Poll: When the price of Gold/PMs drops significantly, I __________.

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Poll: When the price of Gold/PMs drops significantly, I __________.

There is no right or wrong answer for this question, I'm just curious what the typical response is amongst the CM community.  Multiple answers are OK too...

 

When the price of Gold/PMs drops significantly, I __________.

a) eagerly buy as much MORE as I can afford at the time.

b) don't buy/need more PMs, but I begin to relax a little, thinking market consensus is less worried about an imminent economic collapse.

c)  start to feel like an idiot for liquidating so much of my savings into PMs at much higher prices.

d)  (provide your own custom response)

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Re: Poll: When the price of Gold/PMs drops significantly, ...

Gold and silver tend to have 25% pullbacks. Those are, IMO, buying opportunities.

Are you talking about these bumps or something else. Personally, given the debt, the @ssinine over-spending I see no reason for a major pullback.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

Easy answer: "A".

"C" is possible, but I think, unlikely.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

d) When the groupthink proclaims "only a fool would own gold now" and/or "cash has outperformed every financial asset for the last 10 years", I will be swapping my cash and gold allocations.

The goldbugs are the last  buy-and-hold investors left on the planet. I'll be there with my bucket and mop to clean up when Mr. Market wipes the floor with them.

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Re: Poll: When the price of Gold/PMs drops significantly, ...
jeff wrote:

The goldbugs are the last  buy-and-hold investors left on the planet. I'll be there with my bucket and mop to clean up when Mr. Market wipes the floor with them.

I tend to agree, but what if it's illegal to buy then or some other disruption makes it impossible to obtain possession?  A swiss vault I may use warned "there MAY come a time when we will not be able to fulfill orders regardless of price."  Is it worth paying current prices to avoid that risk?

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Re: Poll: When the price of Gold/PMs drops significantly, ...

D.  I don't understand why you would want to buy the PM's when the money has to be borrowed to do so.

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Re: Poll: When the price of Gold/PMs drops significantly, ...
JAG wrote:

d) When the groupthink proclaims "only a fool would own gold now" and/or "cash has outperformed every financial asset for the last 10 years", I will be swapping my cash and gold allocations.

The goldbugs are the last  buy-and-hold investors left on the planet. I'll be there with my bucket and mop to clean up when Mr. Market wipes the floor with them.

Jeff,

First, I think you may be confusing goldbugs with investors who go with the most favorable asset class at the time (be it gold or be it licorice flavored jelly beans).  Second, all buy-and-hold strategies are relative.  In some cases, buy-and-hold just may be a trading position held until it threatens to become untenable, whether it's for a day or a decade.  For the past decade, gold has been a difficult strategy to beat.  Third, you of all people are aware that emotional attachment to any investment position is never wise, even if it's a contrarian position.  I sense a fair amount of emotion in your posts.  One can have too much of a vested interest in being different from what appears to be the pack even when the apparent pack isn't really the pack.  Mr. Market can work in strange and mysterious ways.  Just sayin' ...   

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Re: Poll: When the price of Gold/PMs drops significantly, ...

If there is a short term drop I would veiw it as a buying opportunity, I am already leveraged heavily so I would not make any additional purchases.....ok I'd probably buy a little more silver. If there is a longterm drop I would realize sanity had returned to our financial system, I would be happy! I tell everyone I have a personal conversation with about PM's that I hope to lose money on my Gold and Silver investments. I mean that, but understand that from an objective veiwpoint it is unlikely considering when I got in. I think today is just as good a time as any to get in by the way.

Gold is not a perfect money, but the history of fiat currency is abysmal in contrast. The debt bomb that is engulfing the planet will likely secure Gold as one of the most sound investments to maintain one's wealth moving forward. Gold will not save the human race however. I would also like to point out that I'm much more comfortable being a Goldbug than a dollarbug.  Thomas Paine and Thomas Jefferson were goldbugs too, some pretty good company. I think as more people awaken to the reality of a rather grim future, more will run to PM's. Very few people are actual owners of bullion in the United States. 

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Re: Poll: When the price of Gold/PMs drops significantly, ...

The only way to beat JPM's fraud is to buy silver and ask for delivery. One ounce at a time.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

A!  But I buy even if the price goes up!  Would you like your kids to inherit dollars or PM's?  Easy answer for me;-)

JAG, your position is well known but the attitude that the "pack" owns gold is outlandish.  I'm sure lots and lots of people own gold in their portfolio's (Paper Gold) but only approx. 3% of the US population owns physical gold (from a discussion with Mr. Kosares).  Silver on the other hand is owned by about 15% of the population (owned for investment purposes/not collecting).  So the attitude of "don't go with the pack" isn't in effect with physical PM's.

As for it being illegal to own or sell in the future.  There's always been a black market and always will be a black market.

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Re: Poll: When the price of Gold/PMs drops significantly, ...
JAG wrote:

d) When the groupthink proclaims "only a fool would own gold now" and/or "cash has outperformed every financial asset for the last 10 years", I will be swapping my cash and gold allocations.

The goldbugs are the last  buy-and-hold investors left on the planet. I'll be there with my bucket and mop to clean up when Mr. Market wipes the floor with them.

I dunno JAG, buy and hold has yielded me a 500% return so far.

Of course, I don't look at it quite that way, to me PM's have just preserved what I can buy today.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

Strabes said:

I tend to agree, but what if it's illegal to buy then or some other disruption makes it impossible to obtain possession?  A swiss vault I may use warned "there MAY come a time when we will not be able to fulfill orders regardless of price."  Is it worth paying current prices to avoid that risk?

Strabes, what if we were talking about holding an Amazon stock certificate, or some other financial asset, instead of gold. Would your reasoning still hold? Gold is different, right? Gold will make you safe when the whole world comes crashing down, right? When you invest in gold, a great deal of baggage comes with it, so much so that its hard to determine if you own gold or your gold owns you. This is exactly the mental scenario that caused people to buy tech stocks in 1999.

I'm not saying a diversified portfolio should not have an allocation to physical gold, it should, even if you have to buy gold at these prices. What I'm saying is that buying gold is a slippery slope, and how you approach it now will have serious ramifications on your investing behaviors later.

ao,

Yes I was being dramatic, but its all in fun. My apologies if my janitorial reference offended anyone. If I would have bought gold in the early 2000s, like you, I would be content to let my trade ride a bit.

LR,

You are correct of course about the physical gold market being grossly underpopulated, but what really matters is the derivative market. The gold ETFs are more popular than ever, and the housing market collapse demonstrated that derivative markets can have a real effect on the price of the physical assets.

Thomas,

Did you pay your power bill with debt? What about dinner? Are you foregoing the use of money in your personal life because of your ideological stance on the money creation process? 

 

 

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Re: Poll: When the price of Gold/PMs drops significantly, ...
Davos wrote:

I dunno JAG, buy and hold has yielded me a 500% return so far.

Wow Davos, lets do the math on that.

(Price sold-Price paid)/ (price paid) x 100 = percentage profit

If you sold today at $1180 that would mean you paid roughly $195/oz initially:

(1180-195)/195 =5 (or 500 percent)

Of course that means you bought in August of 1978. Thats one hell of a buy and hold trade.

Sarcasm aside, I'm sure you have made significant "paper" profits on your gold investments, but thats only have of the equation here. The question is when do you exit that trade and lock in the profits?

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Re: Poll: When the price of Gold/PMs drops significantly, ...
JAG wrote:
Davos wrote:

I dunno JAG, buy and hold has yielded me a 500% return so far.

Wow Davos, lets do the math on that.

(Price sold-Price paid)/ (price paid) x 100 = percentage profit

If you sold today at $1180 that would mean you paid roughly $195/oz initially:

(1180-195)/195 =5 (or 500 percent)

Of course that means you bought in August of 1978. Thats one hell of a buy and hold trade.

Sarcasm aside, I'm sure you have made significant "paper" profits on your gold investments, but thats only have of the equation here. The question is when do you exit that trade and lock in the profits?

Well, I did the math in my head, $265 rings in my memory $345 does as well. May be 450% with a calculator. Sarcasm: Ask me what it is at some near future date.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

Once you paperbugs get it through your heads that it isn't the PM's that that are changing in value but the paper, then you will realize that it does not matter what price you pay for the PM insurance policy. Check out CM's crash course on inflation for more info.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

I'll go with "a" unless there are more pressing needs as regards improvements or sustainability projects around the abode.

Coop

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Re: Poll: When the price of Gold/PMs drops significantly, ...

If it  were to drop significantly, below $1000. Canadian, I'd sell, because that would indicate aliens had taken over the levers of control! Manipulation of the kind required to keep it suppressed, particularly considering the Euro/Greek situation, would have to be either superhuman or mean we'd segued into a parallel reality where basic math is radically different.Tongue out

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Re: Poll: When the price of Gold/PMs drops significantly, ...

With my BS paper I rather own thousands of slaves LOL....something that will do something for me.....like oil.

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Re: Poll: When the price of Gold/PMs drops significantly, ...
gregroberts wrote:

Once you paperbugs get it through your heads that it isn't the PM's that that are changing in value but the paper, then you will realize that it does not matter what price you pay for the PM insurance policy. Check out CM's crash course on inflation for more info.

Greg, in all but the longest (multi-generational) time frame, this is just more goldbug "baggage". Did stock prices rise in the 90's because the dollar got weaker? Can the majority of the rise in house prices in the 2000's be just the result of a weakening dollar? Explaining moves in gold within a  macro-economic context is just not realistic in all but the longest time frames. This is just another way that owning gold distorts your perspective, more so than any other financial asset.

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Re: Poll: When the price of Gold/PMs drops significantly, ...
coop wrote:

I'll go with "a" unless there are more pressing needs as regards improvements or sustainability projects around the abode.

Coop

+1.  Ditto what Coop said.  I find myself wanting to invest assets in PMs now -and would especially want to if the price went down as you suggest.  But I am not deaf to the argument that "you can't eat gold".  So I find myself "feeling out" the balance between investing in PMs vs concrete investments at home towards promoting sustainability/resilience.   I weighted the former more heavily previously (when the economy crashing seemed more of an abstract concept), and am weighing the latter more heavily recently (as the economy crashing is feeling more real and "imminent", whatever that means).

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Re: Poll: When the price of Gold/PMs drops significantly, ...

d)  I'm relatively satisfied with the current % of my total so-called "wealth" made up by physical PMs.  So far i've been fortunate enough to be able to afford my sustainability purchases without selling PMs.  However, I'm currently contemplating some serious construction to add features to the house that will probably require getting into the PMs.  I'm fine with that because sustainability is what comes first in my approach to just about everything.  If selling PMs will add to that, fine.

Doug

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Re: Poll: When the price of Gold/PMs drops significantly, ...
JAG wrote:

Did stock prices rise in the 90's because the dollar got weaker? 

No argument there: Tech bubble.

JAG wrote:

Can the majority of the rise in house prices in the 2000's be just the result of a weakening dollar? 

No argument there: Bubble, credit bubble and a bubble of renters who got qualified vis-a-vis subprime, alt-a's and option arms.

JAG my friend, are you being honest with yourself? 4-5 trillion dollar shortfalls (aka deficits) will mean one of 2 things, massive "printing" which will decimate the value the dollar can store or a default on the 108 trillion in off balance liabilities and the 18 (includes GSE debt) trillion in debt. Both spell toast for the dollar.

I think there is an awful lot of blurring between asset bubbles and what is a currency crisis.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

(d)  

If PMs are waaay down, IMO that means we're into the deflationary dip that would likely precede big inflation....   I've already got $10x invested in PMs, but only $x in other preps (stored food, mostly). So I'd be busy spending my excess cash on items at the top of my (endless) prep list.  Cuz once big inflation sets in, "excess cash" is likely to get sparse for me.  

If I had more money to throw around, I'd be buying on the dip.  But I don't so I won't...

Viva -- Sager

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Re: Poll: When the price of Gold/PMs drops significantly, ...
JAG wrote:

 

Greg, in all but the longest (multi-generational) time frame, this is just more goldbug "baggage". Did stock prices rise in the 90's because the dollar got weaker? Can the majority of the rise in house prices in the 2000's be just the result of a weakening dollar? Explaining moves in gold within a  macro-economic context is just not realistic in all but the longest time frames. This is just another way that owning gold distorts your perspective, more so than any other financial asset.

House prices are a good example of massive money printing and lending at unsustainable interest rates, that have led to the inevitable currency depreciation against gold.  Gold should be higher right now, and even higher in the future. There is a growing consensus among both deflationists and inflationists that gold is currently underpriced.

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Re: Poll: When the price of Gold/PMs drops significantly, ...

Jeff,

Personally, I purchase gold and silver only as a means of preserving what excess wealth I generate, not as in investment vehicle to create more wealth. Given what many of us suspect regarding the likelihood of a U.S. sovereign debt default and/or lethal debasement of Federal (Fractional) Reserve Notes, this seems to me a safe bet. Like many others, if I have needs for improvements or preparations, those would be met prior to any purchase of PMs.

Finally, when it comes to choosing which "pack" with which to run, I'd choose the group here at CM. I did find your thoughts on the effects of PM derivatives on the price of physical PMs interesting, however. Do you have anything to back up that suspicion?

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Re: Poll: When the price of Gold/PMs drops significantly, ...
JAG wrote:

 The question is when do you exit that trade and lock in the profits?

Jeff,

 

Good question. Let me ask you a question to follow up. If Davos was to "exit his trade and lock in a profit" just what would he trade his gold for-Dollars???

Ken

 

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Re: Poll: When the price of Gold/PMs drops significantly, ...

d) Don't really care where the price is but watch it and study it according to other world events. Buy some when you can afford it. I'm investing everything I can into tangible goods such as building supplies, tools, solar PVs + wind power + geothermal, books, seeds, soil and edible perennial plants. If I've got any money left I like to invest some in a decent mix of gold/silver and some hard cash in at least 2 currencies.

Gold/Silver won't keep you warm or fed but if S.(really)H.T.F. and you've got to get out of dodge you can always stick it up your A$$ and run. I keep PMs as insurance for MOBILITY!!!  My other argument that also touches on mobility is that in a hyper-inflationary S.H.T.F. scenario where we're brought down to a barter/trade system how the hell does one make larger transactions (house/farm/vehicle)?

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Re: Poll: When the price of Gold/PMs drops significantly, ...


Ken C wrote:

Jeff,

Good question. Let me ask you a question to follow up. If Davos was to "exit his trade and lock in a profit" just what would he trade his gold for-Dollars???

Ken

Hi Ken,

Can a person trade gold for something other than currency? Many people have discussed using PM's to barter for needed items in a post-crisis world, as an "insurance policy" per se. On its face, this seems like a reasonable use for PMs, but I think its difficult to actually predict the nature of a post-crisis USA. Care to speculate on how you see such a future playing out? What assumptions are you making of this future?

In the "world" we currently live in, how are you going to use the purchasing power that your PM's are "preserving" without first converting it to USDs? If digital gold transactions (like Goldmoney's iPhone application) became commercially accepted, this could change this situation significantly.

Dr. Peters wrote:

I did find your thoughts on the effects of PM derivatives on the price of physical PMs interesting, however. Do you have anything to back up that suspicion?

In 2008, when the price of gold plunged along with every other asset (but the USD), it wasn't because people holding PMs decided to sell en masse, it was because those holding the gold ETFs liquidated their positions. Premiums on purchasing PMs went through the roof during that period, so as Strabes alluded to in an earlier post it is difficult and expensive to purchase physical gold during a market crisis. In this situation, it might be cheaper to purchase shares in the Gold ETFs, hold them for a year, and then liquidate them to purchase physical gold when the premiums were less. This is just speculation of course because I haven't run the numbers on this trade (including capital gains taxes).

Davos,

A while back I think you posted that you were looking into becoming a gold dealer yourself. What did you find out about this possibility, if anything?

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Re: Poll: When the price of Gold/PMs drops significantly, ...
JAG wrote:


Ken C wrote:

Jeff,

Good question. Let me ask you a question to follow up. If Davos was to "exit his trade and lock in a profit" just what would he trade his gold for-Dollars???

Ken

Hi Ken,

Can a person trade gold for something other than currency? Many people have discussed using PM's to barter for needed items in a post-crisis world, as an "insurance policy" per se. On its face, this seems like a reasonable use for PMs, but I think its difficult to actually predict the nature of a post-crisis USA. Care to speculate on how you see such a future playing out? What assumptions are you making of this future?

 

 

Jeff,

My plan for the gold that I have is trade it for currency only when I have to. If I need something that I can only get with currency then I will trade enough gold to get the  minimum currency that I need. I think gold will hold value much better than any currency. I just don't think that sitting on cash will preserve any wealth. I am sure that there are other opinions.

 

Ken

 

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Re: Poll: When the price of Gold/PMs drops significantly, ...

Answer: D

 I will stick with silver and buy as much as I can when the price drops. Also If the S.H.T.F. I have salt, sugar, green coffee (unroasted), rice, beans and other commodities  with which I can barter for other stuff

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