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#229489 - 08/09/11 02:11 AM Re: AA+ is that it? [Re: NuggetHoarder]
Susan Offline
Geezer

Registered: 01/21/04
Posts: 5163
Loc: W. WA
Yes, they don't call it the 'Gold Standard' for nothing!

I agree that gold certainly has more value than our dollar, and that it retains value over time. Maybe not the same value, but it never becomes worthless. I would say your plan is a good one as a financial medium of exchange.

But at $1700/oz, most struggling Americans can't afford it. They couldn't afford it a thousand dollars ago, but even less so now.

If a struggling family wants to store something, gold is not the priority.

Sue

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#229492 - 08/09/11 04:48 AM Re: AA+ is that it? [Re: Susan]
Paul810 Offline
Veteran

Registered: 03/02/03
Posts: 1428
Loc: NJ, USA
In all honesty, I feel like anyone who puts all their money into precious metals is just as bad as someone who puts all their money into the stock market, and vice-versa.

Like any good financial adviser will tell you, you first need to get to the point where you are living within your means, and you need to stay there. That's the hardest part, because our inquisitive human nature always wants us to seek out the latest and greatest, which we mentally try to justify purchasing (and often succeed). It's also worth mentioning that, living within your means includes making sure you are properly insured and have proper health/medical care, which are again, sometimes difficult prospects nowadays.

Once you have that, then it comes time to put together an emergency fund. If you or your significant other (or both) lost their job, for example, would you have enough readily accessible money to support yourself for a while? Say six months at a minimum? This money needs to be reasonably isolated from the ebb and flow of the world (i.e. not in the stock market), and it needs to be reasonably accessible. Meaning, you will likely want to keep some of it in your place of residence, in case you need emergency cash at 3am on a Tuesday or something. However, you don't want to keep it all in your home either, for obvious reasons. Once you have that fund, it needs to be left the h*ll alone unless dire circumstances arise.

That emergency fund is where I think having some gold on hand is good, as gold is a hedge against (hyper)inflation/currency devaluation. One tends to balance out the other. When currency value is down, gold is usually up. When gold is down, than currency is usually up. Gold also has an added benefit that, it's usually able to be recovered after a fire, flood, or bug infestation. Whereas, paper money is much more fragile. That's why, wherever I keep emergency paper money (say in my safe or my safety deposit box), I like to keep a little gold and silver with it. Usually in an equivalent amount.


In the end, if you're living within your means, you've got proper health care, you've got proper insurance, and you've got an emergency fund that can cover standard living expenses for a while...well..then you're already doing better than most people. (As people typically have a liquid savings of less than one month's living expenses; with a quarter of the population under two-weeks.)




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#229500 - 08/09/11 03:29 PM Re: AA+ is that it? [Re: Alex]
Alex Offline
Old Hand

Registered: 03/01/07
Posts: 1034
Loc: -
Paul. It seems to me that when the dollar is melting down the wiser tactics would be to keep your dollar debts on hold (even increase them) and invest in some liquid goods (gold is included) instead. When it will stabilize at the bottom - you can repay your debts much easier. Am I wrong? IMO, it's obvious.

For the gold - I'm with Susan. First - you can not eat gold. Your neighbors can't either, so they will not buy it. You can't use it to buy something on a street market, to pay for labor individually, e.t.c. The only feasible way is to exchange it to some currency first (I'm excluding bulk purchases of industrial proportions). That means you will depend on a banksters mercy again. Second - its price is overinflated today, and that's not just because of weakening dollar trends.

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#229502 - 08/09/11 03:51 PM Re: AA+ is that it? [Re: Alex]
Arney Offline
Pooh-Bah

Registered: 09/15/05
Posts: 2485
Loc: California
Originally Posted By: Alex
It seems to me that when the dollar is melting down the wiser tactics would be to keep your dollar debts on hold (even increase them)...

Be aware that so many people have lost their jobs, the jobs picture is so bad in many areas/industries, and inflation is still relatively tame. I think that you're more likely to lose your house or be forced into bankruptcy due to a job loss before inflation makes it "easier" to pay off any debt in inflated dollars. Is anyone getting raises because of inflation? Cost of living increases to their Social Security? Nope.

Then again, you also need to consider whether paying down debt makes sense, too. Many of my neighbords are underwater on their mortgages. Should they try to pay extra and pay down their mortgages? It's case-by-case, but for many, their homes continue to decrease in value so paying down their debt is throwing it into a financial hole that they may never see again in nominal or inflation-adjusted terms.

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#229503 - 08/09/11 04:05 PM Re: AA+ is that it? [Re: Arney]
Alex Offline
Old Hand

Registered: 03/01/07
Posts: 1034
Loc: -
Arney. Why did not you take into account the second part of my message? Instead of paying off the debt - invest in liquid goods (in equal to the debt amounts). You lost your job - start selling the accumulated goods.

By the way. Exactly what happened with the Soviet Russia currency collapse - people lost all their savings (bank accounts and cash in socks).

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#229505 - 08/09/11 04:23 PM Re: AA+ is that it? [Re: sheldon]
Alex Offline
Old Hand

Registered: 03/01/07
Posts: 1034
Loc: -
Originally Posted By: sheldon

I guess there is no contradiction between what I said and what you say. The demand for guns may have skyrocketed, but guns still weren't the most popular thing to trade at all, at least between regular people (as opposed to organized crime group firearm suppliers). So if a regular person wanted to go buy some food or clothes and wanted to trade something for it, guns or ammo weren't the most popular trades, nor the safest ones. If you offer ammo in exchange for food, most people would refuse, and those who accept are pretty likely to kill you instead of paying.

The organized crime (illegal gun buyers and sellers) is ruling that country now.

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#229507 - 08/09/11 04:29 PM Re: AA+ is that it? [Re: Alex]
Arney Offline
Pooh-Bah

Registered: 09/15/05
Posts: 2485
Loc: California
"Liquid" does not mean that you can get as much as you think you'll get later, so that is why I'm saying "be aware" about increasing your debt load. Liquid just means you can sell it for something quickly.

There are a lot fewer absolutes in today's environment. Gold could take a temporary tumble just when you needed to raise a lot of cash, like if interest rates are suddenly jacked up (remember how Paul Volcker popped the gold bubble?). A bad economy or or bout of deflation could dampen demand and/or prices even for firearms/ammo to a surprising extent. Food will always be valuable, sure, but not necessarily the easiest thing to sell in quantities to pay off the balance of your mortage. It's very conceivable that you could find yourself wishing you had simply stuck that cash in the mattress or at least hadn't taken on more debt to buy all that extra (put your favorite liquid asset here).

I'm not saying "don't" but just trying to present the other side of the equation for people to consider.

Edit: One other factor often not stated in relation to "What do I do with my money?" is what is each person's personal timeframe.

I guess this question particularly resonates with me because I have had to make the calculation myself. I have a situation where I may need to pay down/pay off a rather large debt within a year or so. The amount is large enough that I can't really afford to lose any principal in price fluctations because my salary won't allow me to make up the difference on short notice. Look at silver, it got slapped down hard this year at one point. If someone had bought or sold at the wrong time and needed to at least get their original stake back right then, they would've been better off in cash.

With my timeframe and tolerance for capital loss, I have decided that holding this amount in "cash" makes the most senes to me, even knowing that I'm gradually losing purchasing power in real terms with each passing day. If this money were for retirement 20 years from now or "just in case civilization collapses", I'd almost certainly do something totally different with that chunk of change.


Edited by Arney (08/09/11 06:16 PM)
Edit Reason: Added material

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#229510 - 08/09/11 05:37 PM Re: AA+ is that it? [Re: Alex]
Russ Offline
Geezer

Registered: 06/02/06
Posts: 5357
Loc: SOCAL
Interesting topic. My personal opinion is that gold, other previous metals, real estate and even other commodities are very useful as a means for moving wealth and purchasing power from one side of an inflation/hyperinflation event to the other side. There is a reason that most central banks stockpile gold as a reserve asset.

James Turk's interview with Jim Sinclair at http://www.goldmoney.com/video/sinclair-turk-interview.html is a really good listen. Two very smart people in an intelligent conversation covering current events.

As for the current price making it too late to start buying gold, consider that JP Morgan Warns Gold to Go Parabolic and Rise to $2,500 By Year End. From $1700 to $2500 is almost a 50% gain -- not bad.

Whether you want to believe that gold is climbing in value or the dollar is tanking is really of no consequence. The issue is where do you want your savings -- in a passbook savings account making 1% interest while the dollar's value falls 30%, or in a few pieces of gold maintaining value regardless of dollar (or GBP or Euro) fluctuations?
_________________________
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#229514 - 08/09/11 06:11 PM Re: AA+ is that it? [Re: Alex]
JBMat Offline
Old Hand

Registered: 03/03/09
Posts: 745
Loc: NC
I look at it this way. The economy plunges. Barter becomes the way to go. I trade you something you want for something I want. This supposes a total economic collapse -

Gold, while it has value, is of no value. I can't eat it or plant it or wear it as clothing or use it for much. I may take some, if I think the economy will regain it's feet, but not much.

Land doesn't move. I can sell it for cash, if someone has cash. At best, I can use it to make a garden.

Trade goods. Ammo (think .22LR, 12ga birdshot) for hunting. Knives. Toilet paper. Liquor. Clothes. Tools. Cooking supplies. All can be used or consumed. How-to books get rented out by the day/week, with considerable collateral. Fishing supplies.

Sure, invest in gold. But it today at $1700 an ounce, and watch what happens when you can't sell it.

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#229529 - 08/09/11 09:00 PM Re: AA+ is that it? [Re: Alex]
Blast Offline
INTERCEPTOR
Carpal Tunnel

Registered: 07/15/02
Posts: 3760
Loc: TX
Y'all have been doing an excellent job of discussing this subject without going political. Thanks, I really appreciate that!

As for gold, the thing to remember about it is that you don't buy good to use during a collapse. You buy gold as a way to get your wealth through a collapse. Once the collapse is over and things are getting better you sell the gold for whatever the new money is.

Back when my wife's family was getting ready to escape China they bought as many gold rings inside China as possible with their Chinese money. Chinese money is worthless outside of China but they knew the gold rings could be sold anywhere they ended up. The gold was a way to transport their wealth through to a new money system.

-Blast
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