Gold as Safety

[Marketneutral]

Was this the same guy that said the USD was going to fall 10% this year?

I believe USD is up like 14% last time I checked.

A miss of 24% -

 

[greg]

Preferred storage medium of work

I don't know what that means.

SG: Money is basically how we store up all our labor. We work for a living and receive something in return for that work--money. We save some of this stuff and even "compound" it thru that other miracle. Then, when we retire, we unwind all that storage material--money--it is returned to the world to provide us with the goods and services that we need. We buy some property, add some value to it, then sell it for a higher price--more money for us. That's one fundamental way the world has always worked. Pre-retirement is storage mode; retirement is distribution mode. All done with money. Or beans

Adding value to something by just flipping it, kind of like during the tulip craze, can't last very long--and it bears similarities to our current RE bubble. Oh boy, free money: buy a house, hold a house, sell a house. One could call such things "bubbles in process"--in a general, vague sort of way, when people start making money without putting much effort or thought into it.

 

[sgeeeee]

SG:  Money is basically how we store up all our labor.  We work for a living and receive something in return for that work--money.  We save some of this stuff and even "compound" it thru that other miracle.  Then, when we retire, we unwind all that storage material--money--it is returned to the world to provide us with the goods and services that we need.  We buy some property, add some value to it, then sell it for a higher price--more money for us.  That's one fundamental way the world has always worked.  Pre-retirement is storage mode; retirement is distribution mode.  All done with money.  Or beans

Adding value to something by just flipping it, kind of like during the tulip craze, can't last very long--and it bears similarities to our current RE bubble.  Oh boy, free money:  buy a house, hold a house, sell a house.  One could call such things "bubbles in process"--in a general, vague sort of way, when people start making money without putting much effort or thought into it. 

And you think gold is the preferred storage medium of work? Preferred by who? I would prefer to store my work's energy in things that have productivity potential. Stocks and bonds have productivity potential becuase they represent your partial owner of a company that has workers and capital and products and distribution capability. . . Property has productivity potential because you can conduct productive endeavors on the property.

You can argue that gold has productivity potential, but if its value were based on your ability to turn it into tools, jewelery or electronic circuits (its true productivity potential) it would be priced far lower than it is today.

 

[greg]

SG: I almost totally agree with you. We're currently 10% apart on the major issues you mentioned in your last post. Scary, huh? Historically, gold has been the preferred, default currency.

http://www.minneapolisfed.org/Research/data/us/calc/index.cfm

--Greg

 

[TargaDave]

My dad is a classic conservative investor with requisite dose of depression era "gold bug" in him. One of the few people I know who made money from precious metals in the early 80's. I can still remember about 5 bags of silver stuffed in the basement. We used to play "fun" poker with the quarters. He sold 3 of the 5 bags right at the "Hunt Brothers" peak. We used a red wagon to wheel em into the broker to sell (heavy suckers). When I think back on it, the Hunt Brothers turned it into a pretty nerve racking speculation, but it helped put me and my 3 brothers through college. I still think it is a challenging investment that doesn't win often, but I own some silver bags, gold coins and mining stocks now because DD wouldn't let me sleep if I didn't. They've done quite well. Thanks again Dad

 

[yakers]

TargaDave,

My Dad survived the Depression and saved a bag of the old silver coins too. He left each of the kids a few gold coins. I am still trying to figure out what to do with them. I would not mind selling but I have an emotional attachment to these coins. I do not even consider them part of my portfolio. I expect to leave them to my kids as I can't figure out what else to do with them and there are not enough to do anything serious financially.

 

[greg]

My dad is a classic conservative investor with requisite dose of depression era "gold bug" in him. One of the few people I know who made money from precious metals in the early 80's. I can still remember about 5 bags of silver stuffed in the basement. We used to play "fun" poker with the quarters. He sold 3 of the 5 bags right at the "Hunt Brothers" peak. We used a red wagon to wheel em into the broker to sell (heavy suckers). When I think back on it, the Hunt Brothers turned it into a pretty nerve racking speculation, but it helped put me and my 3 brothers through college. I still think it is a challenging investment that doesn't win often, but I own some silver bags, gold coins and mining stocks now because DD wouldn't let me sleep if I didn't. They've done quite well. Thanks again Dad

My guess, Dad might say right now "The more things change, the more they stay the same." In all my little searches and quests, many of the end results come round to something my father said, and then shedding it in a new and different light. Lots of good moments, those. Thank you.

--Greg

 

[sgeeeee]

SG:  I almost totally agree with you.  We're currently 10% apart on the major issues you mentioned in your last post.  Scary, huh?  . . .

Not to me, Greg. That just means you are 90% right about something.

 

[Honkie]

My dad is a classic conservative investor with requisite dose of depression era "gold bug" in him.  One of the few people I know who made money from precious metals in the early 80's.  I can still remember about 5 bags of silver stuffed in the basement.  We used to play "fun" poker with the quarters.  He sold 3 of the 5 bags right at the "Hunt Brothers" peak.  We used a red wagon to wheel em into the broker to sell (heavy suckers).  When I think back on it, the Hunt Brothers turned it into a pretty nerve racking speculation,  but it helped put me and my 3 brothers through college.  I still think it is a challenging investment that doesn't win often, but I own some silver bags, gold coins and mining stocks now because DD wouldn't let me sleep if I didn't.  They've done quite well.  Thanks again Dad 

My FIL was a young man during WW2. During the periods of resistance/invasion/occupation/resistance/on the run/liberation (repeat), his father liquidated whatever the family had and bought the smallest gold coins he could get his hands on. That way, he didn't constantly risk holding paper money which could become worthless almost overnight. Able to transport it in their pockets while on the run, FIL and his brothers and their father traded the gold for food and shelter for the family. Crossing national borders, no change in currency was required, gold coins "would do nicely Sir".

They family survived bar one brother. They kept the gold that was left over and had it made into a variety of everyday objects: belt buckles, buttons, tie clips etc, so it could be smuggled / carried without detection if they ever had to flee again.

Aside from probably saving most of his family from starvation, that gold has been the worst investment he ever made. At the time, there was enough left to feed, clothe and house a family of 9 for about a year, according to him. Now, it would barely pay one month rent for his house. But the impression that gold is "safety" is burned deep and he would probably never sleep if he didn't know he had it as the last resort.

He now stores his gold under a cracked floor tile in the bathroom.

No investment wisdom here, just thought you might like the story.

Cheers,

Honkie

 

[justin]

I've got another story like Honkie's.

My wife's family was living in Cambodia while Pol Pot was in the middle of his genocidal campaign to kill millions of people (early-mid 1970’s I believe). They were the typical third world Cambodian family under a repressive regime – no wealth, living in a tiny hut, eating bugs, bark, leaves, whatever. After being almost killed a few times, DW’s father decided maybe it would be best to move the whole family across the border into Thailand so the commies wouldn’t kill them. The father was also a soldier in the resistance army, fighting against Pol Pot’s regime. A bunch of other villagers paid my FIL in gold (gold nuggets, bars, trinkets, jewelry) to smuggle them out of Cambodia across the border into Thailand.

In that part of the world at that time, gold was the main currency of exchange. If you needed to buy ammo or weapons or pay for lodging or food for your family, gold was frequently the method of payment. Often, a gold necklace (with dozens or hundreds of links) would be expended, link by link, for small goods or services. Buying and selling was more like bartering. A particular size of gold piece or link would be offered, then the quantity of a good or service would be negotiated on. It was a true gold-based economy, barely a quarter century ago.

The Thai measure of gold is the ‘baht’. The Thai currency is also denominated in baht, although 1 gold baht equals many thousand currency bahts.

To this day, my mother in law and father in law keep a large percentage of their assets in gold – primarily pure gold jewelry. MIL has a secret hiding place for all her gold. And someone always has to guard it or she gets worried. The bag where it is hidden probably weighs 15-20 pounds, all gold. They still have the unstated mentality that anything could happen, and the gold is their insurance plan, should they need to flee the country (they live a few minutes from me in North Carolina now).

A good story, but it doesn’t make me want to buy any gold!

 

[Gone4Good]

Ultimately, it  comes back to gold as the preferred storage medium of work.  One oz of gold represents a set of decent clothes or thereabouts--sometimes more, sometimes a less.  Gold wins by default.  My bet is that the default system returns.

So you believe that the fiat currency system fails and we return to gold as a medium of exchange?

Let's consider the implications:
1) The entire world wide financial system shuts down
2) Without a currency of exchange all work ceases, which means the delivery trucks stop delivering food to supermarkets
3) Panic ensues, complete with global rioting and looting
4) After the meager existing supply of food in most cities is depleted, mass starvation

And in the midst of this chaos you plan to do what, exactly, with your gold?

You'd be better off hoarding bullets and MRE's.

 

[Gone4Good]

Adding value to something by just flipping it, kind of like during the tulip craze, can't last very long--and it bears similarities to our current RE bubble.  Oh boy, free money:  buy a house, hold a house, sell a house.  One could call such things "bubbles in process"--in a general, vague sort of way, when people start making money without putting much effort or thought into it. 

Hmmm, sounds like gold to me.    In fact, some have claimed the recent sell off in gold is attributable to increased margin requirements on the COMEX designed to limit speculative buying. 

Yup, sounds like you're buying a bubble in the name of a defensive investment.

 

[greg]

Not to me, Greg. That just means you are 90% right about something.

SG: I see your point. You have turned me on my head and put it . . . um . . . somewhere else. This has made me a better different man .

So, I think we should start a new race of sub-humans. When the darkness comes, we could walk around and knock on people's doors. When If they answer, we could ask to use their bathrooms. We would be called The Toilet Zombies.

And like the Japanese who established the Empire of the Sun, we too could start an empire, the Empire of the Swirl. So, do you want to be the leader? I don't think we'll have a enough participation to have elections.

 

[REWahoo]

So, I think we should start a new race of sub-humans.

Too late. Nords and his Navy buddies beat you to it.

 

[Mr._johngalt]

Too late.  Nords and his Navy buddies beat you to it.

"sub-humans" Good one I almost missed it sandwiched in with
all the other good posts.

JG

 

[Mr._johngalt]

  We would be called The Toilet Zombies. 

 

There is already a group more deserving of that name.
Presently they call themselves Democrats.

JG

 

[LRS]

Wait, one more story about Depression era coin hording. My grandfather saved small coins (mostly silver) obsessively for years. For safety, he buried the loot somewhere on his property. Then he died without telling anyone where he hid it. We went over the lot with metal detectors, no luck. Someday someone will be digging out a new pool or something and find an old Prince Albert's tin full of tarnished silver. They'll probably throw it away.

And when my dad died, we took his stash of buffalo nickles and mercury dimes down to the coin shop. The most valuablle coin, a dime, was worth four times its face value. Big whoop.

 

[greg]

LRS: But you just remembered an interesting story about your father and family. That's always nice--and worth more than a tin of silver.

 

[TromboneAl]

We went over the lot with metal detectors, no luck.

Great story. You should publish it in the paper, and then charge people $10 each to come and search around the property! Finders keepers.

 

[sgeeeee]

There is already a group more deserving of that name.
Presently they call themselves Democrats. 

JG

That's the most positive thing I've heard someone say about a political Party in a long time. Which Party do I always hear described as sub-pond slime?

 

[REWahoo]

Which Party do I always hear described as sub-pond slime?

Both of them...and it's an insult to self-respecting sub-pond slime!

 

[sgeeeee]

Both of them...and it's an insult to self-respecting sub-pond slime!

Ding! Ding! Ding!

 

[greg]

There is already a group more deserving of that name.
Presently they call themselves Democrats.

JG

I think not JG . Although it wouldn't be far fetched to call Libertarians sub-sub-sub-humans.

 

[lazyday]

In case you're interested, Greg, here's a short discussion on another investment board: http://66.223.18.76/wwwboard/messages/131489.html
I haven't read it, but the words "gold" and "mattress" are in the topic.

 

[Mr._johngalt]

"sub-humans"  Good one     I almost missed it sandwiched in with
all the other good posts.

JG

Did I waste this one? I could put in a smiley every time I guess.

JG