More on Gold

[The President]

$1260+ for gold, $20+ for silver.

[Abstract Actuary]

So investing in physical gold (or silver) for purposes of a crisis . . .

I understand the concept that gold has intrinsic value that doesn't change. For the sake of argument, let's say that it costs about $2,500 a month to support my family (in a crisis scenario). So let's say 2 ounces of gold could support my family for a month. Now let's assume that that price is accurate. 2 ounces of gold supports a small family for a month.

People are recommending that you put 10-15% of your assets in gold. Let's say that is $5,000. Now, the shit hits the fan. Will my gold support my family for 2 months? More?

I guess I don't see 2 months of protection enough against a SHTF scenario.

[ElDucky]

Gold is not SHTF protection. Food and ammo and water and necessities are. Gold is a form of money that will hold value when other forms are devalued. In a bad scenario, gold can be traded for necessities, but likely at extreme prices. In a SHTF scenario, you can't eat gold.

[Abstract Actuary]

Originally Posted by Bud Fox

The wife is the gold buyer in my family. She prefers gold rings but lately her research seems to point towards platinum. She is also very bullish on diamonds and pearls...

-------------------------------------------------------

Originally Posted by ElDucky

I hope silver goes back to $10. I'd like to pick up a few thousand ounces at lower prices.

Originally Posted by Baron Von Raschke

Where do you keep a few thousand ounces of silver? Safe?

Originally Posted by ElDucky

I'm not falling for that!

------------------------------------------------------

Two posts that made me lol while reading.

[ElDucky]

I set up a new account to buy silver, the money needs to sit there for a while before I can trade with it, and in the mean time silver went from $18 to $20. Blah!

[The President]

In the SHTF scenario, I couls see gold having some value in providing you and your family the means to escape the scenario, not necessarily survive it. Think about an extreme political event where a society begins to break down and you need to GTFO of the country.

The 10-15% of savings is more for diversification - why have everything tied up in paper assets or things that aren't very liquid?

[gomer_tree]

I think it's just like everything else. You diversify holdings in a number of investments, because it's a generally smart thing to do. Now, how you diversify is a matter of taste, and some people will believe the split should be one thing and others believe the split will be something else.

Gold can be carried on paper and it can be held physically. The better pure investment is to not hold it physically because the transaction costs are lower. But there are other insurance-like benefits of holding gold. It is probably a prudent thing to point out that gold isn't the be-all and end-all holding in a SHTF scenario, and I don't think anyone is saying it is. It's simply another consideration and act of prudence to hold some. I may not know today the exact benefit of having some physical gold WTSHTF, but I'm pretty sure that if you have two people in the scenario and one holds gold and one doesn't, the one with the gold will be better off. It's common sense. Does this mean it's a GTFO card, or that I'd use it to exchange for currency, or that I'd actually use it to physically buy things? All are possibilities. Nobody truly knows for sure. But I'm also fairly certain that if it reaches that point, then the money you spent on your gold will be worthless in some mutual fund account anyway, so it doesn't matter.

But because none of us know if that actual scenario will play itself out, that's the reason most people only put a fraction in gold. Nobody's saying put it all there.

(When I say "Gold", it should probably be read more as "Gold/Silver/Precious Metals")


I'm actually amazed at the reaction I get from people who think holding any gold at all is a goofy thing to do. Think about it... every month you get a slip of papers with numbers printed on it that tell you that you "have" $X. We all know that those dollars aren't even really there. We all know that there aren't even close to enough physical dollars to back up the collective value of everyone's dollars printed on those sheets of paper. We get "check" that is direct deposited by subtracting numbers from one account and adding numbers to a different account. Everyone lives with this system and accepts it, and nobody really thinks about how crazy all that is that an entire country's - and world's - wealth is backed by almost nothing. It works because everyone just agrees that's the way it's going to be. And as long as the status quo remains, it will work. But then someone actually holds a gold coin, and that's just friggin' CRAZY! The whole think baffles me.


The key word is prudence. It's one thing to protect yourself against TSHTF scenarios, but it's probably best to try to do things that just plain make sense even if the world stays completly sane. Get out of debt, hold some physical commodities, a gun for protection or hunting (if comfortable with that), some short-term food stores... all of this is stuff that normal people did forever until people in the last few decades started thinking there was no reason to do it anymore.

[Guilty Bystander]

Was listening to an interview with Mike Burry of subprime CDS fame (he's one of the featured players in Lewis's "The Big Short") at Bloomberg. He's buying gold and farm land with water.

http://www.bloomberg.com/news/2010-0...-and-gold.html

I find the farmland part provocative. My take is he thinks very bad things are in store for the economy.

[ElDucky]

Well, food prices could go up a fair amount, making farm land a very nice investment. I'd buy some if I had the cash to do so. I have the credit to do so... but that seems like a bad idea.

[ElDucky]

Originally Posted by gomer_tree

Think about it... every month you get a slip of papers with numbers printed on it that tell you that you "have" $X. We all know that those dollars aren't even really there. We all know that there aren't even close to enough physical dollars to back up the collective value of everyone's dollars printed on those sheets of paper. We get "check" that is direct deposited by subtracting numbers from one account and adding numbers to a different account. Everyone lives with this system and accepts it, and nobody really thinks about how crazy all that is that an entire country's - and world's - wealth is backed by almost nothing. It works because everyone just agrees that's the way it's going to be. And as long as the status quo remains, it will work. But then someone actually holds a gold coin, and that's just friggin' CRAZY! The whole think baffles me.

Hey. I use those numbers to change the number on the piece of paper that the bank says I owe them.