It's value isn't that stable...
It's just another commodity. It trades like a commodity, its not anything special, it's not currency, it's metal dug from the ground. People attribute way more importance to it than they should.
It's just another commodity. It trades like a commodity, its not anything special, it's not currency, it's metal dug from the ground. People attribute way more importance to it than they should.
It's value is relatively stable.
The fact that it is a commodity, or that it is not a currency, has nothing to do with its value.
It is special, in the sense that is is both a precious metal and an industrial metal, and it is also a common store of value, i.e. gold reserves.
Many incredible, valuable things are "dug from the ground."
Gold is not a bad investment as part of diversified portfolio.
To justinlardinois's point, the stability and risk duaneb refers to, are reasons fearmongers encourage divesting other holdings in to gold in times of instability.
http://finance.yahoo.com/chart/GLD#eyJjb21wYXJpc29ucyI6IlZGS...
1) A generally appreciating asset
2) It physically exists (or is backed by exiting material).
And most importantly:
3) It is a flight to safety commodity so when things go bad you expect to make money.
So I would argue it is something special as a commodity. People dont rush to iron ore in a market crash. Maybe people do attribute more to it than it deserves but its disingenuous to pretend it doesn't have a special place in financial markets.
It's down in the last 5 years. Also, all assets are generally appreciating because of inflation.
> 2) It physically exists (or is backed by exiting material).
This doesn't actually matter. All prices are set by what buyers will pay. Some things, like currencies or bonds, are backed by governments or physical assets like real estate, other commodities, land, etc...
> 3) It is a flight to safety commodity so when things go bad you expect to make money.
As are other assets and securities. Again, nothing inherent to gold.
> Maybe people do attribute more to it than it deserves but its disingenuous to pretend it doesn't have a special place in financial markets.
You could argue every commodity has a 'special' place in financial markets. I'm not arguing gold isn't real or is worthless - it does have value because of its use in electronics as well as in adornment and its historical use as currency.
What I am arguing is that:
> Maybe people do attribute more to it than it deserves
http://kiddynamitesworld.com/why-is-gld-so-hard-for-people-t...