Ditch Gold & Silver as an investment

[freedomordeath]

I think its time that poeple ditch this idea of Gold and Silver as an investment. The truth is is they are metals that store value, so if you have a shoe box with $1000 and have $1000 worth of gold, the gold over 50years will hold its value.

Yes it is true that you can make money on the ups and downs if you know what you are doing, but it can also be dangerous if you bought in the peak of 1979 for example when gold went sideways for decades.

So whats the point of this post, it is simply to start using it as currency. Why wait for the crash to happen, why not have a working system up and running so poeple can be shown its a better system. Why not get the Armish for example on gold and silver, they live a voluteered based opt-in socialist system that uses very little money, but where they do transact with outside world convince them to use gold and silver instead.

Some states have past laws legalizing gold and silver as legal tender, are there any communties set up or markets set up where gold and silver is only currency allowed. Imagine a tourist coming to the market, they don't have gold and silver, guess what, there are friendly exchange booths ready to take their fiat dollars and exchange it for gold and silver. Then the tourists can go buy what they want. In these states, once markets are set up then private banks can allow digital gold for those not wanting to carry it around. The problem with digital gold is the government restricts it, but in states where it is legal, there should be no reason why banks can't be set up. Also businesses can pay their staff in gold and silver and deposit it in there account through digital gold. If we simply DO IT, INSTEAD OF WAITING then we take power away from the globalists.

 

[freedomordeath]

http://www.dailypaul.com/160734/merchants-how-to-transition-to-a-gold-and-silver-currency

they talked about it here at great length

 

[rpwi]

I don't buy the idea that gold is a stable store of value.

People buy gold now because they think...if I acquire 10k in gold now and the money supply goes up 10%, then my 10k gold will be worth 11k. The problem with this is that there are multiple factors that affect the price of gold and silver... Sure inflation will help...but if you don't know WHY gold was valued at 10k to start with, you could be getting yourself into a lot of trouble.

The two main factors that affect precious metals other than the supply of dollars....are fabrication demand and speculative demand. True fabrication demand (which should would not include jewelry) is actually fairly paltry for gold. There are uses for speaker wire, dentist work and other minor oddball uses. Therefore the rest of the value of gold has to be speculative (and therefore significantly overpriced). Can you make money buying an overpriced commodity? Sure...if it becomes even more overpriced, but this is not a sound investment strategy and eventually the chickens will come home to roost.

Another reason to avoid gold, according to Steve Keen...the US has record debt to GDP levels. Last time this happened was before the great depression. It is doubtful we will grow our GDP to meet those levels...instead it is more likely that the debt will come down...and come down hard. If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars. In such a case, precious metal investments would be disastrous.

 

[LibertyRevolution]

If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars. In such a case, precious metal investments would be disastrous.

Nope, your gold would still buy as much stuff as it used too.
You may get less dollars back if the price falls, but that means the dollar will be worth more, and buy more.
Gold is a preservation of wealth, that is all, don't expect to make money by holding it.

 

[rpwi]

Nope, your gold would still buy as much stuff as it used too.
You may get less dollars back if the price falls, but that means the dollar will be worth more, and buy more.
Gold is a preservation of wealth, that is all, don't expect to make money by holding it.

If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?

 

[TheGrinch]

If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?

It's a comparison, not necessarily correlation... In other words, as the dollar becomes a worse investment, by comparison, gold is a better investment. I'm not sure the opposite holds true, but with it being a comparison, it doesn't have to, and when do we ever see deflation nowadays (honest question)?

More simply, the point is that it's value is relatively stable, if not a good investment when things are unstable and it's value goes up, but the fact that it's still a commodity means that is by no means a perfect relationship.

 

[KCIndy]

I agree that gold and silver are bad bets.

Do this: SEND ALL YOUR GOLD AND SILVER TO ME. I'll take it off your hands and send something even more valuable in return: toilet paper. When TSHTF we'll all need lots and lots and lots of TP.

Don't wait! Time's running out!

 

[Steven Douglas]

If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?

The PM holders hit hardest would be those who didn't buy long, or anticipate catastrophic deflation. But let's look at that...

...instead it is more likely that the debt will come down...and come down hard. If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars. In such a case, precious metal investments would be disastrous.

By what mechanism does the debt "come down"? Defaults with no bailouts? And if our debt/money vanished, forget the ratio of dollars to gold and look first at the ratio of future dollars to pay past, present and future debt. More credit tightening, more defaults.

Now forgetting the fact that the Fed is doing more and more buying of public debt from Treasury, let's assume further the unlikely scenario wherein the Fed pulls a Great Depression part II. It does not intervene, does not start up the hyper-inflationary gears, but instead allows us to spiral into a deflationary depression. What happens then?

The same thing as in the Great Depression, only on a much larger scale. The old saying that anyone with two dimes to rub together could buy anything was countered by the fact that nobody had two dimes to rub together. The money supply was dependent on credit that had evaporated, and the money supply along with it. Meanwhile, we have a public sector that has insulated it from reality woes by spending future promises to pay, so it keeps spending.

The biggest problem with a dollar deflation (inflationary depression) scenario is a simultaneous tightening and eventual collapse of the debt system. Deflation means falling prices everywhere except one: past debts, and interest on the same. Under a moderately inflationary regime, you're always paying off past debts in devalued future currency. In a deflationary regime, debts become impossible to pay down, which leads to massive defaults as everyone finds themselves upside down.

The dollar is only gaining in value because fewer people have them, so prices fall. But those same prices that fall for the dollar fall for everything else that the dollar can buy, including gold. So the while the ratio of dollars to gold has changed, the purchasing power of gold remains steady, regardless what the dollar does, as it always has.

Once again back to the longterm dynamic for PM's -- if the dollar deflates appreciably, to the point where it's an actual deflationary depression, we're already in serious, REALLY serious trouble. GLOBALLY. That's a storm that has to be waited out, and a likely precursor to inevitable hyper-inflation, once that becomes the only remaining option, as a death rattle becomes a last dying gasp of an already mathematically doomed currency.

 

[DEGuy]

As stated in many other threads, owning gold is a primarily a hedge against a rapidly deflating dollar. Owning some PMs should be a part of any financial strategy to preserve buying power. In that sense, gold isn't really an investment.

I don't think we will see an increased use of gold as a common currency anywhere because people will want to offload any currency that they think will lose buying value more quickly, such as the dollar. For example, if I have savings in both gold and dollars and want to buy a nice suit, do I spend the gold or the dollars first? Suppose I also believe that the dollars will only decrease in value over time, and that a year from now will cost me 10% more in dollars to buy that same suit. But I think that the same amount of gold will still be needed in a year from now. Well, of course I spend the dollars instead of the gold since I believe the dollars are more likely to lose value.

And because retailers are required by law to accept dollars, there's no power for them to force the market to use a more stable currency like silver or gold. Even (and especially) in a hyper inflation environment, people will be motivated to spend dollars first, and only spend PM's when needed to exchange for dollars.

 

[TruthisTreason]

There is no safe storage of wealth with a Big Government on the hunt.

 

[whippoorwill]

". The use of money in a market economy is a praxeologically necessary fact. That gold, and not something else, is used as money is merely a historical fact and as such cannot be conceived by catallactics."— Ludwig von Mises, in Human Action

 

[brandon]

Why not just keep gold and silver as a small percentage of your portfolio? say 5-10%

 

[McChronagle]

If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?

i asked peter schiff this question heres what he had to say.

http://www.youtube.com/watch?v=ngTi86EXfmo&t=1h31m54s

 

[matt0611]

Why not just keep gold and silver as a small percentage of your portfolio? say 5-10%

This. I go for a little more but I would definitely say diversify, who knows what this crazy government is going to do?

I have metals, stocks, and yeah I even have some dollars (cash) too.

 

[freedomordeath]

I don't buy the idea that gold is a stable store of value.

People buy gold now because they think...if I acquire 10k in gold now and the money supply goes up 10%, then my 10k gold will be worth 11k. The problem with this is that there are multiple factors that affect the price of gold and silver... Sure inflation will help...but if you don't know WHY gold was valued at 10k to start with, you could be getting yourself into a lot of trouble.

The two main factors that affect precious metals other than the supply of dollars....are fabrication demand and speculative demand. True fabrication demand (which should would not include jewelry) is actually fairly paltry for gold. There are uses for speaker wire, dentist work and other minor oddball uses. Therefore the rest of the value of gold has to be speculative (and therefore significantly overpriced). Can you make money buying an overpriced commodity? Sure...if it becomes even more overpriced, but this is not a sound investment strategy and eventually the chickens will come home to roost.

Another reason to avoid gold, according to Steve Keen...the US has record debt to GDP levels. Last time this happened was before the great depression. It is doubtful we will grow our GDP to meet those levels...instead it is more likely that the debt will come down...and come down hard. If this happens much of our money (which is debt) will vanish and this will increase the ratio of gold to dollars. In such a case, precious metal investments would be disastrous.

you missed the point of what I'm trying to say, central banking is simply one type of currency scheme in existance backed by a swat team, another interesting one is bitcoin, everyone bangs on about it not being backed by anything, yet it carries on and trading at $6 as we speak. Gold DOES HOLD ITS VALUE, what planet are you on. You can take a 1oz coin and travel in a time machine and probably buy similar stuff like a tailoured suit in the Byzantine era, the classical greece area the roman era and even today a tailor probably won't say no if you shove it in his face.

Gold is a supperior currency system hands down because it can't be printed and unless they invent a maching that can make gold, it will hold its value relative to other hard assets and services like tailouring.

So again my question... LETS USE IT FOR CRYING OUT LOUD. In Utah its legal, lets start the ball rolling, everyone playing around with moutain hours, bitcoins why not gold and silver. Poeple can start paying their employees in gold and silver.

Yes your right.. WE ARE MEAN'T TO HAVE A DEFLATIONARY DEPRESSION as credit contracts, but where is the deflation. The reason why you don't see it is because these bastards are inflating in sync to keep it flat lining. Its not uniform thats why different asset classes behave differently in price.

 

[PierzStyx]

If dollar inflation is good for gold, then why isn't dollar deflation bad for gold?

Because historically gold has always had worth as a commodity, while paper has not. The idea is that unless we're at a point where food is a more precious commodity than anything else (something not even assured by starvation and post-civilization conditions as history has shown) gold will always be accepted by someone as trade for something else. This is not the case with paper dollars.

 

[Zippyjuan]

Gold DOES HOLD ITS VALUE, what planet are you on.

Not always. It depends. The price of gold declined for over 20 years prior to 2002 (off a peak in 1980). Some ups and downs but definately downward trend over that time.

And if it's value is stable, when adjusted for inflation a chart of gold prices should be pretty flat. It isn't.

http://inflationdata.com/inflation/images/charts/Gold/Gold_inflation_chart.htm

It should be noted that Nixon closed the "Gold Window" in 1972 so gold was freer to move after that point in time.

 

[freedomordeath]

I don't think we will see an increased use of gold as a common currency anywhere because people will want to offload any currency that they think will lose buying value more quickly, such as the dollar. For example, if I have savings in both gold and dollars and want to buy a nice suit, do I spend the gold or the dollars first? Suppose I also believe that the dollars will only decrease in value over time, and that a year from now will cost me 10% more in dollars to buy that same suit. But I think that the same amount of gold will still be needed in a year from now. Well, of course I spend the dollars instead of the gold since I believe the dollars are more likely to lose value.

What if you are paid in gold and silver and live in a town where many of the stores only accept gold and silver, the psychology changes when in that type of situation. Say there is this awesome university in Utah, its relatively cheap but only accepts gold as payment.. will it not be feasible seeing a situation where a parent out of state exchanges their fiat dollars for gold to complete the transaction because the service on offer is a superior in the open market. This could be so for hospitals, machines anything that is in demand.

What we need is a base, get the base up and running and the success will spread like wildfire. Hell take over a little town popular with tourists and start from there.

 

[rpwi]

i asked peter schiff this question heres what he had to say.

http://www.youtube.com/watch?v=ngTi86EXfmo&t=1h31m54s

I don't understand. Peter explains that gold would hold up in a deflationary period because it would retain its real value over its nominal value which is more important. Fine. Then this means there is no point to buying gold as an inflation hedge. If the money supply doubles and prices double (not a realistic correlation factor)...Peter seems to be saying there would be no point in having your gold...because even if you sold it at twice the price, the price of everything else went up twice as much. Sure I have twice the dollars...but everything is twice as expensive. This is the justification for Peter in reverse defending gold against deflation.

 

[freedomordeath]

Not always. It depends. The price of gold declined for over 20 years prior to 2002. Some ups and downs but definately downward trend over that time.

And if it's value is stable, when adjusted for inflation a chart of gold prices should be pretty flat. It isn't.

I would rather take my chances with the ups and downs of gold currency then fiat up and downs where I'm some living battery in the matrix.