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this post was submitted on 07 Nov 2024
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[Migrated, see pinned post] Casual Conversation
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Year 1 you buy it for X
Year N you sell it for Y
Y>X, so profit? Not exactly.
What else could you have invested in? A low cost whole market index fund for example has an average rate of return of 7%. In fact, it's the gold standard of returns comparisons.
Money has opportunity cost, time in market is important, money invested in gold, cannot be invested in other things. So you have to factor that into the profitability calculation.
The theory about gold, is it holds its value, so if you could buy 10 Big Macs for x dollars in year one. In year N when you sell for y dollars, you can still buy 10 Big Macs. That's the goal. You have more dollars then you started with, but you have the same Big Mac purchasing capacity. Because your real world good purchasing power didn't increase, it wasn't a profitable venture.
https://buildyourstax.com/
This is true, which is why libertarians traditionally invested into gold because they didn't trust the government to not artificially inflate currency.
And now it's what you do if don't trust the USD to not collapse.