very interesting article ! The logic is unbeatble. Only those who do not know anything about investing or those who have no money or common sense will write derogatory comments !!!
Gold price is becoming high and high so it became risky to wear gold ornaments for Indian ladies.Buying and selling of ornaments are also wastage of money.Gold is sold in very high amount in the rural areas of India by medium class ladies also.It became useless metal because of no use.Keeping it in locker or at home is more dangerous nowadays. Investing in F.D.and property is much better than buying gold.
Indian commoners - who have been described by Khushwant Singh as among the stuxpidest in the world - keep proving that as a group, they are the biggest sucxkers of all by spending their hard earned money for stocking up this utterly useless metal.
India has been the largest net importer of gold (by a gigantic margin) for over three decades now and countries such as South Africa (which is the biggest exporter to India) remain eternally grateful to the stuxpidity of common Indians ! Their own countrymen are least interested in the gold the south african gold miners produce, but why would they care if there is a gigantic mass of nauseating humanity in South Asia craving for it in increasing proportion each year ?
It is India and Indians alone that support the price of gold in the world. Take away India's demand, and world gold prices will dive to less than two-thirds of it's current level (statement oft heard in the London Metal exchange as reported by the media).
The sight of millions of fatt unattrxactive women and men crowding jewellery shops across India (with the set-in-granite belief that gold jewellery will somehow increase their attractiveness) is a gigantically comic spectacle !!
Gold is of absolutely no use, even a metal like iron and steel is having better use than gold. The hype to gold is given by the people . People and government only buy gold and keep it in their lockers. An absolutely useless element int he periodic table.
Re: Gold is a useless metal, but people give value to it.
by prakash sharma on Apr 06, 2012 12:03 PM
buddy .. the value of anything depends on its availability .. the lesser it is available the more its value ..!
Re: Re: Gold is a useless metal, but people give value to it.
by Maximus Meridius on Apr 07, 2012 12:22 AM
That's just nonsense. Iridium is rarer than gold, but costs less per gram. Many other metals are rarer than gold but cost more. The value (or I should say, price) is a function of the demand: supply can reduce prices, but demand fundamentally drives prices. The price of gold is a function of the amount an idiot is willing to pay for a useless shiny metal. And India has no shortage of such people.
Re: Re: Re: Gold is a useless metal, but people give value to it.
by Maximus Meridius on Apr 07, 2012 12:23 AM
^erratum: Many other metals rarer than gold cost less per gram.
In India and any other place where stability wasn't assured (as in the past under the many kingdoms), gold was a safe "insurance" an FD kept away for later times. It still remains the same but more unconsciously. The argument should really be about, how much insurance do you want from the unknown monetary future (nicely being corrupted by money printing) and if you do need to liquidate a portion of your Insurance, then the question is what do you exchange that gold for? if you get back a lot of paper money, then what do you do with it? Buy land? apartment? Food? or burn it for heat (as they did in post World war Germany). Anything is a good investment, if you know when to "sell", as to know when to "buy". The only problem is that most gold buyers convert gold to jewellery (at least in most households in the south) and then the emotional attachment prevents them from actually selling quickly (hard to liquidate). Comments?
This is the most dumbest article, I ever read... What if gold is already overly priced? What happens if the investors try to divest their money from gold...
Author's theory is based on the system followed in past. There is no guarantee that it will work in future. In a developing country, value investing will give the highest return. Rate of growth in companies' profitability and assets will outperform the growth in any other asset class. As said by Buffett, 1 gm of gold will remain as 1 gm even after 100 years and nothing will be generated from it. But just recollect the story of value creation by Infosys - Rs.1000 invested 20 years back has grown to more than 1 Crore now. We need to find out such opportunities and better to maintain a low exposure to Gold. No one knows what is the real value of gold.
Re: Theory not applicable in developing economies
by Saagar Bhatia on Apr 06, 2012 12:27 AM
The definition of the word "interest" is the "value of money". When interest rates are at 0 (essentially negative), we are saying that the value of money is zero. When you are under so much debt, you just print money. That is exactly what Warren needs to address. You cannot print gold. Interest rates need to come up and fast, or else gold can't be stopped.
Re: Re: Theory not applicable in developing economies
by Maximus Meridius on Apr 06, 2012 05:42 AM
Sorry, you don't understand how interest rates work. Interest rates are a reflection of risk inherent in buying treasury bonds, not the value of money. If inflation is high, the yields on bonds are high. If you are printing money (rather, running high fiscal deficits) the value of a long-term bond will fall in real terms(inflation). To counter this, traders will charge a higher interest rate (actually, yield) on this depreciating asset. Consequently, the government will pay this high interest, and will increase the prime lending rate. When there is long-term economic instability, people buy other assets and sell government bonds. These include commodities like copper, oil, silver, etc. As the economy improves and the stock market picks up, money from assets will go back into stocks. Someone who buys stocks when it is cheap (as Buffett does) tends to gain considerably from this panic mentality.
I suggest you look at historical inflation-adjusted prices of gold. In 1980, the inflation adjusted price of gold was $2200. As late as 2009, it was $950, and even at its peak in 2011, it was around $1700. So if you bought gold in 1980, you actually lost money. As soon as the world economy recovers, I expect gold to slump. It's a useless yellow shiny metal that has no value other than the fact that everyone is convinced it is valuable.
Re: Theory not applicable in developing economies
by Zuber Khan on Apr 06, 2012 12:36 AM
well, if you get your facts right you might understand better. If you are holding 1 share of Infosys then till end you hold 1 share. its the underlying that performs not the share itself. This holds true for anything a car will remain a car and a house will remain a house - BIG DEAL?? One needs to understand economics and a broader sense. A dollar remains a dollar but the underlying ( only for gold back currency) is what matters.
Re: Theory not applicable in developing economies
by vinay on Apr 08, 2012 01:37 AM
'1 gm of gold will remain as 1 gm even after 100 years and nothing will be generated from it.' but 1 lakh of rupee of yesterday has been just 'equivalent' to 1 thousand rupee of today. atleast gold has maintained its buying power. it certainly saves us from inflationary system.
Re: Theory not applicable in developing economies
by Superman on May 01, 2012 10:26 PM
The difference between Infosys and Gold. One black swan event in between that changed everything. Manmohan Singh as the Finance minister. Any such black swan event you are seeing in near future? I am not seeing....But I feel sticking to the ground may help....Land, agriculture, fisheries, food products.
In olden days people had to buy gold because that is the alternative asset for currency. Today we have lot of other assets to buy right from real estate, shares etc instead of buying gold. Buffer is right, you can fondle with the gold but it won't give you back any thing.
