Cash will depreciate 6-10% p.a. depending on how you calculate...

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23skidoo

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107

08/12/21

16:38

Post #: 58165444
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Originally posted by Gibson68: ↑

Below is a chart that tracks the price of gold against the S&P 500 since Oct 2018 (GFC) until now (gold is the blue line and the S&P is the orange line). I think this is interesting as we have had a few significant events in that time and we can hopefully learn from history. Key takeaways for me:

When the GFC hit in Oct 2018, the S&P500 dropped 20% before making a recovery. Gold steadily increased. If you had invested into gold at that point, it wouldn't be until late June 2021 that the S&P 500 finally caught up.
When the markets dropped due to covid in Feb/Mar 2020, the S&P 500 dropped 34% but gold also dropped 12.4%

So is gold a safe haven asset? The GFC experience would indicate yes, but the covid experience would indicate not necessarily. Whilst you were better off in gold vs the stock market at that time, cash is still king.

I find myself in a bit of a quandry. I have a gut feel that there is going to be a significant downturn soon. But is it better to just cash up or go into gold? An interesting dilemma.

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Cash will depreciate 6-10% p.a. depending on how you calculate loss of value of cash due to money expansion (inflation)
You have to bet that gold will suffer at least the same % price drop before cash looks better than gold (or silver)
I personally think the macro political end economic situation favours gold.
Potential for wars-Taiwan & Ukraine
Contagion from Evergrande dismantling. Foreign bond holders on the hook.
Omicron
Potential sovereign defaults eg Venezuela, Lebanon- which ones are next, Turkey?
Forget about interest rates being restored. it can't happen, so its cash under the bed or in a stock market which is rolling over.
Gold looks hell of a lot safer to me.
15 Upvote

2 Great analysis

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