Posted on 07/27/2015 4:19:44 AM PDT by expat_panama
A little less than four years ago, the world looked like it was about to end and gold hit an all-time high of $1,895 an ounce.
The United States had manufactured a debt crisis, and Europe hadn't been able to manufacture a solution to its actual debt crisis, so panicky investors sought safety...
[snip]
That didn't mean, though, that gold wasn't a good short-term investment. It was. Just not for the reason goldbugs thought. Now, the problem with gold is it doesn't pay any interest or dividends, but it does cost money to store. So you have to pay up in the hope that it will pay off by going up in price. That usually makes it a pretty lousy investment. That calculus changes, though, when you're being paid to borrow—that is, when you're paying a negative real interest rate. But when does that happen? Well, when inflation is high but interest rates aren't quite as high, like in the 1970s, or when inflation is low but interest rates are lower still, like today. And that, as Paul Krugman and Larry Summers argued, is why gold prices were going up so much even though inflation wasn't.
It almost makes you feel bad for the goldbugs, until you remember that some substantial number of them are just trying to scare seniors out of their money. But the ones who aren't really thought the 1970s showed that gold went up when inflation did, so the fact that gold was going up now meant inflation couldn't be far behind.
[snip]
That sound you hear is goldbugs insisting that this is just a flesh wound.
[snip]
But don't feel too bad for the goldbugs. The best thing about predicting the apocalypse is you get to try again and again and again.
(Excerpt) Read more at washingtonpost.com ...
Those that stash under the mattress will also have to pay for certifying the gold at time of resale. Another thing for independant owners is the high buy/sell price. Other investments --say, stocks-- we're talking a percent or so (including commissions) but it's many times that for gold.
When the MSM starts bashing Gold it’s a good time to buy.
On that market the problems I see are high volatility and gov’t distortion. Long term returns aren’t that bad as current levels are still up from last Jan. Only time I’m interested in Chinese stocks tho is when they list in the U.S.
Go figure!!! ;-)
Junk Silver US coins look to me to be about the worst possible way to buy silver. Almost very place I look that is a “reputable” broker Junk Silver carries a 30% mark-up to spot where 1 oz bars are 4% and Maple Leaves are about 15% or so.
But but but but the guys in the radio promised that gold would go over $5000 an ounce before the end if the year. If you can’t trust an anonymous radio huckster who can you trust.
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First, precious metals are purchased as an insurance against loosing other parts of your portfolio. Gold is not an investment although some invest in gold, they buy and sell almost every day.
Gold is hard to trade except in small amounts. Gold has never not had value. It is likely to always have value. Cash some day may not have value. Stocks may some day not have value. CD’s may easily some day have little or no value but, even though the value of gold fluctuates it will always have value.
I personally like junk silver better than gold. I store some gold because you can get a lot of value in a small package, but, if you ever have to “spend” your precious metals, old dimes and quarters will be easy to “barter” with. They may not be much better than ammo but much more portable. In a bug out situation portability is essential.
We keep hearing on these threads about how the dollar is worthless and T-bills are trash. I keep volunteering to come over and haul them away for free but I never get any takers. Seriously, we know that most gov't debt is safe because safety's not the problem. Reason I got no use for T-bills is there's no return there, almost as bad as precious metals imho.
Well, a pretty silly argument. People won't give me something for free so it must have value and still be a good investment.
The debt levels of America and most of the developed world are at 100%+ GDP levels and still growing. They will never be paid back with anything close to the value of the initial investment.
Fast forward 10 years after 8 years of Hillary. What do you think the debt level of American will be? How many cities and states will be bankrupt or bailed out with more and more printed money?
Do you really think a 2% return on a 30 year Treasury compensates the investor for the risk he/she is taking?
lol! Rush is powerful enough that he can restrict them to only sponsors he actually buys from so my bet is Rush lost a bundle on gold and is about to lose a bundle on silver. Rush is a super genius w/ broadcasthing but he's a super ditz in other areas.
Better yet, buy .223 made out of gold..just a thought.
Barter for what? Serious question. If things get bad, why would I want to trade with you for metal? I'll want to trade and barter for things I can actually use and need. Metal won't be one of things when store shelves are empty.
Ok so you need penicillin and the penicillin guy lives 50 miles form you. In your pure barter system you have to haul 3 100 sacks of wheat to barter for penicillin. Not practical. In a low civilization scenario there will be money and it will be something precious and it might as well be gold.
Because of the expectation that one day things will get "unserious". And because there are others who will also be interested in metals for the same reason. A medium of exchange is necessary (maybe not 'necessary', but so darn useful we'll always have one).
As for gold, it's really more a matter of holding value until things come around. If you need to protect several hundred thousand dollars, anything else is just too heavy.
A case of Scotch would be better for bartering purposes.
And ammo, firewood, water, food, etc., assuming you have more than enough for you and your kinfolk.
Fiat currency has most of the attributes of money, but it does not act as a store of value. After a few years a dollar bill has only a fraction of its original buying power. However an oz of Gold from (e.g.) the time of the Incas retains its buying power.
Something that has the attributes of money is valuable because it has those attributes. Would-be barterers can use money to overcome the otherwise insuperable problem of discovering a Coincidence_of_wants .
Trade requires money. Let's examine this vital function of money with respect to the coincidence of wants:
My Chicken farm example:
You run a chicken farm, and you need to buy a great many things to keep your farm and family going.
In a given month you need - for instance - to buy chicken feed, to hire someone to repair your generator, to buy a nailgun to allow you to mend chicken barn #9, to hire a midwife to help give birth to your widowed daughter’s baby, to buy milk and bacon - and so on.
Some of these resources will be buyable with chickens or eggs. And some of them will not - there's no coincidence of wants if the midwife or the nailgun owner don't want chicken meat or eggs.
But all or most of these resources will be buyable with money - with Gold or Silver. Because offering money in a transaction vastly improves the chance of a coincidence of wants
My Chicken farm example - continued:
You’ve had a successful month at the farm, and you now have loads of chicken meat and/or eggs to sell.
100 people line up to buy what you’ve got.
* 50 of them have horribly devalued fiat money, food-stamps and a bad attitude
* 40 of them have plans for barter - some of which are better than others. One is willing to work on your farm for food: another is willing to sell you their body, another has a stack of AA duracell batteries, another has some miniature bottles of scotch - and so on, with dozens of variations. You have to gauge each transaction on its own merits - an exhausting process - and half of the barter offers are simply going to be unworkable.
* 10 of them have Gold and/or Silver.
Which customers will you prefer selling your produce to? They all want what you've got - but do you want what they've got? Again: real money vastly increases the chance of a coincidence of wants.
Only Gold and Silver fulfill all of the prerequisites of money. This gives them inherent value - useful (for instance) in a survival situation.
Of course Fiat currency can also be used to run a chicken farm. However in time all Fiat currencies - without exception - revert to their true value of zero. When our current Fiat currency is no longer trusted only precious metals will act as money.
Hope this was helpful.
I have both.
and, all fiat money is in reality blips on an electronic ledger. when the power goes, the value of the money goes
Money is useful simply because it is small and portable. Sure yo can barter with a guy 50 miles form you. You can haul junk back and forth. But it is simpler to convert your barter to money and walk 50 miles with 2 coins in your pocket then pull a wagon of seed corn behind you.
Considering the source of this article, I think I’m going to buy some gold today.
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