What's all this nonsense about gold not paying a dividend?
Firstly, let's compare apples with apples, because it doesn't make sense to compare the dividends received from "cash that is lent out" with the dividends received from "gold that is not lent out". If, instead, we compare the "not lent out" assets, then neither cash nor gold will pay any dividends. If you had put both a lump of gold and a suitcase of cash under your bed 50 years ago, neither would have paid out dividends, and the contents under your bed would not have changed - but only one of the two would have preserved its purchasing power.
Now, let's consider the "lent out" scenario. Obviously, cash would only be lent out for a reason, and that reason would be interest payable on the capital - generally as or including dividends. As for gold, does anyone really think that gold that is lent out would not be done so under similar, if not identical arrangements, and not pay dividends, or that a greater quantity would not be returned than was lent out.
If there is anybody that believes this, please lend me your gold at 0%?
The delusion...Value Investing
- Why it's the best long term investing strategy. Why most investors don't have what it takes. Why and how individual investors can outperform most fund managers, and why some fund managers are worth reviewing
Other stuff
- What is money, where did it come from, and where is it going? Some tax effective investment structures. The Australian Property Bubble. How investing, insurance, gambling, betting are all the same thing..
Showing posts with label cash. Show all posts
Showing posts with label cash. Show all posts
Cash
I've tried to win this argument before - unsuccessfully - that "cash" is a significant enough concept that it should be a "first class citizen" in an investing model. Finally, I found the words that I wanted, from an interview at Gold Money Research with Detlev Schlichter:
At any moment in time you can hold your wealth in three forms: consumption goods, investment goods or money. With money you can stay on the sidelines, you keep your purchasing power and stay ready to buy consumption and investment goods in the future.They key point here is that "cash" - and I'm using that term, in this context, interchangeably with "money", does have the special power of enabling you to stay on the sidelines, while all other investments may be struck by volatility, cash's purchasing power will remain constant (in the short term) to consumer goods, and independent of the volatility of the investment goods.
The reality of models
Models are useful abstractions of reality. The "correctness" of a model is simply is usefulness for a particular purpose.
Labels:
cash,
cash management,
models,
rate of return
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