Posted on 08/12/2011 7:20:45 PM PDT by blam
This just brings us back to my original question...please explain the “insurance” side of owning gold. In buying home owners insurance you are insuring against loss...how does owning gold insure you against loss? If gold is something that is bought and sold then does it not stand to reason that it also moves up and down in price based upon supply and demand...it was just a few years ago that the ads on TV were mostly about sending your gold in the mail to get extra cash (gold prices were cheaper and people were selling) and now the ads are trying to get you to buy (and prices have gone up)...if gold is such a great insurance then why are the ones that now own the gold willing to part with it?
“If you get a chance, read what happened at farms during the Wiemar republic”
I have read some but should probably read some more about it...but I have also read about the history of gold ownership in this country and that does not make me any more comfortable.
“It's much easier to hide a gold coin than a COW! lol”
Thanks for this line...it made me laugh...no cow under my mattress.
That has nothing to do with whether or not you can have a gold standard
No, you had to settle for 90% silver, at least until 1964.
This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury or any Federal Reserve Bank",
was later shortened to:
"This note is legal tender for all debts, public and private."
there is risk associated with anything and everything. Dairy farmers were pouring their milk down the drain during the depression because deflation had driven the price of a gallon of milk down so low that they couldn't make money selling it. That's why we have taxpayer funded Agricultural subsidies today. So what happens if don't have the money to pay those subsidies anymore?
I have had plenty of people tell me that buying gold was a bad idea. Back at $950/ounce, they were all wrong and I was all right. What am I saying? I'm saying that I will take my own advice and you can do whatever suits you. If that means becoming a farmer, then go for it. Like I said, i don't have time for that.
Incidentally, my grandmother was raised during the great depression. She came from a large family in Indiana. They were farmers and they were dirt poor. I mean they were REALLY POOR. Farming didn't pay the bills during the depression. She ultimately got a job at a bluejeans factory and saved up to obtain a college degree in nursing after which she went on to be an officer in the US Army Nurse Corps. She was at Pearl Harbor. She helped save the lives of soldiers injured at Okinawa, Guadalcanal, Iwo Jima, etc. She was, ultimately, the most successful member of her family. She was extremely smart and she managed to become successful during the great depression. She started out as a poor Indiana farm girl. (she was also a hard core conservative Republican). My point is there. You may need to look for it.
Smart Cow! Not many know that deer season hasn’t started yet!! ;)
It's like any other insurance, you hope what you have it for never happens (e.g. collapse of the dollar).
A great thing about it though is that the coverage never expires and its value vs. the dollar most likely increases. And you can leave it to your chillins.
if gold is such a great insurance then why are the ones that now own the gold willing to part with it?
I think you may be confusing investing/trading with insurance. Traders sell their gold when they've reached a target price. They'll even go short until the price falls to a point where they'll go long again. Gold dealers on the other hand make most of their money as middlemen charging a premium over spot prices (Gold Eagles prices now are almost $100 per ounce over spot).
Gold Eagles also come in 1/10 ounce sizes and again, 90% Silver is an option.
My silver assets have quadrupled in value and the gold has doubled in less than three years. I still have some cash on hand - starting to worry about it loosing considerable purchasing power though.
If you figure your labor, small time farming doesn't pay. If you figure the value of living a good life, farming is a gold mine...
Thank you...this I already know...and is why I do not understand the idea of gold being “insurance”. I understand gold as an investment...and I never said that I do not have some of it. Gold can be a good investment if it was bought at $950 and sold at $1800 but would be a bad investment if bought at $1800 but sold at $950. My issue is that gold is now being sold as insurance...as “the only safe place to put your money”...if it is the only safe place then why are the people with the gold so interested in getting rid of it...selling it to others. The real answer is because they know that gold is going up because demand is going up...if nobody wanted gold then the price would drop. This is why I do not look at gold as insurance.
Yes, farmers were pouring “milk down the drain” and they have since then as well...reduce the supply or increase demand and the price will go up in a true market place. The problem with the farm market today is the stupid subsidies...I was actually offered one so that I would mow my pasture instead of graze on it...I don't accept subsidies.
Thank you for the story about the family back ground. I too have relatives that made it through the great depression. Several of them made it through by raising some animals for food (and they all lived in big cities) and my in-laws made it by planting a field with beans that they hand picked so they could barter with others...the community was able to feed itself. The thing that I have noticed with all of these stories...including yours...is that all of them made it through the depression by working, learning and some form of community but none of them had the “insurance” of owning gold. So if we look at the history of the “average” person...gold is not the “insurance” that it is being sold as. If we go into another depression gold will not be the thing that sees you through it...God, family and work will be much higher on the list.
“It's like any other insurance, you hope what you have it for never happens (e.g. collapse of the dollar).”
Okay...and if the dollar collapses how is gold then valued? Would it not be valued based upon what it could buy? With that in mind, if the average person is just trying to put food on the table after a collapse would there really be much demand for gold? I would think that based upon supply and demand the “value” would drop...but who knows.
“And you can leave it to your chillins.”
I actually know a farmer that started with one cow and has lived his enter life off of the calves from the first cow. He now has a herd of around 50 cows and set up a couple of his children with the start of a herd for themselves. So I guess you can leave it to your “chillins” either way :)
“I think you may be confusing investing/trading with insurance”
Actually I understand the idea of gold as an investment and agree that at times it makes sense to invest in it. My issue from the very beginning is the idea of gold being “insurance”. The ads on TV are pushing this idea big time. But if we get to a point of collapse I do not see it as insurance for most people...it will become a false sense of security for most. If we get to collapse then all of us will have to work harder then we now are to take care of our families...even if we own gold.
“My silver assets have quadrupled in value and the gold has doubled in less than three years.”
Congratulations...you made some good investments, but at today's prices do you see it as a good time to get into the market? Do you see gold doubling again in three years?
“If you figure your labor, small time farming doesn't pay.”
Everybody has to spend the same amount of time each day doing something (we all start with 24 hours)...I spend some of that time farming and get a return from it...maybe not much but it is still something. Others spend that time watching TV, golfing, gaming, etc. and that is there choice...but we don't normally think of that as “labor” so we don't count it against our daily time.
“If you figure the value of living a good life, farming is a gold mine...”
I completely agree :)
You just compared gold to a business. You are in the cow/calf/milk business. Why not compare gold to the coffee shop business or the chicken raising business?
Gold is money.
I would agree that gold is money if people are willing to accept it as money...that still does not make it “insurance”. I see it as an asset that can be bought and sold...and like any asset the value of the asset is determined by the parties that are selling and buying.
“Why not compare gold to the coffee shop business or the chicken raising business?”
I was just using what I thought was a good example since the price for each was the same...I would not use a coffee shop as an example since I do not like coffee...as for chicken raising...I could make the same comparison since I raise chickens but then I would have to type a lot more to relay enough information about them...the cow example was easier.
I could have also used the comparison of how people view the value of their home...guess what, the value is what somebody is willing to pay for it...not what the government or bank think it is worth. But that is another discussion...
a pocket full of Krugerrands and sovereigns will see you through a lot my friend. As every financial analyst says, at least 10% of your investment portfolio should be in gold. I would go so far as to say another 10% should be in silver. I would go even further and say that it should be physical gold and silver. Gold is at 1750/ounce. I'm not selling mine. not even at that price. There is nothing on the horizon but more chaos and inflation. Contrary to what you may believe, gold absolutely is insurance in such times. That's why it costs $1,750/ounce right now.
See Zimbabwe, Wiemar Republic (to name a few) for examples.
Do you see gold doubling again in three years?
Yep! Actually, it's highly likely it will do so in half that time. I expect that's when the 2.8T in new borrowing will be gone and Obama will be asking for twice that much more (a Six Trillion dollar increase). That is IF we don't see a collapse of the dollar before hand. If that happens, who knows how high gold will go.
Have you seen these clips?
Rollover-1981- Depiction of Global Worldwide Economic Collapse in 2011
The Day After The Dollar Crashes
Just sayin'...
Agreed...gold can be a good investment.
“I would go even further and say that it should be physical gold and silver”
Agreed...if it is not in your possession then all you have is paper, just like paper money.
“I'm not selling mine”
Are you buying?
“There is nothing on the horizon but more chaos and inflation.”
Agreed...things do not look good at this time.
“Contrary to what you may believe, gold absolutely is insurance in such times.”
Insurance against what? Lose of wealth? Even with gold you can lose wealth which means it is not true insurance. It is an asset and that is what makes it normally a good investment.
“That's why it costs $1,750/ounce right now”
It is at $1750/ounce because people are willing to buy it at that price right now...partially because they have bought into the idea of it being insurance...”the only safe place to put your money”.
I agree that having some gold might be useful in a depression if you could actually use it to barter with. But I think that there will be much better things to barter with...things people need to survive. I do not need my gold to survive.
Your story is interesting, but of very little use to one simply looking for a smart way to hold his savings.
Let me know how much I would have to pay someone to take care of a cow to earn several hundred dollars profit. They also need to insure againt vet bills and disease, as well as providing all the food and land needed.
My cost to store a gold coin is zero, because I own a house with locks, and lots of hiding places.
loss of capital through inflation, deflation, and economic collapse. Don't own any if you don't believe it.
Are you buying?
Nope. I own enough and I got in at $950/oz. I'm currently focusing on paying off my house as an investment. I might not make a lot of money on that investment but I won't find myself homeless either. I am focused on capital/asset preservation. I'm not trying to get rich.
It is at $1750/ounce because people are willing to buy it at that price right now...partially because they have bought into the idea of it being insurance
they have lost faith in fiat currency and its ability to create stability. They, therefore, anticipate chaos and gold has always been the place to be during such times.
I agree that having some gold might be useful in a depression if you could actually use it to barter with.
I won't be bartering for anything except cash. Guaranteed. should the need arise, I will trade my metals and other assets for an acceptable quantity of US federal reserve notes which I will then use to keep my ship floating through the troubled waters. even if it dropped to $1,000/ounce, I would still have preserved my wealth. It will not drop to $1,000/ounce btw.
“loss of capital through inflation, deflation, and economic collapse”
Okay...I understand that. I bought the hobby farm first to provide a great place for my family to grow, but it was also a great investment that should preserve my capitol as well.
“I’m currently focusing on paying off my house as an investment.”
If you sold the gold would you have enough to pay off the house? In my way of thinking, having the house paid off would be more insurance then having gold in my pocket...
From this post I think we are both aiming at the same thing...”asset preservation”...we are just approaching it from different angles and with different risks.
“they have lost faith in fiat currency and its ability to create stability”...”I won’t be bartering for anything except cash. Guaranteed. should the need arise, I will trade my metals and other assets for an acceptable quantity of US federal reserve notes which I will then use to keep my ship floating through the troubled waters.”
This is where I get confused...if fiat currency cannot create stability now, why return to using it when we will be in chaos? If the economy collapses and paper money becomes worthless, I as a producer would not accept paper money in payment for let’s say a dozen eggs...but I might accept a bale of hay or apples, or gas, etc...
I guess we will both just have to continue with our plans to preserve our assets...hopefully we will both do well.
Your post actually points out that you are using gold as an investment while saying you are using it as insurance...
“simply looking for a smart way to hold his savings.”...”take care of a cow to earn several hundred dollars profit”
You profit from investments...if you invest well...but you can also loss from investments. With both the cow and gold you stand the chance to gain or loss...both are investments. My issue is not with gold as an investment, but with the selling of it to the average person as “insurance”.
Not that I think that it will happen anytime soon...but if sanity actually returns to Washington D.C. and the economy would recover because we start paying off our bills...do you think gold would continue to go up or would it go down?
“That is IF we don’t see a collapse of the dollar before hand. If that happens, who knows how high gold will go”
Couldn’t this also be said about other hard assets?
Gold is in a win, win position at the current time (because of QE and Fiat currency). If for some unthinkable reason (e.g. a limitless source of energy discovered) the economy absorbed the massive debt and turned around, inflation would necessarily have to increase - a lot. How does rising inflation affect the prices of precious metals or commodities? Answer, inflation in a booming economy increases the prices of precious metals (especially those with industrial usage like silver and platinum) and commodities
“That is IF we don’t see a collapse of the dollar before hand. If that happens, who knows how high gold will go”
Couldn’t this also be said about other hard assets?
Sure, if the dollar collapses, we'll see tremendous price dislocations. Example: If the masses raid farms (i.e. Wiemar), you'll see prices for farms plummet but prices for food items skyrocket. It will be one screwed up, dangerous, miserable mess to navigate through. On the positive side, maybe you could hire guards that will work for food to help defend your farm.
Let's hope/pray it never gets to the "Mad Max" level...
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