Dave Ramsey's started an anti-precious metals thread...

[Zippyjuan]

From my viewpoint, being against bankruptcy means being for personal responsibility and not walking away from debts.

 

[PRB]

So he's "pro-give-the-bank-your-money-in-some-form". He's also very much against bankruptcy and against credit repair. Like I said, he's a bank mouthpiece.

ask yourself, what's the dumbest way to give your money to a bank? I think debt is. Dave Ramsey may not be Ron Paul or Peter Schiff, but he's one of the biggest voices in America against borrowing and paying interest, and for living within your means. I don't agree with him on investment, but I think he's done more good than harm by telling poor people to avoid borrowing.

 

[DFF]

Well, Dave's first mistake is terminology. Neither gold nor Bitcoin are investments; they are speculation.

Ron Paul would disagree. And he would point out that if gold were indeed "speculation" then central banks wouldn't hold it.

 

[Matt Collins]

Ron Paul would disagree. And he would point out that if gold were indeed "speculation" then central banks wouldn't hold it.

If Ron feels that way, then he would be incorrect.

Regarding the banks, they hold it in order to manipulate the market.

 

[Zippyjuan]

The US Central Bank (Federal Reserve) doesn't hold any gold. Well, technically they HOLD it- they do store it for the US Treasury and some foreign governments, but they don't own any of it.

 

[PRB]

The US Central Bank (Federal Reserve) doesn't hold any gold. Well, technically they HOLD it- they do store it for the US Treasury and some foreign governments, but they don't own any of it.

you know that saying? Possession is 9/10 of the law.

 

[helmuth_hubener]

No... an investment is something that will give you a return because it's productive, and the risk is not high and the return is calculable.

Speculation is very high risk where the outcome is unknown and not really able to be calculated.

This is all undefined. "Return is calculable"? What does that mean?

Most importantly, you haven't defined "high risk". Tell me, how does one go about measuring risk? Could you share with me the experimental protocol? What measuring equipment should I use? How do I make sure the equipment is calibrated properly?

If you are thinking about putting your money into something and are asking your broker or anyone else "Is this risky?" or "How risky is this?" or "Is this investment low-risk or high-risk?" you are asking the wrong questions. You haven't thought things through.

Instead, you should ask:
Under what conditions is this asset likely to perform well?
Under what conditions is this asset likely to perform poorly?

Answer both those questions, and you will have some rational basis for making a decision and be better off than the great majority of investors.

As for the difference between investment and speculation, we can define words however we wish depending on what we want to accomplish. As for me, I find Harry Browne's differentiating definition highly insightful and productive:

Any time when you accept the rate of return that anyone -- anyone -- can get, with no special knowledge or skill, you are investing. An example of investing would be: putting your money into a typical bank savings account. Any Joe Plumber can do that. Anyone can get that rate of return.
Any time when you try to beat the rate of return that anyone can get, you are speculating. An example of speculating would be buying a mutual fund that purports to give "above-average" returns. You're trying to use your superior knowledge and cleverness to get more return than the average Joe can get.

Holding gold bullion is generally an investment. Anyone can do that. Billions do. You get the same return as every other holder of gold.
Holding cash (liquid US dollars) is generally an investment. Anyone can do that. Billions do. You get the same return as every other holder of dollars.
Holding US Treasury Bonds is generally an investment. Anyone can do that. Billions do. You get the same return as every other holder of bonds.
Holding a stock market index fund is generally an investment. Anyone can do that. Billions do. You get the same return as every other holder of the index.

Holding Bitcoins is, in my opinion, a speculation. It is esoteric enough, difficult enough, and obscure enough that I would not say "anyone" can hold bitcoins, though a case could be made that technically, anyone "can" (technically, anyone can do pretty much anything). Only a very small cadre of knowledgeable and technical elite are buying bitcoins at the moment. It is not a very broad ubiquitous holding, in contrast to the things I listed above, which are. No one with any understanding would hold it in an attempt to simply protect their savings and get a very boring, pedestrian return -- the same boring, pedestrian return available to the general populace at large. But those are precisely the very reasons why one holds an investment: to protect one's savings and get the same boring, pedestrian return available to the general populace at large! In contrast, one buys into Bitcoin because he thinks it will vastly, vastly outpace the general rate of return available to the average Joe, and often for other ideological reasons.

So, for now, Bitcoin is a speculation. This could change. If the vision of the Bitcoin community comes to pass and Bitcoin becomes a ubiquitous, widely-used money, like the dollar, then holding cash as liquid Bitcoin would be every bit as much of an investment as holding liquid dollars is today.