i still don't see how one can argue against land for gold, or gold against land.
both are commodities.
both are commodities.
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i still don't see how one can argue against land for gold, or gold against land.
both are commodities.
in the short term yes, over longer periods no.
As gold prices increase there are increased incentives to increase marginal supply of new gold. As the price goes up, more and more marginal participants can participate.
Underlying land is fixed. (this doesnt mean that land prices cant crash), only that in the long term there aint anymore land to be created, what you see is what you get.
(and now i'm going to get posts such as land reclemation etc)
Gold is not as much like Iron ore or coal because it is held as stock / wealth.
.You see with iron ore it is all about flow. their is very little stock of iron ore / coal even oil so when prices rise capacity has to build and there is eventually an overcapacity prices fall and capacity takes a long time to reign in again till you get the next cycle
Yes but to what extent is it held as stock/wealth because of the current increase in price. This does not mean that gold is worth current prices. Only that gold can be exchanged for current prices, and it the sh**t hits the fan, that someone holding gold will be able to get 'something' in return. (ie gold has a store of value, but here is the key question, what is the intrinsic value of that store in value) Is it current price? higher? lower?, what is the underlying certainty factor?????
Yes your comments are all true, so what is the future timing of future significant increases in supply. Also what is future demand (dont correlate with the past, we dont know the future). From this extrapolate the cash returns from today to the future when supply increased and prices drop (long term pricing of resources is just above the marginal cost of production). Do a NPV of those cash returns and compare it to current resource share prices (based on this limited duration).
I dont have the answers to the above, its all in my 'too hard basket'. I prefer to clip the ticket on items which i have more certainty on (and which is why Sunfish is always cracking the sh***t with me. My investments are like an insurance company, i dont like the premium paid upfront, i'm out of there. I will find another sector where people will pay me an adequate premium (which effectively ensures the majority of my risk).
.Before you say I am referring to land reclamation, I am not. the price of urban land has absolutely stuff all to do with land in general in a country like Australia. It is all about zoning, infrastructure, availability, amenity etc. The land is limitless
Land with amenity is not but it like gold can be made but indeed the amount made is very low compared to stock. Hence gold and land do not perform like ore, oil or coal.
The issue with both gold and land is they are prone to bubbles due to flow being only a small component of stock in any year no matter how high prices of either go. Their valuation is often based on what someone is prepared to pay rather than reflected back to costs so yes stock builds slowly over a long time as we saw in the USA and we are likely to get in gold too.
In Iron ore it will be like switching off the light when suddenly capacity hits demand. It will be sudden there will be no warning. Both Gold and Real estate gives you lots of warning. Its whether you are prepared to take notice of the warning that is the issue. Iron ore, oil these are risky commodities to dabble in unlike land and gold where the price moves slowly in comparison.
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I was hedging against a stupid reply like what about those countries with limited land supply.
But in reply in to the rest of your comment, i politely say you are wrong. The land might be limtless, but the underlying value of a single spot of land at at specific point in australia is not limited.
In melbourne, how much more land is available in the cbd, what about brighten, what about torack, what about south yarra. What about sydney?
Now as land prices increase the efficiency of that land increases. In some cases efficiency means better utilisation of the land (ie subdivide), in other cases it means that only those with the most efficient means of making money will be able to buy a house there (ie the top top suburbs).
But if one forced me to take a decision based on just two variables with a 50 year view point: land or gold, i would choose land.
That is an interesting question.
Over 50 years I would agree with you.
Over 1000 years I would not. Gold is the ultimate safety play over very long periods of time. Say you were a carthaginian and with your bag of gold liked the look of a patch of land with sea views and good growing climate a long distance to the east of Carthage.
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. That is why Hobo Jo and I will sometimes measure the performance of property in ounces of gold rather than dollars.