Gold buying

16 posts / 0 new
Last post
Inthon's picture
Inthon
Status: Member (Offline)
Joined: Nov 30 2008
Posts: 8
Gold buying

Great site!  First question I'm posting...

If people lost everything they had but had gold coins stashed somewhere, wouldn't they just eventually turn those back into fiat?

Correct me if I am wrong, but after reading this site, I believe the benefit to owning gold comes down to this:

Massive inflation comes around, gold will appreciate the most and those holding gold will have the most "money".

However, I fail to see how that wealth can be translated into USABLE money.

Meaning, literally, if we own the coins, do we then sell them back to the dealers for fiat?  Or are we anticipating leaving the dollar for good, in which case, we would trade our dollars for a new fiat currency?

I just don't see how gold will ever be usable money, and therefore, practical.

Full disclosure:  I own gold coins and silver bars.

KKPSTEIN's picture
KKPSTEIN
Status: Silver Member (Offline)
Joined: Oct 20 2008
Posts: 120
Re: Gold buying

Hi etrblues.  Great first post! 

Yes, it is a hedge against inflation for sure. But there are many other aspects to consider.  There is less than 1 oz of gold above the ground today per person.  Some people say less than half an oz.  When SHTF and everyone rushes to protect themselves against what is happening and they all go rushing toward the gold/silver door, they will find out that it is a really small door.  When they stampede the door, yes, the price will go up, but the most important thing to remember is that it will always hold its "value", you won't have to cash it into the dealer for fiat, unless you want to.  You can simply buy things with it.  That is why it is good to have small denominational, tradable pieces.

For 4 or more generations of great affluence in western culture, we have lost the knowledge that gold has always been the money of kings and silver has always been the money of day to day transactions for the regular folk. All money started out as gold or silver. In the last century, gold was finally removed from backing our currency and taken out of the day to day marketplace for consumer transactions. This is why for many people, we just don’t understand the buying power and “usage” of gold. It seems foreign to us. Yet if you went to Turkey or India right now, you go pretty much anywhere and buy something with pure gold.

Best!
KKP

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Gold buying

etrblues the main thing IMHO to have is something of value that everybody wants or needs. Who needs a piece of paper that is in crises? Paper is what it is or only what we believe it to be & that can change FAST in times of trouble. Gold or commodities can be changed into whatever monetary systems are really functioning at that time you might need it. It might not be so convenient at times.

Look at what happened in Mexico not that long ago when they changed their money from Pesos to New Pesos. Many countries have had serious problems & there has never been a currency in history that was too big to fail except GOLD.

I am putting more money in more functional things than gold at this moment. One big reason is you know a country that is desperate for money is going to raise taxes on everything. So it will cost you more in gold or dollars in the future than now.

Fear is a powerful human emotion and it makes people do things that would make you wonder about whether an otherwise rational person had come slightly loose from his or her bearings. Unfortunately, with the FDIC warning that it could run out of money without an increase in insurance premiums or an infusion of $500 billion from the Treasury, its plea for replenishment of its deposit insurance fund appeals to the fears of people who are losing faith in our financial system.

Then there's the little problem of the 90% loss in the Dow from the peak to the bottom of the market between 1929 and 1932. If we had a repeat of that decline, the Dow would hit 1,400 before it's all over. Here's the problem for those who are buying gold and the safes to store it in along with guns -- in their nightmare scenario, what makes these folks think that they'll be able to get food and safety in exchange for bars of gold? You can't eat gold and it's hard to get change for a $50 gold coin if you want to buy a stick of gum.

It would probably be best for these people to learn how to hunt, fish, build campfires, and farm. I'm not sure the safes and the gold will do them much good. To be fair, the fear is real and I think the United States has an opportunity to help people deal with that fear in a more effective way.

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
Re: Gold buying
idoctor wrote:

 

 Here's the problem for those who are buying gold and the safes to store it in along with guns -- in their nightmare scenario, what makes these folks think that they'll be able to get food and safety in exchange for bars of gold?

 

Idoctor,

 

What makes you think that buying gun safes and gold is all these people are doing. I ( along with many others) have a gun safe and gold (and silver) and in addition I am taking precausions for food and shelter. Gold is for buying the things that you might need in the future and the guns are for protecting them. It is always a good idea to  have a Plan B and the means to carry it out.

 

Ken

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Gold buying

 

However, I fail to see how that wealth can be translated into USABLE money.

In one of Chris's super podcasts with Becca he mentioned that gold can be exchanged at a bank's currency window since gold is considered the other currency.

Inthon's picture
Inthon
Status: Member (Offline)
Joined: Nov 30 2008
Posts: 8
Re: Gold buying

For money to be useful it has to be exchangable for something.  So my question is, are we anticipating:

1)  Total and utter collapse of everything?  Gold would be the ultimate means of exchange, however, so would barter.  In this case, I could only conduct a handful of transactions since I only have a few coins.  Also, why would anyone want gold since they'd need other pressing things first?
2)  Crazy-ass inflation?  Gold rises a great deal, but no one is dealing in gold.  People are still dealing in USD.  Would we just swap gold for fiat?  At what point?

Some combination of both?  I understand gold's rise in value, but I'm not sure what the end goal result is

 Thanks!  

A. M.'s picture
A. M.
Status: Diamond Member (Offline)
Joined: Oct 22 2008
Posts: 2367
Re: Gold buying

iDoctor,

Quote:

Here's the problem for those who are buying gold and the safes to store it in along with guns -- in their nightmare scenario, what makes these folks think that they'll be able to get food and safety in exchange for bars of gold? You can't eat gold and it's hard to get change for a $50 gold coin if you want to buy a stick of gum.

It would probably be best for these people to learn how to hunt, fish, build campfires, and farm. I'm not sure the safes and the gold will do them much good. To be fair, the fear is real and I think the United States has an opportunity to help people deal with that fear in a more effective way.

While I generally agree with you...

There isn't enough wild game to go around.
If we didn't live on a system is predicated on what essentially equates to artificial respiration (Agro-industrial farming) our social organism would perish, and the amount of natural sustanence is drastically less than the demand.

This is self-evident in nations that don't have agro-industrial programs like many of the African Nations; Sierra Leone, Liberia, Zimbabwe, ad nauseum.

Simply learning how to hunt, fish and build a campfire is a temporary solution for what will almost certainly be a very long term problem.

I'm of the opinion that material wealth (to include Gold) will be of little or no use in the near term - if we have a hard collapse.
If we have a soft collapse, you could expatriate anywhere in the world with Gold as a standard of exchange for currency... if that's your thing.

The most useful thing people could do for themselves at this time is bond with like minds, and work towards moving out into a self-sufficient community.

Cheers, and thanks for the interesting post.

Aaron

Ragnar_Danneskjold's picture
Ragnar_Danneskjold
Status: Silver Member (Offline)
Joined: Feb 23 2009
Posts: 100
Re: Gold buying
Inthon wrote:

1)  Total and utter collapse of everything?  Gold would be the ultimate means of exchange, however, so would barter.  In this case, I could only conduct a handful of transactions since I only have a few coins.  Also, why would anyone want gold since they'd need other pressing things first?

Yes, barter would be common.  However, barter would be very inefficient and maybe impossible over long distances. How would someone in Iowa pay someone in the Northwest Territories or Russia for a barrel of oil?  What happens if no one nearby sees any value in what you have to offer as barter?  Gold and silver are good to have in these situations because someone, somewhere is likely to want them, and they can be easily transported.  People know this.  Although they might discount its value in comparison to whatever they would trade for it, someone could accept gold as barter without any real personal need for it knowing that it could be traded later for something they DO need.

Inthon wrote:

2)  Crazy-ass inflation?  Gold rises a great deal, but no one is dealing in gold.  People are still dealing in USD.  Would we just swap gold for fiat?  At what point?

When Brazil was going through its hyperinflation period, US dollars were in demand.  Probably gold too, although I never saw much of that being an American with dollars. However, given the dollars status relative to other currencies, and the fact that all modern currencies are fiat, I don't see a similar situation occuring here.  I don't think there are any suitable substitute currencies for the dollar (precious metals aside) that would hold their value any better, i.e., holding Euros instead of dollars isn't likely to provide me much security against inflation...they're both paper, and the Europeans are devaluing their currency too.    

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Gold buying

 

One day the Minister of Economy declared that no one would be able to get more than 100 bucks a day from the ATM( correct?) nor close accounts. You could just get 100 bucks out of the bank a day. That was it.

Then came the devaluation. Before this happened 1 U$S= 1 $ Argentine peso. Suddenly this changed into 1 U$S dollar= 2 peso then 2.5 even 4 pesos. Today 1U$S= 3 Pesos.

The banks kept the people's money, including their deposits in US dollars. If you had 1000 U$S dollars in Bank Boston for example, they turned it into 1000 pesos, that equaled 333 U$S dollars. They stole 666 dollars from you!

Prices went up 200%, 300% and sometimes more. Imagine for one moment what your life would be like if today you go to your local 7-11 and everything has gone up 200%. How would you survive with your pay check?

The sheep got desperate. First, because they had been stolen by banks and wouldn't return the money to the people.(the so called "corralito" ) then because the classes with the lowest income found out that their salaries weren't high enough to buy the minimum food stuff to survive. The country marched asking for the presidents resignation. He had to leave the presidential palace in a chopper...

Banks were destroyed by people that wanted their hard earned money back. Supermarkets and other shops were looted, as well as regular houses.

This lasted for about a month, the chaos spread all over the country, concentrated in the largest cities.

I remember being at a supermarket and the mob outside, negotiating with the manager. Sometimes, they would not destroy the place if the supermarket surrendered them the goods peacefully.

Food got scarce. I mean, you could buy just a certain amount of milk or water, 4 bottles for example. And most imported goods disappeared. Electro domestics such as TV, videos, and refrigerators kept their prices in dollars, inaccessible for most people. The same happened with real estates, cars and luxury goods.

Today this all seems far away. Not because it got better, but because us humans have this damn capacity to " get used to".

How did our lives change? I cant even being to explain... everything changed!

The streets are more dangerous than ever, thanks to the general poverty.

Education suffered thanks to this as well. Kids working or stealing to survive instead of going to school.

How could I explain this to you?....

For example, tools are really expensive, since most come from abroad... remember, our national industry was sold out or destroyed.

Stuff like MRE, Emergency food bars are impossible to get. No one imports them anymore. (I paid 10 dollars for 1 MRE a guy had)

Guns and ammo are really expensive and are sold in small quantities.

Forget about buying a "case" of ammo! Forget it! I know it's hard for some of you to imagine this, but you just can't buy a " case" of anything. A large store may have 10 or 15 boxes of 308, 20 rounds each box. Small stores have 10. or less.

 

Aaron please read the four links I put up. Here is a real case scenario an Argentinian posted. This is a recent time event 1999 to 2001 I believe. I would like to hear comments about this if you have the time. A fairly long read. Here is a part of it & he talks about gold also. Looks like dollars were in real demand like Brazil. What would be in demand currency wise if this happened to the USA? Maybe it would have to be gold but they would just outlaw this again.

Kenc I agree with your thoughts I am spreading my resources out as far as I can to cover as many bases as I can. Food is one of them but I think we have more time for a while on this with this reflation trade going on. I live out & have the land & water secured already. I have no debt (always lived below my means) so I have added some to PM & commodities I think will play out no mater which way this goes.

Inthon's picture
Inthon
Status: Member (Offline)
Joined: Nov 30 2008
Posts: 8
Re: Gold buying

The author mentions buying small gold rings and gold jewelry.  Is there a good place to buy this?  Pawn shop?  If I don't want to go overboard buying gold, where can I buy gold rings and jewelry?

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1208
Re: Gold buying

idoctor,

There is actually an existing thread where a number of people discussed the links you gave from about 3 months ago. Enjoy!

http://www.peakprosperity.com/forum/lessons-argentinas-collapse/14152

- Nickbert

 

 

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Gold buying

nickbert thanks for the heads up!

jerrydon10's picture
jerrydon10
Status: Gold Member (Offline)
Joined: Mar 2 2009
Posts: 442
Re: Gold buying

Inthon,

I don't know if this company deals in gold now, but they sure do in silver. I bought a substantial collection of rings, bracelets, etc. from this Jewelry manufacturer in Thailand. Most of this was .925 silver with precious stones:

http://www.925e.com/

This company was honest, truely wholesale in prices (I gave only 3 or 4 bucks a set for some solid silver earring sets, etc.) and every piece was represented correctly on their web site.

I believe their minimum order was $300.00 but that has been a few years. Warning, U.S. customs will want a share when you import this stuff. They hit me about 60 bucks on a 3-4 hundred dollar order.

They could probably tell you who is best in gold jewelry prices over there as well.

 

Brainless's picture
Brainless
Status: Silver Member (Offline)
Joined: Dec 9 2008
Posts: 150
Re: Gold buying

 As someone who lived in Thailand and is married to a Thai wife working in the jewelry industry i can tell you that the prices of 925e.com are absolutely not interesting to convert your money into silver or gold. Too much has to be paid for the design and manufacture of it.

Check this website for daily goldprices in Thailand.

http://www.goldtraders.or.th/index_en.php

if you look at the price for gold bullion you see a difference of only 100 baht. This means the markup is a very low percentage of the actual worth. For jewelry the difference is bigger as it has to be manufactured in the desired form.

Gold in Thailand is the preferred way of saving. People still remember a devalueing currency not so long ago. Actually a lot of people are now selling their gold as money gets tight and gold is peaking. It would have been better to keep it, but when it is a choice of food or a shiny ring the choice is easy. This is happening now in the main cities. A few months ago goldshops closed their doors to not be overwhelmed by people trying to sell. As gold is such a normal item in Thailand it is possible to pay for things with it. It's just a quick walk to the gold shop on the corner (there are thousands of shops in Thailand) and get it valued. The seller will be happy to accept it.

We still have some gold bought in 1999, at that moment it was 4000 baht. The price now is 16000. Still not going to sell it because it is in the form of gifts we got for our wedding. But if shtf it will be worth its weight in gold.

 

 

 

jerrydon10's picture
jerrydon10
Status: Gold Member (Offline)
Joined: Mar 2 2009
Posts: 442
Re: Gold buying
Brainless wrote:

 As someone who lived in Thailand and is married to a Thai wife working in the jewelry industry i can tell you that the prices of 925e.com are absolutely not interesting to convert your money into silver or gold. Too much has to be paid for the design and manufacture of it.

But that is the very idea of investing in PM jewelry. I wouldn't recommend that anyone place the entirety of their PM portfolio into jewelry. However, some feel that when TSHTF those who survive economically will be holding PM. They will probably be spending it for food, not turning it into jewelry in mass quantity as they are today. Jewelry prices will sore.

Precious stones may be valuable as well.

If you are going to invest for the PM content only, then by all means look at the percentage over spot as the price indicator.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments