Gold Is Cheap. Inflation Is Coming. You Do the Math

Barrons ^ | 09-24-2018 | Andrew Bary

[G Larry]

If you chart Barron’s forecasting ability, you would do well to act opposite their advice.

[Attention Surplus Disorder]

The relative movement of gold v platinum has been pretty remarkable. Pt is about $370 cheaper than gold. That is...dumbfounding. Pt is solidly ten times as rare as gold. This condition has existed for some number of years, I don’t mean to say this is anything sudden. And palladium is only about $150 cheaper than gold. I am sure that 95% of this effect has been the ability of auto makers to use what was once cheaper Pd instead what used to be more expensive Pt in cat converters. These metals have more or less swapped market prices. I think I bought some Pd for about $680 about ten years ago. Sold it breakevenish. I’m just saying, historically, the relative prices of these metals is quite an anomaly.

[G Larry]

Yes, which makes it sound like you feel no need to invest or prepare for disaster, beyond having the guns and ammo to TAKE what you need and KILL if necessary.

Too bad about your cornflakes.

[DesertRhino]

“In SHTF time, neither precious metal is of much use. “

Nobody but a moron would run around after a crash of the economy, paying their way, and buying necessities with gold. But once you have your needs stockpiled away, it would be very enjoyable to have a way to preserve wealth for the day when we emerge from the crash. During the SHTF your gold should really never see the light of day. It is for emerging on the other end in nice shape.

Gold has been a very good store of value.

[Graybeard58]

I think a lot of people go broke speculating on silver, and I think gold as well.

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Nobody at F.R. has ever lost a cent on gold.

Just ask them.

[DesertRhino]

“but if you look at historical gold prices during inflationary periods it’s been a loser.”

Not really. If you were a Weimar German, a Zimbabwean, etc, and had gold coins at the beginning, you would be very happy after the inflation ends.

[arrogantsob]

It costs the holder of gold at least the market rate of interest to hold it.

If gold prices are falling there is no inflation.

[DesertRhino]

“There are actually people out there that think you can slap a bar of gold on the counter for a gallon of milk and expect change!”

The gold gold is for after a couple of years passes, and SHTF is over. And now you would like to be somewhere reasonably close financially to where you were before.
It should remain hidden throughout the “STHF”. But nice straw man.

[Zhang Fei]

[That said, Did this place turn into SHTFplan.com while I wasn’t looking ? The lucrative “prepper industry” has been telling us the dollar is collapsing in 24 hours for the past literally 18 years.]

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People resort to the strangest scenarios cooked up by Hollywood and various science fiction authors. We know what happens when currencies go south bigly. Mexico. They still use paper currency. It’s just worth less. And they hedge with some other currency. Greenbacks. We could hedge using Swiss francs. The idea is to use something that doesn’t involve a big spread between purchases and sales, and hopefully pays interest. That’s not gold. Or silver.

[bkopto]

But with a silver to gold price ratio of around 82:1, I'd say silver is even cheaper.

IMO, silver is cheap, and getting cheaper, because it is being de-monetized, and soon will only be good for its industrial uses.

Gold/silver ratio of 82:1? This ratio will only increase.

Silver, as money, is kaput. IMO.

[PA Engineer]

We don’t have the luxury of a border country with a currency sounder than ours. Canadian dollars? Ha!

I have used this example a couple of times when people complain about the high price of gasoline.

A gallon of gasoline in 1945 was .21¢. During WWII, war nickels were produced with 35% silver because of the demand for nickel. They had large mint marks over Monticello so that they could be rapidly removed from circulation after the war.

There were many angry people still from the Roosevelt gold shenanigans. Things did not go as planned and many just kept them for the silver content.

Anyways, it took 4.2 war nickels to buy a gallon of gasoline. Today 4.2 silver nickels equals $3.49. Even without discounting prices with the current taxes, gasoline is quite a bargain.

Something to think about. We are living in a collapse if the dollar has been gutted like this. We have psychologically normalized the increases and blame inflation, rather than the destruction of savings as the result of "digital" money printing. Kind of a banksters look at the squirrel phenomena.

Many "collectors' like Barber, Mercury and Roosevelt dimes. I don't because of circulation wear and loss of silver weight. The nickels would be very useful during a reset.

[SaveFerris]

[Just remember the inflation we had in the 70s which was attributed to printing money to pay down the national debt. It could happen again.]

Hey, that’s Alan Greenspan’s plan. If only I were joking.....

[SkyPilot]

10, maybe 15 years ago I was talking to a bank manager. I was telling him there's going to be a world economic crash because the world was running on debt, everyone is in debt to each other, and the system can't continue.

15 years ago I said on FR that globalism was coming, and one of their goals was a one world currency. I got some hard pushback here from some posters, especially one who said he was a financial manager. We still don’t have the one world currency, but we will someday.

[CincyRichieRich]

Barron is a liberal rag...they can’t get out of their own way to think straight due to their hatred...most of what they say never comes true. Every writer there has their radio stuck on NPR and they breathlessly wait Sunday mornings for their NYTimes.

[Therapsid]

Well....gold has not been used much in industry ......in the past...not like silver.....But 2 days ago there....was an article..suggesting gold the only applicable material for...long term 3d printing error identification...and that article.....is appears to have Vanished.....I cant find it....will post if I do....

[cherry]

I’ve got about 100 sunshine mines silver bullion coins...1oz....is it a good time to dump them?..

[JonPreston]

The Bolivar example makes complete sense to me in respect to gold & silver being a store of wealth, but doesn’t it depend on at least one nation, (US) in the example, maintaining a strong economy? With a global SHTF scenario, where would one go to redeem PMs? That said I do have more than a few silver and gold eagles stashed away in my vault.

[Pollard]

“””extolling the virtues of gold as an investment, why it always tracks the price of a good men’s suit”””

That was Glenn Beck on his fox show. He was talking about the creation of fed reserve and how a 1 ounce piece of gold, $20 in the late 1800s would buy you a really nice suit and that an ounce of gold, worth close to $2000 when his show was on, would still buy you a really nice suit but the $20 might get you a thrift store suit.

Moral of the story, getting off of gold and into fed res notes created inflation.

[Celerity]

The US dollar is collapsing, and has been the moment we took it off the gold standard.

Without Chinese labor in 90% of our products, the prices become too high for any american to purchase anything. Ask an American to pay $7000 for an iPhone.

We’ve been collapsed for sometime now. It’s just not “hyperinflation”. There is a lot of room between those two points on the chart.

[Oatka]

With a global SHTF scenario, where would one go to redeem PMs?

IMO, Gold and silver are understood in all languages, and even in that scenario, people would revert to barter. There would always be those who set themselves up as bankers, so some kinds of deals would be struck.