Posted on 02/11/2009 10:37:46 AM PST by OneVike
What value does gold offer?
Can’t run a plant off of it. Can’t eat it. Can’t make a vehicle move...can’t transform it into medicine or liquor. Can’t make into a practical weapon...
So WHY invest in gold? I would think that human kind would look at practical purchases...that is EXACTLY what happened to “oil” it was for a time the “new gold” but we all now here it was all “speculation”.
PRAY tell...who here is going to argue that 1000.00 an oz gold isn’t “speculation also”?
I say invest in potatoes and rice...at least with a little manipulation you can drink your worries away.
HA!
They hold their value. I was just doing a little checking, a 18kt Tankissime Cartier that sold for a little under $10k about 15 years ago is now selling used for $20.250k. It is the rarity of the watch that also increases in value. Collectors will pay top dollar for some unique models.
I have an Omega Seamaster (Bond edition) that I paid around $1500 for about five years ago that I could sell used for over $2k now even though the market is down. This isn’t a gold Omega either, stainless diver.
When things get really rough people will be using gold as money. But there will be no way to distinguish good gold from from junk gold. So all gold will be treated as junk. Pure gold will be the same as 14K gold. Don't waste money on pure gold.
That advice isn't something I'm just making up. That's from someone that has actually lived through the crisis in Argentina. Check out his blog at Surviving in Argentina.
Yes, have a food and water and gas supply at home.
It isn’t as an ‘investment’ that I think precious metals are safe, but as insurance. If the economy tanks and we go into survival mode, there will most likely be people who are secure enough financially that they will try to profit from the situation. It is with these people that you will buy what you need with gold and silver coins.
That’s the way I look at it, anyway.
BTW, $25k was just a random price, I was looking up price histories when I was replying and that looked like a good example. Watches have a long history of holding value, some pocket watches from the 18th century sell in the millions.
To those who do not know, the link Kanawa has put up to is to the story of an Argentinean man who was present during the economic collapse of his country. It is a very long read, but if it is true, and I belive it to be (I have family in Latin America, and it seems very plausible), then it may be good to read for you. It’s not the exact TEOTWAWKI type story, but it’s very practical with specific examples and direction. I found it very illuminating.
If the economy recovers, there is simply no way for the government to remove all the cash they've pumped into the system and inflation will result. If it doesn't recover the government will continue to pump money into the system until it does.
Either way, Gold will go up. It's not going to be a straight run... it will have its peaks and troughs, but in general over the next 12 to 24 months a gold purchase isn't a bad idea.
my 2c:
I have long denigrated “gold bugs”. In a sense, I still do, but I define “gold bug” not as “someone who believes gold is a good investment”, but rather the paranoid sort that envision themselves shaving off a li’l sliver of their gold Double Eagle to buy a loaf of bread, and stuff like that. If that’s your take on the America of the Future, buy ammo instead. If it comes to that I’ll be happy to trade you bread for bullets, but I won’t be needing gold.
In my humble opinion, we are headed for an inflationary period once we exit the DEflationary period we are now in. This will be the inevitable result of the Government screwing up the economy.
While I see this outcome as inevitable, there are three unknowns that become parameters in my strategy for coping with it: the timing of the inflationary upturn, the “shape” of the deflationary bottom (flat, U-shaped, V-shaped), and the severity of the ensuing inflation: moderate (i.e. US in the ‘70s), severe (Argentina in the ‘80s), or hyper (Weimar republic in the early thirties, Zimbabwe recently).
My guess is, the bottom will be more or less flat, and about 12 to 24 months in duration. I think the ensuing inflation will qualify as moderate — more or less on par with the Carter years (15%), but maybe a little more severe (20% to 30% peaks). This is ONLY a guess, subject to frequent re-evaluation. Really, no one can do anything BUT guess, because — no matter what anyone tells you — no one knows for sure how this will play out. Keep your eyes open.
If the financial systems remain more or less intact as we endure the deflation followed by the inflationary period, you don’t necessarily NEED gold, just investments that keep up with inflation. In my opinion oil, for example, is “good as gold”. And there are many others. In general, certain equities of companies with pricing flexibility will do OK (better than cash, for sure). Gold may have a place in my portfolio, but it probably won’t be the centerpiece. If you are buying gold for this reason under these conditions, it seems the ETF is just as good as bullion, and much more convenient.
If you believe that significantly more inflation (and/or social chaos) is in store, then it might be prudent to have even more gold in your “portfolio”, and it might make sense to hold some or even all of it as bullion.
I am planning to add a little gold very carefully over the next 12 to 24 months. Just for grins, a little of it will be in bullion. I’ll be keeping it in my home at 123 W. 4th Street, Detroit, Michigan, and counting it every night to make sure it’s still there (I work all day, and can’t afford an alarm system or a dog). HA HA just kidding about that last part, I’ll be keeping my bullion in a safe deposit box.
When I say “add slowly” I mean I’ll be adding slowly; I fully expect the price of gold to dip significantly during the next 12 months as more bad news comes out and we endure more deflation. Adding slowly and dollar cost averaging will guard against paying too much — at the risk of REALLY paying too much if the onset of inflation is sudden and unpredictable (which, again, I don’t think it will be).
For what it’s worth—
FRegards
Other good Armageddon investments are:
toothbrushes
soap
bleach
canned goods
gasoline
etc.
If the system does totally melt down, I won’t have much use for gold.
Not necessarily, there are a lot of factors. Supply for one. If supply increases due to new mines or other ways that supply increases in the market, it may counteract inflation's effect on its value. Also, if demand decreases because people do not want to buy your gold, you may see prices fall by those selling who are trying to attract buyers. If things get very bad, the demand may fall off as average investors stop buying but want to sell. Everyone dumping their 'hedge' in order to get cash to buy essentials can collapse the price.
I’m a little intrigued...
Just curious if one were to buy Silver and have physical posession of it, do you think it would be ok to have bullion or just coins. I ask because I think in an “Armageddon” type situation it will be worth a great value just up to economic collapse, or in the case of disaster, just after the initial confusion, and then either way be virtually worthless.
I fear the next thing to hit us may not necessarily be recoverable. In which case if one owns food storage, and assuming guns are not in the picture (yeah, I know, but can’t go there for now), and many emergency supplies are taken care of ie. BOB and stuff, would silver be a worthwhile investment. I realize it could crash, I follow some economics and trends, including secular examples of Peter Schiff, and Gerald Celente, and divine warnings of the Scriptures, not to mention my personal internal radar, and I think we’re going to have a crash one day that will come. I’m not a chicken little, the writing is on the wall, it’s just a question of time. I’m just looking to best prepare like the Thread initiator, but I am young and don’t have a lot to invest, so gold is definitely out.
Like I said, food was taken care of some time ago, and certain provisions. Just looking for opinions.
Who will buy the gold you have?
What will they pay for it?
How much is it still worth to you?
In a dire crisis, gold cannot be eaten or used to build shelters. Gold will make you a target of predators financially and physically.
If the system does totally melt down...
I’m at the point where I tell people “Go to the store. Buy as much as you can fit in your trunk. After you unload it at home, do it again”
I have a few of the rubbermaid 18 gallon thingies stock full of beans and rice and gravy mixes and stuff like that.
Sometime today, I’m going to fill another one.
Don’t think about “Armageddon” type situations, if that ever becomes the case, food, medicine, shelter, fire, and ammo will be all that have value. Just my opinion, but I like the thought of coins if you want something as an insurance policy for part of your investments. Like I mentioned before with buying a watch, with a coin, even if the price of gold collapses, you have the possible hedge in that price by the value of the coin itself to collectors.
Likewise, I've done well with my firearms purchases. The .50 cal. rifle I bought in 1988 for $490.00 at Brandon's in Sacramento would easily go for upwards of $1500-$2000 these days.
But, like the gold and silver, my principle motivation in purchasing the rifle was not as a financial investment.
This is why I don’t post on FR anymore.
Everyone considers themselves an expert on everything whether they know the first thing about it or not. You people will argue every point for the sake of arguing it whether it adds to the discussion or not. And these days there are so many people on this forum who are utterly convinced that their personal falsehoods are true, it might as well be a forum for liberals.
The poster of the thread sounded like he wanted a real answer and as usual on FR, he was getting a lot of noise, but no knowledge. Since it’s an area I know, I figured I’d help out.
Serves me right... no good deed goes unpunished. I should have learned my lesson and stayed away. But at least that’s not a mistake I’ll make twice.
between my brother and law and I, we should be able to survive a few weeks.
I think ultimately there are just too many moving parts for the system to totally collapse. Enterprising spirits will always be there to fill the void.
Do not buy it thinking it is one.
L
Swiss America has a fund for your 401(k) so you can roll over into gold. http://www.swissamerica.com/
Thanks for your super swift and concise response. My great grandmother was once going to give me her (IIRC) father’s pocket watch from the 1800’s. I felt guilty and said “no thanks.” as a young teenager I was foolish, since when deteriorated mentally I hear a cousin conned it out of her and pawned it. It was worth a pretty penny and I’ll not soon forget that lesson.
When you say Medicince and Shelter, just curious what do you mean. I’ve been trying to think of those, but I only have really considered OTC like aspirin, IB and Acetominaphen, heartburn and glucosamine. (Don’t want to suffer heartburn nor joint pain during armageddon) I know this is a bit off topic, sorry guys.
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