The Screaming Fundamentals For Owning Gold And Silver

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[quote=sofistek]


Why would anyone NOT look for an investment of 20 years or more?  I don’t see any inconsistency in Chris’s message.  I do see misunderstanding in what you write.  But if not holding any PMs and keeping your all your wealth in cash and self-sufficiency items floats your boat, who am I to argue.

Mmm, I'm not sure you read my post. The Crash Course makes a convincing argument that things are going to hell in a handbasket. The next 20 years, Chris argues, will be nothing like the last 20, meaning that we're heading for a very different kind of society, either planned or unplanned. Investing, in the sense of the last 20 years, for a period of 10-20 years makes no sense at all, because you have no idea of what the world will look like at that point. If you don't actually hold the physical precious metals, will you be able to get at what you nominally own? Will you be able to sell what you own, given that normal markets aren't functioning any more? If you're still heavily dependent on others for your sustenance, will they happily accept physical gold in payment for what you need to survive, especially if it comes from those who aren't dependent on others (so they don't really need to buy much of what they don't produce themselves)? And, if you don't actually have small physical pieces of gold, how do you expect to get "change" if anyone does accept payment in gold? Will you be able to complete your preparations in a collapsing society, just because you have some gold buried in your garden? All sorts of questions come to mind when the central theme of this blog is aired; that the next 20 years are going to be very different from the last 20. It would appear that you haven't grasped this central theme and it would appear that Chris is so into precious metals that he keeps diluting his main messages (though he has occasionally said the PM holders should consider liquidating some of their holding to finish up preparations for collapse - which kind of, again, goes against what he's saying here). [/quote] I think I have some remote, vague, fuzzy, slight concept of the central theme of this blog but I guess I could be mistaken since you evidently have clearer insights into my thoughts than I do.  Every statement you made has been effectively countered by numerous discussions in the past that have gone on ad nauseum but you just don't seem to get it.  Do you think it's remotely possible that one could have all their self sufficiency ducks in a row but still have wealth that one wishes to invest in gold and silver as "currency insurance", as just one example?  Evidently, you seem to think accumulation of PMs is mutually exclusive from self sufficiency preparations.  Trust me, they can be concurrent and co-existing. Now let's see, do I want to listen to Chris and do I want to follow the strategies which I've been following which have been very successful for me and my family or do I want to listen to sofistek?  Hmm ... no brainer there for me. The proof of the pudding is in results though.  Personally, I have no major complaints in my life.  Professionally, I'm doing very well and am well respected and recognized in my field.  Financially, I'm financially independent and could retire now if I so chose (but I really like what I do and I'm very good at it and I can help others doing it).  Healthwise, I've surprised myself recently by surpassing certain records of physical performance that I keep including strength and reaction speed.  I need no medications.  I'm capable of defending myself with either armed (including firearms, edged weapons, and weapons of opportunity) and unarmed combat.  Familywise, I have a wonderful wife who's onboard with me 100% and two great kids who are going to be successful no matter what happens because of how they've been raised and the type of people they are.  Spiritually, I know who I am, I know what my purpose is, and I know where I'm going.  Preparationwise, if you dropped me off in the middle of the woods with a good knife, I'd survive.  I can fish, hunt, trap with snares and deadfalls, gather wild edible and medicinal plants, make clean water, make fire, make shelter, etc. in the primitive ways.  Luckily though, we've done well in our preps and should live comfortably regardless of what happens due to our personal skills and knowledge as well as the community relationships we've developed and are continuing to develop.  By the way, how're you doin'?       
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C’mon Denny…
You have been around this long and you don’t know the answer to that insincere question?

If you really think that our future is doomed to a TSHTF scenario (and I don’t discount this probability), then there really is only one choice: invest in the means to produce life’s necessities without the need of an economic and/or monetary system. Of course, this is much harder than just buying gold and sitting back and hoping for the best, as I’m sure you know. But it’s really the only way to know that you will have something that people will always value and need. I mean, isn’t that what wealth truly means?

If anyone has questions regarding this type of investment, please direct them to Ready. He is the personification of this approach in my book.

Oh yeah, and regarding your sour grapes comment, don’t bother trying to bait me, just hit the “ignore user” button. And good luck with your plan to outsmart Wall Street.

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Seems like you’re still dancing, Jeff.
Doctor M’s report is about stored wealth after preps are considered.

The original question to you was about a better alternative than gold for stored wealth after TSHTF preps:

JAG.........what do you recommend to protect wealth after one is comfortable that he is materially prepared for a tumultuous future?
 
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[quote=saxplayer00o1]OK…Who is that quote from?
This could almost have been posted in the humor thread…Hmmmm,  Anybody here been on a hot date lately that they aren’t talking about?
[/quote]
Saxplayer has 998 posts, and in the year and a half I’ve been here this is the first one I remember where he actually “spoke”.  Usually he just does an extraordinary job of bringing us links to an incredible amount of useful information.  What does this mean?  Is it a portent of unimaginable changes about to commence?  Ominous! 
Travlin

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Jeff, I luv ya man. Hopefully you can wait for my response for a few days. it’s a long weekend, and I have real work to do away from the interwebs.
Wish I could send you an electronic beer.

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OK, after that. Lets suppose we have made our selves self sufficient or have all we feel we need to do so. Would you just then let your money sit around in cash, stocks, bonds, real estae or gold. Pick one. Assuming you are prepared for the worst and have money left over, now lets prepare for a future where our “doomsday” preperations prove hopefully unneccesary and you want your savings to grow or at least not deteriorate so you may do something productive later on for your future family generations or whatever. I have heard all of the “GOLD IS BAD” arguments (and i do honestly hear where you are coming from) but no one is offering up anything else.Reminds me of politicians. Everyone running around pointing out the problem but no solutions being proposed. I used to run a large company and I had a saying as the General Manager. “Pointing out the problem is the easy part. Now, if you can give me a solution, you will be proving your worth something.” We all know the problems this society is facing. And there are many problems we can find with any investment but when you weigh the pro’s and con’s against the other financial tools out there I think they (gold/silver) have been coming out and still look to come out ahead for some time to come. But I am not married to the stuff and would love to have Jag or Sofistek point me in a direction that makes as much sense right now as physical PM’s.
 

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If wall street is marketing gold then they are doing one stealth job of it. I know many financial professionals and none of them are marketing gold.But Jag, you must live a very stress free and peaceful life. I envy you for that as you have:

  1. No fear of the actions of the Fed.
  2. No fear of inflation or deflation.
  3. No fear of global war or terrorist attacks.
  4. No fear of the dollar losing value, (which it has done consistently since the fed was created)
  5. Complete trust of the financial and political elite (as they so obviously have the best of intentions and everyones best interest in mind.)
  6. Complete trust in banks and wall street.
  7. No concerns for making gains on your capital.
  8. No fear of a new economic crisis (as if the last one ever ended)
    You are a truly wealthy person with no need to insure against any of these supposed items as they are all just marketing tools used to get us to buy GOLD!! And .05% of the population has fallen for it and purchased some of it. Brilliant marketing.
    The only marketing campaign from wall street is the bankers, and the elite trying to do everything they can including possible criminal manipulation of the markets to keep you in the stock market, the dollar, and OUT OF GOLD!!
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[quote=ao]
I think I have some remote, vague, fuzzy, slight concept of the central theme of this blog but I guess I could be mistaken since you evidently have clearer insights into my thoughts than I do.  Every statement you made has been effectively countered by numerous discussions in the past that have gone on ad nauseum but you just don’t seem to get it.  Do you think it’s remotely possible that one could have all their self sufficiency ducks in a row but still have wealth that one wishes to invest in gold and silver as “currency insurance”, as just one example?  Evidently, you seem to think accumulation of PMs is mutually exclusive from self sufficiency preparations.  Trust me, they can be concurrent and co-existing.
Now let’s see, do I want to listen to Chris and do I want to follow the strategies which I’ve been following which have been very successful for me and my family or do I want to listen to sofistek?  Hmm … no brainer there for me.
The proof of the pudding is in results though.  Personally, I have no major complaints in my life.  Professionally, I’m doing very well and am well respected and recognized in my field.  Financially, I’m financially independent and could retire now if I so chose (but I really like what I do and I’m very good at it and I can help others doing it).  Healthwise, I’ve surprised myself recently by surpassing certain records of physical performance that I keep including strength and reaction speed.  I need no medications.  I’m capable of defending myself with either armed (including firearms, edged weapons, and weapons of opportunity) and unarmed combat.  Familywise, I have a wonderful wife who’s onboard with me 100% and two great kids who are going to be successful no matter what happens because of how they’ve been raised and the type of people they are.  Spiritually, I know who I am, I know what my purpose is, and I know where I’m going.  Preparationwise, if you dropped me off in the middle of the woods with a good knife, I’d survive.  I can fish, hunt, trap with snares and deadfalls, gather wild edible and medicinal plants, make clean water, make fire, make shelter, etc. in the primitive ways.  Luckily though, we’ve done well in our preps and should live comfortably regardless of what happens due to our personal skills and knowledge as well as the community relationships we’ve developed and are continuing to develop.  By the way, how’re you doin’?   [/quote]
Not as well as you apparently are. However, your comments do appear to be entrenched in the current economy and society, despite what you claim about preparations. There is a lot of emotion in this one but I’ve still to read anything about gold investment that explains why it would be a good investment over other things, in a collapsing society. However, I can see that in a slow collapse, gold hoarders might live a more glorified, but less satisfying, life than the increasing masses of have-nots. What I can’t see, nor can anyone else, is how long it would take before they start to be engulfed by collapse and perhaps wish they’d used their wealth more wisely.

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[quote=jones11]OK, after that. Lets suppose we have made our selves self sufficient or have all we feel we need to do so. Would you just then let your money sit around in cash, stocks, bonds, real estae or gold. Pick one. Assuming you are prepared for the worst and have money left over, now lets prepare for a future where our “doomsday” preperations prove hopefully unneccesary and you want your savings to grow or at least not deteriorate so you may do something productive later on for your future family generations or whatever. I have heard all of the “GOLD IS BAD” arguments (and i do honestly hear where you are coming from) but no one is offering up anything else.Reminds me of politicians. Everyone running around pointing out the problem but no solutions being proposed. I used to run a large company and I had a saying as the General Manager. “Pointing out the problem is the easy part. Now, if you can give me a solution, you will be proving your worth something.” We all know the problems this society is facing. And there are many problems we can find with any investment but when you weigh the pro’s and con’s against the other financial tools out there I think they (gold/silver) have been coming out and still look to come out ahead for some time to come. But I am not married to the stuff and would love to have Jag or Sofistek point me in a direction that makes as much sense right now as physical PM’s.[/quote]I’m not saying gold is bad, Jones11.
You’re right to want answers but neither I, nor Chris, have them; we only have opinions. Some of mine are based on Chris’s Crash Course. It’s very certain that doomsday (as you call it) preparations will be a good investment. As Chris has pointed out, the future will be very different. The are resource constraints which scream with certainty that the future will be very different. But I see no meaningful moves towards gradual change to a no-growth sustainable society. Therefore, society WILL collapse. Really, there is very little doubt of that, apart from the proviso that if enough of your particular community become aware enough, in time to ease the path down, you might get lucky that some vague resemblences to some aspects of current society might remain. The only real question is whether you personally will be caught up in the collapse (i.e. will its speed engulf you before you’re dead of natural causes?). You might, of course want to think a bit further ahead than that, perhaps to the lives of your children and grandchildren. Collapse is inevitable and there are a lot of indications that it is already happening. So being able to rely only on yourself, your family and your local community is certainly an aim you should be striving for.
So where do gold and PMs fit into this picture? I’ve still not seen a good commentary on that. I’ve heard Chris talk about preserving wealth until you are in a position to invest in useful skills, tools and, maybe, land. So I’ve never seen it is a long term investment because I don’t see a need to preserve that sort of artificial wealth indefinitely. I’m also not convinced that, once fiat money is gone, suddenly life will go on as normal with gold and silver being the means of exchange. Not that they won’t be important to some people in some areas of society, and they may even eventually become more common means of exchange.
Of course, if one is so rich that one can’t think of any more preps to invest in, then by all means buy gold and PMs (indeed, it seems to be rapidly becoming a buy that only for the rich). It’s just that I fail to see what it has got to do with the future that’s looming up. The only decent comment I’ve read on this is that at least gold and PMs will have some value when fiat money will have none. So perhaps those with gold will eventually be able to improve on their preps when others can’t. I might also say that if you simply can’t face the prospect of learning the skills needed (and it is a daunting prospect to many, including myself) then buying gold MIGHT allow you to buy most of what you need, if you’re lucky.
But don’t go looking for a conventional retirement by hoarding gold.

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Less satisfying than the have-nots?  What could be more satisfying than being a have-not? Well…Ghandi seemed to get off on it.

Are you suggesting that somehow life is less fulfilling if you own gold?  How does that compute?  It has been stressed frequently here that people, certainly including myself, own PMs because we don’t see any good alternatives for preserving purchasing power.  If you think that hoarding cash is a swell idea, I would remind you that it is the stated goal of the Bernank to make sure your cash deteriorates in value 2-3% a year.  That means just to stay even, you have to put your money somewhere that matches that deterioration with an equal gain.  If, like me, you expect greater inflation coming down the road (according to John Williams and my personal experience, it’s already here), where do you put that cash?

I’m not interested in hearing about all the wonderful preparations you can make with that cash, I’m already there.  I don’t care how well you’re prepared in terms of sustainable land, things and skills, there is still a financial aspect to our lives that has to be acknowledged.

How many of us are living completely self-contained lives where we have no need of a medium of exchange beyond barter?  Not even the Amish are that secure.

Once you acknowledge that some store of financial value is necessary, then you have to figure out how to ensure that value doesn’t deteriorate.  I have concluded that the traditional financial assets, including cash, are at least as risky as PMs.  From that perspective, I’m just trying to see that my family and I don’t become wards of the state, as it is increasingly clear that the ‘state’ can’t afford us.

Doug

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Hello,
I been following Chris for some time now including others…

 

I suggest Chris Martenson, GATA.org, GoldSilver.com (Mike Malony), run2gold.com (Trace Mayer), Marc Faber, David Morgan, Bob Chapman  and others (also some people at globalresearch.ca) have a great common publication/website that merges their work in addition to their own publicaitons/sites/podcasts…

 

Great work and thanks…

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My contention is it is correlated, and the time frame (80’s through 90’s) you are considering is an anamoly, because US was exporting dollars all over the world. The dollars never stayed domestically to stoke inflation.

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Nothing can be more false than this statement. Gold is no one’s liability, unlike stocks where the company is the liability and housing where bank is liable. That is the beauty of gold. It doesn’t pay dividends, but at the same time – holding it means there is no counter party risk.

No way am I going to accept this statement. You don’t sell your insurance, just because there is a lesser likelihood of your house catching fire. Same rule applies here as well. Gold is an insurance against currency debasement. There is no time in history where currency debasement has led to prosperity.

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Hyper-Inflation
Dr. Martenson has previously written or said that he wasn’t sure which one - hyper-inflation or deflation - was likely to occur. However, he was leaning more towards hyper-inflation. That was probably a year ago. Now he leans further in the hyper-inflationary camp for all the various reasons he’s listed.
Also in this camp, National Inflation Association, FoFoA, Gonzalo Lira, Fernando “FerFAL” Aguirre, Jesse of Jesse’s Café Américain, etc.

Deflation
On the other end, a few sites like The Automatic Earth and the principals, “Ilargi” and Nicole “Stoneleigh” Foss, believe in deflation. Their thesis is that credit bubbles are bound to collapse. Money may be printed to offset deflation and increase the money supply - but effective deflation continues. People spend less, jobs become scarcer, they don’t feel confident about the economy, banks have reduced their lending, home prices continue to drop. This becomes a downward spiral. Foss believes that after the period of deflation (years), then there may be hyper-inflation.

Where They Agree
Both Martenson and Foss has said that, first you should take care of the basics. Access to food, water, emergency supplies, be out of debt, have a few months’ cash on hand, tools, skills, security, community, and other things of resiliency (solar water heater, panels, etc. Foss argues for storing more cash - physical cash, bank accounts, short-term Treasuries, etc. If you have even more after that, then you can consider putting money into securely stored physical gold and silver, preferably gold.

For Most People
I think for most people, getting all the basics will be more than enough to occupy one’s attention and meager resources. Beyond that point, having several months of cash and getting gold and silver is pretty much something for those with more financial means. This debate on gold and silver is more academic for me. But if I had the resources, I would hedge my bets.

Poet

 

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[quote=sofistek]There is a lot of emotion in this one but I’ve still to read anything about gold investment that explains why it would be a good investment over other things, in a collapsing society. However, I can see that in a slow collapse, gold hoarders might live a more glorified, but less satisfying, life than the increasing masses of have-nots. What I can’t see, nor can anyone else, is how long it would take before they start to be engulfed by collapse and perhaps wish they’d used their wealth more wisely.
[/quote]
Mindlock … with a twist of sour grapes?  If you don’t get it by now with reading Chris’s article or watching the video posted #1 by sundarb, you never will.
Let me say it one final time … investment in gold does not preclude investment in other “things”.  Once again, for emphasis …
INVESTMENT IN GOLD DOES NOT PRECLUDE INVESTMENT IN OTHER “THINGS”
And what’s your evidence that gold “hoarders” (an emotional term if I’ve ever heard one) will live a less satisfying life.  Maybe water hoarders will live a less satisfying life.  Nothing worse than someone hoarding water when almost 1 billion people on this planet don’t have clean, safe fresh water supplies.  I’ve always been shocked how people in places such as New Zealand can keep all their abundant fresh water to themselves rather than shipping some of it to the Sudan.
Have you ever consider that some of those gold “hoarders” might give away some of their bounty to charities like charity:water to help others have access to fresh water.  You might want to emulate them.  Here you go.  Kvetch talk is cheap.  Put your money where your mouth is.
http://www.charitywater.org/whywater/

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I appreciate the intellectual honesty and civil attitude of most posters on CM.com.   In find it very helpful as I attempt to clarify my understanding of the predicaments we all face, and determine what I can do to possibly mitigate their impact on my life and the lives of my loved ones.
Dr. Martenson discusses three types of wealth in his book: primary, secondary and tertiary.   My primary objective is to convert as much tertiary wealth as feasable into primary wealth: homestead, water, food, garden, chickens, etc., and developing the skills needed to sustain those things.  I also believe it is important to invest in the means to defend and protect my family and our support structure.  After that, with what tertiary wealth remains, my objective is to hedge against a collapsing financial system by converting 60% of it into a store of value…an alternative medium of exchange.  That would be gold and silver.  I am not aware of any better (or equal) alternative exchange medium.

Of course, the financial system may not collapse. WTIM, I keep some of it in cash (4+ months worth of expenses), then spread the rest between short-term Treasurys, plus agriculture and energy stocks (largely ETFs).

(Side bar:  I haven’t bought ag or energy stocks yet as I’m not convinced we’ve seen a bottom in the markets.  I got 80% out of the stock market in August of 2007, started buying storage foods in spring of 2008, started buying PMs in spring of 2009.  I started a raised bed garden last year, and am also learning about container gardening.  Currently, I am completing our back-up water system (rain water cistern), and planning the chicken coup for this Fall.  I am fortunate to have the space to do these things, and good friends who are teaching me how to do them.)

If I were younger (I’m a 63 year old small business owner hoping to retire in two years), I’d be finding a way to get into a business that focuses locally on the types of needs people will have in a post-growth economy: recycling, small scale manufacturing, farming and/or local food distribution, solar heat and power, private replacements for goverment services (police, fire, garbage collection, etc.), and change management.  Owning a business of this type would be a form of primary wealth as it would serve to sustain you.  Short of owning it, I’d look for a position of responsibility in one, then make myself irreplaceable.

Wishing everyone all the best.  Keep the ideas flowing.

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Tony,
There have been no alternatives laid out as to other options for saving. Why save? Saving is a wise thing to do. Here are a couple of commodity money links that may or may not pique your interest. Things may just sputter along for a lot longer than many well informed folks think possible so a little insurance is a great way to fly. My timber is insurance too.
http://mises.org/daily/2942
http://en.wikipedia.org/wiki/Coinage_Act_of_1792
The current meme is that the US can and will pay massive debts without debasing the currency. The current bubble is the US treasury market. If we default, watch those dollars repatriate en masse. Whether 2 years or 20 just keep your eye on the price of gold in Federal Reserve notes. My guess is that the exponential function will come into play at some point. When janitors are taking out NINJA loans to buy half a million in gold I’ll be selling.
I asked Ben Stein if he thought silver was a good investment last night when I saw him out. He thinks precious metals are a bad investment and  that guys like Jim Rogers are “commodities speculators” . Apparently he missed the part of the crash course where the price of the orange in the boat is dictated by the amount of money in the boat. He did add he wished he could print money and he gave me a monotone “bye bye now” as he walked away. At least you are in good company. Off to cover the blueberries from the waxwings.
TJ

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Marc Faber outlook for Gold

Marc Faber : "...First of all it is true that gold has gone up from $252 in 1999 to now $1550 an ounce. However, at the same time over this 11-year period, the quantity of money in the world and the quantity of credit in the world has exploded. So that I could make a case that actually maybe gold is cheaper today than it was in 1999 adjusted for the increase in the quantity of money and credit.Secondly, today we have many more people that have become affluent, just think of the well-to-do people in India, then Indian middle class, the middle class in China, the well-to-do people in China, it has exploded over the last 11 years. And all these people I guarantee you, they are all essentially flooded with US dollars and so for them to take a little bit of their money and park it into gold is a no-brainer in the long run. I go to many conferences every year.They usually ask the audience even at resource conferences, how many of you have more than 5% of their portfolio assets in gold? I have been at a conference in Singapore two days ago, among 500 people involved in real estate, not one had more than 5% of his assets in gold. I guess most of them did not have any gold at all, and so if someone tells me it is a bubble, I can tell you in year 1999-2000, the whole world was gambling in NASDAQ stocks, in telecom stocks and the media companies everywhere in the world. Now most people that I know have actually already sold their gold. " - in ET Now 24 June 2011
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Sorry, but paper gold is someone else’s liability, and it is the paper market that determines the economic value of physical gold (today, h/t Ready). So just because one holds only physical gold doesn’t necessarily mean that they are immune to the counter party risk within the financial markets. 
 

Captain Sheeple is Done! When I look back over this enjoyable discussion, I must admit that I underestimated just how entrenched the pro-gold argument has become in the belief structure and identity of this community. I offered my critique in the spirit of Dr. M’s opening statement to the Crash Course, where he said:

I get no pleasure in playing the “black sheep” of the community when it comes to this issue, but if I hold a different perspective than the collective, I owe it to this community to express it. After all, isn’t that what we all truly value about this community, the fact that it holds a different perspective than the majority?
You guys have a great 4th of July.
P.S. And Denny, just sell some gold and buy some more pasture land for your dairy cows. The value of organic milk is going exponential!
All the best…Jeff

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As per John Mauldin, we are coming up on the “End Game” as the result of a debt supercycle. A reevalution of the currency is one way to default. There have been major monetary changes over time, such as, Demonetization of Silver in 1873, the formation of the Federal Reserve in 1913, gold confiscation in 1933, devaluation of the dollar in 1934 and the closing of the gold window in 1971. I suspect we are about to have the next one. Dr. Martenson mentioned re-monetizing gold. That would be a big and welcomed change! I agree that gold confiscation is highly unlikely, but couldn’t the government apply a special 90% capital gains tax on the sale of gold? This would would effectively confiscating gold, or at least deminish the benefits of holding gold? How about potential capital controls? In one of Carmen Reinhart’s papers, she mentions capital controls are implemented before a currency crisis to prevent flights to safety. Since all currencies are being debased, gold is the ultimate destination for safety.