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Old 29th May 2011, 12:31 PM   #441
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oh, i understood all right, and it's still funny.

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Old 3rd June 2011, 11:45 AM   #442
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Originally Posted by Tippit View Post
While I can't deny the knee-slapping comedic value of this response, the word fake doesn't necessarily denote worthlessness, and more likely indicates an increasing rate of worthlessness. The US dollar is authentic in that it's produced by the US, and fake in terms of having an important property of money - the store of value.

....
Have you sold any of your silver yet to lock in the profits you've continually claimed? I'd do it soon before your ROI is lower than T-bills or the inflation rate.
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Old 3rd June 2011, 04:47 PM   #443
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Originally Posted by stilicho View Post
Have you sold any of your silver yet to lock in the profits you've continually claimed? I'd do it soon before your ROI is lower than T-bills or the inflation rate.
I asked the same thing and was summarily dismissed for not understanding the underlying principles. Apparently, the math goes something like this....

You hold 15,000 oz of silver at an average buy of $8 ($120,000). That goes to $50, and then starts its inevitable downward curve. Somewhere along the line, one could invest 22 minutes and sell off that 15,000 oz at 750,000, and just ride a little bit on the downbeat and buy 19,000 oz and have a little left over for a decent steak and a bottle of Pouilly Fuisse.

But that's not how it works. They bought in at the absolute depths of the prices and are so convinced that it's going to $150 someday, that it would make no sense to take a $225,000 profit on the margin between $50 and $35. I think it has to do with the well known "Oooh, Shiney!" theory of commodity investment.

It's really sort of a religious thing with gold and silver bugs. It seems that they don't want to be seen cheating on their wife(their silver blah blah) so will not take that ignoble quarter million in profits, even if that would allow them to horde another 30% of the shiney stuff if they just turned around and reinvested in the same.

My broker in Montreal was much the same. He recommended in '97 that I hold onto WeHaveNoContentJustIdeas.com Fast Eddy. He's now parking cars at Ruby Foo's.
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Old 4th June 2011, 04:23 PM   #444
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Originally Posted by Foolmewunz View Post
I asked the same thing and was summarily dismissed for not understanding the underlying principles. Apparently, the math goes something like this....

You hold 15,000 oz of silver at an average buy of $8 ($120,000). That goes to $50, and then starts its inevitable downward curve. Somewhere along the line, one could invest 22 minutes and sell off that 15,000 oz at 750,000, and just ride a little bit on the downbeat and buy 19,000 oz and have a little left over for a decent steak and a bottle of Pouilly Fuisse.
That works great, in hindsight. Problem is, one never knows what silver is going to do at any given time.

Quote:
But that's not how it works. They bought in at the absolute depths of the prices and are so convinced that it's going to $150 someday, that it would make no sense to take a $225,000 profit on the margin between $50 and $35. I think it has to do with the well known "Oooh, Shiney!" theory of commodity investment.

It's really sort of a religious thing with gold and silver bugs...
This is both a straw man argument (who is "they"?), and wrong on so many levels.

It assumes one is buying silver to make "profits". You may scoff that that is the only reason to speculate on silver (or anything other commodity) and so far as that goes, I agree. Common stocks, silver, gold, pork bellies, oil, nearly anything can be traded and speculated upon in the hopes of profits.

I can't speak for "silver bugs", but for me, there are absolutely no price machinations that would ever induce me to sell. If the price of an ounce of silver went up to $100 over the next year, my paper "net worth" would go up, and I wouldn't mind, but I would still not consider selling. Not at any price. Really.

If and when any of my gold or silver gets sold, it will be at the market price at the time (which I still hold is unforeseeable), and only because at some point in the future my wife and I or our heirs need to sell it to live - its insurance, not speculation.

Quote:
My broker in Montreal was much the same. He recommended in '97 that I hold onto WeHaveNoContentJustIdeas.com Fast Eddy. He's now parking cars at Ruby Foo's.
Its hard for me to know...

1) is that referring to ME somehow?

2) If it is, is it complimentary or insulting? I really can't tell.

Last edited by Fast Eddie B; 4th June 2011 at 04:54 PM.
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Old 14th June 2011, 05:23 AM   #445
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Still waiting for the hyperinflation.

Right now silver spot is a touch under $35 an ounce.

Can anyone who is forecasting hyperinflation please give some kind of indication as to the likely timelines. An apocalyptic forecast with no indication as to when it may happen is more or less useless.
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Old 14th June 2011, 07:49 AM   #446
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Originally Posted by The Don View Post
Can anyone who is forecasting hyperinflation please give some kind of indication as to the likely timelines.
No. As I stated above: "Problem is, one never knows what silver is going to do at any given time."

Quote:
An apocalyptic forecast with no indication as to when it may happen is more or less useless.
"The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again." - John Maynard Keynes
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Old 14th June 2011, 08:17 AM   #447
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Originally Posted by Fast Eddie B View Post
If and when any of my gold or silver gets sold, it will be at the market price at the time (which I still hold is unforeseeable), and only because at some point in the future my wife and I or our heirs need to sell it to live - its insurance, not speculation.
Still can't see how that's insurance against anything except a collapse of the dollar (or whatever the currency is where you are). Because otherwise you are simply gambling that the value of silver when you or yours need it is higher than it would have been via inflation. Anything else is a loss. So yes, it is ultimately about profits.
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Old 14th June 2011, 08:22 AM   #448
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Well the tenor of the early posts in this thread was

"I'm holding silver as a hedge against hyperinflation"

The evidence for this was the, at the time, rising value of silver (due to the debasing of the dollar).

There was a further suggestion that a pre-1946 (actually pre-1964) dime may be able to provide food for a few days.

Although it was never explicitly stated, I inferred that the posters thought that this may happen at some time in the foreseeable future.

I personally don't think we'll see hyperinflation in the United States in the next 5 years and I was trying to explore with the hyperinflation enthusiasts when they might think the hyperinflation may take place (because "sometime" is neither helpful nor does it provide a testable hypothesis for their economic theories).

It is impossible to predict the value of commodities in the short term but I interpreted the alert to the current silver price was an indication that hyperinflation was around the corner and that as a consequence, the value of silver in dollars was going to soar.

The fact that the price of silver over the last couple of months has been pretty flat indicates to me that perhaps the hyperinflation isn't as imminent as the original poster would have us believe.
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Old 14th June 2011, 08:30 AM   #449
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I knew I should have read more of the thread...
So it is a collapse of the dollar thing.
OK.
One of those "any day now...any day" I presume?
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Old 14th June 2011, 12:25 PM   #450
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Originally Posted by Fast Eddie B View Post
That works great, in hindsight. Problem is, one never knows what silver is going to do at any given time.

....

This is both a straw man argument (who is "they"?), and wrong on so many levels.

It assumes one is buying silver to make "profits". You may scoff that that is the only reason to speculate on silver (or anything other commodity) and so far as that goes, I agree. Common stocks, silver, gold, pork bellies, oil, nearly anything can be traded and speculated upon in the hopes of profits.

I can't speak for "silver bugs", but for me, there are absolutely no price machinations that would ever induce me to sell. If the price of an ounce of silver went up to $100 over the next year, my paper "net worth" would go up, and I wouldn't mind, but I would still not consider selling. Not at any price. Really.

....
I was asking Tippit since he seems to be confident in his business acumen but your reply is confusing. "No price...would ever induce me to sell." Not $40/oz. Not $400/oz. Not $40,000,000/oz.

Are you certain of this?
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Old 14th June 2011, 03:11 PM   #451
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Originally Posted by stilicho View Post
I was asking Tippit since he seems to be confident in his business acumen but your reply is confusing. "No price...would ever induce me to sell." Not $40/oz. Not $400/oz. Not $40,000,000/oz.

Are you certain of this?
I like an "argument ad absurdum" as much as the next guy, so fair question.

If, tomorrow, silver shot to $40,000,000/oz, and everything else remained roughly the same, then, yes - I'd likely sell one ounce and buy a personal jet and a fancy home and never worry about money again.

But the problem with that thought experiment is that it would be impossible for everything else to remain the same (ceteris paribus). Everyone else in the world would also be rushing to sell some silver, which would drive the price back down. Or we'd be in the midst of hyperinflation, and that $40,000,000 proceeds wouldn't even cover a trip to the grocery.

Not to mention that on the day that silver hit $40,000,000/oz, it would be exactly as likely to go up the next day as down.

Quote:
Although it was never explicitly stated, I inferred that the posters thought that this may happen at some time in the foreseeable future.
(from The Don)

Your inference may be correct pertaining to some posters. I guess it depends on your definition of "foreseeable". I will again compare holding silver with insurance. You buy flood or life or car insurance not because you expect any one of those things to happen, and certainly not because you hope they do. I hold some precious metals and would far prefer that hyperinflation never rears its ugly head, much as I hope I don't fall victim to a flood, or die, or get in a car accident.

I've been hearing about impending doom for the US financial system since the 70's, and I'm glad the gloom and doomers have been wrong to this point. But no one knows what the future holds, and "Black Swan" events can leave us all scratching our heads and wondering why we didn't see this or that coming.
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Old 15th June 2011, 12:42 AM   #452
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Originally Posted by Fast Eddie B View Post
I've been hearing about impending doom for the US financial system since the 70's, and I'm glad the gloom and doomers have been wrong to this point. But no one knows what the future holds, and "Black Swan" events can leave us all scratching our heads and wondering why we didn't see this or that coming.
And if you had ploughed a substantial portion of your net worth into silver as a hyperinflation hedge at the time, you'd have missed out on 35 years of stock market and housing market gains.

Just wailing "we're all dooooooooooomed at some unspecified point in the future" simply isn't helpful as either advice or as a means of testing the model that underpins that forecast because it will never produce falsifiable results (after all, it seems that the forecast disaster has been forecast for 35 years, hasn't quite yet happened but could still be just around the corner.
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Old 15th June 2011, 04:47 AM   #453
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Quote:
And if you had ploughed a substantial portion of your net worth into silver as a hyperinflation hedge at the time, you'd have missed out on 35 years of stock market and housing market gains.
This assumes that participating in gains in any market is easy or just assumed.

One might have invested in Apple or Microsoft and had huge gains. Or one might have leveraged those positions into a huge position in Enron and not so much.

Similarly, I have a friend who participated in the real estate boom in Knoxville and ended up with 50+ homes, worth a LOT of money. He's now bankrupt.

Looking at historic silver prices, they were about $5/oz in the '70's:



Right now, as an investment, from the 70's one would have a "seven-bagger". One could have done worse (or better) in other investments, but there you have it.
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Old 15th June 2011, 05:47 AM   #454
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And if you look at that graph, for most of that time you'd have made next to nothing. Indeed inflation alone would have wiped out any small gains.
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Old 15th June 2011, 05:47 AM   #455
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Originally Posted by Fast Eddie B View Post
This assumes that participating in gains in any market is easy or just assumed.
My knowledge is UK based and cash ploughed into property in, say, 1975 your return would have been 16 fold:
http://www.mortgageguideuk.co.uk/hou...ice-index.html


If you'd put it into a Down Jones tracker mutual fund it would have been 12-24 fold PLUS any dividends you may have received
http://stockcharts.com/freecharts/hi.../djia1960.html

Timing the peaks and troughs is difficult. Picking a single stock is also difficult.


Silver has been a comparatively rotten investment over that period (and form the perspective of a couple of years ago even worse). The reason to hold it (as a hedge against hyperinflation which hasn't happened) has not come about.

I'm not saying that commodities are not part of a balanced portfolio but if someone as a sizeable proportion of their net worth in silver as protection against something that has been predicted for the last 35 years as being about to happen but has not so far, then I'd question the rationality of that decision UNLESS.....


....they can present an argument as to why now is different to any time in the past 35 years and ideally present some kind of checkpoint to see whether their economic theory is correct.
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Old 15th June 2011, 06:08 AM   #456
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Originally Posted by Fast Eddie B View Post
If and when any of my gold or silver gets sold, it will be at the market price at the time (which I still hold is unforeseeable), and only because at some point in the future my wife and I or our heirs need to sell it to live - its insurance, not speculation.

I'm coming late to this thread but how exactly is that going to work? Exactly how much gold and silver do you hold on your person/in your home and under what scenario are you going to have to sell it?

If the apocalyptic predictions are true then your silver and gold is going to be as worthless as pretty much everything else except food, water, weapons and ammo.

If we're just talking about a financial crisis to the point where gold/silver was a better investment that stocks and shares then your policy of never selling is silly as it would simply be a risk/reward calculation.
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Old 15th June 2011, 06:34 AM   #457
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Originally Posted by Fast Eddie B View Post
This assumes that participating in gains in any market is easy or just assumed.

One might have invested in Apple or Microsoft and had huge gains. Or one might have leveraged those positions into a huge position in Enron and not so much.

Similarly, I have a friend who participated in the real estate boom in Knoxville and ended up with 50+ homes, worth a LOT of money. He's now bankrupt.

Looking at historic silver prices, they were about $5/oz in the '70's:

http://silverprice.org/charts/histor...data_o_usd.png

Right now, as an investment, from the 70's one would have a "seven-bagger". One could have done worse (or better) in other investments, but there you have it.
If you put 10,000 bucks in a 12% certificate of deposit in 1979, you tripled your 10K in ten years. I know. I did it twice and put my daughter through H.S. on it. If you bought silver in '79 at $18, what would you have now? The people pumping silver in this thread are not even recommending buying it at those prices - they're recommending buying it NOW because it's such a wise investment. (I also bought a small handful of silver ounces back then - by '82, we used them as paperweights!!)
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Old 15th June 2011, 08:28 AM   #458
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I think we're largely talking past each other.

1) I don't recommend that anyone buy silver. Just that there are feasible scenarios possible where one might wish one had. Or not.

2) Looking back at ways one might have invested in the past is interesting but of no use deciding how to go forward. My IRA is diversified across mutual funds focusing on tech, utility/income, blue chip stocks, emerging growth stocks, China fund and a gold fund. My best-performing fund is a Fidelity software and computing, up 80% on share price and about 380% with reinvested dividends and gains. It's easy to play the game, "if only I had put it ALL into that fund". But looking forward one never has the clarity of vision that one has looking back.

3)
Quote:
If the apocalyptic predictions are true then your silver and gold is going to be as worthless as pretty much everything else except food, water, weapons and ammo.
Historically, not true. But its not either/or. Food/water/weapons and ammo are all good things to have tucked away.

4)
Quote:
Exactly how much gold and silver do you hold on your person/in your home and under what scenario are you going to have to sell it?
About 5% of my net worth is in precious metals. The majority is in securities (stocks and bonds) and real estate. Again, I'd only sell the metals if I needed to in order to survive. I don't see that 5% of my portfolio as an investment, I see it as insurance.
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Old 15th June 2011, 08:41 AM   #459
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Originally Posted by Fast Eddie B View Post
I think we're largely talking past each other.

3)

Historically, not true. But its not either/or. Food/water/weapons and ammo are all good things to have tucked away.
Well historically we've never really had an apocalyptic scenario. Not in the sense that some of the more rabid commentators and 'buy gold!!!!!1111' bloggers talk about at any rate.

If we are talking about Latin America, the Asian IMF crisis or whatever then yeah, I could possibly see the sense of buying gold as a hedge against a fairly localised issue. If we're talking about the backside falling out of the the US dollar and global economic meltdown to the point where people are trying to exchange gold nuggets for food and shelter then I think we would have gone beyond the point where any investment made much sense.
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Old 15th June 2011, 09:23 AM   #460
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Originally Posted by Last of the Fraggles View Post
If the apocalyptic predictions are true then your silver and gold is going to be as worthless as pretty much everything else except food, water, weapons and ammo.
Don’t forget the bottle caps, you definitely want to have a big stash of those just in case...
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Old 15th June 2011, 09:49 AM   #461
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Originally Posted by Last of the Fraggles View Post
Well historically we've never really had an apocalyptic scenario...
And from this you're concluding, what? That it can't happen?

Reminds me of an old Mother's song!

I'm reading a book now on the Great Depression. Some similarities with now, some marked differences.

Anyway, I'm not a doom and gloomer and hope that things will go relatively smoothly going forward - that the Fed can somehow manage fiscal policy to walk the thin line between too much inflation and deflation.

But to think we're immune from an "apocalyptic scenario", well, I've always liked this excerpt:

"We [ Specifically Americans] think we are exempt from universal laws but we are not. People who think they are exempt from universal laws have a moral disease called, hubris, frequently fail. I am not trying to be clever or outrageous; this is simply history, the way the world has been ever since we've been recording it. Separatism is a fact of history at all times of economic distress. Most people will maneuver to maximize their economic lives, always have and always will, and in the process new societies and structures will be established. Sooner or later political structures around them must shift to deal with the change.

Americans find it hard to believe that such laws apple to their country that even their borders can change. They shouldn't. borders and governments move to follow economic interests, which shift constantly, as Adam Smith, Marx and Keynes all noted; then come religious, ethnic, and linguistic reasons. there is no border in the world that has lasted centuries, much less forever. With our short-term myopia, we think it's different this time....... [he talks about large caps and how they eventually get over taken]
Well, in the laws of economics, in the laws of history, in the laws of politics, and in the laws of society its never different this time. The law of gravity isn't ever suspended for someone's convenience, and these laws are just as rigorous, though more subtle and complex. "Oh come on!" I hear all the time [ I heard it from Buffet last Thursday night], "This is America. It's different here." I wish it were, but unfortunately, its never different anywhere, never different anytime. Every piper has to be paid Fall of a cliff and no matter whether you're Spanish, Argentine, Chinese or American, gravity still operates, no different from any other time."


Jim Rogers - Investment Biker

(sorry for the errors - its just a copy/paste.)
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Old 15th June 2011, 09:50 AM   #462
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Originally Posted by Last of the Fraggles View Post

If the apocalyptic predictions are true then your silver and gold is going to be as worthless as pretty much everything else except food, water, weapons and ammo.
I have no idea why people believe this. In times of chaos, precious metals have always held their value and more. Why should it be any different in times of extreme chaos???

IMO, gold will probably be out of the financial reach of ordinary people.
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Old 15th June 2011, 09:58 AM   #463
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Originally Posted by UndercoverElephant View Post
I have no idea why people believe this. In times of chaos, precious metals have always held their value and more. Why should it be any different in times of extreme chaos???
Mainly because they have not held their value in times of chaos. In 1920’s Germany you would have needed significant amounts of gold to buy even a small amount of food. You seem to be under the impression that because cash did worse (did it?) that gold did well which isn’t the case.
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Old 15th June 2011, 10:22 AM   #464
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From Wikipedia (Hyperinflation):

"During a period of hyperinflation, bank runs, loans for 24 hour periods, switching to alternate currencies, the return to use of gold or silver or even barter become common..."

I don't see how one can argue that if currency is being hyper-inflated, its not reasonable to attempt to store value via commodities, of which gold and silver are but two.

Or maybe it will be different this time!
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Old 15th June 2011, 10:35 AM   #465
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Originally Posted by lomiller View Post
Mainly because they have not held their value in times of chaos. In 1920’s Germany you would have needed significant amounts of gold to buy even a small amount of food. You seem to be under the impression that because cash did worse (did it?) that gold did well which isn’t the case.
What "did well" then??

I'm betting the only thing which did better than gold was farmland.
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Old 15th June 2011, 10:42 AM   #466
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Originally Posted by Fast Eddie B View Post
And from this you're concluding, what? That it can't happen?
No. I'm concluding that looking at past non-apocalyptic events as evidence of what would happen to gold prices in a globally apocalyptic event is not really useful. I thought that was pretty clear given what I was talking about.
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Old 15th June 2011, 10:58 AM   #467
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Originally Posted by UndercoverElephant View Post
I have no idea why people believe this. In times of chaos, precious metals have always held their value and more. Why should it be any different in times of extreme chaos???

IMO, gold will probably be out of the financial reach of ordinary people.
In times of some, temporary, chaos yes. 'Precious' metals can be a good place to store funds while the crisis plays out or as a method of exchange with areas which are unaffected.

In a global catastrophe all bets are off. Everyone is going to be in the same boat and there will be noone to trade your gold with.

Gold/Silver/Shiny things have no intrinsic value. They're only worth what people with wealth are willing to give you for them. Your final comment that gold would be out of the reach of people should point to something that seems economically flawed - the only people who could afford to buy gold would be the people who already had it?

Or put it another way? Why would I want to trade my tasty, delicious and nourishing food for your shiny but inedible gold?

Originally Posted by Fast Eddie B View Post
From Wikipedia (Hyperinflation):

"During a period of hyperinflation, bank runs, loans for 24 hour periods, switching to alternate currencies, the return to use of gold or silver or even barter become common..."

I don't see how one can argue that if currency is being hyper-inflated, its not reasonable to attempt to store value via commodities, of which gold and silver are but two.

Or maybe it will be different this time!
Because what the global economic collapse people are arguing is not a 'period of hyperinflation' but a global economic meltdown. Back to the Wild West/Stone Age type stuff.

Good luck with having a piece of paper that says you own X ounces of gold stored in vault somewhere hundreds of miles away (which is what a lot of 'gold investors' actually have) if that happens.

Originally Posted by UndercoverElephant View Post
What "did well" then??

I'm betting the only thing which did better than gold was farmland.
So we should all be investing in land and property then - things with intrinsic value rather than shiny baubles?
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Old 16th June 2011, 05:48 AM   #468
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Originally Posted by Last of the Fraggles View Post
In times of some, temporary, chaos yes. 'Precious' metals can be a good place to store funds while the crisis plays out or as a method of exchange with areas which are unaffected.

In a global catastrophe all bets are off. Everyone is going to be in the same boat and there will be noone to trade your gold with.
Why will there be nobody to trade my gold with?

Quote:
Gold/Silver/Shiny things have no intrinsic value. They're only worth what people with wealth are willing to give you for them. Your final comment that gold would be out of the reach of people should point to something that seems economically flawed - the only people who could afford to buy gold would be the people who already had it?
No. The only people who could afford to buy gold would be large organisations like nation states and obscenely rich individuals. Gold will be traded just like it is at the moment. The only difference will be that it is a lot more expensive. Silver will probably take over the role gold currently plays for "normal" people.

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Or put it another way? Why would I want to trade my tasty, delicious and nourishing food for your shiny but inedible gold?
Depends how much food you had. Food goes off. Gold doesn't. If you've just got a bucketfull of apples then there won't be a lot of point in trading it for a small speck of gold, but if you've got a whole orchard full of apples then trading them for some gold would be a very real option.

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Because what the global economic collapse people are arguing is not a 'period of hyperinflation' but a global economic meltdown. Back to the Wild West/Stone Age type stuff.
Depends which "people" you are talking about. This is not an either/or between Business As Usual and Olduvai Theory. I'm more of a Long Descent sort of doomer.

Quote:
Good luck with having a piece of paper that says you own X ounces of gold stored in vault somewhere hundreds of miles away (which is what a lot of 'gold investors' actually have) if that happens.
Those people are fools. I own physical gold sovereigns: impossible to convincingly fake and easy to sell. The whole point in owning gold as a protective measure against a collapsing global financial system is that the physical stuff retains its value. I totally agree that if "your" gold is physically located in somebody-else's vault then you might as well not own it all when TSHTF.

Quote:
So we should all be investing in land and property then - things with intrinsic value rather than shiny baubles?
Farmland is likely to be a good invesment. As for houses and commercial property....that all depends on local conditions. In the US there is an oversupply of houses. In the UK there is a shortage. Therefore buying houses may not be such a good idea in the US as it is in the UK. It also depends what sort of house and what sort of district it is in - does it have a decent sized garden? Are the neighbours criminals?

There is a fascinating debate within the doomer community between those who believe there is going to be a population migration from the cities to the countryside and those who believe the migration will go the other way. It all depends on what sort of world you believe will emerge after the peak of the crisis.
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Old 16th June 2011, 06:30 AM   #469
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Of course it's harder to forge an apple than it is to forge a gold coin. Gold will be a poor medium for exchange and storing wealth unless the quality of that gold can be easily verified.

A demonstrably working firearm with ammunition on the other hand would be an excellent thing to stockpile
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Old 16th June 2011, 06:40 AM   #470
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Originally Posted by The Don View Post
Of course it's harder to forge an apple than it is to forge a gold coin. Gold will be a poor medium for exchange and storing wealth unless the quality of that gold can be easily verified.
It is actually very hard to fake a small gold coin. All you need to know to be able to be sure it is a genuine coin and not a fake is the measurements of the coin and its weight. The only metals that could be used to create the fake are more expensive than gold, because gold is so dense. The only element which is close to the correct density but also very cheap is tungsten, but tungsten has totally different chemical and other physical properties to gold.
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Old 16th June 2011, 08:13 AM   #471
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Originally Posted by UndercoverElephant View Post
Why will there be nobody to trade my gold with?

No. The only people who could afford to buy gold would be large organisations like nation states and obscenely rich individuals. Gold will be traded just like it is at the moment. The only difference will be that it is a lot more expensive. Silver will probably take over the role gold currently plays for "normal" people..
Maybe I'm missing something and I await my education but why do you believe the demand for gold and silver would remain in a post global economic apocalypse situation?

Surely at the very least, if you are prepared to entertain the risk of a global economic implosion and hedge against it with gold you should also be willing to entertain the risk that gold might become worthless too?

Seriously if I'm a nation state or an individual with obscene wealth I'm not looking to buy more gold - I'm looking to buy weapons and ammo and food and water or the means to produce them.
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Old 16th June 2011, 08:45 AM   #472
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Originally Posted by Last of the Fraggles View Post
Maybe I'm missing something and I await my education but why do you believe the demand for gold and silver would remain in a post global economic apocalypse situation?
For precisely the same reason that they have been valuable ever since humans first discovered them. Gold, silver and a handful of other metals which sit close to them in the periodic table have always been a reliable store of wealth because of their physical properties. Non-elements aren't generally much use, unless they are incredibly hard to produce (e.g. diamonds historically, but we can now make artificial diamonds). There are only 83 naturally-occuring elements with stable isotopes. Of those, which could be a reliable store of wealth? Well, you have to get rid of everything which is a gas or liquid at room temperatures, everything which readily reacts with other elements and everything which is either too abundant or too rare. What does this leave? It leaves gold, silver, platinum, palladium, rhodium and iridium, and that's about it. These metals sit in a neat block of six in the periodic table, and the further you get away from that part of the table, the less suitable the elements are to be "precious metals."

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Surely at the very least, if you are prepared to entertain the risk of a global economic implosion and hedge against it with gold you should also be willing to entertain the risk that gold might become worthless too?
Only if I was crazy....

Quote:
Seriously if I'm a nation state or an individual with obscene wealth I'm not looking to buy more gold - I'm looking to buy weapons and ammo and food and water or the means to produce them.
If you've already got lots of gold then you may well want to sell some of it in order to buy other stuff you need. Gold is just a currency - money - it's just a special sort of money which nobody can artificially devalue. There's nothing the powers that be would like right now more than to be able to control the price of bullion. They have tried every trick in the book to keep it down, but they are fighting a losing battle, because there are far too many people, from central banks to common people in Asia, who see gold exactly like I see it and who can also see where the world is heading. Gold is the canary in the mine, and she is going to sing her heart out....
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Old 16th June 2011, 09:04 AM   #473
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Originally Posted by UndercoverElephant View Post
For precisely the same reason that they have been valuable ever since humans first discovered them. Gold, silver and a handful of other metals which sit close to them in the periodic table have always been a reliable store of wealth because of their physical properties. Non-elements aren't generally much use, unless they are incredibly hard to produce (e.g. diamonds historically, but we can now make artificial diamonds). There are only 83 naturally-occuring elements with stable isotopes. Of those, which could be a reliable store of wealth? Well, you have to get rid of everything which is a gas or liquid at room temperatures, everything which readily reacts with other elements and everything which is either too common (e.g. iron, aluminium) or too rare (e.g.osmium). What does this leave? It leaves gold, silver, platinum, palladium, rhodium and iridium, and that's about it. These metals sit in a neat block of six in the periodic table, and the further you get away from that part of the table, the less suitable the elements are to be "precious metals."
So what? They still have no intrinsic value.

Quote:
Only if I was crazy....
Well that's a useful comeback. You can't see any possible circumstance under which people might just decide that they don't really want gold all that much? Every other single commodity can drop in value but not gold because it's 'special'?


Quote:
If you've already got lots of gold then you may well want to sell some of it in order to buy other stuff you need. Gold is just a currency - money - it's just a special sort of money which nobody can artificially devalue. There's nothing the powers that be would like right now more than to be able to control the price of bullion. They have tried every trick in the book to keep it down, but they are fighting a losing battle, because there are far too many people, from central banks to common people in Asia, who see gold exactly like I see it and who can also see where the world is heading. Gold is the canary in the mine, and she is going to sing her heart out....
Yes, lots of people see gold as a hedge against something fairly bad happening for some finite period of time. The plan in some cases is to store the value in the gold see out the 'bad thing' and then exchange it back to money when the system corrects in other cases its just to benefit from the rise in price of gold as an investment.

Thats a far sight from exchanging your sovereigns for water and grain. If we get to that point good luck getting to the water and grain shop with your sovereigns in your pocket.
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Old 16th June 2011, 09:18 AM   #474
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Originally Posted by Last of the Fraggles View Post
So what? They still have no intrinsic value.
Did you actually read what I wrote? I just explained to you exactly why they have intrinsic value. They are valuable because they are the only elements usable as stores of wealth. They have physical properties which are unlike those of any other substances that exist. What about that do you not understand?

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Well that's a useful comeback. You can't see any possible circumstance under which people might just decide that they don't really want gold all that much? Every other single commodity can drop in value but not gold because it's 'special'?
That is correct, or it would be if you'd written "precious metals" instead of "gold." What happens to the values of other commodities depends on the nature of those commodities. There is a limit to how high the price of wheat, for example, can go. This limit is due to the fact that wheat is a perishable commodity which is bought by vast numbers of people as part of the everyday survival. When the price goes up beyond a certain point (say it doubles from today's prices) then all that happens is a large number of the world's poor people can't afford to buy it and eventually starve to death. So wheat can go up in price and can act as a short-term store of value but it can only go up so far and is no use as a long-term store. Wheat is not money. Resources like iron and oil aren't perishable but they are too bulky for most people to use them as a store of wealth and in the case of oil there is also a limit to how high the price can go before non-investors can no longer afford to buy it.

Precious metals are special. That's why they are precious metals.

Quote:
Yes, lots of people see gold as a hedge against something fairly bad happening for some finite period of time. The plan in some cases is to store the value in the gold see out the 'bad thing' and then exchange it back to money when the system corrects in other cases its just to benefit from the rise in price of gold as an investment.
Yes.

Quote:
Thats a far sight from exchanging your sovereigns for water and grain. If we get to that point good luck getting to the water and grain shop with your sovereigns in your pocket.
I never said I would directly exchange gold for food. Somebody else started talking about that...was it you?
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Old 16th June 2011, 10:10 AM   #475
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Originally Posted by UndercoverElephant View Post
What "did well" then??

I'm betting the only thing which did better than gold was farmland.
The people who do really well off gold in times of crisis are the one who buy not the ones who sell.


Any other commodity would likely have done at least as well. Food related commodities almost certainly did better.

Realestate & Land would have been the largest asset classes and both would have outperformed gold

Businesses/Stocks at the time had significant problems with transparency, but with access to real financial information about the company it would have been relatively easy to outperform gold.
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Old 16th June 2011, 10:20 AM   #476
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Originally Posted by UndercoverElephant View Post
For precisely the same reason that they have been valuable ever since humans first discovered them. Gold, silver and a handful of other metals which sit close to them in the periodic table have always been a reliable store of wealth because of their physical properties.
The notable “physical properties” of gold are that it’s shiny and malleable. These may have been fairly rare at one point but are common today. Gold has no useful physical properties that can help you in day to day life so in times of crisis its value drops relative to things that can people in their daily lives.
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Old 16th June 2011, 10:27 AM   #477
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Originally Posted by The Don View Post
Of course it's harder to forge an apple than it is to forge a gold coin. Gold will be a poor medium for exchange and storing wealth unless the quality of that gold can be easily verified.

A demonstrably working firearm with ammunition on the other hand would be an excellent thing to stockpile
A hundred cases of big bottles of vodka, whisky and rum would do nicely. Somehow they seem to have an everyday utility that firearms and gold lack....
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Old 16th June 2011, 10:29 AM   #478
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Originally Posted by lomiller View Post
The notable “physical properties” of gold are that it’s shiny and malleable.
Did you read my post explaining why precious metals are precious? The fact that it is shiny and malleable is irrelevant. What matters is that it is an element which is solid, non-reactive, non-radioactive, not so common as anybody can get hold of it and not so rare that almost nobody can get hold of it. It being not actually useful for much (if this was actually true, which it isn't) is also irrelevant, because it is being used as a store of wealth, not a consumable commodity.

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These may have been fairly rare at one point but are common today.
The rareness of gold depends on its occurence in the Earth's crust and the difficulties facing anyone hoping to mine what is left of it.

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Gold has no useful physical properties that can help you in day to day life so in times of crisis its value drops relative to things that can people in their daily lives.
Gold and silver are the best electrically-conducting metals known. They are used in manufacturing of various high-performance and extreme-tolerance products for this purpose.

I simply don't buy your argument that in times of crisis precious metals will drop relative to things like food. This has never happened historically and I see know reason why it should happen in the future. The only truth in what you are saying is that if there is almost no food left and nearly everybody is close to starvation then almost nobody will be interested in swapping their food for your gold. Sure...but if we get to that sort of a situation then life won't be worth living anyway, so it doesn't matter.
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Old 29th June 2011, 02:00 AM   #479
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Hyperinflation watch, day elebenty.....

Current silver spot price: Under $35
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Old 29th June 2011, 02:15 AM   #480
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Originally Posted by The Don View Post
Hyperinflation watch, day elebenty.....

Current silver spot price: Under $35
Personally, I am not expecting hyperinflation. High inflation yes, hyperinflation no. Hyperinflation requires that wages rise to match prices, and I see the opposite happening. In the UK at least, wages are going down, not up.
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