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Comment by kahawe | Hacker News Reader

In the 90s everyone rushed the IT shares and then the dotcom bubble burst.

In the first decade of our new millennium, real estate and all sorts of weird financial products somehow building on real estate were THE best way to invest money because nothing can happen, you have a house standing right there, right?? Then that bubble burst.

Now, you'd think people would have learned by now but no... sure as hell now everyone rushes to buy gold and silver because "hey what could possibly happen"??? Even one of my colleagues who has been burned both times on dotcom shares and some shady real estate thingy in east-germany, no less, now religiously swears by gold and silver because what could possibly happen?

People seem to really not be able to grasp that it is just another market.

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Except gold and silver have a couple of millenia of history, that shows that unlike fiat money, they retain their value.

(Unfortunately, your friend is likely to lose his pants again -- not because gold is going to lose its value, but because there is no way to invest in gold without fiat and counterparty risk which is equivalent or even worse than the equity investment risks. If you don't believe that, ask any MF Global customer who had money and gold futures worth lots of money where his money is)

Gold retains its value over time only on average. Guess what? So does real estate. Gold over the past 30 years has retained its value relative to gold a century ago. But right this very minute we're in the middle of a gold bubble. If you buy gold today and then sell it a decade from now there is a great likelihood that you will lose, not retain, perhaps 75% of your investment.

There were booms and busts in the value of gold in the 70s and 80s as well.

> everyone rushes

Who is rushing to buy gold? I'd be surprised if more than 1% of households have meaningful gold exposure.

I'd be surprised if more than 1% of household had actually held tech stocks in 2000, also.

Look at this graph: http://blog.thomsonreuters.com/wp-content/uploads/2011/04/GL...

Is that the sign of an investment that keeps growing in value steadily across the ages or merely the sign of a speculative bubble about to burst? Hint: look at the late 70s as well.

Have you considered that the chart merely shows the value of gold in US dollars, and that it could be, this time, that the US dollar is the speculative bubble that has been bursting for some time now.

It has two lines, one is for prices adjusted for inflation (the blue line), the other (the yellow line) is with absolute prices.

Inflation rate doesn't properly reflect the change in the value of the US dollar. A better line would be one adjusted for the growth in money supply.

Inflation is the proper measure. The chart might not say what you want it to but that's not it's fault.

Ew. Is there a version of that graph that's on a logarithmic scale?

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