Posted on 02/19/2003 3:19:30 PM PST by Publius
There is a sharp bend in the supply curve for gold. Much above $300 and low grade ores become economical. Obviously different mines have different economics, many are around $300. Short copper, it is a byproduct of gold extraction. More gold equals more copper.
Invest in gold mining stocks. Gold is only for survivalist modes where it is significantly less valuable then guns.
Since this thread pertains to gold and silver, there is one 'commodity' that is not flexible and that's rare coins. Specifically, United States rare coins. (but I think that JimRob would not want me to post my advice on this topic...too many rare coins to list and would use up a tremondous amount of bandwidth..rofl)
Let me politely knock down this idea of investing in gold only via gold mining stocks with the following:
1. With gold mining stocks you get a very nice piece of paper. Yes, just as like fiat money.
2. These 'survivalist' you refer to did sound extreme to back in my coin dealer days. I had my share, yes. However, even though I chuckled at some of them...one thing that was always in the back of my mind was that if worse did come to worse, they sure would be better off with all those small United States pre-1964 silver dimes when looking to trade them for loaves of bread, or gasoline if they ever needed to. Yep!
3. All my clients back then took a great amount of pleasure walking out of my shop with all that cold, hard metal to take to their safe deposit boxes. Yes, they felt quite secure with the actual bullion coins, bars of silver, gold and platinum -then they would have with a piece of paper from a mining stock. Anyway.......bttt.
If you truely expect social collapse the only sensible investment would be rural land, guns and other trade goods.
That is only sort of true. It depends on the region, and frequently it is the other way around; good copper ore is a low-grade gold ore. Most of the currently active gold producing regions in the US aren't producing any copper, even though there is plenty of it. I own a disgustingly concentrated copper ore body; it is something to be seen, with the rocks being completely covered in verdigris and blue crystals. The only reason it was never exploited is that copper ore bodies have to be huge to be profitably mined, and this one was too small for anyone to put in the effort, particularly with copper prices being what they are. It turns out that there is a modestly good gold ore body in and under this copper ore body. Are they processing this ultra-rich copper ore? No, they dump it.
Incidentally, a lot of the new gold ore bodies that they've been finding in Nevada are largely copper and silver free. They have a different search strategy these days geologically speaking. A weird trivia fact about Nevada gold bodies: When they drill test bores using their current prospecting strategies, they often find oil. One famous test well in northern Nevada has delivered over 20 million barrels of oil to date with millions more expected. Nevada's oil is considered something of a geological mystery. The geology formations where it is found are often very young. No "liquid dinosaurs" here; in a bore drilled just below some land I own that pulled up a bunch of oil that was dated to only 20 million years, about 45 million years too young to be buried dinosaur bodies. Small tar seeps are pretty common in the Nevada desert.
Yes, my property has an incredibly rich geology. I let the UNR geology and mining department use it for field trips, because for them it is like a candy store.
In my post #104, kindly note that I was giving examples of my clients that had their reasons for wanting the actual metals.
But, just like them, if worse does come to worse, I'd much rather run around with some real hard money,
some small, tradeable United States 90% pure silver dimes - trying to trade for bread and gas....
....then with an - oh so valuable - piece of paper with a mining company name on it.
Each to their own I guess, huh.
There is a pile of them; I hardly remember. Most are privately held, though Google will probably pull up a number of them. Because many have totally unmemorable names, I tend to only remember the big old ones (like Coeur-Rochester), and these aren't the ones that I'm personally familiar with that are doing interesting new projects. My business partner usually deals with these companies far more regularly, otherwise I'd probably remember. I'm supposed to have a meeting with him about some suddenly interesting mineral rights on one of the parcels (gold again) this weekend. Over the years it has turned out by dumb luck that we accidentally bought a lot of dirt cheap land that suddenly became very valuable. We never really bought any of it intending to make any real money from it; they were just lovely parcels in the middle of nowhere that nobody wanted (mostly because they were really remote) that we would use for hunting, ranching, or other recreational activities.
Not trying to be humorous, but let's all consider the following scenario:
"Yes Sir, I'm kinda hungry today - so would you consider me trading you
a shovel full of my nice dirt ... for a few slices of your bread?"
Short of that, owning a gold mining company is like owning a strip of call options at the gold mines cost of production. Admittedly much more leveraged then owning actual gold.
A SMALL part of your worth in gold or silver makes sense. Reloading gear and a breading pair of horses could be worth the crown jewels.
Now I have to agree, guns are a good investment, however, in the event of social collapse, let's also consider this scenario:
***
"Yes Sir, I'm kinda hungry today - so would you consider me trading you
my 22 rifle for a loaf or two of your bread?"
"One or two or three or four or five guns/rifles...hmmm, guess I can cut them into pieces so I can buy bread everyday."
"Hmmmm, a $1000 bag of United States 90% silver dimes has 10,000 dimes in it - hmmm, how many trades for bread can I make - for how many days?"
None. For zero days. What possible use is a silver dime to someone concerned with starvation? You would drop your bag of dimes because you are week from hunger. At least gold is possible to travel with.
Trading away your guns in this scenario would be insane. Hunting with them as well as using them for self protection is more what I had in mind.
Well, this could go on all night, but let's switch from bread to eggs:
"Yes Mr Chicken Famer, I see you have thousands and thousands of eggs -
would you consider trading me a few of your many thousands of yummy, nice eggs for a...a few pieces of silver?"
So forget the .22 rifle, you only need one, two tops. A box of 50 .22 cartridges, on the other hand, is something that I might be able to use. Worse case scenario, I'll have no problem finding someone else who could use them.
It is an unlikely scenario where society has collapsed to the point were all paper is valueless yet silver retains significant barter value. Picture a world were the citys are burning and nobody knows where the next few years (yes years) worth of food is coming from. Would you trade eggs for silver? How about a box of .22LR?
I have to agree with this. Yes, I sure do. However, what I'm getting at is that I'm recommending - just 5% of a portfolio in bullion silver and gold coins. I suppose one could also invest -another 5% - in bullets. Yes, I have to agree with your logic.
Yes and in my post #118, I concurred with the idea of having bullets. We can all put another 5% of our portfolios in ...bullets. Sure, yes, why not.
I'm putting my net worth into single malt scotch. ;-)
Good night Sir.
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