weeks. Those who bought before December 1979, and after January 1980 were not subject to that eroded value.

In fact, if you just take out that single month, the performance of gold vastly improves, and beats the dollar, adjusted for inflation. If you take out all of 1980, gold is the far and away winner against the dollar.

The number I cited was an average for the year 1980, not the specific month of the peak.

http://www.inflationdata.com/inflation/images/charts/Gold/Gold_inflation_chart.htm

"If you take out all of 1980."

But your source is still incorrect. If the inflation adjusted peak was $2189, according to your chart, based on the actual high of $850 in Jan, 1980, then, based on that percentage (and yes, I know inflation fluctuates throughout a year, but it's close enough for these purposes) then the actual inflation adjusted number for all of 1980, based on the cumulative avg. price of gold at $612, is really about $1550, not $1732, or an erosion of buying power equivalent to about 39 cents to the dollar.

Therefore, if you only bought gold in the highest inflation adjusted year in the entire history of gold, you would STILL be about par with the dollar.

When you add in any other year, gold wins. As it always has.

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

The point is not to buy gold at "historic highs" and during "speculative bubbles." The point is to store your wealth...by buying metals consistently throughout the years as a hedge against the erosion of the buying power of the dollar by inflation.

That is a fine plan. Gold can be a useful part of a portfolio as a long term inflation hedge. However, the sudden interest in buying gold by the general public and CNBC crowd does not make me think that this is the best time to start buying gold.

But, in a former post, you cautioned against using gold as a "store of value."

If you pick any 10 years period in gold's history...any 10, including Jan 1980....you will find that it beats inflation. Of course, one would have to have bought gold on a consistent basis throughout that time, not just Jan 14, 1980.

And....if you consider inflation from 1973-1983, and gold's performance in that time, gold held far more value than the dollar.

Sure, but that is true for almost any wildly fluctuating asset.

No, that's just not true. If a company is wiped out of existence, their stock value becomes zero. There is no further chance for that stock to "wildly fluctuate." It's dead, and any money you had tied up in that stock is gone. Poof!

The point is, even when gold is "wildly fluctuating", it will never become worth $0.

You would be up in the stock market over the last ten years if you dollar cost averaged, even though it is overall pretty much flat for that time period.

My concern is not for people who have been buying gold all along. They will have bought gold cheap over the years. That will protect them from buying some a little high now. My concern is the people who have decided that now is the time to buy. I suspect that they are wrong and likely to get burned.

Here is my general advice--

If you we're buying gold 2 years ago, now is a bad time to start.

But what about the people consistently buying gold? Should they stop?

And, since it's still not anywhere near its inflation adjusted high, why would now be a bad time to start buying and holding?

Again...including the very worst possible year to buy gold in the history of gold...1980...gold has still outperformed the dollar against inflation.

Is it a bad time to buy gold with the hopes of cashing out in 6 months? Absolutely.

But it's never a bad time to start buying and holding gold.

asteroid-comix · November 27, 2009

Which would you rather invest in?

Ugly+Gold+Teeth.jpg

OR

Hamlet · November 28, 2009

Therefore, if you only bought gold in the highest inflation adjusted year in the entire history of gold, you would STILL be about par with the dollar.

When you add in any other year, gold wins. As it always has.

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

You're ignoring interest that people get paid to hold dollars. While current rates are only about 1% on FDIC insured money (which is part of the reason people are suddenly excited about gold), risk-free interest rates are often in the 4% range. During the early 80s, they were higher.

If you buy gold at peaks, you are losing buying power compared to holding cash in money markets or CDs.

No, that's just not true. If a company is wiped out of existence, their stock value becomes zero. There is no further chance for that stock to "wildly fluctuate." It's dead, and any money you had tied up in that stock is gone. Poof!

The point is, even when gold is "wildly fluctuating", it will never become worth $0.

I should have said "asset class". The S&P500 is not going to zero. If it does, you better have lots of guns to protect that gold of yours :>

But it's never a bad time to start buying and holding gold.

1980 was. Someone buying gold in 1980 has lost a lot of buying power compared to someone who kept their money in money markets or CDs.

I don't have great numbers, but I would guess that the average 6 month CD rate is probably at least 4% normally. Here is a chart of rates from 1987 on. I'm pretty sure rates in the early 80s were higher than 4%.

http://www.expss.com/MoneyMarket/historicalrates.htm

So someone buying gold at $612 nominal in 1980 would have about $1200 now.

Someone putting $612 into 6-month CDs and rolling them over (assuming 4% CD rates average) would have $1835.

So gold bought in 1980 has lost a third of its value compared to just holding risk free dollars in CDs.

BucOne-migration · November 28, 2009

Only fools buy gold at historic highs and then never buy it again. Jan-80 only lasted a couple of weeks. Those who bought before December 1979, and after January 1980 were not subject to that eroded value.

In fact, if you just take out that single month, the performance of gold vastly improves, and beats the dollar, adjusted for inflation. If you take out all of 1980, gold is the far and away winner against the dollar.

The number I cited was an average for the year 1980, not the specific month of the peak.

http://www.inflationdata.com/inflation/images/charts/Gold/Gold_inflation_chart.htm

"If you take out all of 1980."

But your source is still incorrect. If the inflation adjusted peak was $2189, according to your chart, based on the actual high of $850 in Jan, 1980, then, based on that percentage (and yes, I know inflation fluctuates throughout a year, but it's close enough for these purposes) then the actual inflation adjusted number for all of 1980, based on the cumulative avg. price of gold at $612, is really about $1550, not $1732, or an erosion of buying power equivalent to about 39 cents to the dollar.

Therefore, if you only bought gold in the highest inflation adjusted year in the entire history of gold, you would STILL be about par with the dollar.

When you add in any other year, gold wins. As it always has.

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

The point is not to buy gold at "historic highs" and during "speculative bubbles." The point is to store your wealth...by buying metals consistently throughout the years as a hedge against the erosion of the buying power of the dollar by inflation.

That is a fine plan. Gold can be a useful part of a portfolio as a long term inflation hedge. However, the sudden interest in buying gold by the general public and CNBC crowd does not make me think that this is the best time to start buying gold.

But, in a former post, you cautioned against using gold as a "store of value."

If you pick any 10 years period in gold's history...any 10, including Jan 1980....you will find that it beats inflation. Of course, one would have to have bought gold on a consistent basis throughout that time, not just Jan 14, 1980.

And....if you consider inflation from 1973-1983, and gold's performance in that time, gold held far more value than the dollar.

Sure, but that is true for almost any wildly fluctuating asset.

No, that's just not true. If a company is wiped out of existence, their stock value becomes zero. There is no further chance for that stock to "wildly fluctuate." It's dead, and any money you had tied up in that stock is gone. Poof!

The point is, even when gold is "wildly fluctuating", it will never become worth $0.

You would be up in the stock market over the last ten years if you dollar cost averaged, even though it is overall pretty much flat for that time period.

My concern is not for people who have been buying gold all along. They will have bought gold cheap over the years. That will protect them from buying some a little high now. My concern is the people who have decided that now is the time to buy. I suspect that they are wrong and likely to get burned.

Here is my general advice--

If you we're buying gold 2 years ago, now is a bad time to start.

But what about the people consistently buying gold? Should they stop?

And, since it's still not anywhere near its inflation adjusted high, why would now be a bad time to start buying and holding?

Again...including the very worst possible year to buy gold in the history of gold...1980...gold has still outperformed the dollar against inflation.

Is it a bad time to buy gold with the hopes of cashing out in 6 months? Absolutely.

But it's never a bad time to start buying and holding gold.

from the spot price you pay around $60.00 in fees (includes shipping) for 1oz

Hamlet · November 28, 2009

I actually just went and tried to calculate what someone would have if they had kept $612 dollars in 1-month CDs from 1980 until now. My guestimate of 4% average rates was way too low. The early 80s had a number of years that had double digit rates.

I took my rates from this Fed website--

http://www.federalreserve.gov/RELEASES/H15/data/Annual/H15_CD_M1.txt

These are the rates from the site--

1980, 12.87

1981, 15.94

1982, 12.04

1983, 8.96

1984, 10.20

1985, 7.96

1986, 6.61

1987, 6.75

1988, 7.59

1989, 9.11

1990, 8.15

1991, 5.82

1992, 3.64

1993, 3.11

1994, 4.38

1995, 5.87

1996, 5.35

1997, 5.54

1998, 5.49

1999, 5.19

2000, 6.35

2001, 3.84

2002, 1.72

2003, 1.15

2004, 1.45

2005, 3.34

2006, 5.06

2007, 5.23

2008, 2.73

If you use these rates, $612 put in 1-month CDs from 1980 to 2008 would be $3595 today.