“You can’t eat Gold”

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  • Tue, Nov 15, 2011 - 11:37pm

    #11
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    safewrite makes sense

I agree with safewrite about gold and about other aspects of life, but I would describe gold as ‘stuff’ rather than as a ‘luxury’. Of course, having a lot of stuff is a luxury. Let me explain.

A friend of mine has a walk-in fireproof safe full of collectible cigar bands, including entire proof print sets. That’s what I call ‘stuff’, and stuff, for us plain folks, is a luxury.

I recall when Nelson Rockefeller had to run the Senate gauntlet to become Vice President, he didn’t have any monetary assets in his own name, he didn’t have any income tax returns for the committee to review, because he never had any income. As governor of New York, he hadn’t taken any salary. When becoming VP, he promised, he wouldn’t take any salary and he even wouldn’t need any security from the Secret Service, since he already had Rockefeller Security — all paid for by a Rockefeller trust. He did, however, acknowledge that he owned some stuff, namely many hundreds of millions of $$$ worth of rare works of art by great artists of the past (probably would be worth $$$Billions now).

Gold is stuff. Rich people love it.

Gold would make a lousy global or national currency. Stick with silver.

  • Wed, Nov 16, 2011 - 12:11am

    #12
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    I’ll throw in my two cents.

I’ll throw in my two cents. Over the last couple of years I have invested myself very heavily in gold and silver, to the tune of about 90%. I cashed in all of my other investments (which would be worth considerably less today) took the penalties and never looked back. This was part of a long term plan to purchase a sustainable piece of property and then convert back into the dollar and purchase everything needed to bring the place up to my needs. This includes the PV system to get off the grid, all of the livestock, shop, underground fuel tank, orchard, greenhouse and anything else that will make my family self-sustaining. Over the last three years my investments have done very well and I have been able to accelerate my plans by over a year. I just purchased the farm and am about to move there this comming March and  I am about to start converting back into the dollar.

I have heard all the negative things said about gold/silver over the years but they have done very well for me. That being said I would rather have the things that make life easier and self sufficient than the metals. No matter what I will NOT invest in the "system" in any way. I will leave whatever I can in metals with a small ammount of paper on hand.

Rich

  • Wed, Nov 16, 2011 - 12:13am

    #13
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    You can’t eat FRNs, either.

[quote=Aaron Moyer]

We’ve probably all heard this tired old cliche – you can’t eat Gold.

There are a significant number of opinions out there that cast Gold as both a useless waste of money, and an invaluable method of asset protection. There are anecdotes about trading in metals in SHTF, and there are situations where it’s simply made a person a target during periods of lawlessness.

It’s my opinion that the truth is somewhere down the middle – it’s wise to take care of necessities first, but having some measure of asset protection only makes sense. For those of us who’re not wealthy, and can’t afford to do both, what’s your exposure?
Do you still try and buy Gold, or is it a luxury that is less important than food, or other necessities for survival?
What would you purchase instead of Gold to hold value and perhaps provide utility?
Or is Gold worth the stretch in terms of potential for gains?

I’ve been thinking about this quite a bit lately, and would love to hear the communities opinions on Gold, and it’s place in practical preparations.
Cheers,

Aaron

[/quote]

 

You’ve probably also heard the tired response to "You can’t eat gold"…        "You can’t eat Federal Reserve Notes, neither"

Gold (and silver) are simply long term stores of wealth protecting against currency devaluation.

Since early civilation to today, man has been able to trade a ounce of a gold for a nice suit and pair of shoes.   Gold holds its’ value over time, a long time.

Gold isn’t meant for us common folk to be trading it, buying and selling, or buying GLD.

In the past, CM has recommended, if you have cash in the bank, to trade some in for gold (or silver).  I believe he recommends (as most who recommend gold) 10%+ as a percentage of your overall liquid wealth, while he has disclosed his holdings at 50%+.

 

 

 

 

 

 

  • Wed, Nov 16, 2011 - 12:20am

    #14
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    Great post !

The first thing that pulled me to CM and the 3E’s was his strategy for hedging strongly with metals (and his take on energy).

I was a financial rep and later a Financial Advisor from 2000 to 2005. I advised on all kinds of plans to save for retirement. When I became aware of the problems that face us my whole philosophy on investing fell apart. I sold off all my long term investments almost straight away. I started looking at the market from a 30 year forward perspective (no need to examine pre 73′ as a forward moving indicator).

What I found was that if you could afford to set yourself up with physical property you would be better off. I decided to design my life to require as little inputs (income) as possible. Provide for energy, housing, food, and transportation then focus on long term security. My old philosophy was provide for retirement, then fund your current lifestyle. Now I want to secure my life, and hope for some style with it.

Gold, Silver, antiques, or any other physical item that is planned on holding value is a luxury. I would buy solar panels, property (land),  home improvements to minimize inputs all before I would invest in Gold.

Example: If I had a 401K valued at 100K, was 40 years old, 2 kids, suburban lifestyle, and had an income of 60K. That 100K would turn into roughly 55K after taxes and pay for my solar and extended preps. (or relocate to bigger and better )

Example 2: If I had 500K in savings varied and an income of 100K+. I would make all the physical preps then secure almost 60% of my remaining savings in small amounts of gold and silver. I would proably use an existing model. (I don’t have this luxury as a problem 🙂

Long story more coherent, Gold is an after thought for those that can afford it. "You can’t eat it", and like all things it’s only worth what others will give for it. If SHTF will it be the most valuable thing? Will you get a equal return on your investment? Will it retain it’s value when the cutain is pulled back on the rest of the market?…I don’t know. I do know that land, chickens, a cow, a bike, a diesel vehicle, a secure peice of land, a strong community, a weatherized structure, and peace of mind will hold their value.

  • Wed, Nov 16, 2011 - 12:40am

    #15
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    JAG wrote:Though, I think

[quote=JAG]

Though, I think you should be disqualified for profiting from insider information, lol.

[/quote]

You are right JAG, I had no idea that PV was a good investment until I met you!  What the hel…

<SLAP>

But Ma, he started it!

 

OK, Back on topic. JAG can be such an as…

<SLAP THUD>

 

Aaron, I am seriously thinking about getting rid of some in order to build a new house down at the farm. Something a little bit better thought out, more energy efficent, more secure, etc. It kinda feels like we are reaching a top right now, give or take 10%. I’d be hard pressed to be a buyer right now if the idea was to buy and hold. I know that goes contrary to much of what is said on this site, but we all have to trust ourselves in the end.

If you have everything else covered (knowing you, a tent and a Bowie knife is all you need, actually scratch the tent) gold can absolutely make some sense, easy to carry, hide in a small place, no one else’s property, but until you do have everything you need, it is a risk IMHO. If you have dollars today, they easy to trade for what you need directly, unlike gold. Gold is not what you need. Gold is for when you can’t figure out what else to spend your dollars on.

You are in a good position in that you have marketable skills, and will likely find good employment regardless of the future events. My advice, for what little it is worth, is plan to be able to make a living when others struggle. That said, what does gold do for you? Is there another option that has less risk?

If you still want to invest in gold, give me a call. Maybe we can make another trade. Or you can buy from JAG becuase he HATES gold and is an …

<THUNK>

Best,

R

Hi Aaron,

I have two thoughts. The first is that since my wife is violently anti-prepper, gold and silver coins, oddly enuf, are the easiest, most concealable way for me to pre. ie. to sneak money out of my checking account and buy a coin every once in a while. Stockpiling canned goods in the basement and other prepper stuff has been somewhat harder. The PMs are my secret and as long as I am in positive territory, I have no guilt.

Second, to paraphrase another concept, I actually regard gold as merely part of a well-balanced diet that includes food, firearms and ammo, clothing, meds, etc. My worst fear about gold is that, while confiscation appears unlikely to me, a horrendous surtax on reselling your coins, say, 50%, would be tough to evade and greatly infuriating to the prudent. I do think that is possible.

The only unbelievably wealthy person I know told me that his peers own tons of gold. They also would have little trouble in stuffing it on the Gulfstream and going to a less hassled clime.

JMHO.

SG

 

  • Wed, Nov 16, 2011 - 02:31am

    #17
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    Big problem with PV

JAG

I love the idea of putting up some photovoitaics on the house.  I fully agree that this would be a great investment and much better than gold from a financial standpoint.  The problem with PV is it sticks out like a sore thumb.  When times get really tough, it is a big advertisement, "Hey look at me, I’ve got electricity, and you’re shivering in the dark."  I’ve listened to Ferfal from Argentina several times, and he has indicated that the resentment between the have’s and the havenots amplifies during economic turmoil.  He goes so far as to say that the poor despise those who they perceive as having more than them.   

I don’t know how bad things will get, but having PV panels on your rooftop will make one look very wealthy relative to others.  Unless your willing to make your home a community center for all to benefit from.  

 

Brian

  • Wed, Nov 16, 2011 - 03:20am

    #18
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    You can’t eat gold.

It’s quite true, you can’t eat gold.  Like any other form of money, gold has value only inasmuch as it can be exchanged for things that you can eat (or use).  Gold is a means of carrying surplus wealth through severe market disruptions, so that when you emerge at the other end you still have what you saved.  It’s a way of taking your savings account, and preserving it so that it will be available when the market stabilizes.

(1)  But if you don’t have surplus wealth that you need to preserve, then it makes little sense to skimp just for the sake of buying gold (unless you are looking for speculative profits).

(2)  While gold is a superior means of carrying wealth through market disruptions, there is no guarantee that gold will be useful during a period of market disruption, simply because there might be no food (say) which is available to buy. 

This is where practical preparations have a place, illustrated by the Russian experience following the collapse of the USSR.  Many Russians kept their wealth in the form of gold and silver, yet during the months of intense market turmoil, the price of gold collapsed relative to necessities like food and firewood simply because there was none to be bought at any price.  You could buy just about anything else at fire-sale prices, but many people lost vast fortunes in gold and other valuables (like gems, houses, and heirlooms) during the period of economic crisis — NOT because of the currency collapse — but because they had to spend it to survive.  A month’s worth of potatoes cost ten times the price of the land they were grown on.  Clearly in this case, having a small garden was more than worth it’s weight in gold.

So, gold cannot replace at least partial self-sufficiency, because money does no good when there is nothing for sale.

But how much practical preparation is enough?  That all depends on an individual’s assessment of the risks, I think.  If gold is a savings account, practical preparations might be more like an insurance policy that only pays off in a specific situation.  Unlike gold, most (not all) practical preparations will produce a net loss if the threat they were meant to guard against doesn’t materialize, so there is sometimes a trade-off to be made.  Furthermore, there will (for most practical prepatations) reach a time when you simply have enough.

I tend to agree with Chris that practical prepatations tend to follow a line of diminishing returns, with enormous benefits for the first small steps, and slowly diminishing returns for further investment.  As Chris says, there is a tremendous difference between 0% self-sufficient and 10% self sufficient.  Put in a more crass way (credit to Doug Casey), "You don’t have to run faster than the bear.  You only have to run faster than the slowest camper." 

  • Wed, Nov 16, 2011 - 03:37am

    #19
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    jrf29, But how much

jrf29,

But how much practical preparation is enough?  That all depends on an individual’s assessment of the risks, I think.  If gold is a savings account, practical preparations might be more like an insurance policy that only pays off in a specific situation.  Unlike gold, most (not all) practical preparations will produce a net loss if the threat they were meant to guard against doesn’t materialize, so there is sometimes a trade-off to be made.  Furthermore, there will (for most practical prepatations) reach a time when you simply have enough.

Exactly. We had to draw a line. Everything we did with my retirement money will help us now, not just later. Screens and screen doors, CFL lights, solar fans and solar hot water plus a clothesline and an efficient wood stove mean we are saving on electricity for heating and cooling and clothes drying right now. Water is very expensive in our subdivision (sadly, we are legally locked into using the worst water utuility in the area) so the well will pay for itself rapidly. Even a pantry saves you money – not just on last minute trips to the store, but stocking up when things are on sale makes sense. And our garden, once the initial investment was made to build the SFG boxes, is really helping put produce bill – and our health as it is all organic and great exercise to weed and turn the compost pile.

The few "only if the SHTF" things we have are also useful in an ice storm or hurricane situation. That’s our comfort zone: practicality.

  • Wed, Nov 16, 2011 - 10:07am

    #20
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    not just a luxury

Aaron

I have a neighbor who is originally from China.  His family escaped to Hong Kong when the communists took over.  He told me that he knew others who escaped.  what was their ticket out?  payment in gold.  Yes, gold can get confiscated, get you killed, get stolen.  But, in the right situation it can save your life.  My neighbor told me they couldn’t sell their farm, their chickens, their livestock… already confiscated by the communists.    Gold may be the only thing one can sneak out.

so a little bit of gold an silver, once other needs are met, imho, is a good idea.  

It’s also a possible little inheritance I can leave my children.  Hopefully I wont every have to use it, and I can pass it down to my children.  it’s simply one avenue of wealth protection.

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