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Wall Street Journal Proves It Doesn’t Understand Gold

Goldhedge

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Wall Street Journal Proves It Doesn’t Understand Gold​

BY JOHN RUBINO ◆ AUGUST 13, 2021 LEAVE A COMMENT

Gold bugs should never assume that the mainstream investing community actually understands finance. That includes the Wall Street Journal, which recently published an article (Gold as an Inflation Hedge: What the Past 50 Years Teaches Us) purporting to show that gold does not protect against a depreciating currency.

The article begins with a couple of subheads…

On the anniversary of the metal’s unleashing by Nixon, gold’s believers may be disappointed by the record
Investors often think that gold is the answer to inflation. It’s not that simple, as the past 50 years have shown.
…and then attempts to prove those points graphically with a chart comparing gold to stocks and bonds:
Wall Street Journal gold
Its conclusion? Pretty much everything has gone up since the US left the gold standard in 1971, and the things that went up most – stocks — are by definition the best “inflation hedges,” while bonds are just about as good as gold.

So what’s wrong with this argument? Simply put, gold is not an “investment”. It is money. You don’t own it in place of Amazon stock or Treasury bonds, you own it in place of the dollars that might otherwise be in your pocket, your bank account, or under your mattress. Here’s a picture that’s as clear as the previous one is obscure.

Wall Street Journal gold
Two piles of dollars and coins. The one on the right is the amount that was required to buy an ounce of gold in 1920. The other, massive pile is the number of dollars it takes to buy an ounce of gold today. The upshot: gold has protected its owners’ purchasing power while the dollar has been depreciated to oblivion. That is the definition of “inflation hedge.”

 

arminius

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Pretty obvious they want to steer us away from PMs...
 

Casey Jones

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Sure they do; but equally obvious, they don't understand gold.

I lost a lot of money in the stonk market in 2009...after which I got out, converted to more stacks. But I wanted to know how I'd been so far off; and I hadn't given up on the market completely. Had no exposure but wanted to try to know what I didn't see.

Well, I learned a lot - P/E; valuations; the repeal of Glass-Steagal. Of what QE was really about, tied to ZIRP and the backdoor monetizing of the debt.

What I also learned is that many, maybe most, Finance types are JACKASSES. That's how they fall so hard for a stock like TSLA and how they were so easily suckered by Enron, which was a train wreck waiting to happen.

This article shows it, also. These people...I can't believe that even dummies could be so stupid. How can printing up huge quantities of money NOT result in prices rising? But they just pretend it's a force of nature, or something.

And then stonk valuations rise...along with the CapGains tax bill...and all this because the banksters are taking Fed fiat and plowing it into the index stocks. NO improvement in business fundamentals. And because those of us here don't want to play...they mock us.

Pleases their masters, too...who are masterminding this destruction.
 

Casey Jones

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They understand it.
They just don't want anyone else to understand it.
I honestly don't think so.

They're just not that smart. If they were that smart, they'd refuse to write the bilge they write.

Because they would know how stupid they sound.

Maybe you're correct; but I think it's more likely they still believe their idiot economics professors. And anyway, they're not financial people and they're not economists. They're just...Communications majors, ten years later.

Know the difference between someone who writes for the WSJ, and someone who writes for the Podunk Press? Or for CNN? It comes down to, which of those offered a job first, and whether it was likely a better-paying offer might come through.

Deep down, they're all the same. Programmed bots.
 

Buck

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here's the latest:
"Gold weaker on profit-taking, bearish outside markets"


what profits were taken?
it's been a 'down market', it's not the EOM...

according to the pundits, they don't even speak, what it is they actually know, they only speak what it is they want us to think, to believe

it's the workings of a cult, a false belief system, take them for every dime you can
 

wjv

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Thankfully they are highly knowledgeable about other things like firearms.

BTW: Can someone tell me where I can buy one of those Ultra powerful 223 Fully Semi-Automatic AR15s that shoots 50 caliber bullets, has 100 round magazines and can fire 2,000 rounds per minute.

:dog:
 

Zed

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It isn't an inflation hedge, never has been, gold succeeds when people see no other opportunity to safely invest their money for a reasonable return over and above any inflation. In that sense it is a crisis hedge. Inflation or deflation it will work when other opportunities are closed off. Frankly you'd be mad to own too much gold if the economy was healthy and you can get a solid and safe return lending or investing. Buying gold is simply a vote of no confidence!
 

Zed

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They understand it.
They just don't want anyone else to understand it.

Somewhere back there this is true however these days there are many useful idiots writing all manner of things that they actually believe.
 

Casey Jones

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You mean price rises and drops.

Prices rise and fall with demand and cost. Inflating the money supply increases costs, ergo necessitates price increases. If there's no demand, there can't be price increases - what there is, is clearance sales, and a discontinuance of what is not selling.

Perhaps of the whole store.
 

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WSJ is just another tentacle of the International Bankers. If you think you can learn anything by reading financial media articles you're spinning your wheels.
 

Zed

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There are 4 factors in price, basically 2 sets of supply and demand.

Supply and demand for the item being priced.
Supply and demand for the currency the item is being priced in.

Alter any one of those and price will move. Measuring price and calling that inflation is a flawed concept. In reality real inflation occurs when the growth of the money supply out strips the productive capacity (wealth) in the area (country?!) that the currency is accepted. Growth in money supply is OK so long as it runs alongside growth in the wealth (or productive capacity) it is supposed to represent.

Gold has grown in supply @ roughly 2% PA, but in past gold rush events we have seen rapid supply growth and prices rise as a result. Gold isn't immune, or wasn't... if anything the supply rate is falling now.
 

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Imagine being in Afghanistan standing in line to get some money and the bank just closed...
 
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Bottom Feeder

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WSJ is just another tentacle of the International Bankers. If you think you can learn anything by reading financial media articles you're spinning your wheels.
One of the initial Trusted News partners in the Trusted News Initiative (TNI)

BF
 

Zed

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Imagine being in Afghanistan standing in line to get some money and the bank just closed...

What is the old regime's fiat worth with a new regime?
 

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There are 4 factors in price, basically 2 sets of supply and demand.

Supply and demand for the item being priced.
Supply and demand for the currency the item is being priced in.

Alter any one of those and price will move. Measuring price and calling that inflation is a flawed concept. In reality real inflation occurs when the growth of the money supply out strips the productive capacity (wealth) in the area (country?!) that the currency is accepted. Growth in money supply is OK so long as it runs alongside growth in the wealth (or productive capacity) it is supposed to represent.

Gold has grown in supply @ roughly 2% PA, but in past gold rush events we have seen rapid supply growth and prices rise as a result. Gold isn't immune, or wasn't... if anything the supply rate is falling now.
Supply and demand for physical metals.
Supply and demand for paper metals.