TOPIC: Price of Stock v. Price of Gold (Calling Logan)

Hey, is there any relationship between the price of stock and the price of gold?

I've thought it was an inverse relationship, but I hear otherwise from gold investors
www.mastergoldtraders.com/en/mastertrade...ketgold-relationship
(and many others)

Show me some decent evidence, otherwise I'm wrong.

I'm staring at this Vanguard fund that is at a near all-time low and guaranteed to rebound/revert to the mean.
personal.vanguard.com/us/funds/snapshot?...FundIntExt=INT#tab=1

hah hah

Logan just went to bed
he might consult w you in the morning, for some BILLS

Good Looking Loser wrote: Hey, is there any relationship between the price of stock and the price of gold?

I've thought it was an inverse relationship, but I hear otherwise from gold investors
www.mastergoldtraders.com/en/mastertrade...ketgold-relationship
(and many others)

Show me some decent evidence, otherwise I'm wrong.

I'm staring at this Vanguard fund that is at a near all-time low and guaranteed to rebound/revert to the mean.
personal.vanguard.com/us/funds/snapshot?...FundIntExt=INT#tab=1

Yes there is an inverse relationship between the price of gold and how the economy is doing.

Wen the economy goes south, gold and pawn shops do extremely well.

It's def a good time to buy dude.

I notice you have to be a US citizen to open an account on there. Is there an international equivalent? Also, how much money is the minimum for such an investment typically, and how long do you have to hold it for or is it liquid?

bendenherover wrote:

Good Looking Loser wrote:
Yes there is an inverse relationship between the price of gold and how the economy is doing.

Wen the economy goes south, gold and pawn shops do extremely well.

It's def a good time to buy dude.

^^This

bendenherover wrote:

Good Looking Loser wrote: Hey, is there any relationship between the price of stock and the price of gold?

I've thought it was an inverse relationship, but I hear otherwise from gold investors
www.mastergoldtraders.com/en/mastertrade...ketgold-relationship
(and many others)

Show me some decent evidence, otherwise I'm wrong.

I'm staring at this Vanguard fund that is at a near all-time low and guaranteed to rebound/revert to the mean.
personal.vanguard.com/us/funds/snapshot?...FundIntExt=INT#tab=1

Yes there is an inverse relationship between the price of gold and how the economy is doing.

Wen the economy goes south, gold and pawn shops do extremely well.

It's def a good time to buy dude.

That what I thought, but my financial advisor just told me otherwise (somewhat)
----

Remember- the only thing with a proven and logical negative correlation to stocks are US GOVERNMENT BONDS (because they are the world's safest assets). That's it. Not gold, not real estate, not oil, not stocks from Iceland or Narnia, etc...

This is why understanding how bonds work and putting more money in them is very important if you need some money that will be less volatile than stocks.

I do not recommend you speculate on precious metals or mining firms. Even if your "bet" paid off, you wouldn't be investing enough money as a percentage of your portfolio to make a difference in your annual returns. If you did invest enough money to make a difference (30%+ of your portfolio), I would just call you a fool for taking that much undiversified risk!

TIPS (one of my links to you) are interesting- I can link you some threads on the Boglehead forums about them if you want. TIPs are literally the ultimate inflation hedge- the US government will adjust the principal value of TIPS every 6 months exactly according to inflation. Of course, there is no free lunch- they have much lower yields than normal bond funds. I think inflation hedges are over-rated because we haven't had unexpected inflation since the 1970s and the federal reserve does everything in its power to control inflation.

What TIPS do is, if inflation is higher than expected, TIPS will be expected to outperform all other bonds. If inflation is about what's expected (as it usually is), TIPS will have about the same return as other types of bonds, maybe a little less. If we have DEFLATION, like in Europe right now, and prices of goods are falling, TIPS will under-perform other bonds.

Other people argue that stocks (total stock market, not a specific sector) are the ultimate inflation hedge, as long as you hold them for a long period of time. I tend to agree with that. Here's a cool chart:

static.seekingalpha.com/uploads/2011/5/1..._totalrealreturn.jpg

Investing in TIPS, or REITs, or other advanced stuff requires lots of understanding of what they are and what they are expected to do. They are not magic pills or secret sauces. Nothing is. Everything has pros and cons.

Chris tbh I really don't know but I can tell you what I have heard/read. But keep in mind I am far from an expert in this stuff. There are experts who will tell you that gold does have a strong negative correlation with the stock market and experts that will say it's not as strong as a lot of people think. I would agree more with what that excerpt says that you just posted.

I'm not a huge believer in gold. But I do think having some in a portfolio is a good idea because it tends to increase when inflation is higher than expected while stocks and non-inflation protected bonds do poorly. But now we have inflation protected bonds(TIPS) which also do a good job at this.

There is definitely somewhat of a correlation as bender said there are a lot of people who turn to gold when stocks are doing poorly. Gold has been really weird the last decade or so though. It's price has just shot up and up(whether the stock market was up or down) until recently where it is now falling.

In my personal opinion, that fund you are looking at is probably a good buy but you should take my opinion with a grain of salt lol. But I also don't know what you are planning on doing with it? Is this a short term or long term investment? Are you putting in a huge chunk of your cash?

If you're trying to build a portfolio that will generate you money over a long period of time putting a large chunk into this one fund would be extremely risky. It's not diversified. Many experts say about 10% of gold is a good percentage for your portfolio. Stocks should be more important because historically they have returned much more than gold. Bonds are also important to have low risk as well.

If this a short term thing where you just want to get in and pull out in a couple years when gold in hopefully back to where it once was then It may be a good idea but putting a lot of your money into it is still somewhat risky.

BTW: Aren't you friends with the Wall Street Playboys? You should ask them what they think. They would be able to give you a much better answer than me.

zzzz

Username wrote: @logan: every time a question pops up about websites, money etc... You have answers. How do you know so much about these topics? Did you major in something related? I think it's legit that we have you on this site btw

Well, thank you. That means a lot to me man.

The thing is I know stuff about affiliate marketing, stocks, etc. but i am far from an expert in any of them. I just know some stuff about them but not enough to actually make any money haha.

I am currently a senior in college getting a bachelors in Finance. Although, I can't say I've actually learned much about finance in school hahaha. Everything I just posted in that last post was stuff I learned from reading on my own. And that's pretty much how I learned about affiliate marketing and the other stuff too. Just reading online and some books. I just love absorbing all the information I can. I'm like a sponge. I don't remember most of it though haha.

I need to put down the books and start taking action with this stuff though. That's one of my problems.

ccc

Yeah dude, just learn as much as you can. From good sources of course.

I recently listened to the new podcast on Danger and Play with Mike and Victor Pride and they say one of the key things you should do in your 20s is just read as much as you can. Absorb as much information as you possibly can and I think that's great advice.

With a growing number of countries wanting to drop the US dollar, I think it's a great idea to buy gold, but only in physical form. The value of physical gold cannot be manipulated unlike stocks and bonds.

Another good investment is currencies in certain countries in Asia. The values are ever increasing and a lot of those country's banks are at least 40% liquid, unlike the 2-5% liquidity here in the states.

If what I said don't make sense, it's because I tried to make it short and sweet as possible. Otherwise it would turn into a 5 page report. LOL