Gold bubble?

Beer Baron said:

Y'all can stock up on gold in preparation for the collapse of civilization.

I will stock up on Whiskey. Much better preparation.

• More useful to more people
• If society truly collapses, I don't want to be sober for the end
• When society doesn't collapse, I still get to enjoy whiskey

Sounds to me like the best SHTF insurance might just be a still.

Datsun240ZGuy said:

Someone on the Dave Ramsey show told him gold bars is what you want if the economy totally collapses.  

Never happen but say it does you'll want bullets and water.  Gold bars will be useless.  

But silver on the other hand -- you can make bullets out of the silver and then if the zombies attack...

AnthonyGS (Forum Supporter) said:

Real wealth is retained when you hold lots of assets and not money.  With enough assets you can get access to all the cash you want.

Generally, I agree. It's just that the ROI on gold is awful when compared to something like the S&P500.

Driven5 said:

Beer Baron said:

Y'all can stock up on gold in preparation for the collapse of civilization.

I will stock up on Whiskey. Much better preparation.

• More useful to more people
• If society truly collapses, I don't want to be sober for the end
• When society doesn't collapse, I still get to enjoy whiskey

Sounds to me like the best SHTF insurance might just be a still.

In World War 1, one of the most highly sought after machine guys was the French Chauchat.  It was desired not because of its efficacy against the enemy but rather because it could be easily disassembled and turned into a makeshift still.  

A 401 CJ said:

Datsun240ZGuy said:

Someone on the Dave Ramsey show told him gold bars is what you want if the economy totally collapses.  

Never happen but say it does you'll want bullets and water.  Gold bars will be useless.  

But silver on the other hand -- you can make bullets out of the silver and then if the zombies attack...

That's for werewolves, and vampires in some stories.

AnthonyGS (Forum Supporter) said:

You want to know what reality has done to and what the world thinks of the dollar?  

As of Q3 2023, the US Dollar accounted for 59.17% of all world Official Foreign Exchange Reserves.

long story made short...  I have invested in gold, and with the exception of the runup after y2k where I bought a bunch of it for about $300 and sold it for $1,800 it has done nothing for me.  I have bought foreign currency and made some gains on swiss francs and norwegian krone, but on the whole the stuff I have left long term has done nothing for me.

Was doing some end of year cleanup last week and I noticed that Vanguard says my average return since 2016 when I opened the account was over 13% and I was patting myself on the back so hard I damn near injured myself.  Then I looked at the S&P returns when dividends were reinvested and it beat me by a couple of tenths.

Moral of the story:  Put the money in a low cost index fund unless you want to entertain yourself gambling in the stock marked.  Commodity speculating - gold and silver, for instance is best left to professionals.  I would be way way ahead if the money I put in metals and currency were sitting in Vanguard, not to mention losing the heartburn of watching the markets.

One final through re: this thread.  I have shorted a lot of stocks over time and have generally been right in my assessment of them.  However as one or another investor noted, "The market can stay irrational longer than you or I can stay solvent."  Shorting requires being right on both valuation AND timing.  Good luck.

AnthonyGS (Forum Supporter) said:

If everyone wants to preserve this, people need to start paying attention to the national budget a lot more. 

'People' can only use this to make a difference if they're given an option that might actually have any meaningful impact... Currently the only choices we're given are between which mechanisms you prefer to watch make it worse.

CrustyRedXpress said:

ShawnG said:

 

Personally, I never buy anything that doesn't pay a dividend. Why buy into a company or group of companies that doesn't pay you back for borrowing your money?

Nothing wrong with dividend stocks, but there are really good reasons why really, really great companies retain earnings. 

Paying out dividends is the most tax-ineffecient method of returning value to the shareholder.

I'm in Canada so our tax structure is a little different.

Everything is held inside a TFSA (tax free savings account). Any profit from investments in that account is tax free. 

In reply to AnthonyGS (Forum Supporter) :

The US Dollar is the worst currency, except for all of the others.

jwagner (Forum Supporter) said:

Put the money in a low cost index fund unless you want to entertain yourself gambling in the stock marked.

Agreed!

I've read scores of studies on investment strategies and simply buying and holding index funds performs the best a large majority of the time (~85% is a commonly reported number). 

92% of my portfolio is in S&P500 index funds and I've taken two significant positions in individual stocks in my life (Lucent and Amazon)...the former pretty much went to zero and the later is currently worth 32 times what I paid for it.  I bought about the same amount of each so I'm up about 16 fold on average and the S&P500 has gone up about 13 fold during the same period.

Bottom line, there are a lot more companies that go under than there are massive success stories like Amazon...I got really lucky picking one of those exceptionally rare huge winners and yet I still didn't do all that much better than I would have by just buying an S&P500 index fund (16 Vs 13 fold ROI).

I'll be 60 in a few months, I've done well, and my advice is to not get sucked into FOMO (Fear of Missing Out) and be aware of selection bias (winners talk a lot more than losers giving the false impression that hitting it big is more common than it is).

- Start investing early

- If you're not investing so much that it hurts, invest more

- Buy and hold (never, never, never sell in fear)

- Nobody knows what's going to happen next so ignore or better yet openly laugh at the "experts" and for god's sake don't pay them anything

- Take full advantage of company matches and after that be tax smart by putting some money into a Roth IRA if you're below the income limit (161K single / 240 filing jointly).

Good luck.

Went to Costco yesterday and had a look at gold there.

People are getting hosed if they're buying at Costco. So far above spot price.

Beer Baron said:

In reply to AnthonyGS (Forum Supporter) :

The US Dollar is the worst currency, except for all of the others.

You are 100% correct.  It's the best of the worst.  I'd love to have other options.  It seems that for most worldly systems this ends up being the choice.  

ShawnG said:

Went to Costco yesterday and had a look at gold there.

People are getting hosed if they're buying at Costco. So far above spot price.

Yes, the premiums above spot price right now are insane.  This changed for the worse after the housing bubble.  An interesting side note relevant to this discussion would be to understand how the financial laws affected gold and silver specifically after the housing bubble.  Those laws probably make silver and gold a terrible investment.  Of course with the current rates of inflation, taxes and general greed, I'm not convinced there are many good investments.  

Just ran across the most perfectly relevant video to this thread. Apparently people who get algorithmically-selected ads and look up finance stuff have been seeing way more of this than me:

In reply to GameboyRMH :

I use a VPN, so I have to go look for things I want to buy :).  

“All right," said Susan. "I'm not stupid. You're saying humans need... fantasies to make life bearable."

REALLY? AS IF IT WAS SOME KIND OF PINK PILL? NO. HUMANS NEED FANTASY TO BE HUMAN. TO BE THE PLACE WHERE THE FALLING ANGEL MEETS THE RISING APE.

"Tooth fairies? Hogfathers? Little—"

YES. AS PRACTICE. YOU HAVE TO START OUT LEARNING TO BELIEVE THE LITTLE LIES.

"So we can believe the big ones?"

YES. JUSTICE. MERCY. DUTY. THAT SORT OF THING.

"They're not the same at all!"

YOU THINK SO? THEN TAKE THE UNIVERSE AND GRIND IT DOWN TO THE FINEST POWDER AND SIEVE IT THROUGH THE FINEST SIEVE AND THEN SHOW ME ONE ATOM OF JUSTICE, ONE MOLECULE OF MERCY. AND YET—Death waved a hand. AND YET YOU ACT AS IF THERE IS SOME IDEAL ORDER IN THE WORLD, AS IF THERE IS SOME...SOME RIGHTNESS IN THE UNIVERSE BY WHICH IT MAY BE JUDGED.

"Yes, but people have got to believe that, or what's the point—"

MY POINT EXACTLY.”
― Terry Pratchett, Hogfather

ShawnG said:

Went to Costco yesterday and had a look at gold there.

People are getting hosed if they're buying at Costco. So far above spot price.

Spot price has kind of been a joke ever since Comex started allowing contracts to be settled in cash a ways back on silver futures.

eastsideTim said:

ShawnG said:

Went to Costco yesterday and had a look at gold there.

People are getting hosed if they're buying at Costco. So far above spot price.

Spot price has kind of been a joke ever since Comex started allowing contracts to be settled in cash a ways back on silver futures.

Yes and that's by design.  You can buy and trade paper or electronic fiat silver and gold all day long.  When you sell it you get dollars.  You can never redeem it for actual gold or silver.  If this is done with intent could it be used to control and suppress the spot price?  Everything since '08 or '09 when they passed "financial reforms" says probably.  Meanwhile, rich people and foreign banks are buying all the metal they can get making the premium price to get actual metal insane.  
 

ICYMI, when you buy physical metal you pay spot + premium to get it.  The spot price has been stagnant for about 15 years but premiums are ludicrous now.  
 

This is also why bitcoin gets so much negative press and Congress would love to control it more.  
 

There is a concerted effort to badmouth any options to the dollar.  The game must continue!  

I used this analogy as a modification to something someone here once told me (about why to buy a house):

 The financial / investment / monetary system is a giant freight train, moving along the tracks, with massive amounts of intertia, with it's engineer fully committed to it's path.

  You can yell at the wind about how it's "wrong" or it "doesn't make sense" or it "unfair", and the wind and the train won't care and certainly won't change it's path because of your bleating.

  Or,

  You can get on the F'n train.

AnthonyGS (Forum Supporter) said:

There is a concerted effort to badmouth any options to the dollar.

Okay, I'll bite.

What are you considering options to the US Dollar that are supposedly being badmouthed?

The US Dollar is a currency. The purpose of a currency is to be a medium to facilitate trade. It is more useful the more it circulates and exchanges. It needs to be able to quickly and easily be exchanged for goods and services, and it should hold its value relatively steadily on a day-by-day basis. It is not meant to appreciate in value. Quite the opposite - it's generally recognized that it is best when there is modest inflation (the Fed targets 2%). This encourages people to spend or invest, but doesn't frighten people into panic buying.

A currency is sort of like the trucks that bring goods to market, not the goods themselves. You do not want a situation where a company would profit more by buying a bunch of trucks and parking them in a lot because they will appreciate more in value than would be made using them to move goods.

In simple terms: a good currency I need to be able to walk into a store, pick an item off the shelf, exchange with the proprietor, and walk out with minimal hassle.

The only other viable options I see are other fiat currencies that have much the same strengths and weaknesses as the USD. They're just backed by smaller, less stable, and/or less trustworthy economies.

Commodities like Gold are not currency. They're commodities. They are generally solid long-term STORES of value (neither growth nor loss) that are relatively straitforward to liquidate.

Crypto-currency is also not currency. They behave sort of like commodities, except with wildly fluctuating values and the ability to transfer virtually. So international business that you don't want a record of and don't care about wildly fluctuation returns (i.e. illegal trade).

In reply to aircooled :

Great analogy.

Also like trains - people regularly think they get a bright idea for something COMPLETELY NEW and TOTALLY DIFFERENT. Over time, they refine it down and evolve its efficiency until they basically end up with trains.

It's basically the infrastructure equivalent of carcinization (things evolve into crabs).

Ditto systems of economic exchange and currency.

Beer Baron said:

AnthonyGS (Forum Supporter) said:

There is a concerted effort to badmouth any options to the dollar.

Okay, I'll bite.

What are you considering options to the US Dollar that are supposedly being badmouthed?......

He's talking about BRICS.  

https://www.reuters.com/markets/currencies/what-is-brics-currency-could-one-be-adopted-2023-08-23/

But when you think of a "train" to jump on:  Brazil, Russia, India, China and South Africa, just screams "stability", doesn't it.