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    The Screaming Fundamentals For Owning Gold And Silver

    The investment thesis for precious metals
    by Chris Martenson

    Wednesday, June 29, 2011, 1:22 PM

This report lays out an investment thesis for gold and one for silver.  Various factors lead me to conclude that gold is one investment that you can park for the next ten or twenty years, confident that it will perform well. My timing and logic for both entering and finally exiting gold (and silver) as investments are laid out in the full report.

The punch line is this: Gold and silver are not (yet) in bubble territory, and large gains remain, especially if monetary, fiscal, and fundamental supply-and-demand trends remain in play.

Introduction

In 2001, as the painful end of the long stock bull market finally seeped into my consciousness, I began to grow quite concerned about my traditional stock and bond holdings. Other than a house with 27 years left on a 30 year mortgage, these holdings represented 100% of my investing portfolio. So I dug into the economic data to see what I could discover. What I found shocked me. It's all in the Crash Course in both video and book form, so I won't go into that data here.

By 2002, I had investigated enough about our monetary, economic, and political systems that I decided that holding gold and silver would be a very good idea, poured 50% of my liquid net worth into precious metals, and sat back and watched.

Since then, my appreciation for and understanding of the role of gold as a monetary asset and silver as an indispensable industrial metal have deepened considerably.

Investing in gold and silver is still a good idea. Here's why.

Why own gold and silver?

The reasons to hold gold and silver, and I mean physical gold and silver, are pretty straightforward. So let’s begin with the primary reasons to own gold.

  1. To protect against monetary recklessness
  2. As insulation against fiscal foolishness
  3. As insurance against the possibility of a major calamity in the banking/financial system
  4. For the embedded 'option value' that will pay out if and when gold is remonetized

By ‘monetary recklessness,’ I mean the creation of money out of thin air and the application of more liquidity than the productive economy actually needs. The central banks of the world have been doing this for decades, not just since the onset of the great financial crisis. In gold terms, the supply of above-ground gold is growing at roughly 3% per year, while money supply has been growing at nearly three times that yearly rate since 1980.

Now this is admittedly an unfair view, because the economy has been growing, too, but money and credit growth have handily outpaced even the upwardly distorted GDP measurements by a wide margin.  As the economy stagnates under this too-large debt load while the credit system continues to operate as if perpetual expansion were possible, look for all the resulting extra dollars to show up in prices of goods and services.    

Real interest rates are deeply negative (meaning that the rate of inflation is higher than Treasury bond yields). This is a forced, manipulated outcome courtesy of central banks that are buying bonds with thin-air money. Historically, periods of negative real interest rates are nearly always associated with outsized returns for commodities, especially precious metals. If and when real interest rates turn positive, I will reconsider my holdings in gold and silver, but not until then. That is as close to an absolute requirement as I have in this business.

Monetary policies across the developed world remain as accommodating as they’ve ever been. Even Greenspan's 1% blow-out special in 2003 was not as steeply negative in real terms as what Bernanke has recently engineered. But it is the highly aggressive and ‘alternative’ use of the Federal Reserve balance sheet to prop up insolvent banks and to sop up extra Treasury debt that really has me worried. There seems to be no way to end these ever-expanding programs, and they seem to have become a permanent feature of the economic and financial landscape.  In Europe, the equivalent would be the sovereign debt now found on the European Central Bank (ECB) balance sheet.  

Federal deficits are seemingly out of control and are now stuck in the -$1.5 trillion range. Massive deficit spending has always been inflationary, and inflation is usually gold/silver friendly. Although not always, mind you, as the correlation is not strong, especially during mild inflation (less than 5%). Note, for example, that gold fell from its high in 1980 all the way to its low in 1998, an 18 year period with plenty of mild inflation along the way. Sooner or later I expect extraordinary budget deficits to translate into extraordinary inflation.

Reason #3, insurance against a major calamity in the banking system, is an important part of my rationale for holding gold. I’m not referring to “paper gold” either, which includes the various tradable vehicles (like the "GLD" ETF) that you can buy like stocks through your broker. I’m talking about physical gold and silver because of their unusual ability to sit outside of the banking/monetary system and act as monetary assets.

Literally everything else financial, including your paper US money, is simultaneously somebody else’s liability, but gold and silver are not. They are simply, boringly, just assets. This is a highly desirable characteristic that is not easily replicated.

Should the banking system suffer a systemic breakdown, to which I ascribe a reasonably high probability of greater than 1-in-4 over the next 5 years, I expect banks to close for some period of time. Whether it's two weeks or six months is unimportant; no matter the length of time, I'd prefer to be holding gold than bank deposits.

During a banking holiday, your money will be frozen and left just sitting there, even as everything priced in money (especially imported items) rocket up in price. By the time your money is again available to you, you may find that a large portion of it has been looted by the effects of a collapsing currency. How do you avoid this? Easy; keep some ‘money’ out of the system to spend during an emergency. I always advocate three months of living expenses in cash, but you owe it to yourself to have gold and silver in your possession as well.

The final reason for holding gold, because it may be remonetized, is actually a very big draw for me. While the probability of this coming to pass may be low, the rewards would be very high.

Here are some numbers:  The total amount of 'official gold,' or that held by central banks around the world, is 30,684 tonnes, or 987 million troy ounces (MOz). In 2008 the total amount of money stock in the world was roughly $60 trillion.

If the world wanted 100% gold backing of all existing money, then the implied price for an ounce of gold is ($60T/987MOz) = $60,790 per troy ounce.

Clearly that's a silly number (or is it?), but even a 10% partial backing of money yields $6,000 per ounce. The point here is not to bandy about outlandish numbers, but merely to point out that unless a great deal of the world's money stock is destroyed somehow, or a lot more official gold is bought from the market and placed into official hands, backing even a fraction of the world's money supply by gold will result in a far higher number than today's ~$1,500/Oz.

The Difference Between Silver and Gold

Often people ask me if I hold goldandsilver as if it were one word. I do own both, but for almost entirely different reasons. Gold, to me, is a monetary substance. It has money-like qualities and it has been used as money by diverse cultures throughout history. I expect that to continue.

There is a chance, growing by the week, that gold will be remonetized on the international stage due to a failure of the current all-fiat regime. If or when the fiat regime fails, there will have to be some form of replacement, and the only one that we know works for sure is a gold standard. Therefore, a renewed gold standard has the best chance of being the ‘new’ system selected during the next bout of difficulties.

Silver is an industrial metal with a host of enviable and irreplaceable attributes. It is the most conductive metal known, and therefore it is widely used in the electronics industry. It is used to plate critical bearings in jet engines and as an antimicrobial additive to everything from wall paints to clothing fibers. In nearly all of these uses, plus a thousand others, it is used in such vanishingly small quantities that it is hardly worth recovering at the end of the product life cycle — and often isn’t.

Because of this dispersion effect, above-ground silver is actually at something of a historical low point. When silver was used primarily for monetary and ornamentation purposes, the amount of above-ground, refined silver grew with every passing year. After industrial uses cropped up, that trend reversed, and today there are perhaps 1 billion ounces above ground, when in 1980 there were roughly 4 billion ounces.  

Because of this consumption dynamic,  it's entirely possible that over the next twenty years not one single net new ounce of above ground silver will be added to inventories, while in contrast, a few billion ounces of gold will be added.

I hold gold as a monetary metal. I own silver because of its residual monetary qualities, but more importantly because I believe it will continue to be in demand for industrial uses for a very long time, and it will become a scarce and rare item.

Scarcity

If we cast our minds forward ten years and think about a world with oil costing 2x to maybe 8x more than today, we have to ask how many of our currently-operating gold and silver mines, or the base metal mines from which gold and silver are by-products, will still be in operation, and how many will close because their energy costs will have exceeded their marginal economic benefits.

After just 100 years of modern, machine-powered mining, nearly all of the good ores are gone. By the time you are reading stories like this next one, you should be thinking, 'Why are they going to all that trouble unless that's the best option left?'

South African Miners Dig Deeper to Extend Gold Veins' Life Spans

Feb 17, 2011

JOHANNESBURG—With few new gold strikes around the world that can be turned into profitable mines, South Africa's gold miners are planning to dig deeper than ever before to get access to rich veins.

The plans raise questions about how to safely and profitably mine several miles below the surface. Success would mean overcoming problems such as possible rock falls, flooding and ventilation challenges and designing technology to overcome the threats.

Mark Cutifani, chief executive officer of AngloGold Ashanti Ltd., has a picture in his office of himself at one of the deepest points in Africa, roughly 4,000 meters, or 13,200 feet, down in the company's Mponeng mine south of Johannesburg. Mr. Cutifani sees no reason why Mponeng, already the deepest mining complex in the world, shouldn't in time operate an additional 3,000-plus feet deeper.

"The most critical challenges for all of us in South Africa are depths and depletion of reserves," Mr. Cutifani said in an interview.

The above article is just a different version of the story that led to the Deepwater Horizon incident.  By the time exceptional engineering challenges are being pondered to scrape a little deeper, it tells the alert observer everything they need to know about where we are in the depletion cycle.  We are closer to the end than the beginning.

We are at a point in history where we can easily look forward and make the case for declining per-capita production of numerous important elements just on the basis of constantly falling ore purities, and gold and silver fit into that category rather handily. Depletion of reserves is a very real dynamic. It is not one that future generations will have to worry about; it is one with which people alive today will have to come to terms.

The issue of Peak Oil only exacerbates the reserve depletion dynamic by adding steadily rising energy input costs to mix. Should oil get to the point of actual scarcity, where we have to ration by something other than price, then we must ask where operating marginal mines fits into the priority list. Not very high, would be my guess.

Supply and Demand – Gold

Not surprisingly, the high prices for gold and silver have stimulated quite a bit of exploration and new mine production. With over a decade of steadily rising prices, there has been ample time to bring on new production. Which leads to a real surprise: In the case of gold, relatively little incremental mine production has occurred.

The analytical firm Standard Chartered has calculated  a rather subdued 3.6% gold production growth over the next five years:

Most market commentary on gold centres on the direction of US dollar movements or inflation/deflation issues – we go beyond this to examine future mine supply, which we regard as an equally important driver. In our study of 375 global gold mines and projects, we note that after 10 years of a bull market, the gold mining industry has done little to bring on new supply. Our base-case scenario puts gold production growth at only 3.6% CAGR over the next five years.

(Source – Standard Chartered)

Of course, none of this is actually surprising to anyone who understands where we are in the depletion cycle, but it's probably quite a shock to many an economist. The quoted report goes on to calculate that existing projects just coming on-line need an average gold price of $1,400 to justify the capital costs, while greenfield, or brand-new, projects require a gold price of $2,000 an ounce.

This enormous increase in required gold prices to justify the investment is precisely the same dynamic that we are seeing with every other depleting resource: Energy costs run smack-dab into declining ore yields to produce an exponential increase in operating costs. And it's not as simple as the fuel that goes into the Caterpillar D-9s; it's the embodied energy in the steel and all the other energy-intensive mining components all along the entire supply chain.

Just as is the case with oil shales that always seem to need an oil price $10 higher than the current price to break even, the law of receding horizons (where rising input costs constantly place a resource just out of economic reach) will prevent many an interesting, but dilute, ore body from being developed. Given declining net energy, that's forever, as far as I am concerned.

The punch line of the Standard Chartered gold report is that they think $5,000 gold is a realistic target and go on to note the most important shift in gold accumulation of the past 30 years:

The limited new supply comes at a time when central banks have turned from being net sellers to significant net buyers of gold. The result, in our view, will be a gold market in deficit, even assuming flat growth in demand.

With the supply-demand balance so out of kilter, we see the gold price potentially going to US$5,000/oz.

(Source)

The emergence of central banks being net acquirers of gold is actually a pretty big deal. Over the past few decades, central banks have been actively reducing their gold holdings, preferring paper assets over the 'barbarous relic.' Famously, Canada and Switzerland vastly reduced their official gold holdings during this period, a decision that many citizens of those countries have openly and actively questioned.

The World Gold Council out of the UK is the primary firm that aggregates and reports on gold supply-and-demand statistics. Here's the most recent data on official (i.e., central bank) gold holdings:

(Source)

Note that the 2009 data is lowered by slightly more than 450 tonnes in this chart to remove the one-time announcement by China that it had secretly acquired 454 tonnes over the prior six years, so this data may differ from other representations you might see. I thought it best to remove that blip from the data. Also, the data for 2011 is for the first four months only, so we might expect 2011 to be a record-setter if the current pace continues.

Overall, world supply and demand are a bit out of alignment right now, with supply increasing by 2% last year and non-official demand increasing by 10%:

The summary of the fundamental analysis is that with mine production seriously lagging, the price increases for gold, and increased central bank and investment demand, we have set the stage for some hefty price increases irrespective of any fiscal or monetary shenanigans.

However, once we put those back into the mix, I forecast a quite volatile but upwardly sloping price for gold over the coming years. Possibly a very steep upward slope at points.

Supply and Demand – Silver

Silver demand is growing by double-digit percentages, being led primarily by industrial uses and investment demand. The Silver Institute does a fine job of tracking and reporting on these matters.

First, demand:

Total fabrication demand grew by 12.8 percent to a 10-year high of 878.8 Moz in 2010; this surge was led by the industrial demand category. Last year, silver’s use in industrial applications grew by 20.7 percent to 487.4 Moz, nearly recovering all the recession-induced losses in 2009, and is now seeing pronounced advances in 2011.

Jewelry posted a gain of 5.1 percent, the first substantial rise since 2003, primarily due to strong GDP gains in emerging markets and the industrialized world’s improving economic picture. Photography fell by 6.6 Moz, realizing its smallest loss in nine years, as medical centers deferred conversion to digital systems. Silverware demand fell to 50.3 Moz from 58.2 Moz in 2009, essentially due to lower demand in India.

(Source)

Now, supply:

Silver Production 2010

Silver mine production rose by 2.5 percent to 735.9 Moz in 2010 aided by new projects in Mexico and Argentina. Gains came from primary silver mines and as a by-product of lead/zinc mining activity, whereas silver volumes produced as a by-product of gold fell 4 percent last year.

Mexico eclipsed Peru as the world’s largest silver producing country in 2010, and Peru is followed by China, Australia and Chile. Global primary silver supply recorded a 5 percent increase to account for 30 percent of total mine production in 2010.

(Source)

Again, we are comparing double-digit demand increases against low single-digit supply increases.  After a decade of rather dramatic price increases for silver, the alert observer should be asking exactly why this is the case.

In table form, we can clearly see that the silver balance for the world requires both dishoarding from government stockpiles and the recycling of scrap silver. That is, shortfalls from mining have to be made up from above-ground stocks:

(Source)

There's only so long that such an imbalance can continue before the shortfalls require much higher prices to cool off demand.

One of the precise reasons that I originally invested quite heavily in silver is that I came to the conclusion that the price was far too low, artificially so, and that it would therefore be a great investment. So far, so good.

Given the above fundamentals, I project that prices for the precious metals will be many multiples higher – in today's dollar terms – by the end of the decade.

Part II of this report: How to Play The Greatest Gold & Silver Bull Market Of Our Lifetime delves into the specifics of how much of your net worth to invest and in what forms, what price targets gold and silver are likely to reach, and what indicators to look for that will indicate that it's time to sell out of your precious metal investments.

Click here to access Part II (free executive summary, enrollment required for full access).

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211 Comments

  • Wed, Jun 29, 2011 - 3:20pm

    #1
    sundarb

    sundarb

    Status Bronze Member (Offline)

    Joined: Jan 10 2011

    Posts: 35

    thank you Chris

    Pretty Comprehensive analysis, thanks Chris!

    Here’s a video I found that is less than 5 minutes, but packed with info on gold..

    May help people who want to let their friends know the value of gold.

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  • Wed, Jun 29, 2011 - 3:32pm

    #2

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    Best Article Since The Crash Course

    Thank you, Dr. Martenson. This article is, hands down, the best and most useful article I’ve ever read from you since the Crash Course.

    You have really cleared up a lot of the confusion and hesitation out there on the purpose and role of gold and silver. And most importantly – something that a lot of other analysts out there have not put out that I know of – you have reminded us of the fact that the ores out there have already been high-graded. All that’s left is the expensive-to-extract stuff that will become even more expensive to extract in the future.

    Interestingly, I see a huge spike in today’s gold and silver spot prices in the past hour. Coincidence? Maybe not… 🙂

    Poet


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  • Wed, Jun 29, 2011 - 3:34pm

    #3
    ewspears

    ewspears

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    Con Job

    I saw article part1 on ZH. Clicked on link to read part2. was taken to CM website which indicated I had to Register for free to access part2 so I did so. then when I clicked to read part 2 it brought up another page giving me subscription options.

    IT’S CON-JOBS LIKE THIS THAT GIVE THE INVESTMENT COMMUNITY A BAD REPUTATION!!!!!!

    [Moderator’s note: Generally a statement such as this would be a violation of our forum guidelines inasmuch as it apparently accuses somebody of a fraud or attempted fraud without an adequate basis in fact, which is libel.  However, we will assume that the poster was merely confused because he mis-read the langauge in the link.  See Adam’s explanation below for an excellent clarification.]

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  • Wed, Jun 29, 2011 - 3:48pm

    Reply to #3
    Doug

    Doug

    Status Platinum Member (Online)

    Joined: Oct 01 2008

    Posts: 1364

    ewspears wrote:I saw

    [quote=ewspears]
    I saw article part1 on ZH. Clicked on link to read part2. was taken to CM website which indicated I had to Register for free to access part2 so I did so. then when I clicked to read part 2 it brought up another page giving me subscription options.
    IT’S CON-JOBS LIKE THIS THAT GIVE THE INVESTMENT COMMUNITY A BAD REPUTATION!!!!!!
    [/quote]
    This site has more free valuable info than any other site I’m aware of.  I’ve been a member for three years, and pt. II of this article is worth every penny of the fee. 
    Doug

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  • Wed, Jun 29, 2011 - 3:51pm

    Reply to #3

    Adam Taggart

    Status Platinum Member (Offline)

    Joined: May 25 2009

    Posts: 2548

    Part 2 is for enrolled members

    ewspears -This site is supported by an enrollment business model, where the deepest analysis is reserved for paying subscribers. The article on ZH clearly states that to access Part 2, enrollment is required (“free executive summary, enrollment required for full access”). The Part 2 executive summary page reiterates this and includes a very large “Enroll now” button that links to a detailed page further explaining the benefits of enrollment. and enabling those interested to subscribe.
    We take great pains to be transparent: no one is trying to “con” anyone here.
    And as Doug notes, we invest heavily in producing high-quality public content and have a well-demonstrated history of making a large amount of analysis & commentary free to all vs other subscription sites. We view maximizing the value we offer to both free and paying readers is in everyone’s best interests. 

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  • Wed, Jun 29, 2011 - 4:39pm

    Reply to #3

    Siemster

    Status Member (Offline)

    Joined: Nov 17 2010

    Posts: 0

    Table

    Adam,Chris,
    Great stuff, as always!

    I think I’ve noticed an error in THE last table in part 1. Supply and demand totals are equel.

    Kind regards from Holland,
    Siemster

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  • Wed, Jun 29, 2011 - 4:42pm

    #4

    thc0655

    Status Platinum Member (Offline)

    Joined: Apr 27 2010

    Posts: 1445

    Gold spike, enrollment

    Poet:

    The dollar is dropping and goldandsilver rising because the President is speaking/lying/obfuscating on national TV!!  🙂  Besides we can save the phrase “huge spike” in goldandsilver for when gold rises $100-300 in a day and silver $10-30 in a day. Those days are coming soon enough.  Yahoo!

    ewspears:

    I held off getting a subscription, then got a 3 month subscription, and now an annual renewing subscription.  VERY VERY worth the price.  For a lot less, you can buy Mike Maloney’s book Rich Dad’s Guide to Investing in Gold and Silver and get an extremely comprehensive look at the subject which completely agrees with Chris Martenson (without the up to the minute quotes and stats).

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  • Wed, Jun 29, 2011 - 6:20pm

    Reply to #3

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    ewspears wrote:I saw

    [quote=ewspears]
    I saw article part1 on ZH. Clicked on link to read part2. was taken to CM website which indicated I had to Register for free to access part2 so I did so. then when I clicked to read part 2 it brought up another page giving me subscription options.
    IT’S CON-JOBS LIKE THIS THAT GIVE THE INVESTMENT COMMUNITY A BAD REPUTATION!!!!!!
    [/quote]
    Mr/Ms Spears,
    This is not Zero Hedge. Comments on this site are held to a higher standard.
     
    There are many sites on the net where a free-for-all atmosphere for posting and the idea that pretty much anything goes is the theme, but this is simply not one of them. You are invited to participate in the discussion, offering considered opinions and valuable knowledge, but I am afraid you will not last long with the posting style you have adopted should it continue. Simply put, attacks are not tolerated.

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  • Wed, Jun 29, 2011 - 6:58pm

    #5

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Here it comes....

    Oh boy,

    The gold-bug baggage in this piece is top-dollar. Dr. M, your rationalizing skills are better than most, but the reasons that you cite for holding gold are lacking any proven correlation. For example:

    • Thin-air Money: Money has been created from thin-air for our entire lifetimes. If there was a correlation between money being “printed” by the central bank (or banking system) and gold, then how do you explain the bear market in gold during the 80s and 90s? Did the money supply decrease during the greatest bull market in our history?
    • Financial System Collapse: Since the price of gold is determined by the financial markets, what do you suppose will happen to its price action in the absence of a financial market? What happened to the value of credit default swaps when that market shut down? Granted, local physical markets may still exist in such a scenario, but when people are faced with physical survival, will any form of money (including gold) have any personal value?
    • Gold Remonitized: Ok, so let’s assume that a one-world currency is in our future and that its value will be based on some fraction of physical gold. Do you really think that architects of such a monetary system would not confiscate all the gold they could prior to its implementation? Would they allow a redistribution of wealth to occur, or would it be the same system with a new face on it?
    • Supply & Demand: In our distorted market environment, supply and demand analysis has a diminished role in the price action of commodities. The biggest component of commodity prices is wall street speculation. The spike in oil in 2008 is a good example. Prices didn’t rise because there was a shift in the supply-vs-demand equation, they rose because wall street was exploiting the market for profit.

    On the other hand, you did give one reason that does have a good correlation to the price of gold; Negative Real Interest Rates. But this phenomenon seems more likely in a deflationary environment, rather than in the “extraordinary inflation” environment that you are hedging against by holding gold.

    Bottom Line: Just like we did with the internet bubble in the late 90s, we are fooling ourselves with all our rationalizations about the value of gold. Gold is in a bull market for one reason, so Wall Street can profit from our rationalizations and expectations. The game is always the same, and the “gold game” is getting big enough these days, that a crash in gold will likely be the hallmark of the next economic crisis.

    It was an enjoyable read and great writing, as usual. You almost had Captain Sheeple convinced.Laughing

     

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  • Wed, Jun 29, 2011 - 8:58pm

    #6
    robbie

    robbie

    Status Bronze Member (Offline)

    Joined: Jul 16 2008

    Posts: 57

    Original mint tube vs. Dates our choice

    “Dates our choice” always seems to be the cheaper option when purchasing coins (Eagles). If there is no numismatic value, is there any reason to pay more for original mint items in a tube i.e. it’s only the number of ounces that really matter right?

     

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  • Wed, Jun 29, 2011 - 11:36pm

    Reply to #3
    12bones

    12bones

    Status Member (Offline)

    Joined: Feb 17 2011

    Posts: 2

    bio fuel

    Ready,I agree with your comments.This site is not a pitch site for anyone and something for nothing is what got us in this current state of affairs. Chris is
    one of the few straight shooters out there but the cost of what he does is very small compared to the service he provides.
    On another subject:
    I am just starting to pull together a biodiesel effort. I am a small farmer and grow soybeans and sunflowers in the south.
    Do you know of any programs near Virgina that teach diodiesel production to small farmers . i am thinking along the lines of providing a portable
    press to the local farms. I have been thinking about a 300 gal press to test the water and investing in a larger press if it proves to make sense over time .
    Any advice concerning scale to start would be helpful.
     

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  • Wed, Jun 29, 2011 - 11:49pm

    Reply to #5

    zoneblue

    Status Member (Offline)

    Joined: Nov 23 2008

    Posts: 4

    Remonitization?

    I have to disagree with Chris on the gold remonitization angle. The pattern of escalating power consolidation mitigates against this. The Ron Pauls of the world notwithstanding, the chance of a more ‘sound money (even if you thought gold the solution, which i dont) being one of the outcomes of a dollar collapse isnt one of them i am afraid. A new currency/reserve is much more likely to be more of the same, albeit devalued, fiat, and probably something based on  highly cornerable assets, eg. carbon credits.I also agree with others that find the pro gold/inflation consensus of ‘experts’  concerning. Im fairly new to all this but it seems to me that four things will shortly collide:
    a) further (a good deal more if  you believe the investment media) credit/business contraction, deflationary tendancy, reduced demand for commoditys incl PMs, associated flight to cash.
    b) QE addicton, to keep interest rates down, reduce the value of the soverign debt, minimize constituant flashback, and postpone treasurys default as long as possible
    c) peak oil and supply constraints of other inelastic commodtiys, which leads to an significant unwinding of industrial/consumer infrastructure.
    d) continuing relentless population growth and momentum of third world expectations of increased standard of living.
    If my economics is right c supports a, and d supports b. Therein lies the 64K question about what that combination will actually look like, maybe stagflation is the best it gets, and warfare to the bottom being the worst.
    However of only one thing i am certain and thats that local food production and rebuilding community are the only two prioritys we should really have. All the rest is noise. 
     
     
     

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  • Thu, Jun 30, 2011 - 1:01am

    #7

    MrEnergyCzar

    Status Member (Offline)

    Joined: Oct 14 2010

    Posts: 23

    metals

    You can’t print more of it is about all you have to know…..  Everyone should see Chris give one of his talks….

    MrEnergyCzar

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  • Thu, Jun 30, 2011 - 1:18am

    Reply to #5
    Denny Johnson

    Denny Johnson

    Status Bronze Member (Offline)

    Joined: Aug 14 2008

    Posts: 119

    JAG wrote:Oh boy, The

    [quote=JAG]
    Oh boy,
    The gold-bug baggage in this piece is top-dollar. Dr. M, your rationalizing skills are better than most, but the reasons that you cite for holding gold are lacking any proven correlation.
    [/quote]
    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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  • Thu, Jun 30, 2011 - 2:29am

    Reply to #5
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    JAG wrote:Oh boy, The

    [quote=JAG]
    Oh boy,
    The gold-bug baggage in this piece is top-dollar. Dr. M, your rationalizing skills are better than most, but the reasons that you cite for holding gold are lacking any proven correlation. For example:

    Thin-air Money: Money has been created from thin-air for our entire lifetimes. If there was a correlation between money being “printed” by the central bank (or banking system) and gold, then how do you explain the bear market in gold during the 80s and 90s? Did the money supply decrease during the greatest bull market in our history?
    Financial System Collapse: Since the price of gold is determined by the financial markets, what do you suppose will happen to its price action in the absence of a financial market? What happened to the value of credit default swaps when that market shut down? Granted, local physical markets may still exist in such a scenario, but when people are faced with physical survival, will any form of money (including gold) have any personal value?
    Gold Remonitized: Ok, so let’s assume that a one-world currency is in our future and that its value will be based on some fraction of physical gold. Do you really think that architects of such a monetary system would not confiscate all the gold they could prior to its implementation? Would they allow a redistribution of wealth to occur, or would it be the same system with a new face on it?
    Supply & Demand: In our distorted market environment, supply and demand analysis has a diminished role in the price action of commodities. The biggest component of commodity prices is wall street speculation. The spike in oil in 2008 is a good example. Prices didn’t rise because there was a shift in the supply-vs-demand equation, they rose because wall street was exploiting the market for profit.

    On the other hand, you did give one reason that does have a good correlation to the price of gold; Negative Real Interest Rates. But this phenomenon seems more likely in a deflationary environment, rather than in the “extraordinary inflation” environment that you are hedging against by holding gold.
    Bottom Line: Just like we did with the internet bubble in the late 90s, we are fooling ourselves with all our rationalizations about the value of gold. Gold is in a bull market for one reason, so Wall Street can profit from our rationalizations and expectations. The game is always the same, and the “gold game” is getting big enough these days, that a crash in gold will likely be the hallmark of the next economic crisis.
    It was an enjoyable read and great writing, as usual. You almost had Captain Sheeple convinced.
    [/quote]
    Jeff,
    I love reading your thoughts.  When you, my brother-in-law, and a friend’s husband buy gold is when I bail big time.  Please post when you go bullish on gold.  You’re one of my qualitative indicators.

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  • Thu, Jun 30, 2011 - 2:36am

    Reply to #5

    Damnthematrix

    Status Diamond Member (Offline)

    Joined: Aug 09 2008

    Posts: 1132

    Denny Johnson

    [quote=Denny Johnson]JAG………what do you recommend to protect wealth after one is comfortable that he is materially prepared for a tumultuous future?
    [/quote]
    Once you’re “comfortable [and] materially prepared for a tumultuous future”, what do you need wealth for?  Are you gonna buy some slaves?
    Mike

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  • Thu, Jun 30, 2011 - 2:50am

    #8
    Johny Rebel

    Johny Rebel

    Status Member (Offline)

    Joined: Nov 22 2010

    Posts: 0

    Price of Subscription

    To any whiners,

    I have been a free subsciber ofr well over six months.  First, Thank you Chris!!!!  You are one of the few honest gold/silver websites in the world, bar none.  Not once have I ever been asked for a penny for all of the excellent advice that I receive every week.  I live in a small South American country and make in a month what most of you make in a day.  Every penny of savings that I do have is in silver and gold.  I have been a buyer since 1981.  I will return to the US this year and one of the very first things that I will do is buy a full sunscription to Chris’ web site.  Why?  His information is the most acurate and well written that I have seen and I read most of the metals web sites.  I feel that the free services that he provides id more valuable than most of the pay sites.  Sunscribe to his free emails and you will understand that his information is not only honest and well written but covers a lot more than just gold and silver.  He understands the backgrounds of the who’s and why’s.  The internet is filled full of junk in this area and most are just trying to get a buck.  Chris has naver once asked me for a penny and that is why I am indebted to him.  Go to Google and find another site if you feel anything here is a scam.  I have yet to have a bad experience and have even received free iformation usually for only paid subscribers because Chris thought they were so important that the information had to be given out because it was the right thing to do at the time and not to sell you something.  Chris is a staight up guy and I will defend him and his website.  I have made money not because of him but he has helped me keep my focus and to not panic when many of my friends have panicked.  I bought most of my metals when silver was 5 and gold was 300 but I have continued to buy whenever I have gotten any bonusses or received any extra money.  I have never sold an ounce and that is one of the reason that I will become a sunsciber because I do not know enough about the market yet but Chris has helped me and my education in ways that I could never place a price.  Once again, Thank you Chris!!!

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  • Thu, Jun 30, 2011 - 3:30am

    Reply to #3
    Nate

    Nate

    Status Silver Member (Offline)

    Joined: May 05 2009

    Posts: 318

    12bones wrote:Ready, I am

    [quote=12bones]
    Ready,
    I am just starting to pull together a biodiesel effort. I am a small farmer and grow soybeans and sunflowers in the south.
    Do you know of any programs near Virgina that teach diodiesel production to small farmers . i am thinking along the lines of providing a portable
    press to the local farms. I have been thinking about a 300 gal press to test the water and investing in a larger press if it proves to make sense over time .
    Any advice concerning scale to start would be helpful. 
    [/quote]
    12bones,
    An excellent book on biodiesel is “From the Frier to the Fuel Tank” by Joshua Tickell.  He covers crops, chemistry, small and large scale efforts, and suppliers.  Good place to start.
    Nate

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  • Thu, Jun 30, 2011 - 3:39am

    Reply to #3

    Dogs_In_A_Pile

    Status Platinum Member (Offline)

    Joined: Jan 04 2009

    Posts: 810

    Blue Ridge Permaculture

    [quote=12bones]On another subject:
    I am just starting to pull together a biodiesel effort. I am a small farmer and grow soybeans and sunflowers in the south.
    Do you know of any programs near Virgina that teach diodiesel production to small farmers . i am thinking along the lines of providing a portable
    press to the local farms. I have been thinking about a 300 gal press to test the water and investing in a larger press if it proves to make sense over time .
    Any advice concerning scale to start would be helpful.
    [/quote]
    12bones –
    Give these guys a shot. 
    http://www.blueridgepermaculture.net/
    Every now and then a biodiesel workshop comes up.  If one isn’t scheduled in the near term, I’ll bet BRPN can get you set up with someone who knows biodiesel.

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  • Thu, Jun 30, 2011 - 4:01am

    Reply to #5
    Denny Johnson

    Denny Johnson

    Status Bronze Member (Offline)

    Joined: Aug 14 2008

    Posts: 119

    Damnthematrix wrote: Once

    [quote=Damnthematrix]Once you’re “comfortable [and] materially prepared for a tumultuous future”, what do you need wealth for?  Are you gonna buy some slaves?
    Mike
    [/quote]
    Hi Mike…….as I am not totally self sufficient and don’t ever expect to be, I see wealth as something to possibly exchange for goods and services. Perhaps for my own benefit, perhaps for the benefit of others……..mmmmmm, perhaps I could buy some slaves……….. and set them free.
    Let me guess…….you are still young and indestructible, unaware of the reality and limitations of aging.
    I feel very fortunate to have some stored, but liquid, wealth; for example, it allows me to subscribe to this site, and that’s almost priceless. It meant I could take my 89 year old mum out to dinner tonight. It meant I had something to exchange w the guy who fixed my flat car tire yesterday.
     

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  • Thu, Jun 30, 2011 - 4:08am

    Reply to #5

    nickbert

    Status Silver Member (Offline)

    Joined: Jan 14 2009

    Posts: 260

    Damnthematrix wrote:Once

    [quote=Damnthematrix]
    Once you’re “comfortable [and] materially prepared for a tumultuous future”, what do you need wealth for?  Are you gonna buy some slaves?
    [/quote]
    Yes!  Actually, energy slaves (gasoline, electricity, natural gas) if you want to be specific 
     
    I’m preparing for a future of using much less, but I expect I will still be using them to some small degree…
    – Nickbert

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  • Thu, Jun 30, 2011 - 4:09am

    Reply to #5

    Damnthematrix

    Status Diamond Member (Offline)

    Joined: Aug 09 2008

    Posts: 1132

    I wish.....

    [quote=Denny Johnson][quote=Damnthematrix]
    Once you’re “comfortable [and] materially prepared for a tumultuous future”, what do you need wealth for?  Are you gonna buy some slaves?
    Mike
    [/quote]
    Let me guess…….you are still young and indestructible, unaware of the reality and limitations of aging[/quote]
    I wish…….
    At 59 I’m not exactly old yet, but I sure as hell am aware of “the reality and limitations of aging”, especially after doing my back in the other day for just picking my socks up off the floor!
    I expect we’ll be swapping some food, water, and solar energy for some labour…
    Mike

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  • Thu, Jun 30, 2011 - 4:14am

    #9
    r

    r

    Status Bronze Member (Offline)

    Joined: Oct 02 2008

    Posts: 44

    Gold standard RIP

    While I understand that the fiat money system requires a world with unlimited resources, I would not care to see the clock wound back to the 19th century with a return to the Gold standard. Yes, some people would become very wealthy over-night, but many others would remain very poor. And hoarding is one the reasons we lost the gold standard in the first place.

    Gold, especially at $6000+ an ounce is not easy to sell. I don’t mean there won’t be buyers, that’s absurd, but in a dangerous world, and it is predicted here that we are heading toward an even more dangerous world, storing and transporting gold will be difficult.  And it may be confiscated.

    Mining gold is not “clean” in more ways than one. We need to find some other way of stabilizing currency.

    The Toxic Shimmer of Gold

    “Today most mining operations use a process called heap-leaching, where gold is chemically sifted from huge piles of low-grade ore using a water-based sodium cyanide solution. To get a sense of the scale of the process, at the Yanacocha mine in Peru for example, Newmont Mining must extract and leach approximately 30 tons of dirt and rock to recover just one ounce of gold.”

    http://www.pbs.org/frontlineworld/stories/peru404/environmental.html

    Congo’s Gold

    “Five million people have died in the Democratic Republic of Congo in a war fueled primarily from gold mined in the country by warlords and smuggled out to be sold on the open market.”

    http://www.cbsnews.com/video/watch/?id=5825990n#ixzz1QjC6ZaLo http://www.cbsnews.com/video/watch/?id=5825990n

    Alaska’s choice: Salmon or Gold

    “If built, a huge mine would trans­form Alaska’s Bristol Bay region, possibly jeopar­dizing the world’s richest sockeye salmon fishery.”

    http://ngm.nationalgeographic.com/2010/12/bristol-bay/dobb-text

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  • Thu, Jun 30, 2011 - 4:33am

    Reply to #8

    Johnny Oxygen

    Status Gold Member (Offline)

    Joined: Sep 09 2009

    Posts: 454

    Johnny Rebel wrote:To any

    [quote=Johnny Rebel]
    To any whiners,
    I have been a free subsciber ofr well over six months.  First, Thank you Chris!!!!  You are one of the few honest gold/silver websites in the world, bar none.  Not once have I ever been asked for a penny for all of the excellent advice that I receive every week.  I live in a small South American country and make in a month what most of you make in a day.  Every penny of savings that I do have is in silver and gold.  I have been a buyer since 1981.  I will return to the US this year and one of the very first things that I will do is buy a full sunscription to Chris’ web site.  Why?  His information is the most acurate and well written that I have seen and I read most of the metals web sites.  I feel that the free services that he provides id more valuable than most of the pay sites.  Sunscribe to his free emails and you will understand that his information is not only honest and well written but covers a lot more than just gold and silver.  He understands the backgrounds of the who’s and why’s.  The internet is filled full of junk in this area and most are just trying to get a buck.  Chris has naver once asked me for a penny and that is why I am indebted to him.  Go to Google and find another site if you feel anything here is a scam.  I have yet to have a bad experience and have even received free iformation usually for only paid subscribers because Chris thought they were so important that the information had to be given out because it was the right thing to do at the time and not to sell you something.  Chris is a staight up guy and I will defend him and his website.  I have made money not because of him but he has helped me keep my focus and to not panic when many of my friends have panicked.  I bought most of my metals when silver was 5 and gold was 300 but I have continued to buy whenever I have gotten any bonusses or received any extra money.  I have never sold an ounce and that is one of the reason that I will become a sunsciber because I do not know enough about the market yet but Chris has helped me and my education in ways that I could never place a price.  Once again, Thank you Chris!!!
    [/quote]
    Yeah! Another Johnny!
    Great first post

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  • Thu, Jun 30, 2011 - 5:07am

    #10

    ccpetersmd

    Status Silver Member (Offline)

    Joined: Oct 12 2008

    Posts: 103

    Great post, as usual, Chris;

    Great post, as usual, Chris; thank you!

    While I have acquired a fair amount of physical gold and silver (nowhere near 50%, but still what I consider a fair amount), I understand JAG’s concerns. Gold, and to a lesser extent, silver, have been time-honored stores of wealth. It is hard to ignore the vast swath of human history during which this has been true. Still, much of this history occurred before the advent of carbon-based fuels, which empowered and extended the industrial revolution, and I continue to have nagging doubts as to whether or not the time-tested value of gold and silver may be past.

    If we finally realize that our fiat systems of money are inherently flawed, and seek out a commodity upon which to base a new system of currency, would not energy be a more useful base? I don’t know how this would be constructed, perhaps based upon something akin to carbon credits, as another respondent suggested, but the idea seems to have merit.

    Still, for now, I believe that the arguments that Chris has presented regarding the wisdom of converting fiat wealth to gold and silver are valid, possibly excepting the remonetization argument. I will continue to buy precious metals during periods of price depreciation, and will sell when JAG decides to buy!

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  • Thu, Jun 30, 2011 - 1:10pm

    Reply to #5

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    JAG wrote:Bottom Line: Just

    [quote=JAG]
    Bottom Line: Just like we did with the internet bubble in the late 90s, we are fooling ourselves with all our rationalizations about the value of gold. Gold is in a bull market for one reason, so Wall Street can profit from our rationalizations and expectations. The game is always the same, and the “gold game” is getting big enough these days, that a crash in gold will likely be the hallmark of the next economic crisis.
     [/quote]
    Mornin’ Jeff,
    I do appreciate your views, and often seek them out to balance my incoming data so as to form a more objective and well informed position. After reading your post several times, I have to say you missed the mark on this one a bit. Not because anything you say is directly wrong (although I might pick apart a few sentences, like “gold is priced by the financial markets [TODAY]”. I’d add the word today because no one is certain of what is to come next, and when someone tells me they are, I call BS.
    You seem so certain of your position, that it makes me concerned that you are as emotionally con-gold as the pro-gold gold bugs you tend to mock.
     
    Anyhow, I enjoyed reading your post. I always learn something from you. What I learned this post was to stay neutral mentally and make necessary changes as the landscape shifts. Right now, I am neither buying nor selling, just watching intently.
     
    Cheers,
    R

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  • Thu, Jun 30, 2011 - 1:13pm

    Reply to #3

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    12bones wrote:On another

    [quote=12bones]
    On another subject:
    I am just starting to pull together a biodiesel effort.  
    [/quote]
    12Bones, welcome to the site. Always happy to meet a fellow smale scale farmer.
    I’d like to take up this conversation either via PM or on the Biofuels thread so as not to hijack this PM thread.
    Shoot me a PM or email and I’ll get you going best I can.

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  • Thu, Jun 30, 2011 - 1:28pm

    #11

    Arthur Robey

    Status Platinum Member (Offline)

    Joined: Feb 03 2010

    Posts: 1814

    Confusion confession.

    My money is not where my mouth is. I am into silver.

    At present I am as least unsure as I can be that silver will swoon before bubbling. The reason is the promise to end QE which will expose just how fast money is evaporating with none performing debts. (When promises-to-pay evaporate, so does money). ie deflation.

    Money will become scarce and the paper dollar becomes king. So I shall follow Chris’s advice and keep my powder dry. However there may not be an industry to desire my silver when it all goes belly up.

    I have posted before that I cannot think of an historical precident where money became less abstract, so I am not totaly comfortable with the idea that precious metals are the only alternative to fiat money. If we go peer-to-peer digits (Bitcoin) that will satisfy the always more abstract arrow of money. (Always goes from less absract to more abstract.)

    Another factor I feel favours Bitcoin is that large centralised organisations are fast losing any credibility, and so an unregulated peer to peer system will seem a better bet to the punter.

    Money might become so vaporus as to disappear altogether. We can get along quite nicely with no money when all our needs are met by slaves. Mechanical slaves. (Isaac Asimov).

    This tendancy towards grass roots deregulation will be countered with Fascism.

    I trust you are now all as confused as me.

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  • Thu, Jun 30, 2011 - 1:44pm

    #12

    Thomas Flower

    Status Member (Offline)

    Joined: Apr 21 2009

    Posts: 5

    Gold part V

     Chris,

     What a good view point on Gold and its potential future. There is another viewpoint in Part V from The Automatic Earth website. There are interesting and subtle differences in thinking and in the future projection of potential gold outcomes as it plays into the demise of fiat currencies and debt destruction.

    Tom

     

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  • Thu, Jun 30, 2011 - 1:48pm

    Reply to #5
    joemanc

    joemanc

    Status Silver Member (Offline)

    Joined: Aug 16 2008

    Posts: 138

    JAG wrote:Supply & Demand:

    [quote=JAG]
    Supply & Demand: In our distorted market environment, supply and demand analysis has a diminished role in the price action of commodities. The biggest component of commodity prices is wall street speculation. The spike in oil in 2008 is a good example. Prices didn’t rise because there was a shift in the supply-vs-demand equation, they rose because wall street was exploiting the market for profit.
    Bottom Line: Just like we did with the internet bubble in the late 90s, we are fooling ourselves with all our rationalizations about the value of gold. Gold is in a bull market for one reason, so Wall Street can profit from our rationalizations and expectations. The game is always the same, and the “gold game” is getting big enough these days, that a crash in gold will likely be the hallmark of the next economic crisis.
    It was an enjoyable read and great writing, as usual. You almost had Captain Sheeple convinced.
     [/quote]
    Hi Jeff,
    Have you read Jim Rogers book Hot Commodities? Rogers analyzes bull markets in commodities and how they have run historically in 20-year cycles. This cycle started around 2000 or so, give or take, so we have another 10 years or so to go. This Time is Different however, because of population growth and hitting limits on important resources. I highly recommend you read the book.
    I also disagree with your statement that gold is in a bull market so Wall Street can profit. In 2008 during the financial meltdown, my company brought in our financial advisor from Merrill Lynch to go over our 401K’s and to re-assure us everything would be fine. Anyways, the advisor discussed various investments and returns and when she got to gold and silver, she broke out some chart on gold and said it was not a good investment. I had to bite my tongue. Gold was the best investment of the last decade. So 3 years ago, Wall Street was not into gold and even now, they are just tip toeing in and around gold. How do you explain that gold is in a bubble? Eventually, I could see gold being in a bubble, but not right now. Not even close. Especially not when I told my co-worker about a year ago who was looking to sell gold jewelry that gold was 1150 an ounce, and she understood me say saying it was 11 dollars and 50 cents an ounce. She really thought it was that price!
    You do raise a good point about the bear market in gold in the 80’s and 90’s. I would explain that by saying money printing thenwas not as prolific then as it is now. Also, Paul Volkker took a lot of money out of the system with his sky high interest rates early on in that time period. Volkker is not in chare of anything now right? Party on gold bulls, Party on!
    Otherwise, as Ready said, I enjoy reading your contrarian viewpoints too. Keeps my mind balanced as well.

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  • Thu, Jun 30, 2011 - 1:49pm

    Reply to #10

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    When Captain Sheeple buys gold...

    [quote=ccpetersmd]I will continue to buy precious metals during periods of price depreciation, and will sell when JAG decides to buy!
    [/quote]
    [quote=ao]
    Please post when you go bullish on gold.  You’re one of my qualitative indicators.
    [/quote]
    LOL, I wouldn’t recommend this approach, because your gold coins would be nearly worthless at that point. Captain Sheeple is a market sentiment trader, and therefore the only time he buys is when the market finds no value in a particular asset (notice the snobby 3rd person narrative here, lol). 
    If you bought gold in the early oughts, then kudos to you for buying into a “hated” asset. But if you are chasing gold at this point, then your investment risk is rising exponentially. Gold wasn’t on my radar a decade ago, so I was too late to enter the gold game as a long-term investment. 
    I figure my next big trade will be to short gold, if only to hedge against my investment manager’s overweighting of gold in my portfolio. Look for my short just before all the whining about gold manipulation starts up again. 
    [quote=Denny Johnson]
    JAG………what do you recommend to protect wealth after one is comfortable that he is materially prepared for a tumultuous future?
    [/quote]
    Hi Denny,
    See Puke: The Best Investment for my observations on proven wealth protection strategies.

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  • Thu, Jun 30, 2011 - 2:47pm

    Reply to #5
    sundarb

    sundarb

    Status Bronze Member (Offline)

    Joined: Jan 10 2011

    Posts: 35

    JAG wrote:Oh boy, The

    [quote=JAG]
    Oh boy,
    The gold-bug baggage in this piece is top-dollar. Dr. M, your rationalizing skills are better than most, but the reasons that you cite for holding gold are lacking any proven correlation. For example:

    Thin-air Money: Money has been created from thin-air for our entire lifetimes. If there was a correlation between money being “printed” by the central bank (or banking system) and gold, then how do you explain the bear market in gold during the 80s and 90s? Did the money supply decrease during the greatest bull market in our history?

    [/quote]
    As already answered by one of the members, it is the interest rate that did the trick to kill the gold bull market. Paul Volcker rised it to as ridiculously high as 21% to tame inflation and cash became dear. gold came back down. Also prior to the 70’s when US was on a gold standard, deficit spending = inflation. This equation cannot be violated as this is basic economics. But after US went off the gold standard, deficit spending != inflation. Voila! how did that come about? The secret lies in the fact that US dollar was the de facto world reserve currency, so everyone doing trade had to accumulate dollar reserves. US dollar in a perverse way, had become gold of fiat currencies. Money supply kept increasing, but the money never stayed in the US. It went all over the world. But as they say, world is a finite place and you can print only so much dollars until it becomes worthless.
    [quote=JAG]

    Financial System Collapse: Since the price of gold is determined by the financial markets, what do you suppose will happen to its price action in the absence of a financial market? What happened to the value of credit default swaps when that market shut down? Granted, local physical markets may still exist in such a scenario, but when people are faced with physical survival, will any form of money (including gold) have any personal value?

    [/quote]
    Gold is priced by financial markets only as long as the dollar survives. If dollar collapses, who cares about financial markets any more? Price of gold is determined by what the human owning gold values to be exchanged for. Value determination becomes subjective and will vary from person to person, which is how it should be in the real world. Gold will continue to have value as long as humans think there is value. There is an axiom in Austrian Economics: value does not exist outside of mankind’s consciousness. This statement is self-evidently true and in the event of a currency crisis, gold/silver will automatically come to the forefront. gold/silver are the currencies of choice by the free-market.
    The below video describes the Menger Axiom and calls BS on Keynesian economic models in practice today.

    [quote=JAG]

    Gold Remonitized: Ok, so let’s assume that a one-world currency is in our future and that its value will be based on some fraction of physical gold. Do you really think that architects of such a monetary system would not confiscate all the gold they could prior to its implementation? Would they allow a redistribution of wealth to occur, or would it be the same system with a new face on it?

    [/quote]
    This is a risk, but think about this: Can the US really confiscate gold again? I mean the markets are so widespread, there are so many options these days for storing gold/silver – I am sure people would diversity their holdings geographically. It would be an extremely arduous task to do this in today’s world. The world is not 1933. Also, if it means that our survival in a collapse depended on owning some physical, then why would you not take the risk?
    [quote=JAG]

    Supply & Demand: In our distorted market environment, supply and demand analysis has a diminished role in the price action of commodities. The biggest component of commodity prices is wall street speculation. The spike in oil in 2008 is a good example. Prices didn’t rise because there was a shift in the supply-vs-demand equation, they rose because wall street was exploiting the market for profit.

    [/quote]
    What you say is true, This is the reason why going forward we will see a large divergence between the paper market (derivatives based on metals) and the actual physical market. Silver Eagles are already selling at a high premium and the supply crunch is quite visible, if you want the physical right away. So I think rife speculation can go on, until the paper exchanges can run. Comex silver is running all-time low inventories and it will take one or two hedge fund billionaires to empty their shelves. If there is a default on the Comex, that will spell the death-knell for paper derivatives. Also, a fiat monetary system is a confidence game. It runs as long as people believe in the faith and credit of the US Govt. Once the faith dies, all bets are off.
    [quote=JAG]
    On the other hand, you did give one reason that does have a good correlation to the price of gold; Negative Real Interest Rates. But this phenomenon seems more likely in a deflationary environment, rather than in the “extraordinary inflation” environment that you are hedging against by holding gold.
    [/quote]
    Gold does well regardless of whether we have inflation or deflation. As long as there is uncertainty in the markets surrounding its stability, gold will continue to do well. Jim Grant observed <i>“Gold is a very difficult investment because its value is indeterminate. It is the reciprocal of the world’s confidence in the likes of Ben Bernanke. I think the price will go higher.” </i>
    [quote=JAG]
    Bottom Line: Just like we did with the internet bubble in the late 90s, we are fooling ourselves with all our rationalizations about the value of gold. Gold is in a bull market for one reason, so Wall Street can profit from our rationalizations and expectations. The game is always the same, and the “gold game” is getting big enough these days, that a crash in gold will likely be the hallmark of the next economic crisis.
    It was an enjoyable read and great writing, as usual. You almost had Captain Sheeple convinced.
    [/quote]
    The world is running on the fuel of debt. Look at the staggering debt numbers and see if these countries can actually pay up. There are going to be more, larger defaults like Greece coming. The largest one, elephant in the room is the United States. We are in a time of history, where world wide central planning is trying its best to prop up a system that is inherently unstable to begin with. No historical references can help us understand this time we are in. This is unique. 
    Overall, you make excellent points, although I hope I have clarified a few 🙂

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  • Thu, Jun 30, 2011 - 2:56pm

    Reply to #5

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Certainty & Emotion

    [quote=Ready]I’d add the word today because no one is certain of what is to come next, and when someone tells me they are, I call BS.
    You seem so certain of your position, that it makes me concerned that you are as emotionally con-gold as the pro-gold gold bugs you tend to mock.
    [/quote]
    Hey Rog,
    I think you know me better than to think I am ‘certain of what comes next’ . The very fact that I am part of this community shows that I am uncertain about our future. And my impression is that many people here are much more confident in their own beliefs about the future than I am. Everyone must assign the own probability spectrum to our future, and I guess mine is a little different than most here. 
    I don’t understand the perception of emotion in my posts. My point of view on this subject is as objective and unemotional as I can make it; you buy an asset when it is out-of-favor and you sell it when it becomes the asset-de-jour. It’s a simple approach that removes emotion from the investing equation. 
    Perhaps I should follow your lead and use the term pro-gold instead of gold-bugs. My apologies if I offended anyone with this term.
     
     
     
     

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  • Thu, Jun 30, 2011 - 3:10pm

    #13

    Johnny Oxygen

    Status Gold Member (Offline)

    Joined: Sep 09 2009

    Posts: 454

    I've gone all out.

    I finally just plated myself in gold.

     

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  • Thu, Jun 30, 2011 - 3:13pm

    #14

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Thanks...

    Good points Joe and Sundarb,

    You gotta love this community. Where else on the net would you find a “dinner party” conversation of this quality?

    I would like to clarify one common point in your rebuttals. It wasn’t my contention that money supply was correlated with the price of gold, it was Dr. M’s (and many others) observation. I agree with you and Dr. M on the interest rate correlation.

    All the best….Jeff

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  • Thu, Jun 30, 2011 - 3:25pm

    Reply to #11

    rhare

    Status Silver Member (Offline)

    Joined: Mar 29 2009

    Posts: 397

    Bitcoin

    I support the idea of alternative currencies and I wish Bitcoin all the best, but it is not a currency I would use.  I think Doug Casey did a fairly good  review of why not to use Bitcoin. The basic reason I won’t use it is it offers no advantage over other currencies.  The only thing Bitcoin brings to the table is limited availability (maybe), but requires a well connected network to operate, has no physical representation that can be used without a computer and whose trust mechanism is based on encryption and hashing techniques which can and will be broken in the future.
    Bitcoin is at best just another currency that might offer transactional convenience.  I believe it is highly questionable as a long term store of wealth.  Of course the same can be said of all currencies including gold and silver. Gold and silver are only valuable because they have functioned well as currencies over the long term, primarily because they cannot easily be obtained, are of limited in supply, and not centrally controlled.  However, like all currencies, they only act as a store of value because people will accept them in exchange for other goods.  The only truly long term store of value is productive capacity.

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  • Thu, Jun 30, 2011 - 3:34pm

    Reply to #10
    Denny Johnson

    Denny Johnson

    Status Bronze Member (Offline)

    Joined: Aug 14 2008

    Posts: 119

    JAG wrote:See Puke: The

    [quote=JAG]
    See Puke: The Best Investment for my observations on proven wealth protection strategies.
    [/quote]
    Hi Jeff….I had a look over there …..wasn’t very convincing, felt like you could be selectively citing examples from the past that supported your strategy.
    It would be interesting to test your proven wealth protection strategies going forward……perhaps you could let us know about current or future PUKE ideas that you are actually invested in, we could compare the future performance w Doctor M’s readily trackable suggestions.
    Could be the start of something big, seems a guy w proven ‘proven wealth protection strategies’ could make a fortune.

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  • Thu, Jun 30, 2011 - 4:11pm

    #15
    Reggieoo

    Reggieoo

    Status Member (Offline)

    Joined: Jun 30 2011

    Posts: 0

    Open question

    I am just learning about Gold and think I understand the Goldsmiths Tale, but permit me to make an observation that begs an answer.  I noticed that the most knowledgeable persons about currency, monetary policy as well as macro and micro economics seems to be people who own Gold.   I ask this rhetorical question:

    Given my assumptions above, why would ANYONE who has any quantity of Gold metal EVER want to trade it for fiat currency?  You may have converted me into being a “believer”? I respect the knowledge that parallels MOST ownership of Gold.  Why would any sane person sell Gold?  And why would they trade buttery, yellow, shiny gold metal for paper play money–the US Dollar?  Is there some secret that the owner of Gold knows that makes “them” want my  paper play money?

    If I bought Gold at any price —even if it were at $2,000 an ounce, given the terrible state of our monetary system, why would ANY one ever sell it?  Gold looks like a buy, hoard and wait commodity.  No problem…but what would motivate one to actually sell Gold for any reason?  If there are any Gold harders out there, why would you trade REAL Gold metal for Helicopter Ben dollars?  Try to convince me!  Please don’t tell me that the only people who sell Gold are broke, insane or crazy or all three.  Are only “crazy people” selling Gold ?

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  • Thu, Jun 30, 2011 - 4:15pm

    #16
    Denny Johnson

    Denny Johnson

    Status Bronze Member (Offline)

    Joined: Aug 14 2008

    Posts: 119

    Welcome Reggieoo, Doctor M

    Welcome Reggieoo,

    Doctor M discusses “The six signs I watch to know when it’s time to get out” in Part 2 of this report.

    If you have the $30 for a one month subscription, may be the best $30 you could spend. Allows you full access to all past reports.

    Jeff………in case you are wondering, you were not one of the six signs.Wink

    Peace

    Denny

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  • Thu, Jun 30, 2011 - 4:18pm

    Reply to #15

    rhare

    Status Silver Member (Offline)

    Joined: Mar 29 2009

    Posts: 397

    Because the government says so....

    [quote=Reggieoo]Given my assumptions above, why would ANYONE who has any quantity of Gold metal EVER want to trade it for fiat currency?
    [/quote]
    Because right now you have to have fiat currency to buy other goods that you need or want.  You can’t buy things directly with PM (yet).  Also, the only true wealth is productive assets.  Gold/Silver/Currencys are mostly intermediarys.   Gold/Silver just happen to be better at holding their value than the fiat because they also have intrinsic value, particularly silver as an industrial metal.

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  • Thu, Jun 30, 2011 - 4:20pm

    #17

    saxplayer00o1

    Status Silver Member (Offline)

    Joined: Jul 30 2009

    Posts: 2940

    U.S. $ will soon be worthless if the Fed keeps printing money!

     

    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?

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  • Thu, Jun 30, 2011 - 4:23pm

    Reply to #5

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    JAG wrote:Perhaps I should

    [quote=JAG]
    Perhaps I should follow your lead and use the term pro-gold instead of gold-bugs. My apologies if I offended anyone with this term.
    [/quote]
    Sorry I didn’t reply sooner, I hit the ignore user button on you after you offended me LOL.
     
    Perhaps emotional is the wrong word to describe your reactions. I’ll try to think of a better one, but disconnected is certainly not it.
    Truth is, I don’t give a rat’s , uh, tail about gold or silver specifically, I don’t wear it, carry it in my pocket, use it on a daily basis, look at my stash, count it, or interact with it in any way, it just doesn’t hold anything over me any more than a $100 bill does. I care about being able to do things like pay for healthcare in the uncertain future. I suppose this is a personal limitation that I have to deal with, but I just can’t figure out a better way to preserve my savings at this point, considering I am fully prepped and have physical cash as well. If a better store of wealth, outside the banking system, were to show itself tomorrow, I would quickly move to it. Yet, lumped in with the “gold bug mentaility” I go.
    Looking at your OP, it starts off on what I percieved as a statement of emotion, but if you say that’s not true, I believe you. Gold Bug Baggage  (GBB) ought to have a  wiki, so I’m off there now to add one. Now, what would be the opposite of GBB, hmmmmmmmm, I’ll have to figure that out for the wiki. Not that anyone here has experienced that phenomenon!

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  • Thu, Jun 30, 2011 - 4:39pm

    Reply to #17

    Johnny Oxygen

    Status Gold Member (Offline)

    Joined: Sep 09 2009

    Posts: 454

    saxplayer00o1

    [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]
    Remember when Joe Kennedy said:
    “When the shoeshine boys talk stocks its a great sell signal” in 1929?
    I think this applies to the dollar here.

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  • Thu, Jun 30, 2011 - 4:40pm

    Reply to #10

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Clarification

    [quote=Denny Johnson]It would be interesting to test your proven wealth protection strategies going forward……
    [/quote]
    Looking back at my wording, I can see how you thought I meant my proven wealth protection strategies. But actually, I was referring to value investor Seth Klarman’s (and other value investors like Warren Buffet’s) proven strategies. And yes, these approaches to wealth conservation have been proven, to the extent that any idea can be proven outside of the hard sciences. 
    The point of my response to you was to emphasize that wealth preservation is an active process, requiring one to adapt to opportunities as they arise. The old buy-and-hold strategy just makes you a target for Wall Street exploits, especially if you didn’t get in before they did. 
    Also, if you like to sign up for the Captain Sheeple Investing Newsletter, just call 1-800-Panic-Now, lol.

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  • Thu, Jun 30, 2011 - 7:19pm

    Reply to #9
    Nate

    Nate

    Status Silver Member (Offline)

    Joined: May 05 2009

    Posts: 318

    r wrote:Gold, especially at

    [quote=r]
    Gold, especially at $6000+ an ounce is not easy to sell.
    [/quote]
    Valid point.  A friend recently offered ranchland in Wyoming, farmland in Iowa, or timberland in Georgia for gold or silver.  My gut tells me that gold and silver will “appreciate” more than the property offered, so I am currently in the waiting mode.
    IMHO, the time between a dollar collapse and the birth of a “real currency”,  gold will be used for large purchases (homes, land, and businesses) and silver will be used for daily needs.
    Nate

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  • Thu, Jun 30, 2011 - 9:45pm

    #18

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    A 20 Year Investment?

    When I read something like, “Various factors lead me to conclude that gold is one investment that you can park for the next ten or twenty years, confident that it will perform well.”, I find it very difficult to read further. This is from someone who has done an excellent job of convincing us that the next 20 years will be nothing like the last 20 years (though that was a few years ago). Why is anyone here looking for an investment of up to 20 years (and probably more)? As I understood it, gold and silver are just a means of preserving wealth until you can prepare much better for an uncertain future.

    Now, uncertain surely doesn’t mean a little like today; Chris has rammed home that message many times. Uncertainty is more, how bad is it going to get or how different will it be. What on earth will people do with their $60,000 per ounce of gold in a decade (assuming they can hold on to it or be allowed to use it)? Will they be shaving leaves off their bars and going down to the local supermarket to buy some delicacy from a far off land, or perhaps going to the local DIY store to start buying some stuff to dig a garden?

    I have enough in savings to buy a reasonable amount of gold but, after several years of reading this stuff, I still remain to be convinced of the usefulness of doing so. In the short term, my savings are safe. In the long term, I expect to have spent as much of it as I can in becoming self-sufficient, or as self-sufficient as I can  within a self-sufficient community. Well, perhaps “expect” is not the right word, more “hope”. But that seems to be a far better goal than having oodles of precious metals in 20 years.

    I just keep getting mixed messages from Chris. It’s like he’s got the right mindset and then he ploughs back into the gold story. And I shake my head yet again.

    Tony

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  • Fri, Jul 01, 2011 - 12:42am

    Reply to #18
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    mucho kvetching

    [quote=sofistek]When I read something like, “Various factors lead me to conclude that gold is one investment that you can park for the next ten or twenty years, confident that it will perform well.”, I find it very difficult to read further. This is from someone who has done an excellent job of convincing us that the next 20 years will be nothing like the last 20 years (though that was a few years ago). Why is anyone here looking for an investment of up to 20 years (and probably more)? As I understood it, gold and silver are just a means of preserving wealth until you can prepare much better for an uncertain future.
    Now, uncertain surely doesn’t mean a little like today; Chris has rammed home that message many times. Uncertainty is more, how bad is it going to get or how different will it be. What on earth will people do with their $60,000 per ounce of gold in a decade (assuming they can hold on to it or be allowed to use it)? Will they be shaving leaves off their bars and going down to the local supermarket to buy some delicacy from a far off land, or perhaps going to the local DIY store to start buying some stuff to dig a garden?
    I have enough in savings to buy a reasonable amount of gold but, after several years of reading this stuff, I still remain to be convinced of the usefulness of doing so. In the short term, my savings are safe. In the long term, I expect to have spent as much of it as I can in becoming self-sufficient, or as self-sufficient as I can  within a self-sufficient community. Well, perhaps “expect” is not the right word, more “hope”. But that seems to be a far better goal than having oodles of precious metals in 20 years.
    I just keep getting mixed messages from Chris. It’s like he’s got the right mindset and then he ploughs back into the gold story. And I shake my head yet again.
    Tony
    [/quote]
    Lots of kvetching there.  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.

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  • Fri, Jul 01, 2011 - 12:54am

    #19

    Montana Native

    Status Member (Offline)

    Joined: Mar 17 2009

    Posts: 44

    Where else should I park liquid assets?

    There are a couple anti-gold posts here from repeat offenders (you know who you are). Trying to shoot holes in Chris’ story is admirable and needed for a balanced debate, but in the end, current trends and past history make a very compelling case for gold and silver. As members here, you are no doubt familiar with exponential growth. Our debt and monetary creation are compounding and turning the corner on that hockey stick as we speak.

    How one can just stick their nose up at money that has served humanity for millennia makes me scratch my head. As Chris plainly shows, mine production can’t grow exponentially. Barter is extremely difficult, and yes, people have used gold to buy food, drink, land, whatever, since the dawn of civilization. Ignoring such a glaring trend seems a little reckless to me, particularly seeing we are headed to financial crazy town.

    As a young man how am I supposed to save for my future? I’m working on many forms of resilience, but have to store something for lean times. It’s as simple as the grasshopper and the ant. Shall I save in dollars created by the keystroke of the Bernank or perhaps a rigid 401k competing against nimble black box traders. How do I save??

    In the end, precious metals and currency are a matter of trust. I think that globally we are facing the death of debt based money. How many bailouts does Greece get before we just say they are flat broke? Maybe the tootsie pop owl knows. In the mean time, folks like me will remove physical metal from the market. This is not an attempt to become rich, but an attempt to beat a system that has failed us.

    In closing I will note that everyone who claims gold isn’t worth $1500 an ounce or $60,000 for that matter should question how much a dollar is really worth. It’s worth increasingly less every decade and cruising toward the edge of El Capitan from what I see. There will be ups and downs, but the endgame looks dreadful.  Chris’ premise is less energy and more monetary creation moving forward. I’m not claiming gold is a panacea, but if the shoe fits, wear it. I’ll be here in two years and we can see how this plays out.

    TJ

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  • Fri, Jul 01, 2011 - 1:33am

    #20

    Arthur Robey

    Status Platinum Member (Offline)

    Joined: Feb 03 2010

    Posts: 1814

    Good debate everyone.I am

    Good debate everyone.

    I am not sold on Bitcoin, nor is my ego so fragile that I have to rush in and defend any position that I might have taken.

    Let me give my favourite analogy. The difference between hummingbirds and seagulls. Hummingbirds are glamourus specialists. Seagulls are do-anything generalists. Which one is more vulnerable? I try to emulate the seagull. So I  walk and chew gum.

    Gold and silver part of the mix.

    The seagull serves his stomach, not his ego. Place a seagull on my pennant.

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  • Fri, Jul 01, 2011 - 2:08am

    Reply to #20
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    Arthur Robey wrote:The

    [quote=Arthur Robey]
    The seagull serves his stomach, not his ego. Place a seagull on my pennant.
    [/quote]
    Not all.  Some have a higher calling. 
    http://en.wikipedia.org/wiki/Jonathan_Livingston_Seagull
    That being said, I’m a seagull admirer myself.  They can survive bitter cold and oppressive heat, are equally at home in the air, on land, and on the sea, can survive on any type of food, and still look good doing it all.  

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  • Fri, Jul 01, 2011 - 6:07am

    Reply to #5
    jones11

    jones11

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    Joined: Jul 01 2011

    Posts: 0

    What else?

    Jag, you are saying that gold/silver are the “asset-du-jour”? I do not think you realize just how underowned and unpopular they really are. How many people do you know that own or are even considering owning any physical precious metals? I agree, when they do become the “asset-du-jour” it will be time to sell. But we have not even scratched the surface yet, unlike the internet bubble or the real estate bubble when everyone wanted in at any price. I meet or know very few people who would even know the first thing about precious metals investing or holding. In the mainstream investment world precious metals are still a seriously contrarian investment. Although it is amazing at the press they get. And very much mostly negative, especially silver. Jag, it is not too late for you to get on board. Don’t be upset you did not get in at $250 an ounce, very few did. Not even George Soros but look at the money he made off of gold.But what I really wanted to ask was, what else is there. Where should I put  my life savings in order to keep it safe? Dollars? Bonds? Stocks? No confidence in any of it.

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  • Fri, Jul 01, 2011 - 1:48pm

    Reply to #5

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    Jones...

    Not to put words in JAG’s mouth (that just wouldn’t be sanitary) but I think JAG would rightly tell you that today, PM prices are set by the financial markets, not the physical one. So, while you may be carrying around a 1 oz coin in your pocket, it is getting a ride up and down in value along with ETFs (GLD) etc. Massive quanitites of paper are being traded, and that currently is the price discovery mechanism for gold, including physical spot prices.So, if we are in bubbleland, and the paper market crashes, your dollar denominated value of the coin in your pocket crashes with it. At least going by today’s rules. In that respect, if it is in a bubble that fully crashes before the proverbial TSHTF event (whatever that is) PMs will turn out to be a poor wealth storage device.
    At least I think that is the gold contrarian point.
    But, the key thing to remember about folks that take that stance is that typically they have a trader mentaility. In order to maximize wealth, you must accumulate FRNs or their equivalent, a trader might say. And there may be better, less risky, less bubble prone ways to do it. From a trader’s perspective, the martket is being flodded with ads from goldline, the guys standing in front of pawn shops trying to get you to sell your gold chains, and ads for converting your IRA or 401k to gold. That is real, and honestly it is a little spooky if you really think about it.
    So, the other side of the coin (see what is did there, punny, huh?) would be the long term “investor” who is not as concerned with profits as spendability. Not sure if that is a word, but hopefully you get my point. I need to know that I have an asset that would be accepted by Doc Peters for heart surgery, or Robbie for grain, regardless of what is happening in the financial markets, as long as I need to purchase goods and services. It will never go to zero. Can’t say the same for the USD, but I hold them too.
    So, JAG’s points are actually valid (man it hurts to say that ) depending on your mindset. Where  JAG and I start to spar a bit is when he tries to say that gold hatred is not the opposite of gold bug, and yes, hatred is an emotion.

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  • Fri, Jul 01, 2011 - 7:33pm

    Reply to #5

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Hatred is just marketing....

    [quote=Ready]Where JAG and I start to spar a bit is when he tries to say that gold hatred is not the opposite of gold bug, and yes, hatred is an emotion.
    [/quote]
    Great job in explaining my position Ready, thank you. I would also emphasize to “Jones” that the GLD ETF is the second largest exchange-traded fund in the world. I agree that the physical market is too small to be much of a factor, but bubbles are typically a byproduct of the Wall Street derivative markets. Just as Wall Street speculation fueled the housing bubble of a few years ago, it is fueling the current bubbles in commodities, stocks, bonds, etc….
    Regarding hatred….I certainly wouldn’t waste my energy hating something as benign as a financial asset. What I focus my attention on is Wall Street marketing. Its sole purpose is to get you to trade your hard-earned money for an empty and undelivered dream. And the Wall Street marketing for gold is just overflowing with emotional triggers:

    Buy gold because you fear the actions of the Fed.
    Buy gold because you fear the hyperinflation that is just around the corner.
    Buy gold because you fear a deflationary depression is upon us.
    Buy gold because you fear global war or terrorist attacks.
    Buy gold because you fear that the dollar will lose all its value.
    Buy gold because you fear that the financial elite are planning a one world currency.
    Buy gold because you hate the government and fear what the politicians will due next.
    Buy gold because you hate Wall Street and don’t want any part of it (ohh, that’s just brilliant marketing)
    Buy gold because you fear and hate missing out on easy-as-pie capital gains.
    Buy gold because it will protect you and your wealth in the next economic crisis.

    That last one just takes the cake. I figure that holding gold will protect you about as much in the next crisis as holding internet stocks did in the 2000-2002 crash and holding real estate did in the housing market crash in 2007. But here is the kicker, because most people hold physical gold not out of greed, but out of fear, they will never sell. So when the day comes when your gold coins are worth a $1000 less than what they once were, acknowledge the fact that you just contributed to the next round of Wall Street bonuses.
    Though I haven’t read part 2, I would think that Dr. M has done everyone a big favor by defining an objective gold exit plan. If I hadn’t already sold my gold, I would certainly be willing to pay for that information. 

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  • Fri, Jul 01, 2011 - 7:51pm

    Reply to #5

    Dogs_In_A_Pile

    Status Platinum Member (Offline)

    Joined: Jan 04 2009

    Posts: 810

    Consider another angle...

    [quote=JAG][quote=Ready]
    Where JAG and I start to spar a bit is when he tries to say that gold hatred is not the opposite of gold bug, and yes, hatred is an emotion.
    [/quote]
    Great job in explaining my position Ready, thank you. I would also emphasize to “Jones” that the GLD ETF is the second largest exchange-traded fund in the world. I agree that the physical market is too small to be much of a factor, but bubbles are typically a byproduct of the Wall Street derivative markets. Just as Wall Street speculation fueled the housing bubble of a few years ago, it is fueling the current bubbles in commodities, stocks, bonds, etc….
    Regarding hatred….I certainly wouldn’t waste my energy hating something as benign as a financial asset. What I focus my attention on is Wall Street marketing. Its sole purpose is to get you to trade your hard-earned money for an empty and undelivered dream. And the Wall Street marketing for gold is just overflowing with emotional triggers:

    Buy gold because you fear the actions of the Fed.
    Buy gold because you fear the hyperinflation that is just around the corner.
    Buy gold because you fear a deflationary depression is upon us.
    Buy gold because you fear global war or terrorist attacks.
    Buy gold because you fear that the dollar will lose all its value.
    Buy gold because you fear that the financial elite are planning a one world currency.
    Buy gold because you hate the government and fear what the politicians will due next.
    Buy gold because you hate Wall Street and don’t want any part of it (ohh, that’s just brilliant marketing)
    Buy gold because you fear and hate missing out on easy-as-pie capital gains.
    Buy gold because it will protect you and your wealth in the next economic crisis.

    That last one just takes the cake. I figure that holding gold will protect you about as much in the next crisis as holding internet stocks did in the 2000-2002 crash and holding real estate did in the housing market crash in 2007. But here is the kicker, because most people hold physical gold not out of greed, but out of fear, they will never sell. So when the day comes when your gold coins are worth a $1000 less than what they once were, acknowledge the fact that you just contributed to the next round of Wall Street bonuses.
    Though I haven’t read part 2, I would think that Dr. M has done everyone a big favor by defining an objective gold exit plan. If I hadn’t already sold my gold, I would certainly be willing to pay for that information. 
    [/quote]
    Most Inimitable Captain Sheeple and Nemesis Ready –
    I have greatly enjoyed following this thread and the spiral discussions.  Jeff, I think you left what might be the skeleton key reason off you list.  Some might argue that it is a subset of the last reason on your list, but I think it stands alone.
    Cat and I bought our gold and silver (and continue to do so) not because we are investing and think/hope/know it is going to go up in price.  The only reason we hold it is because it will store some measure of wealth when the dollar goes to zero.  Gold and silver will have a value – it might be a fraction of it once was, but unlike the dollar that went ZOOF, it will have some value.  We anticipate that it will take some time to come up with another form of currency or exchange medium, but I find it hard to imagine a credible scenario where gold AND silver are worthless as a form of barter to secure goods and services that we haven’t accounted and prepped for. 
    Our gold and silver are more of an insurance policy than any form of investment strategy.  And just like any insurance policy, nobody buys it and goes out hoping to get into a car accident to see how good their policy is.

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  • Fri, Jul 01, 2011 - 11:04pm

    Reply to #18

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Why would anyone NOT look

    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).

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  • Fri, Jul 01, 2011 - 11:28pm

    Reply to #19

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Montana Native wrote:There

    [quote=Montana Native]There are a couple anti-gold posts here from repeat offenders (you know who you are). Trying to shoot holes in Chris’ story is admirable and needed for a balanced debate, but in the end, current trends and past history make a very compelling case for gold and silver.[/quote]So you say. I didn’t realise that criticism was considered an “offence”. I’m not anti-gold, I just haven’t seen a convincing case for it that examines all sides of the argument. There seem to be the gold zealots who never appear to examine the counter story, including Chris.[quote=Montana Native]How one can just stick their nose up at money that has served humanity for millennia makes me scratch my head.[/quote]Well, this is the current meme but I’m not sure it’s correct. I’ve seen others comment on gold that say history is completely the opposite. Oh yes, the wealthy have always had gold but the masses didn’t and primarily used barter during times such as we’re facing. Survival and satisfaction doesn’t require such artifical wealth measures, it only requires self-sufficiency and community. I’d like to see a close examination of the conventional wisdom that gold has always served as a widespread means of exchange, because I’m not convinced that the conventional wisdom is accurate (most conventional wisdom isn’t). Also, it seems to me that this frenzy for gold will just lead to another, but different, highly unequal society as most people end up with nothing whilst some of the more forward looking investors have wealth beyond their imagination (with gold at $65,000 an ounce, or more, at least nominally).[quote=Montana Native]As a young man how am I supposed to save for my future?[/quote]What are you trying to save for? If you believe that the next 50 years will just be a continuation of the last 20, then you haven’t paid much attention to the central theme of Chris’s work. Why do you think that money (in some form) is what you need for the future? Sure, if you have property, you’ll have to pay property taxes, at least, whilst society holds together enough to have local governments that have central services to pay for but otherwise you should be aiming to not rely on anyone but yourself, your family and your community.
    [quote=Montana Native]In closing I will note that everyone who claims gold isn’t worth $1500 an ounce or $60,000 for that matter should question how much a dollar is really worth.[/quote]Gold has no intrinsic worth. It’s worth only what people are prepared to accept it’s worth. Something like oil, on the other hand, has real intrinsic value because of what can be done with it (more or less) directly. Gold is funny money, sort of.
    [quote=Montana Native]I’ll be here in two years and we can see how this plays out.[/quote]Chris is talking about a long term investment. Two years isn’t long term. I too expect gold to continue rising but I’m still not getting in that game. I have some savings only because I had the forsight to extract my pension funds at a time when I could do it without taking a penalty. I don’t expect to retire in the conventional sense, so I don’t need the money for that eventuality. It’s useful to have those savings, though, because they give me some form of independence and a fairly liquid wealth base, with which to prepare. I’ve taken on a low paying job to ensure that I have some stream of income, should I not be able to get to my funds, though I don’t see it as a long term thing as I continue my preparations. Gold still doesn’t feature in those preparations, until I see a convincing case made.
    Tony

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  • Fri, Jul 01, 2011 - 11:33pm

    Reply to #5

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    jones11 wrote: Where should

    [quote=jones11] Where should I put  my life savings in order to keep it safe?[/quote]Put them into making yourself as self-sufficient as possible. What else are you thinking of doing with your life savings as we start to enter a world where limits turn out to be real?

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  • Fri, Jul 01, 2011 - 11:40pm

    Reply to #5

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Dogs_In_A_Pile wrote:Cat and

    [quote=Dogs_In_A_Pile]Cat and I bought our gold and silver (and continue to do so) not because we are investing and think/hope/know it is going to go up in price.  The only reason we hold it is because it will store some measure of wealth when the dollar goes to zero.  Gold and silver will have a value – it might be a fraction of it once was, but unlike the dollar that went ZOOF, it will have some value.  We anticipate that it will take some time to come up with another form of currency or exchange medium, but I find it hard to imagine a credible scenario where gold AND silver are worthless as a form of barter to secure goods and services that we haven’t accounted and prepped for.[/quote]That is, perhaps, the most sensible thing I’ve read from the gold advocates. It has a better chance of have some value (as agreed between participants in the exchange) than anything else you might hold. Except, of course, knowledge of how to look after yourself and others; that, surely, will always have the most worth of anything.

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  • Sat, Jul 02, 2011 - 1:47am

    #21
    Denny Johnson

    Denny Johnson

    Status Bronze Member (Offline)

    Joined: Aug 14 2008

    Posts: 119

    C'mon JAG

    C’mon JAG, man-up, inquiring minds want to know.

    What’s the alternative that you are not sharing, the one makes you so confident criticizing gold and Doctor M’s analysis?

    When I asked:

    JAG………what do you recommend to protect wealth after one is comfortable that he is materially prepared for a tumultuous future?

    You danced around it.

    When jones11 asked:

    But what I really wanted to ask was, what else is there. Where should I put  my life savings in order to keep it safe? Dollars? Bonds? Stocks? No confidence in any of it.

    You ignored him.

    Looking at some of your past gold posts it seems that you’ve been a gold bear since at least Aug 15, 2009 (“Personally, my investment of choice is the USD. The market doesn’t reward herd behavior, it punishes it.” Gold at $948) and for most of the past 2 years a lot of your portfolio is w Sitka Pacific and the US$. They can’t be what you suggest for a good night’s sleep.

    C’mon buddy, stop holding back, spill the beans, what’s that alternative, give us something we can objectively track as Doctor M has done, let us in on it before some folks here (especially the old timers who have listened to this for so long) get to thinking that it’s just cheap talk from a sour grapes troll.

    There is something to be said for contrarian investing, but ask yourself this……..how many people in the world w stored wealth own US dollars and how many own gold?

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  • Sat, Jul 02, 2011 - 1:51am

    Reply to #18
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    mindlock?

    [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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  • Sat, Jul 02, 2011 - 1:56am

    #22

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    C'mon Denny...

    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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  • Sat, Jul 02, 2011 - 2:40am

    #23
    Denny Johnson

    Denny Johnson

    Status Bronze Member (Offline)

    Joined: Aug 14 2008

    Posts: 119

    Still dancing

    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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  • Sat, Jul 02, 2011 - 3:23am

    Reply to #17

    Travlin

    Status Gold Member (Offline)

    Joined: Apr 15 2010

    Posts: 524

    A memorable event!

    [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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  • Sat, Jul 02, 2011 - 4:08am

    Reply to #5

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    JAG wrote:Ready

    [quote=JAG]
    [quote=Ready]
    Where JAG and I start to spar a bit is when he tries to say that gold hatred is not the opposite of gold bug, and yes, hatred is an emotion.
    [/quote]
    Great job in explaining my position Ready, thank you. I would also emphasize to “Jones” that the GLD ETF is the second largest exchange-traded fund in the world. I agree that the physical market is too small to be much of a factor, but bubbles are typically a byproduct of the Wall Street derivative markets. Just as Wall Street speculation fueled the housing bubble of a few years ago, it is fueling the current bubbles in commodities, stocks, bonds, etc….
    Regarding hatred….I certainly wouldn’t waste my energy hating something as benign as a financial asset. What I focus my attention on is Wall Street marketing. Its sole purpose is to get you to trade your hard-earned money for an empty and undelivered dream. And the Wall Street marketing for gold is just overflowing with emotional triggers:

    Buy gold because you fear the actions of the Fed.
    Buy gold because you fear the hyperinflation that is just around the corner.
    Buy gold because you fear a deflationary depression is upon us.
    Buy gold because you fear global war or terrorist attacks.
    Buy gold because you fear that the dollar will lose all its value.
    Buy gold because you fear that the financial elite are planning a one world currency.
    Buy gold because you hate the government and fear what the politicians will due next.
    Buy gold because you hate Wall Street and don’t want any part of it (ohh, that’s just brilliant marketing)
    Buy gold because you fear and hate missing out on easy-as-pie capital gains.
    Buy gold because it will protect you and your wealth in the next economic crisis.

    That last one just takes the cake. I figure that holding gold will protect you about as much in the next crisis as holding internet stocks did in the 2000-2002 crash and holding real estate did in the housing market crash in 2007. But here is the kicker, because most people hold physical gold not out of greed, but out of fear, they will never sell. So when the day comes when your gold coins are worth a $1000 less than what they once were, acknowledge the fact that you just contributed to the next round of Wall Street bonuses.
    Though I haven’t read part 2, I would think that Dr. M has done everyone a big favor by defining an objective gold exit plan. If I hadn’t already sold my gold, I would certainly be willing to pay for that information. 
    [/quote]
     
    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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  • Sat, Jul 02, 2011 - 6:29am

    Reply to #5
    jones11

    jones11

    Status Member (Offline)

    Joined: Jul 01 2011

    Posts: 0

    After that.

    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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  • Sat, Jul 02, 2011 - 6:57am

    Reply to #5
    jones11

    jones11

    Status Member (Offline)

    Joined: Jul 01 2011

    Posts: 0

    Wall Street

    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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  • Sat, Jul 02, 2011 - 10:14am

    Reply to #18

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    ao wrote:I think I have

    [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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  • Sat, Jul 02, 2011 - 10:42am

    Reply to #5

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    jones11 wrote:OK, after

    [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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  • Sat, Jul 02, 2011 - 10:53am

    #24
    Doug

    Doug

    Status Platinum Member (Online)

    Joined: Oct 01 2008

    Posts: 1364

    Sofistek

    [quote]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]

    Less satisfying than the have-nots?  What could be more satisfying than being a have-not? SmileWell…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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  • Sat, Jul 02, 2011 - 11:53am

    #25
    Khalid Altayaran

    Khalid Altayaran

    Status Member (Offline)

    Joined: Jul 02 2011

    Posts: 1

    Thanks for this great blog.

    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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  • Sat, Jul 02, 2011 - 2:08pm

    Reply to #14
    sundarb

    sundarb

    Status Bronze Member (Offline)

    Joined: Jan 10 2011

    Posts: 35

    JAG wrote:It wasn't my

    [quote=JAG]
    It wasn’t my contention that money supply was correlated with the price of gold, it was Dr. M’s (and many others) observation. I agree with you and Dr. M on the interest rate correlation.
    [/quote]
    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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  • Sat, Jul 02, 2011 - 2:15pm

    Reply to #5
    sundarb

    sundarb

    Status Bronze Member (Offline)

    Joined: Jan 10 2011

    Posts: 35

    JAG wrote:That last one

    [quote=JAG]
    That last one just takes the cake. I figure that holding gold will protect you about as much in the next crisis as holding internet stocks did in the 2000-2002 crash and holding real estate did in the housing market crash in 2007.
    [/quote]
    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.
    [quote=JAG]
    But here is the kicker, because most people hold physical gold not out of greed, but out of fear, they will never sell. So when the day comes when your gold coins are worth a $1000 less than what they once were, acknowledge the fact that you just contributed to the next round of Wall Street bonuses.
    [/quote]
    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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  • Sat, Jul 02, 2011 - 2:50pm

    #26

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    Maybe This Will Explain It Better

    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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  • Sat, Jul 02, 2011 - 4:12pm

    Reply to #18
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    water hoarders

    [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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  • Sat, Jul 02, 2011 - 4:16pm

    #27

    Outcast 19

    Status Member (Offline)

    Joined: Mar 23 2011

    Posts: 24

    I appreciate the...

    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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  • Sat, Jul 02, 2011 - 8:24pm

    #28

    Montana Native

    Status Member (Offline)

    Joined: Mar 17 2009

    Posts: 44

    Links

    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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  • Sat, Jul 02, 2011 - 8:49pm

    #29

    Thomas Flower

    Status Member (Offline)

    Joined: Apr 21 2009

    Posts: 5

    Gold bull market

    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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  • Sat, Jul 02, 2011 - 10:47pm

    Reply to #5

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    sundarb wrote:JAG

    [quote=sundarb]
    [quote=JAG]
    That last one just takes the cake. I figure that holding gold will protect you about as much in the next crisis as holding internet stocks did in the 2000-2002 crash and holding real estate did in the housing market crash in 2007.
    [/quote]
    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.
    [/quote]
    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:
    [quote= Chris Martenson]
    “I think it is very important to distinguish between facts, opinions, and beliefs…”
    [/quote]
    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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  • Sat, Jul 02, 2011 - 10:58pm

    #30
    cstone

    cstone

    Status Member (Offline)

    Joined: Nov 12 2010

    Posts: 1

    "End Game" and the debt supercycle

    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.

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  • Sat, Jul 02, 2011 - 11:56pm

    Reply to #30
    hucklejohn

    hucklejohn

    Status Bronze Member (Offline)

    Joined: Dec 13 2008

    Posts: 64

    The gold vs anti-gold debate

    The gold vs anti-gold debate makes for great reading.  As Chris often has said, “Trust yourself.”  1)  For the last ten years gold has gone up an average of 18% as measured in dollars.  See http://www.goldmoney.com/gold-research/gold-rises-in-2010-to-end-a-stellar-decade.html
    2)  For years gold has been going up in all currencies.
    3)   Because of the continually irresponsible (and destructive) policies of the Federal Reserve, and the free spending ways of the Federal Government, it is highly unlikely that the debasing of the U. S. dollar will stop anytime soon.  Therefore, I must conclude at some point — which could be sooner or it could be later — there will be a dollar crash or default of some sort, similar to (but not exactly like) what occurred in 1933-34 and 1971.
    4)  So no matter how the endgame developes, and whether folks like it or not, gold is not an investment, GOLD IS MONEY!  That settles the issue for me. 
     

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  • Sun, Jul 03, 2011 - 12:13am

    Reply to #5
    sundarb

    sundarb

    Status Bronze Member (Offline)

    Joined: Jan 10 2011

    Posts: 35

    JAG wrote:Sorry, but paper

    [quote=JAG]
    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. 
    [/quote]
    Jeff, one important distinction I would like to make is that there are paper markets such as ETF’s GLD, SLV which supposedly track the price of gold/silver and then there are two critical paper markets which is the futures market and the lending market. The GLD, SLV ETF’s are meant to be trading vehicles for PM’s without physically owning them. Now there is a camp that argues that paper vast exceeds the actual physical and therefore naked shorting leads to suppressed PM prices. I am not saying there is no truth to this argument, but I don’t think this paints the full picture.
    I believe the futures market and the metals lending market have a more drastic effect on the physical metal spot prices, than these paper trading vehicles. Decreased participation in the futures market or in other words – people unwilling to part with their metal causes backwardation and thus increased spot prices to get the marginal seller to sell the metal. Lending market also has an important effect on the spot price because metals can be borrowed short to lend long (just the same way banks take our demand deposits and make long-term loans using them), which causes price distortions as well. 
    There are ways to track the activity in futures/lending market using bases (see http://www.bullionbasis.com ) and thereby we can make a reasonable prediction on future track of PM’s. I think silver is in a more persistent backwardation than gold at the moment.
    [quote=JAG]
    ————————————————————————————————————————————————
    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?
    [/quote]
    Precisely and the very reason I am a member of this community. I don’t know if I can speak for others, but my pro-gold argument is mostly based on facts (as explained in my other posts) and also in my belief that the politicians won’t man up and make the necessary spending cuts, curtail growth (which as we learn time and again through Chris that it is not necessarily a good thing). 

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  • Sun, Jul 03, 2011 - 12:25am

    Reply to #5

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    JAG

    [quote=JAG]Sorry, but paper gold is someone else’s liability.
    [/quote]
    I am in complete agreement with this statement
    [quote=JAG]
    ————————————————————————————————————————————————
    Captain Sheeple is Done!
    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?
    [/quote]
    Public thank you to JAG for being intellectually honest. I couldn’t wish for a better sounding board and checker of my beliefs vs. facts circuit.
    [quote=JAG]
    You guys have a great 4th of July.
    [/quote]
    U2.

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  • Sun, Jul 03, 2011 - 12:32am

    Reply to #5

    Ready

    Status Silver Member (Offline)

    Joined: Dec 30 2008

    Posts: 150

    Sundarb,I don't have a lot

    Sundarb,
    I don’t have a lot of time or bandwidth, but did you just say that the le4nding market and the futures market are not someone else’s liability? Maybe I have a lack of understanding that you can help me with here, becuase I would have said that they clearly were.

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  • Sun, Jul 03, 2011 - 1:22am

    Reply to #5
    sundarb

    sundarb

    Status Bronze Member (Offline)

    Joined: Jan 10 2011

    Posts: 35

    Ready wrote:Sundarb, I

    [quote=Ready]
    Sundarb,
    I don’t have a lot of time or bandwidth, but did you just say that the le4nding market and the futures market are not someone else’s liability? Maybe I have a lack of understanding that you can help me with here, becuase I would have said that they clearly were.
    [/quote]
    No, I did not mean that. What I meant is that if you own the physical, the asset itself is no one’s liability at the same time. Isn’t that a true statement? 
    This is not true with stocks or even cash, because they can both flat out go to zero. Sure gold’s economic value measured in fiat dollars is continuously going to vary at any given time frame. and the economic value, again measured in dollars is liable to the activities of futures and the lending market. But what are we most worried about here? Short term trading in and out of the market or looking at the big picture and making an investment? If you’re worried about short term trading in and out, you can get burnt if you look at just the spot market trend. That’s where the basis will help. If you’re concerned about the big picture and making an investment, then buying the dips and relaxing is the best way. Because of the inherent instability in the debt based monetary system, gold will do well.

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  • Sun, Jul 03, 2011 - 2:41am

    #31
    Denny Johnson

    Denny Johnson

    Status Bronze Member (Offline)

    Joined: Aug 14 2008

    Posts: 119

    Pastureland

    Hey Jeff,

    Pastureland…..now there’s something we can agree on.Smile

    You have a great weekend as well.

    Best wishes

    Denny

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  • Sun, Jul 03, 2011 - 4:05am

    Reply to #24

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Doug wrote:Are you

    [quote=Doug]Are you suggesting that somehow life is less fulfilling if you own gold?[/quote]No, not at the moment. If you are one of the select few who own gold during the collapse, it may be less and less satisfying having to expend more and more resources to protect what you have and having fewer and fewer friends who are able to stay in your circle. As others possibly start to fend for themselves, their lives could be much more satisfying than those who continue to try to buy their existence with gold.[quote=Doug]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.[/quote]Yup, sounds reasonable if you’re in the part of society that hasn’t been overtaken by collapse. After that, I’m not sure how long it will take for gold to be a common enough means of exchange for the investment to have seemed worthwhile. However, in the short term, it’s probably a reasonable hedge against your particular bank going bankrupt and unable to pay you your savings. If your government decides that gold should not be held by individuals, then it may not be a good investment even in the short term. Investments are always a gamble.
    [quote=Doug]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?[/quote]Buy tools. Buy land. Go on courses.
    [quote=Doug]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.[/quote]Whilst there is some form of government that can impose taxes on you, I agree. I hope they take gold as payment. But, if you’re all set, then it doesn’t really matter where you put your excess cash. After all, it’s excess, isn’t it? Give it to a charity.
    [quote=Doug]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.[/quote]I thought hoarding gold was a long term thing. Sure, barter is not yet a medium of exchange, but you also are not going to be using your gold as such tomorrow. As society breaks apart, I would think barter would become much more prevalent than gold as money, at least for a while.
    [quote=Doug]Once you acknowledge that some store of financial value is necessary[/quote]Well, I suppose that’s it, I don’t, at least long term. Long term, the only things that matter are the skills and knowledge that your community has managed to acquire.
    [quote=Doug]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.[/quote]Then make sure you’re not dependent on the state.
    Tony

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  • Sun, Jul 03, 2011 - 4:17am

    Reply to #18

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    ao wrote:Let me say it one

    [quote=ao]Let me say it one final time … investment in gold does not preclude investment in other “things”.[/quote]I didn’t say it did, at least for those with excess wealth. If one has more than enough wealth to make the short term preparations that are needed (indeed, I seem to remember Chris talking about the urgent need to finish of preparations, and even sell gold, if that is needed to do so), then buy gold if you want. But this article was an out and out sell for gold and silver. That’s why I ask what are the alternatives? Is this just a strategy for those who have completed their preparations or for those who have more than enough savings and income to do so? If it is, then, as far as I can see, it doesn’t matter whether the advice is sound or not.

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  • Sun, Jul 03, 2011 - 4:28am

    Reply to #28

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Outcast19 wrote:After that,

    [quote=Outcast19]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.[/quote]That’s fair enough, outcast. I can’t find much fault with that.[quote=Outcast19]I’m a 63 year old small business owner hoping to retire in two years[/quote]What do you mean by “retire”?
    [quote=Montana Native]Saving is a wise thing to do.[/quote]Why? Paying off debt and making preparations is a wise thing to do. Perhaps saving enough for property taxes is a wise thing to do but I’m not sure why saving beyond that is wise.
    [quote=Montana Native]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.[/quote]Yes, they may. How does that affect how you approach the future? Things may also not sputter along, for much longer, for you personally, or for other members of your family, or for anyone. My insurance would be to acquire the skills needed to rely on others, particularly the state, as little as possible.

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  • Sun, Jul 03, 2011 - 6:49pm

    #32

    Mark_BC

    Status Bronze Member (Offline)

    Joined: Apr 30 2010

    Posts: 284

    I have read all but the last

    I have read all but the last two pages of comments as I am short of time since at 3 pm today I’ll be flying in a small float plane into the wilderness of the central coast of BC to check out the grizzlies and test my self survival skills. But I really like the debate in these comments sections.

    The main comment I have is that people tend to describe economic collapses, and especially the final one to come in the next year or so, as being “wealth destruction” events. I take issue with that characterization, because there is no plausible way for such a huge amount of the world’s wealth to simply vaporize over such a short time, save for say a nuclear bomb being dropped or an asteroid hitting the planet somewhere. The amounts of physical productive capital of the world do not change at all over a 2 hour-duration stock market crash or currency devaluation event. Rather, what happens is that the ownership of that wealth shifts, as apparent wealth, or paper promises for wealth, gets destroyed.

    What we have is the mother of all ponzi schemes, where holders of paper wealth believe that they are entitled to have access to a certain amount of real world physical things of value. This ponzi scheme is being propped up by the Fed and the 100 trillion dollar plus (quadrillions?) derivatives market. Based on how I put the pieces together, the Fed is able to buy up new Treasury debt and artificially suppress interest rates, while still printing money, while at the same time keeping inflation relatively in check (to tame the masses and keep everyone believing in some magical economic recovery that will never happen), by hiding all that crap in the derivatives, using JP Morgan (apparenlty just an arm of the Fed), and other Wall Street firms. The problem is, this Keynesian activity violates the laws of nature and the crap must be hidden from everyone in the derivatives ponzi scheme, ie. artifical paper entitlements to real assets that could never be honoured in the real world. The crap can’t just be papered away. And  the longer this goes on, the longer the artificially low commodity prices will spur overconsumption, which means the final ponzi collapse will be even worse than it otherwise would be. Rob Kirby explains the Fed’s ponzi scheme well in his Elephant in the Room article,

    http://www.financialsensearchive.com/fsu/editorials/kirby/2009/0804.html

    He also just wrote another great article on the topic:

    http://news.goldseek.com/GoldSeek/1309532700.php

    I also like Eric Sprott’s recent analysis of the silver take downs,

    http://www.industrymailout.com/Industry/Home/5274/22439/images/0611%20Caveat%20Venditor.pdf

    The take home message I am getting at is that economic collapses do not destroy wealth; they redistribute ownership of it. The destruction of actual wealth has occurred over the last few decades due to misallocation of capital and consumption patterns; the final crash is merely the “wake up call” where the market realizes what has happened. So the key to maintaining your prosperity is to correctly predict where that wealth ownership redistribution will go (hyperinflation or deflation? In a world of increasingly scarce resources where real prices have been suppressed low for decades by Fed monetary intervention, I have a hard time believing all those new trillions of dollars being printed are going to deflate, and when that money printing must go up exponentially so if and when interest rates rise, and they must at some point, when the derivatives scheme crashes and the dollar is to continue to be the central unit of the monetary system). I just don’t see long term deflation being possible in this scenario.

    True, gold is not a valuable productive asset since it doesn’t do anything. Rather, productive farmland, fisheries, factories, and mineral and energy resources are productive assets. Those are the things people will be scrambling to gain ownership of when the phony paper ponzi scheme crashes, because those are the things the paper wealth is supposedly representing ownership of (but cannot possibly fulfill those obligations; that’s why they are printing money and suppressing interest rates!)

    I think a well rounded portfolio in all those things could not go wrong in the medium to long term; after all, what else of true productive value is there in the world to have ownership of? And gold and silver will be another hard physical asset which people will automatially flock to when they lose confidence in paper ponzi schemes, so whether gold will form the basis of a new monetary system or not (I hope not, IMHO) is irrelevant for me right now, the point is that it is well positioned to be on the receiving end of a major wave of investment sentiment.

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  • Sun, Jul 03, 2011 - 8:04pm

    #33
    richardgordon

    richardgordon

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    Gold a Barbarous Relic

    Chris, I always enjoy reading your stuff because it is interesting, analytical and well reasoned.  However, I think that your own analysis proves why gold will never revert back to the basis of a monetary system. 

    Firstly, you admit that the size of the world economy is vast in comparison to the available gold to back the return to the gold standard and couldn’t possibly sustain the world economy.

    “In 2008 the total amount of money stock in the world was roughly $60 trillion.

    If the world wanted 100% gold backing of all existing money, then the implied price for an ounce of gold is ($60T/987MOz) = $60,790 per troy ounce.

    Clearly that’s a silly number (or is it?), but even a 10% partial backing of money yields $6,000 per ounce.”

    But let us assume for arguments sake a country, for example, Poland, decided to revert back to the gold standard.  Of course, gold bugs everywhere would be delighted and pile into the Polish Zltoy with abandon.  Moreover, given the state of the Euro and the American Dollar, even non gold-bugs would pile into the Polish Zltoy.  The Zltoy would skyrocket in value vis a vis every other international currency in the world.   The problem is that such appreciation would kill the competitiveness of the Polish Economy.  Secondly, the Polish Economy would be held hostage to the vagaries of the price of gold.  If the price of gold appreciated to $6,000 per oz as you and other suggest might happen it would make it impossible for the Polish Economy to compete, on the other hand if Poland decided to peg its currency to the price of gold at say its current value of $1,500 per oz, and the price of gold collapsed to $400 per oz then the flip side is that inflation would suddenly become a huge problem.  Morover, the value of the price of gold has more to do with the percieved inflationary risks of the US Economy than the fundamentals of the Polish Economy.  Try managing the Polish economy based on these bizzare influences.  It would be chaotic.

     

    My view is that as a store of value and a medium of exchange, gold was great while it lasted.  It served its purpose, but it does not have a place in the modern international economy.  As you yourself have pointed out there is not enough of it to serve the world economy’s needs. For another  it’s not flexible enough to manage the dynamics of the modern economy.  Whatever your criticisms of Bernanke and the Feds monetary policy.  So far it has kept the world out of the second great depression.   If the world had been tied to the gold standard as it had been after the First World War it would have guaranteed that the world would now be grinding through a depression even greater than the  1930s.

    Moreover, it is my belief that what is holding back the United States from a full recovery is the intransigence of the Republican Right.  There are solutions to the mess we find ourselves in.  You don’t have to be Milton Friedman or John Maynard Keynes to figure that out.  Simply raise taxes and cut spending.  The problem in the United States is not economic but political.   Ask yourself what would happen if somehow, mysteriously and magically, Congress behaved like adults and sat down and worked out a credible plan to reduce the debt and tackle entitlements and spending.  Within a year or two the crisis would be over and the United States would have regained the crediblity that everyone – even the Chinese want the United States to have.

    The problem is not the debt, its not the Chinese, or Iran, or Al Quada or anybody else.  The problem are those bozos in congress who will do anything to seize power.  Even kill America to get re-elected.

    As for your thesis regarding the eventual collapse of the world economy because we are squandering our resources, I fully subscribe to that.  In my opinion you are dead right.

     

    One final thought, you may be right that in the end that the world returns to the gold standard, but this would presuppose a total collapse of the international economy.  However, I don’t think owning gold would be much help.  Chaos would reign supreme and it’s quite possible we all would have reverted back to barter anyway.  I don’t think there is anything one could plan to survive a situation like that.  It seems to me skills, in such an economy would be worth more than anything that gold could buy.

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  • Sun, Jul 03, 2011 - 11:07pm

    #34
    awgrad

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    The big question not addressed - govt legislation when its time

    There is a conspicuous absence of comment on the liklihood that no nation will allow its paper currrency to be supplanted by gold and silver coins or bullion and that those of us who have bought into this seemingly no brainer investment will find out NOT that our bullion is confiscated, but its profitability is much diminished by taxation, dealer’s spreads, capital controls, and other oppressive legislation by the state.  There is already ample evidence of this liklihood. Try to buy or sell a silver bullion coin in the UK. At the minimum you will be subjected to the dealer’s premium, a VAT currently at 20%, and capital gains tax. My question is why dont the pundits (Chris, you are one) address the extreme liklihood that the governments will legislate in draconian fashion to minimize and take for themselves any gains the average person holding bullion is expecting for themselves. We see this starting with the collectibles tax on undocumented “taxable” events with its implied penalties of not reporting. We see it in the 1099 legislation starting in 2012 (and probably retroactive investigations) on sale of bullion products. If you are investing in the BullionVault type systems, you still have to return your sales proceeds to the US bank that you you originally funded your “segregated” purchase from . Now this is not paranoia. The kleptocracy which masquerades as free market economies will not let you benenfit from your farsighted bullion purchases. They will legislate it away from you. You will need to buy their paper at the price they determine. So maybe its just an oversight on the part of the gold and silver advocates, but the lack of foresight about what governments will do is a glaring lack in the discussions. I bought gold and silver. I am really wondering what the government will take from me when I try to convert it. I prefer this be discussed and all possibilities aired, not just the confiscation scare. 

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  • Mon, Jul 04, 2011 - 8:53pm

    #35

    Dirk Campbell

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    store of value

    ‘The only truly long term store of value is productive capacity.’ -rhare

    I copied that and posted it on my desktop.

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  • Tue, Jul 05, 2011 - 4:06am

    #36
    Eye

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    With respect to ao's post

    Excellent post ao.  I would add that geothermal energy diversifies your energy self sufficiency,  is largely protected ( unlike solar and wind ) and can not be easily stolen because it is underground or inside your house.  Also, keeping a sizable portion of your assets in cash allows you to pay the surprizing increase in real eastate taxes and other levies municipalities will charge those who have adequately prepared.  It’s all in the balance.

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  • Tue, Jul 05, 2011 - 2:12pm

    #37
    Doug

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    Sofistek

    [quote]But, if you’re all set, then it doesn’t really matter where you put your excess cash. After all, it’s excess, isn’t it? Give it to a charity.[/quote]

    This is a central failing of your reasoning.  My PMs are not “excess”, they are finanacial assets that give my family and me a measure of security.  I’ve reached an age where I need to seriously be thinking about how I’m going to survive when my physical and possibly mental abilities wane.  All the tools and land in the world aren’t going to help me if I can’t use them.  Having financial assets allows me to hire or work out some kind of exchange with those who still can do the work.  Your dismissal of the value of financial assets in general and PMs specifically is frivolous and lends no credibility to your argument.

    I might add more generally that people here are not addressing the reality that when governments become more predatory in acquiring our wealth, as they are reasonably sure to do, the existing and thriving black markets in this land will grow, perhaps exponentially.  Surprised  Remember, practices like barter are technically black markets.  They are taxable events, though rarely taxed because of the difficulties in doing so.  As gov’t practices become more confiscatory, people will find alternatives and substances of traditional value will come to be useful in those markets.

    Doug

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  • Tue, Jul 05, 2011 - 3:09pm

    #38

    Ready

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    Well JAG,

    I came back from the long weekend ready to start this conversation back up, only to find that you are gone, and we are now debating whether or not savings (of any kind) is a good thing (seriously???? ) and religious dogma’s place at CM. On a  PM Special report from CM no less.

     

    *sigh*

     

    See ya around buddy, I’m out.

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  • Tue, Jul 05, 2011 - 3:47pm

    Reply to #5
    raptor

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    Nice try ;)

    @Captain Sheeple (JAG)Nice try, but as most of the people as you said our whole live (the last generation) have been in paper market. And is clear from your post that you still live in this paper market. And yes the speculations you mentioned will continue to work in this paper fiat market. And this is the biggest weakness of your argument.
    As I said when you change your perspective i.e. starting to measure your well being by the real material world not by the paper-pipe dreams then you wll find that all your arguments vaporise and become thin air as all the fiat becomes sooner and later.
    And yes USA $ is just the next in line… it can happen here, it happened almost everywhere in those last 30-40 years that you prize as perpetual motion machine… do I have to name it .. South America, Asia, Eastern Europe, USSR….all of them experienced hyper or high inflation periods… many currencies disappered.
    I’m not saying dollar will disappear just I’m sure it will devalue enought to kill the bulk of the profits of speculators who didn’t exited in time..
    Again the main mistake most people have is using the wrong measuring rod.
    PS> the reason of the long term downtrend in gld was not some miracle of new fiat-paper, but the invention of the microprocessor and technological advances that allowed cheap oil and the followed increase in world wide productivity. This is now tipping off combined with continuous griding steadily increase of the cost of the energy.
    The only way this can continue now is something on the scale of “personal cold fusion reactors” if that is ever possible 😉 We may be able to find some sort of cheap energy along those lines, but it will be long after current looming crisis is history, something like 30+ years in the future.
     
     

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  • Tue, Jul 05, 2011 - 5:06pm

    Reply to #38
    tictac1

    tictac1

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    WOW!

    I wonder why Christianity is so offensive to people here?  I mean, one line in a lengthy post, and everyone jumps him?!?Some people here need to wake up to the fact that ALL discussions are both political AND religious, especially discussions involving economics and wealth.
    This is because one’s axioms, that which is taken for granted in the subtext of every argument, are rooted in one’s religion, whether that be Christianity, Islam, Statism, or one of the other smaller players.  I’m actually surprised this isn’t obvious to such an astute group. 
    We do not interpret data or form opinions in a void.
    On the gold issue, I’m of the opinion that 10,000 years of history won’t turn on a dime, i.e. gold will not somehow be worthless this time around.  Of course, how do we know the current price is not the product of manipulation to some end we do not currently know about? 
    Personally, I’m not worried about being able to sell it later, even with all the imaginable tariffs, taxes, etc.  The government’s ability to enforce laws is limited to its ability to use violence, and I think if the “situation” gets bad enough I’m selling gold to make ends meet, the government will have it’s hands full just trying to exist.  There already exists a vast blackmarket, in many goods, the government is unable to even slow down.  Most of a government’s ability to rule comes from fear, and when people realize just how impotent their governments are, that fear starts to dissolve.
     
     

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  • Tue, Jul 05, 2011 - 6:12pm

    Reply to #38
    raptor

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    @tictac1 You are right,

    @tictac1You are right, black market opens up at the moment the gov. become too invasive…. so they will get nothing if they try to tax too much.
    You can take my word for it.. I lived in a socialist regime ..Just to clarify nobody was allowed to have a company and bussiness everything was nationalized.. Yet almost everybody was doing favors/work for anybody else on the black market w/o giving a dime back to the corrupt government. And socialist regimes were more totallitarian than the current Western democracies at least for now..
    The same thing happens everywhere it is human nature… and when the government try to inflate blatantly people will just switch to whatever, doesnt have to be gold and silver !! But most probably will be.
    Did the prohobition stopped selling alchohol, no it made it more profitable to whoever took the risk to smuggle it…

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  • Tue, Jul 05, 2011 - 6:48pm

    Reply to #38

    Ready

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    Ready wrote:I came back

    [quote=Ready]
    I came back from the long weekend ready to start this conversation back up, only to find that you are gone, and we are now debating whether or not savings (of any kind) is a good thing (seriously???? ) and religious dogma’s place at CM. On a  PM Special report from CM no less.
     [/quote]
    Apparently, this thread got cleansed just a bit, in case ‘yall thought I was smokin’ the cleaning rags again. I’d edit the previous post, but I guess it’s been too long.

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  • Tue, Jul 05, 2011 - 9:32pm

    #39
    tictac1

    tictac1

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    Gold Market

    On grey/black market value of gold, it’s been said that the illegality of trade would lower the price.  While this makes some sense, I cannot think of any other item that gets CHEAPER on the black market.

    Value is not what the spot price says, however, it is exactly how much the person you are trying to sell to will pay for it.

    On eBay, gold fluctuates, but recently has been quite reasonable-

    http://goldkrugerrandferret.com/gold-krugerrand-price/

    In the recent past, ebay was very pricey for Krugs, even though the supply was high.

    Has anyone attempted to use silver ounce coins to pay for goods/services?  I’m of the opinion that much would depend on the clerk.  When I was a cashier, I would have paid for the customer’s goods out of pocket, and kept the silver, but I’m not sure anyone would recognize real silver today.

    So if silver right now is at $35/oz, but you can only trade it for $20 worth of goods, that tells you the “street price”, so to speak.  Or maybe you can get $40 worth of goods?  Anyone tried this recently?

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  • Tue, Jul 05, 2011 - 10:42pm

    Reply to #37

    sofistek

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    Doug

    [quote=Doug]This is a central failing of your reasoning.[/quote]Not really. You said, “I’m not interested in hearing about all the wonderful preparations you can make with that cash, I’m already there.” and I said (including new emphasis), “If you’re all set”. If you didn’t mean you’re all prepared then my “if” becomes irrelevant and we revert back to the argument between buying PMs and preparing. If you are, indeed, all set, then my reasoning is sound. If there is no more that you can do to prepare then any savings you have are excess to requirements, though, of course, you may still have taxes to pay and I’ve covered that. You make the point about being able to buy in what you need, if you and your family become incapable either of looking after yourselves or of bartering for what you need. But the PMs, if they are accepted in exchange for goods and services, will run out at some stage, either in your lifetime or your family’s lifetimes, unless your family can start providing something that other people need – in which case you could always barter than sell.[quote=Doug]Your dismissal of the value of financial assets in general and PMs specifically is frivolous and lends no credibility to your argument.[/quote]Only if your PMs will allow you to do what you say they will. Neither you nor Chris knows that (not that Chris mentioned your proposed use of your PMs, as far as I know). I don’t dismiss financial assets; they can be very useful in preparing for a very different future by becoming as self sufficient as possible.[quote=Doug]Remember, practices like barter are technically black markets.[/quote]Sorry, I don’t see that, either in the current society or after collapse. Barter is direct exchange of goods and services, instead of through some intermediate mechanism, like money or gold. I don’t think I’ve heard of barter being taxable currently, though I wouldn’t put it past governments or dictators to try to do so, in some way.[quote=Doug]As gov’t practices become more confiscatory, people will find alternatives and substances of traditional value will come to be useful in those markets.[/quote]Providing governments don’t confiscate those substances. Skills will always have value and governments will find it very difficult to confiscate those.

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  • Tue, Jul 05, 2011 - 10:49pm

    Reply to #38

    sofistek

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    Ready wrote:and we are now

    [quote=Ready]and we are now debating whether or not savings (of any kind) is a good thing (seriously???? )[/quote]No, we’re not debating that, in as stark a manner as you’ve put it. I hate that way of debating – a bit like a straw man. Savings are a great thing to have now. But what is their purpose, especially as we’re facing a very uncertain future (though certain in some key ways, since our behaviours are unsustainable)? Some have claimed it’s sort of an insurance policy but where the insurance company is not guaranteed to pay out. Others seem to view savings as a delaying mechanism, to prolong the time before they really have to fend for themselves.Savings today are a good thing to have but only to spend on preparations (though I admit that there are many ways to view those preparations).

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  • Tue, Jul 05, 2011 - 10:57pm

    Reply to #38

    sofistek

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    tictac1 wrote:gold will not

    [quote=tictac1]gold will not somehow be worthless this time around[/quote]I’m not sure that anyone said it would be. Whether you can physically use it in the way you might imagine is another matter. It’s questionable as to whether PMs will be a common enough means of exchange to make it a useful commodity to hold. The masses will probably be bartering rather than exchanging gold coins or slivers.

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  • Wed, Jul 06, 2011 - 12:47am

    Reply to #38
    capesurvivor

    capesurvivor

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    back from the void

    I guess I was “cleansed” along with the religious comments. Ok with me.Tictac1, there’s a difference between placing precious metals and their ownership in a context and proselytzing. The Crash Course is a secular course. Chris very carefully made it so and  is therefore conceptually accessible to everyone without interference of, or minsinterpretion by, religious dogma.
    There are thousands of religious websites, especially religious preppers, who might welcome those with a religious interpretation of the Triple E predicaments we face. On this thread, such intrusions have proven to be just that, intrusions, and diversions, as you’ve seen.
    At the risk of having my comment cleansed, I won’t answer your musing out loud about why people are offended by Christianity.  Books have been written.
    I am certainly concerned that my PMs will stolen by some manner of government finagling or intervention and that I will be penalized, not rewarded, for my economic caution. They have thrown savers and retirees under the bus and saved bankers for the past several years and I assumer that they will throw precious metal owners under the bus to save the bankers in the future.
    I’m all ears for suggestions from, as you noted, an astute group. I don’t believe that a Swiss gold account accessible by a neat ride in my Gulfstream is in the cards for me, as many “poser’ gold mavens who publish newsletters so smugly suggest.
     
    CS

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  • Wed, Jul 06, 2011 - 1:54pm

    Reply to #39
    raptor

    raptor

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    not necessarily

    >>On grey/black market value of gold, it’s been said that the illegality of trade would lower the price.  While this makes some sense, I cannot think of any other item that gets CHEAPER on the black market.<<Not necessarily, In my country back in the days…. the official exchange rate of the $ was 1:1 but on the black market it was 1:3 (3 times more expensive). There was this subtlety of course, not everybody was allowed to exchange or have $. Talks about the stupidity the gov can come up and also you can’t change human nature with fabricated laws that make no sense.
    So it depends.

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  • Wed, Jul 06, 2011 - 2:53pm

    #40
    tictac1

    tictac1

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    For sofistek:  bartering

    For sofistek:  bartering without paying taxes is most definetly illegal in the U.S., as is trading labor for labor.  I can get you IRS code if you need it, I just don’t have it handy right now.  Interestingly, the IRS says you have “no basis” in your own labor, i.e. it is worthless, until you go to trade it, of course.  That’s why any money you make through your labor is 100% taxable.

    Based on recent history, I think we should all plan on governments furthering their looting of the public in favor of powerful banking interests.  World-wide corporate socialism, if you will.  This might mean taxing or otherwise regulating your PMs into near worthlessness, IF that means saving their bacon.  Again, though, this presupposes a compliant public to make it worthwhile on a large scale.

    The last time gold was confiscated, the general atmosphere was very different.  I think the public had a basis of trust in the US government, something that does not appear to be so at this time. 

    I don’t think anyone should see PMs as the end-all, be-all of self-sufficiency.  I doubt anyone here does.  They are merely one way to preserve wealth, an insurance policy.  Another wise investment might be tools of various sorts, and learning the skills to use them effectively.  For example, a generator/TIG/stick welder might cost you a few grand, but it can easily be made to pay for itself many times over if you know how to use it.

    Diversified income streams, in addition to a variety of wealth preservation/investment vehicles, is about the best you can do, financially. 

    For those that believe PMs are a bad idea, I would ask this question- if that is so, why are banks reversing course on holding gold, and buying?  If PMs are being manipulated upward, wouldn’t banks be reducing their holdings to take advantage of the “bubble”?  My WAG is that central banks are quietly preparing for what they see as a forgone conclusion, the eventual collapse of the US dollar.  I don’t see a gold standard arising from this, though.  I see another fiat.  It’s the only way “the game” of robbing the masses through wealth destruction and confiscation can continue.  I welcome retorts to this idea, however.

    Historically, this does not bode well.  The masses get violent when “class warfare” comes to a head.

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  • Wed, Jul 06, 2011 - 3:44pm

    Reply to #40
    raptor

    raptor

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    I also agree we will end

    I also agree we will end with another fiat/s.. no way out of it (expandable electronic money are better lubricant for world trade than commodity money).. It can even be more abstract like the SDR for the interbank backbone (Then the bankers can play even more games). Any gold standard scheme is doomed to failure too.sofistek: Gld holding is not for trading and day to day transaction. But a way so you can go trough the crisis on the other side with preserved purchasing power.

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  • Wed, Jul 06, 2011 - 4:12pm

    Reply to #38

    Ready

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    Dear Sofistek,

    [quote=sofistek][quote=Ready]and we are now debating whether or not savings (of any kind) is a good thing (seriously???? )[/quote]No, we’re not debating that,[/quote]
    [quote=sofistek]
    Paying off debt and making preparations is a wise thing to do. Perhaps saving enough for property taxes is a wise thing to do but I’m not sure why saving beyond that is wise.
    [/quote]
    Well, you are right about one thing, WE are not debating that. Apparently you are debating it with yourself across posts.
    Cheers,
    Strawman

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  • Thu, Jul 07, 2011 - 2:28pm

    #41
    Doug

    Doug

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    Sofistek

    Doug wrote:Remember, practices like barter are technically black markets,

    [quote]I don’t see that, either in the current society or after collapse. Barter is direct exchange of goods and services, instead of through some intermediate mechanism, like money or gold. I don’t think I’ve heard of barter being taxable currently, though I wouldn’t put it past governments or dictators to try to do so, in some way.[/quote]

    http://www.irs.gov/taxtopics/tc420.html

    [quote]

    Topic 420 – Bartering Income

    Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.

    Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report this income, correct your return by filing a Form 1040X. Refer to Topic 308 for Amended Return information.

    A barter exchange or barter club is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis.

    The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B for all transactions unless certain exceptions are met. Refer to Barter Exchanges in Publication 525, Taxable and Nontaxable Income, and the instructions for Form 1099-B for additional information on this subject. Persons who do not contract a barter exchange but who trade services do not file Form 1099-B. However, they may be required to file Form 1099-MISC. If you are in a business or trade, you may be able to deduct certain costs you incurred to perform the work that was bartered. If you exchanged property or services through a barter exchange, you should receive a Form 1099-B (PDF), Proceeds From Broker and Barter Exchange Transactions. The IRS also will receive the same information.

    Please refer to our Bartering page for more information on bartering income and bartering exchanges.

    If you receive income from bartering, you may be required to make estimated tax payments. Refer to Publication 525, Taxable and Nontaxable Income, for additional information.[/quote]

    So, if you haven’t reported your barter arrangements, you are running afoul of IRS rules.  It isn’t very strictly enforced, but it can be at the whim of the IRS.  Remember, there is no more powerful agency of gov’t than the IRS.  Going forward, we should assume every financial agreement (whether involving currency, commodity or services) is potentially a taxable event and we are functioning in at least a gray if not black market if we ignore the tax consequences.  Paranoia is a healthy reaction to such a financial environment.

    Doug

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  • Thu, Jul 07, 2011 - 2:36pm

    #42
    Doug

    Doug

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    taxation of barter

    I should have added that there are exemptions of certain barters from the requirement to file a 1099-B:

    http://www.irs.gov/businesses/small/article/0,,id=188094,00.html

    [quote]

    Barter exchanges, whether Internet based or with a physical location, are required to file Form 1099-B for all transactions unless certain exceptions are met. Barter exchanges are not required to file Form 1099-B for:

    • Exchanges through a barter exchange having fewer than 100 transactions during the year
    • Exempt foreign persons as defined in Regulations section 1.6045-1(g)(1)
    • Exchanges involving property or services with a fair market value of less than $1.00[/quote]
    • Not very comforting.
    • Doug

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  • Thu, Jul 07, 2011 - 3:02pm

    Reply to #41

    Dogs_In_A_Pile

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    Scope and scale....

    [quote=Doug]So, if you haven’t reported your barter arrangements, you are running afoul of IRS rules.  It isn’t very strictly enforced, but it can be at the whim of the IRS.  Remember, there is no more powerful agency of gov’t than the IRS.  Going forward, we should assume every financial agreement (whether involving currency, commodity or services) is potentially a taxable event and we are functioning in at least a gray if not black market if we ignore the tax consequences.  Paranoia is a healthy reaction to such a financial environment.

    Doug

    [/quote]
    I don’t hink it will be so easily enforced.  If things degrade to the extent that many of us think it may, and barter exchanges increase more and more, I have serious doubts as to the ability of the IRS to enforce anything that will be occurring on such a large scale.  Don’t forget, not all of the IRS “Agents of Destruction” are storm troopers.  Many of them might actually turn out to be your neighbors.  I’m not so sure there is anything about being an IRS agent that will make one immune to the coming storm.

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  • Thu, Jul 07, 2011 - 4:24pm

    #43
    Doug

    Doug

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    their jobs

    [quote]I’m not so sure there is anything about being an IRS agent that will make one immune to the coming storm.[/quote]

    Keeping their jobs in such a storm is a powerful incentive.

    Doug

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  • Thu, Jul 07, 2011 - 4:39pm

    Reply to #43
    tictac1

    tictac1

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    Turnover

    The turnover rate for field agents is very high.  For some reason, it’s not a very nice place to work…:)  Some agents that quit go on to be anti-IRS crusaders.  The IRS operates illegally much of the time, and for some reason, there’s no recourse.

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  • Fri, Jul 08, 2011 - 4:18am

    Reply to #43
    capesurvivor

    capesurvivor

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    Default

    Default will affect my gold ownership. I’m a saver and not a borrower. It seems to me that two consequences of default, among many, maybe, would be a surge in interest rates and in the price of gold. I think I would sell my gold into that rally and put the money in CDs, which undoubtedly would also go WTF up with interest rates. After TPTB figured some way to redo the system and  get back to the business of screwing us as usual and interest rates and gold went back down, I’d stay in my high interest CDs and  use some other cash to buy back cheaper gold.A reasonable plan?
     
    CS

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  • Fri, Jul 08, 2011 - 7:04pm

    Reply to #43

    rhare

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    Interest on something worth nothing = ZERO!

    [quote=capesurvivor]I think I would sell my gold into that rally and put the money in CDs, which undoubtedly would also go WTF up with interest rates.
    [/quote]
    What if the currency that your CDs are denominated in goes to zero?  It doesn’t matter what your interest rate is.  At this time in history, I think I would not worry about gain and only about preservation of wealth.

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  • Fri, Jul 08, 2011 - 11:33pm

    Reply to #43
    capesurvivor

    capesurvivor

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    zero

    If U.S. currency actually went to zero, wealth preservation would be the least of my concerns probably. 
    SG

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  • Fri, Jul 08, 2011 - 11:54pm

    Reply to #43

    Dogs_In_A_Pile

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    Wrist Rocket

    [quote=capesurvivor]If U.S. currency actually went to zero, wealth preservation would be the least of my concerns probably.
     
    SG
    [/quote]
    Steve –
    You could use 1 ounce gold bars in a slingshot?????

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  • Sat, Jul 09, 2011 - 12:57am

    Reply to #43
    capesurvivor

    capesurvivor

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    hmmm

    Not against tanks!CS

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  • Sat, Jul 09, 2011 - 9:45pm

    Reply to #40

    sofistek

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    raptor wrote:sofistek: Gld

    [quote=raptor]sofistek: Gld holding is not for trading and day to day transaction. But a way so you can go trough the crisis on the other side with preserved purchasing power.[/quote]So you see the crisis as some temporary blip where the other side of it will have markets functioning like today? There seem to be two lines promoted here, for holding PMs. One is to preseve wealth until one is in a position to use that waelth for preparations. The other is to hoard it for some uncertain future but where one is certain that it can be used to trade in lieu of physical goods or services. Now you seem to be adding a third, whereby there is some other side of this crisis where everything will calm down and, whilst many parts of society may be changed, you will still be able to sell PMs for some means of exchange and have expectations that the PMs will continue to hold their value during your lifetime (or perhaps your family’s lifetimes).The least gamble seems to be the first position but then it would be a short term position and I don’t think Chris often espouses PMs for the short term, though he has encouraged sale of some portion of holdings if required to complete preparations. However, most advice is for a long term hold and that is where I simply don’t see the reasoning. In a world that will probably see collapse or some stages of collapse in the lifetimes of everyone here, I don’t see the benefit of holding a largely useless material simply in the hope that it will enable its holders to think they are wealthy as society collapses around them.
    Tony

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  • Sat, Jul 09, 2011 - 9:51pm

    Reply to #41

    sofistek

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    Doug

    [quote=Doug]http://www.irs.gov/taxtopics/tc420.html[/quote]OK, Doug. Fair enough. In the US, it’s illegal (bizarrely). Maybe it’s illegal anywhere, then, though I don’t recall reading or hearing that before. I don’t know if it’s illegal here in New Zealand. However, we’re talking of the future here, during and after collapse. I can’t see how taxing or avoiding bartering can be enforced in a world where most people only have goods and services to exchange for other goods and services. I don’t see gold and silver as a means of exchange being common. That’s my point. There will be haves and havenots but what difference does it make to survival and quality of life?

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  • Sun, Jul 10, 2011 - 12:54am

    Reply to #40
    ao

    ao

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    Abandon your gold, all ye foolish people?

    [quote=sofistek]In a world that will probably see collapse or some stages of collapse in the lifetimes of everyone here, I don’t see the benefit of holding a largely useless material simply in the hope that it will enable its holders to think they are wealthy as society collapses around them.
    [/quote]
    Let’s look at the situation from a little different perspective.  I can’t recall members of various collapsed civilizations or declining empires or countries being conquered or countries experiencing currency destruction or persecuted populations including Egyptians, Chinese, Indians, Assyrians, Babylonians, Persians, Israelites, Romans, Greeks, Mayans, Aztecs, Incas, Ottomans, Mongols, Dutch, French, English, Russians, Vietnamese, etc., etc. ever abandoning their gold because it was a useless substance.  But suddenly, this time it’s different and gold will become completely useless and valueless in every way, shape, and form?
    I think not.
     

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  • Sun, Jul 10, 2011 - 9:01pm

    Reply to #40

    sofistek

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    ao wrote:Let's look at the

    [quote=ao]Let’s look at the situation from a little different perspective.  I can’t recall members of various collapsed civilizations or declining empires or countries being conquered or countries experiencing currency destruction or persecuted populations including Egyptians, Chinese, Indians, Assyrians, Babylonians, Persians, Israelites, Romans, Greeks, Mayans, Aztecs, Incas, Ottomans, Mongols, Dutch, French, English, Russians, Vietnamese, etc., etc. ever abandoning their gold because it was a useless substance.  But suddenly, this time it’s different and gold will become completely useless and valueless in every way, shape, and form?[/quote]So you believe that the use of gold as a means of exchange was widespread among the members of those collapsed civilisations? I think that’s the prevalent view here but I’ve read equally strong views that it was not widespread, that it’s a myth. No one said that gold was ever completely abandoned – we wouldn’t be considering it now as a means of exchange if it had been. But I think it is wishful thinking to suppose that during or after collapse, the few with gold will be any, or much, better off than the majority without. Those with skills and those in resilient close-knit communities will do far, far better than those who simply have a lot of gold stashed away.It’s possible that gold and silver will be able to be used in limited ways during and after collapse but it may take the rise of the next unsustainable civilisation before the gold hoarders (or their great descendants) will be able to start being able to use gold and silver freely for whatever their bodies need or whatever their hearts desire.
    Unfortunately, articles like this from Chris, will probably get a lot of people thinking they could make a killing (what with notions of an ounce of gold being potentially worth $65,000 or more). I think it has no longer become a means of maintaining wealth in order to better prepare but rather a business as usual investment, with the hopes of riches to come. I’d like to see Chris’s take on some of the counter points raised here but, sadly, he doesn’t usually involve himself in these types of discussions.
    Tony

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  • Mon, Jul 11, 2011 - 12:06am

    Reply to #40
    ao

    ao

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    flexible or inflexible?

    [quote=sofistek][quote=ao]Let’s look at the situation from a little different perspective.  I can’t recall members of various collapsed civilizations or declining empires or countries being conquered or countries experiencing currency destruction or persecuted populations including Egyptians, Chinese, Indians, Assyrians, Babylonians, Persians, Israelites, Romans, Greeks, Mayans, Aztecs, Incas, Ottomans, Mongols, Dutch, French, English, Russians, Vietnamese, etc., etc. ever abandoning their gold because it was a useless substance.  But suddenly, this time it’s different and gold will become completely useless and valueless in every way, shape, and form?[/quote]So you believe that the use of gold as a means of exchange was widespread among the members of those collapsed civilisations? I think that’s the prevalent view here but I’ve read equally strong views that it was not widespread, that it’s a myth. No one said that gold was ever completely abandoned – we wouldn’t be considering it now as a means of exchange if it had been. But I think it is wishful thinking to suppose that during or after collapse, the few with gold will be any, or much, better off than the majority without. Those with skills and those in resilient close-knit communities will do far, far better than those who simply have a lot of gold stashed away.
    It’s possible that gold and silver will be able to be used in limited ways during and after collapse but it may take the rise of the next unsustainable civilisation before the gold hoarders (or their great descendants) will be able to start being able to use gold and silver freely for whatever their bodies need or whatever their hearts desire.
    Unfortunately, articles like this from Chris, will probably get a lot of people thinking they could make a killing (what with notions of an ounce of gold being potentially worth $65,000 or more). I think it has no longer become a means of maintaining wealth in order to better prepare but rather a business as usual investment, with the hopes of riches to come. I’d like to see Chris’s take on some of the counter points raised here but, sadly, he doesn’t usually involve himself in these types of discussions.
    Tony
    [/quote]
    If you can cite me some historical instances of citizens with gold being worse off than those without, I’d be interested in hearing about them.  I don’t know why but you seem to perseverate in this notion that having gold precludes having skills.  Also, I haven’t seen anyone say they think their gold is going to be worth $65K/oz.  In addition, you seem fixated on gold as a medium of exchange or as an investment.  I think most folks here would use silver as a medium of exchange or an investment or some other goods or services for exchange.  I think more than anything else, most think of gold as a store of wealth.  Here’s why:   
    Attributes of gold 

    Rarity  
    Stable supply
    Chemically inert
    Durability
    Divisibilitiy
    Easily stored
    Portability
    Universal recognition
    Liquidity
    Not only a commodity but also a currency
    Not someone else’s liability
    Can be wholly owned

    Consider that one of the most important assets in a collapse is flexibility of thought and action.  How flexible are you?  How married are you to not having gold?  Personally, I’d consider it financial suicide not to hold some wealth in PMs in our present economic climate but that’s just me.  

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  • Tue, Jul 12, 2011 - 11:06pm

    Reply to #40

    sofistek

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    If you have spare cash you might as well buy gold

    That people might be worse off with gold was an opinion, I have no historical evidence, so feel free to dismiss it, as you obviously have. It was an opinion expressed earlier only insofar as those seen trying to only buy their survival instead of chipping in might be ostracised in their community. It’s just an opinion so don’t rail at it too hard.I don’t think buying gold precludes gaining skills and have never said so. All I’ve said is that gold shouldn’t be thought of as an alternative to preparations, in any way, unless one is physically incapable of preparing.
    If you have spare cash that you can’t use in preparations, then buying gold is as good as anything else. Or if your preparations may take a few years, then gold may be a good way of preserving your wealth during that time.
    Financial suicide not to hold PMs? Nah. Only if you plan to prepare over a period of time does it make sense to me to hold gold. It can’t easily be exchanged for goods and services now and so you would have to sell it in order to extract its value for your preparations. Most people actually don’t have PMs (in any significant amount) so by your reckoning almost everyone is comitting financial suicide. You could hold cash instead – yes, it’s value is eroding but, so far, inflation is not so onerous that its value will be gone before you can make good use of it, and most countries have some form of insurance against banks holding your savings going bust, though spreading it around is probably wise. Cash is always immediately available and accepted by everyone as a means of exchange, now. Maybe you’re right but I’m dismayed that Chris’s blog seems to be becoming a gold selling forum; his last three blog entries are all about gold and PMs. You’d think things weren’t going to change that drastically – just buy gold and you’ll be all set.

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  • Wed, Jul 13, 2011 - 1:56am

    Reply to #40
    ao

    ao

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    how's that cash doing compared to PMs?

    [quote=sofistek]That people might be worse off with gold was an opinion, I have no historical evidence, so feel free to dismiss it, as you obviously have.
    [/quote]
    Indeed, there is ZERO historical evidence.
    [quote=sofistek]
    I don’t think buying gold precludes gaining skills and have never said so. All I’ve said is that gold shouldn’t be thought of as an alternative to preparations, in any way, unless one is physically incapable of preparing.
    [/quote]
    But your statements implied this.  And, as far as I know, I don’t think there’s a single post on this forum that ever said or implied that gold was an alternative to preparations.
    [quote=sofistek]
    If you have spare cash that you can’t use in preparations, then buying gold is as good as anything else. Or if your preparations may take a few years, then gold may be a good way of preserving your wealth during that time.
    [/quote]
    There are very few where preparations will take less than a few years.
    [quote=sofistek]
    Financial suicide not to hold PMs?
    [/quote]
    So how exactly do you plan to hold onto wealth in a hyperinflationary environment?
    [quote=sofistek]
    Most people actually don’t have PMs (in any significant amount) so by your reckoning almost everyone is comitting financial suicide.
    [/quote]
    When everone is doing something investment wise, that’s exactly the time I don’t want to be doing what they’re doing.  Compare the returns for individuals who started holding PMs in 2001 versus those holding stocks, bonds, or cash.  If the returns on the latter 3 asset classes compared to the returns on PMs aren’t a form of financial suicide, I don’t know what is.

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  • Wed, Jul 13, 2011 - 3:39pm

    #44
    tictac1

    tictac1

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    On PMs as currency- "I

    On PMs as currency- “I think that’s the prevalent view here but I’ve read equally strong views that it was not widespread, that it’s a myth.”

    I’d like to see some sources on that.  I’m a bit of a history buff, and the use of gold and silver as currency in multiple, long-lived civilizations is well-documented.  In fact, many of the coins minted still exist in museums and private collections.  Additionally, even when it was not used as currency, it was always highly valued.  I can find no instances where civilized peoples considered gold to be of low value.

    As a store of wealth, PMs enable those with wealth to remain wealthy after a catastrophic collapse.  The concept that the wealthy will fair no better than the average man under such conditions is also without historic precedent.  Even in countries experiencing violent revolution AGAINST the rich (for example Cuba), money gives an escape route not available to those without it.

    So far, all the arguments I’ve seen against gold involve a view of the future without precedent and in contradiction to human nature.  The “Mad Max” scenario is simply fiction, humans never remain in a state of anarchy for any extended period, they group up and begin forming rules to live by, and mediums of trade.  We inherently seek order and social structure.

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  • Wed, Jul 13, 2011 - 4:06pm

    Reply to #44
    earthwise

    earthwise

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    tictac1 on PM currency and anarchy

    [quote=tictac1]On PMs as currency- “I think that’s the prevalent view here but I’ve read equally strong views that it was not widespread, that it’s a myth.”
    I’d like to see some sources on that.  I’m a bit of a history buff, and the use of gold and silver as currency in multiple, long-lived civilizations is well-documented.  In fact, many of the coins minted still exist in museums and private collections.  Additionally, even when it was not used as currency, it was always highly valued.  I can find no instances where civilized peoples considered gold to be of low value.
    As a store of wealth, PMs enable those with wealth to remain wealthy after a catastrophic collapse.  The concept that the wealthy will fair no better than the average man under such conditions is also without historic precedent.  Even in countries experiencing violent revolution AGAINST the rich (for example Cuba), money gives an escape route not available to those without it.
    So far, all the arguments I’ve seen against gold involve a view of the future without precedent and in contradiction to human nature.  The “Mad Max” scenario is simply fiction, humans never remain in a state of anarchy for any extended period, they group up and begin forming rules to live by, and mediums of trade.  We inherently seek order and social structure.
    [/quote]
    This reinforces what I’ve concluded, also. A question for you, however, regarding the “Mad Max” scenario. While I agree that humans are unlikely to remain in a state of anarchy, isn’t it possible or maybe even likely that we would pass through that stage en route to a more stable society? And wouldn’t it be prudent to prepare for that scenario however unlikely it may be?

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  • Wed, Jul 13, 2011 - 5:57pm

    Reply to #44
    tictac1

    tictac1

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    Before I prepared for it,

    Before I prepared for it, I’d like to see historical precendent for it, so that I’d have at least a vague idea of what it might look like.  I’m open to suggestions on periods of history that might resemble this.However, you can’t REALLY prepare for the mad max world.  After all, it’s essentially a “might makes right” scenario, which means to “prepare” is to be able to resist another’s use of force.  Gun nuts like to fantisize about scenarios where they single-handedly fend off maruading groups, like a western frontiersman fighting the “indians”.  The reality, however, is that people group up so quickly it’s unlikely you will NOT be part of a group of people, unless you purposesly choose not to, which is suicide.
    We already have groups of people that are essentially prepared to fill any power vacuum left.  MS-13, LA Crips, etc.  In CA, these are the folks you will either align with, resist, or be victimized by.  Witness Mexico.  Of course, I have no doubt various militias would pop up to combat these, ala the colonies of America immmediately after the revolution.
    Another possibility of collapse is that former LE agents will become mafia, like the USSR after their collapse.  Unemployed government workers with few skills could easily turn to crime, as seen in the former Soviet Union.  Some might argue they already are a criminal enterprise.
    In any of these scenarios, having wealth can both make you a target, and provide a means of escape/survival.
    A well-off homestead or farm, located remotely, is a very attractive target for groups of murderers/thieves.  Look at South Africa.
    The best defense is to proactively create close-knit communities, like Mr. Martenson says.  Look at the Amish and Mennonite communities, if they did not have to pay exorbitant taxes on their land, they would not need the “english” at all.  They will ride out any financial upheaval far less scathed than the rest of us, by virtue of community and practical skills.

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  • Thu, Jul 14, 2011 - 3:31am

    Reply to #40

    sofistek

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    ao wrote:Indeed, there is

    [quote=ao]Indeed, there is ZERO historical evidence.[/quote]Well, I doubt you know that for certain so my opinion is as valid as yours.[quote=ao]But your statements implied this [that gold is an alternative to preparations].  And, as far as I know, I don’t think there’s a single post on this forum that ever said or implied that gold was an alternative to preparations.[/quote]Well, that’s your opinion. When the articles don’t explicitly give the conditions under which gold might be a reasonable investment to make, it is not unreasonable to suppose that it’s an alternative to preparations or, at least, a reason to delay preparations. If the articles stated that before making a long term investment in PMs make sure that you have sufficient liquidity to complete your preparations, then that would be fine. Alternatively, if they stated that those who cannot make their preparations for some time would be wise to place some of their wealth in PMs, to extract when they can make their preparations, then that would be fine too. I just don’t see that but apologies to Chris if he does make this point often.
    [quote=ao]There are very few where preparations will take less than a few years.[/quote]Just to be clear, I meant that the investment for preparations may take a few years. The physical labour and land preparations may take many years, but the investment in tools and skills may largely take place over a shorter time period – and perhaps should; there is no knowing when the facilities to make those investments in preparations will not be available, or easily available.
    [quote=ao]So how exactly do you plan to hold onto wealth in a hyperinflationary environment?[/quote]Well, it’s not clear that there will be such an environment and Chris has been in two minds about this, though currently appears to favour an inflationary environment (though I’m not sure about hyperinflationary). Of course, if we see inflation creep near or into double figures, that might be a signal to do something different, or complete preparations ASAP. Almost no-one else will be holding significant quantities of PMs so, at least, you won’t be any worse off that most people, if you can’t make those PM purchases.
    [quote=ao]When everone is doing something investment wise, that’s exactly the time I don’t want to be doing what they’re doing.[/quote]But that really misses my point. If you’re looking to make a financial killing then I’d agree. The fact that you then compare returns between PMs and stocks/bonds/cash shows that you’re viewing it as a “normal” investment vehicle, rather than a means to maintain wealth. In that case, you’re right and good luck to you. But that’s not akin to suicide. Though people are generally becoming worse off, suicide is not the right word to use. Maybe stupid? But if I can meet my preparation requirements with what I have, then I’m not going to wait around for many years, in an attempt to get a good return from PMs so that I can complete my preparations. Who knows how this will pan out and what the time scale will be. I get mixed messages from Chris; a couple of his posts this year have urged the need to complete preparations but then we get a series of entries on the investment potential of gold.

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  • Thu, Jul 14, 2011 - 3:57am

    Reply to #44

    sofistek

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    Posts: 557

    tictac1 wrote:I'd like to

    [quote=tictac1]I’d like to see some sources on that.  I’m a bit of a history buff, and the use of gold and silver as currency in multiple, long-lived civilizations is well-documented.[/quote]As a common means of exchange? I don’t have sources off-hand but some of these ideas (that gold will immediately take over from fiat money after collapse) come from The Automatic Earth blog. This isn’t to say that gold will lose its value. Among those who can use it as a means of exchange, it will remain valuable but it makes sense to me that, given most people won’t have any or much PMs, PMs won’t be a widespread means of exchange for a long time. So if you have some, you might well need to hold onto it for quite a long time before being able to realise its agreed value.[quote=tictac1]As a store of wealth, PMs enable those with wealth to remain wealthy after a catastrophic collapse.[/quote]Well yes, at least nominally, though, as I say, they may need to hold onto their PMs for a while before being able to use that wealth. However, I’ve really gone off the notion of wealth inequality, so I can’t say that that would be a convincing reason for me.
    [quote=tictac1]So far, all the arguments I’ve seen against gold involve a view of the future without precedent and in contradiction to human nature.[/quote]And I think the view of the future held by the pro-PM movement is a very rosy view and, IMHO, unlikely to be borne out, at least for quite some time. However, there may be patchy regions, as collapse progresses, where the gamble pays off. I remain unconvinced, but I’d say that one should buy one’s gold and silver in as small amounts as possible (small coins, maybe, or 1 gram ingots), since I don’t think many traders will want to, or be in a position to, give change, if they do accept gold/silver (and are confident it actually is gold or silver).

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  • Thu, Jul 14, 2011 - 10:58am

    Reply to #40
    ao

    ao

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    Posts: 882

    there is none so blind as he who will not see

    [quote=sofistek][quote=ao]Indeed, there is ZERO historical evidence.[/quote]Well, I doubt you know that for certain so my opinion is as valid as yours.
    [quote=ao]But your statements implied this [that gold is an alternative to preparations].  And, as far as I know, I don’t think there’s a single post on this forum that ever said or implied that gold was an alternative to preparations.[/quote]Well, that’s your opinion. When the articles don’t explicitly give the conditions under which gold might be a reasonable investment to make, it is not unreasonable to suppose that it’s an alternative to preparations or, at least, a reason to delay preparations. If the articles stated that before making a long term investment in PMs make sure that you have sufficient liquidity to complete your preparations, then that would be fine. Alternatively, if they stated that those who cannot make their preparations for some time would be wise to place some of their wealth in PMs, to extract when they can make their preparations, then that would be fine too. I just don’t see that but apologies to Chris if he does make this point often.
    [quote=ao]There are very few where preparations will take less than a few years.[/quote]Just to be clear, I meant that the investment for preparations may take a few years. The physical labour and land preparations may take many years, but the investment in tools and skills may largely take place over a shorter time period – and perhaps should; there is no knowing when the facilities to make those investments in preparations will not be available, or easily available.
    [quote=ao]So how exactly do you plan to hold onto wealth in a hyperinflationary environment?[/quote]Well, it’s not clear that there will be such an environment and Chris has been in two minds about this, though currently appears to favour an inflationary environment (though I’m not sure about hyperinflationary). Of course, if we see inflation creep near or into double figures, that might be a signal to do something different, or complete preparations ASAP. Almost no-one else will be holding significant quantities of PMs so, at least, you won’t be any worse off that most people, if you can’t make those PM purchases.
    [quote=ao]When everone is doing something investment wise, that’s exactly the time I don’t want to be doing what they’re doing.[/quote]But that really misses my point. If you’re looking to make a financial killing then I’d agree. The fact that you then compare returns between PMs and stocks/bonds/cash shows that you’re viewing it as a “normal” investment vehicle, rather than a means to maintain wealth. In that case, you’re right and good luck to you. But that’s not akin to suicide. Though people are generally becoming worse off, suicide is not the right word to use. Maybe stupid? But if I can meet my preparation requirements with what I have, then I’m not going to wait around for many years, in an attempt to get a good return from PMs so that I can complete my preparations. Who knows how this will pan out and what the time scale will be. I get mixed messages from Chris; a couple of his posts this year have urged the need to complete preparations but then we get a series of entries on the investment potential of gold.
    [/quote]
    ROTFLMAO.  A vision enters my head of you standing on the sloping deck of the Titanic, resolutely lecturing the passengers about the rashness of abandoning ship as the sea water begins to lap at your feet.  Thank you for the entertaining exchange.
    BTW, gold’s just gone up about 7% in 2 weeks and silver over 15%.  How’s that cash doing?

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  • Thu, Jul 14, 2011 - 10:16pm

    Reply to #40

    sofistek

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    Joined: Oct 02 2008

    Posts: 557

    The Difference

    [quote=ao]BTW, gold’s just gone up about 7% in 2 weeks and silver over 15%.  How’s that cash doing?[/quote]Well, this is a pretty clear illustration of the difference between your view and mine. I’m not interested in making a fast buck. I’m not interested in getting as wealthy as I can (in financial terms) as quickly as possible. My cash, actually, is doing better than inflation, just. And that’s fine with me.
    Look, I’ve never said I’m against gold but that I find the arguments for holding it either unconvincing or morally unsound. But your ethics may vary. However, I’m still considering gold and could probably afford 10-15 ounces, quite easily, but the only reason I see for doing so would be for a short term hedge against the banks that hold most of my money going bust. In the short term, I don’t think that’s likely, at least for the banks I’m using. I think it is just as likely that gold will plummet in price in the short term (I think Chris said this in his article). I see no benefit in holding it for the long haul, partly because it will likely have to be a very long haul, since it’s unlikely to be a widespread means of exchange for a very long time, and partly because I see no benefit in being wealthy in a land of financial paupers, unless I am physically and mentally incapable of acquiring skills and tools that will be far more useful to my, and my family’s, survival than a few ounces of some inert metal.
    Most of Chris’s messages here are spot on but he seems to have a fixation for gold, perhaps driven by the vision of untold riches (though I know he ditched the wealthy lifestyle many years ago). I think that vision is what has driven many gold followers here, demonstrated by the quote from you above.

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  • Fri, Jul 15, 2011 - 12:24am

    Reply to #40
    ao

    ao

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    slapstick comedy

    [quote=sofistek][quote=ao]BTW, gold’s just gone up about 7% in 2 weeks and silver over 15%.  How’s that cash doing?[/quote]
    Well, this is a pretty clear illustration of the difference between your view and mine. I’m not interested in making a fast buck. I’m not interested in getting as wealthy as I can (in financial terms) as quickly as possible. My cash, actually, is doing better than inflation, just. And that’s fine with me.
    Look, I’ve never said I’m against gold but that I find the arguments for holding it either unconvincing or morally unsound. But your ethics may vary. However, I’m still considering gold and could probably afford 10-15 ounces, quite easily, but the only reason I see for doing so would be for a short term hedge against the banks that hold most of my money going bust. In the short term, I don’t think that’s likely, at least for the banks I’m using. I think it is just as likely that gold will plummet in price in the short term (I think Chris said this in his article). I see no benefit in holding it for the long haul, partly because it will likely have to be a very long haul, since it’s unlikely to be a widespread means of exchange for a very long time, and partly because I see no benefit in being wealthy in a land of financial paupers, unless I am physically and mentally incapable of acquiring skills and tools that will be far more useful to my, and my family’s, survival than a few ounces of some inert metal.
    Most of Chris’s messages here are spot on but he seems to have a fixation for gold, perhaps driven by the vision of untold riches (though I know he ditched the wealthy lifestyle many years ago). I think that vision is what has driven many gold followers here, demonstrated by the quote from you above.
    [/quote]
    Omigosh, this is just too funny!!!  So if suddenly, the return on gold fell relative to the return on cash, would you then dump your cash for gold because you’d be getting wealthy too fast?  Do you think there’s an morality associated with poverty or with getting rich slowly and an immorality associated with getting rich more quickly?  Because if you do, you can assuage your guilt even more by giving your remaining cash away before it’s inflated away to nothingness.  Come to think of it, applying your point of view, it’s morally wrong to hold any cash.  It’s hoarding.  I think you should distribute it all to those needy individuals in your community.  You’re making a fast buck on it relative to those who’ve lost their money.
    And sorry but I sincerely doubt that your cash is outpacing inflation unless you believe some of the imaginary inflation figures generated by governments.
    Actually I think you’re far more fixated on Chris discussing gold than Chris is fixated on gold (and I don’t think he’s fixated at all).  You’ve perseverated on that issue with every single post.   
     

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  • Fri, Jul 15, 2011 - 3:19am

    #45
    r

    r

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    ao wrote:Omigosh, this is

    [quote=ao]Omigosh, this is just too funny!!!  So if suddenly…[/quote]

    I don’t see why there has to be this sort of back-and-forth about varying mileages.  On the one hand, let’s say I recently became aware that I should be preparing for an uncertain future.  Should my priority be preserving my wealth, or investing in things that would make living self-sustaining?  Let’s say, I choose to buy gold, and years later I’m living in an apartment and buying cartons of tomatoes with my gold eagles.  Is this sustainable?  Would it not have been better to invest in some land and grow the tomatoes myself?  Or let’s say, I invested in land, now should I invest in aquaponics or gold?  Is that a no-brainer question?

    On the other hand, if you have land and are, or on the way to being, self-sustaining, why not own gold to pay for taxes, etc.?  I can’t argue with that.  And for those who can do both, you are not as many as you think 😉

     

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  • Fri, Jul 15, 2011 - 10:52am

    Reply to #45
    ao

    ao

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    the gas, it's spreading

    [quote=r][quote=ao]Omigosh, this is just too funny!!!  So if suddenly…[/quote]
    I don’t see why there has to be this sort of back-and-forth about varying mileages.  On the one hand, let’s say I recently became aware that I should be preparing for an uncertain future.  Should my priority be preserving my wealth, or investing in things that would make living self-sustaining?  Let’s say, I choose to buy gold, and years later I’m living in an apartment and buying cartons of tomatoes with my gold eagles.  Is this sustainable?  Would it not have been better to invest in some land and grow the tomatoes myself?  Or let’s say, I invested in land, now should I invest in aquaponics or gold?  Is that a no-brainer question?
    [/quote]
    ??? 
    I think I’d to buy some land with a 100% down ARM, plant some gold, throw the tomatoes out, and use my cash as mulch. 
    r, go back, read the exchange carefully, and note the subtext.  I realize some things are lost on the intraweb.;-) 

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  • Fri, Jul 15, 2011 - 12:41pm

    #46
    r

    r

    Status Bronze Member (Offline)

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    Posts: 44

    re: ???

    [quote=ao]

    ??? 

    I think I’d to buy some land with a 100% down ARM, plant some gold, throw the tomatoes out, and use my cash as mulch. 

    r, go back, read the exchange carefully, and note the subtext.  I realize some things are lost on the intraweb.;-) [/quote]

    I think I made a valid point about the priorities of those with more limited means.  You don’t have to make light of it, and I really don’t care about the lines between the lines.

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  • Sat, Jul 16, 2011 - 1:57am

    Reply to #40

    sofistek

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    ao wrote:Omigosh, this is

    [quote=ao]Omigosh, this is just too funny!!!  So if suddenly, the return on gold fell relative to the return on cash, would you then dump your cash for gold because you’d be getting wealthy too fast?[/quote]Thanks for another example. Chris has usually emphasised the “retaining wealth” aspect of PMs, not the “getting wealthy” aspect. It seems that you are too into wealth to ever see another point of view.
    [quote=ao]And sorry but I sincerely doubt that your cash is outpacing inflation[/quote]You can doubt it all you like, it doesn’t bother me. Most of my cash is on term deposit, getting between 4% and 5% interest. Inflation, here in New Zealand, is about 4.5%. Up until the last month, I was getting 5%-5.5%. That’s fine with me. I don’t mind if it falls a little below inflation, that’s life. I’ve got more important things to worry about, unless inflation starts ratcheting up to double figures. Also, interest rates are expected to rise before too long, as the official economy is apparently doing quite well over here. Yes, the figures are probably wrong (though not as wrong as the US figures) but I’m doing OK.
    [quote=ao]Actually I think you’re far more fixated on Chris discussing gold than Chris is fixated on gold[/quote]Hmm. The last 4 entries on his blog, removing the advert for the German version of the Crash Course, are heavily into PMs. I think that demonstrates where his current thoughts are centered. I’m not fixated on discussing gold but it does concern me that this site, which started so well with the crash course and preparations, seems so heavily weighted towards buying gold and silver. Yes, mention it occasionally, even have an in depth report on it once or twice a year, but to have four blog entries in a row (apart from the advert) on it seems a bit over the top.

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  • Sat, Jul 16, 2011 - 2:03am

    Reply to #45

    sofistek

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    Quite right, r.This is

    Quite right, r.
    This is pretty much what I’ve been saying. Preparations first. Any spare after that, by all means buy gold and silver. Also, gambling on gold and silver in the short term as a means of possibly retaining wealth as you prepare (selling as needed to prepare), is fine too. Personally, I’m not convinced of the short term gamble and long term has no end, plus your gold is of no worth until you spend it, if you can spend it.

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  • Sat, Jul 16, 2011 - 2:12am

    Reply to #46
    ao

    ao

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    r wrote:ao

    [quote=r]
    [quote=ao]
    ??? 
    I think I’d to buy some land with a 100% down ARM, plant some gold, throw the tomatoes out, and use my cash as mulch. 
    r, go back, read the exchange carefully, and note the subtext.  I realize some things are lost on the intraweb.;-) [/quote]
    I think I made a valid point about the priorities of those with more limited means.  You don’t have to make light of it, and I really don’t care about the lines between the lines.
    [/quote]
    Actually, as far as I can see, there was no mention of those with more limited means.  That wasn’t the discussion here.
    Also, right now, land is significantly more expensive than gold or silver.
    http://cherokeetribune.com/view/full_story/14721613/article-Investors-see-big-potential-down-on-the-farm?instance=special%20_coverage_right_column
    It’s pretty hard to buy arable land in sizes smaller than an acre and good arable land is going for significantly more than an ounce of gold per acre.  So I’m not sure how valid your argument is.
    Sorry you don’t seem to have a sense of humor but I tend to make light of almost everything.  My father was joking as he was dying.  I have those same genes.  If it offends you, sorry … you can always choose not to read my posts. 

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  • Sat, Jul 16, 2011 - 2:39am

    Reply to #40
    ao

    ao

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    sofistek wrote:ao

    [quote=sofistek]
    [quote=ao]Omigosh, this is just too funny!!!  So if suddenly, the return on gold fell relative to the return on cash, would you then dump your cash for gold because you’d be getting wealthy too fast?[/quote]
    Thanks for another example. Chris has usually emphasised the “retaining wealth” aspect of PMs, not the “getting wealthy” aspect. It seems that you are too into wealth to ever see another point of view.
    [quote=ao]And sorry but I sincerely doubt that your cash is outpacing inflation[/quote]You can doubt it all you like, it doesn’t bother me. Most of my cash is on term deposit, getting between 4% and 5% interest. Inflation, here in New Zealand, is about 4.5%. Up until the last month, I was getting 5%-5.5%. That’s fine with me. I don’t mind if it falls a little below inflation, that’s life. I’ve got more important things to worry about, unless inflation starts ratcheting up to double figures. Also, interest rates are expected to rise before too long, as the official economy is apparently doing quite well over here. Yes, the figures are probably wrong (though not as wrong as the US figures) but I’m doing OK.
    [quote=ao]Actually I think you’re far more fixated on Chris discussing gold than Chris is fixated on gold[/quote]Hmm. The last 4 entries on his blog, removing the advert for the German version of the Crash Course, are heavily into PMs. I think that demonstrates where his current thoughts are centered. I’m not fixated on discussing gold but it does concern me that this site, which started so well with the crash course and preparations, seems so heavily weighted towards buying gold and silver. Yes, mention it occasionally, even have an in depth report on it once or twice a year, but to have four blog entries in a row (apart from the advert) on it seems a bit over the top.
    [/quote]
    Actually, Sofistek, you seem to be more into me being into wealth than I am.  So are you saying you’re opposed to increasing your wealth?  If so, do you think it’s immoral and if so, why?  Certainly if you’re opposed to wealth, why not give yours away to charity.  Why are you saving your money and getting interest?  That sounds hypocritical to me.  But if you think I’m into wealth, that’s fine.  I certainly am into increasing my wealth but it’s not my sole pre-occupation, just one of many things that I do.  If I have the option of decreasing it, keeping it the same, or increasing it, I’d be a fool not to increase it.  If increasing it is anathema to you, however, why not invest it in something where you lose money?  That’ll take care of that distasteful issue of increasing your wealth.
    And since you stated your interest rate on your term deposits, I’m sure you realize that the TRUE rate of inflation in NZ is higher than your return.  Or maybe you don’t?  Also, from what I’ve seen, the NZ economy figures are questionable in several ways.  The government statistics office in Christchurch was destroyed.  Also, I’m sure you’ve heard of something called “disaster economy” … not something you want as a long term economic engine.
    Also, if Chris’s blogs about PMs are disturbing to you, I would elect not to read them.  Better not to read them than be distressed.  Attitude and stress control will become increasingly important in times to come.  Unlike you, however, I think most folks here find them valuable. 

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  • Sat, Jul 16, 2011 - 4:49am

    #47

    Montana Native

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    Posts: 44

    Hmmmmm.....

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  • Sat, Jul 16, 2011 - 11:03pm

    Reply to #40

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    No

    [quote=ao]So are you saying you’re opposed to increasing your wealth?[/quote]Well, I wasn’t saying that but I wouldn’t put it that way, anyway. However, it’s irrelevant (though I’m not interested in increasing my wealth) since Chris has said in that past that PMs are a means of maintaining wealth, not increasing it. Which is why I fail to see why he’s pushing it so much now, and touting the potentially fabulous financial gains to be made. In this respect, the site has become an investment advice site, thus watering down the notion that the next 20 years will not be a continuation of the last 20.Yes, I know all inflation rate numbers and all GDP numbers are garbage but since I don’t know what the real numbers are, the official numbers are all I have to go on. If I’m only losing a few percentage points a year, then I’m hardly going to cry about that, especially as the impact goes down each year as I spend my money on preparations.
    Now, if deflation takes hold, you might not think me quite as crazy or as suicidal as you do.

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  • Tue, Jul 19, 2011 - 10:21pm

    #48
    tictac1

    tictac1

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    Posts: 124

    The official numbers are

    The official numbers are lower than actual inflation, so double them and you’ll be close, at least here in CA.  Our CD rates are about 1.2%, with stated inflation at about 3%.  So CDs are a joke.

    You seem to be operating under the assumption that gold/silver will either be near worthless, or difficult to use.  However, I believe you’ve already admitted this view has no precedent, so you are COMPLETELY spit-balling by conjuring up a totally baseless scenario, then making preparations as though it were not only LIKELY, but a forgone conclusion.  This is insane.  Unless you are spending every dime on “preparations”, though I think your statements about CDs prove you are not.  That money you placed in CDs has lost value, whereas had you spent it on gold, in any given 1 year period for the last 10, you would have at least neutralized the inflation losses. 

    If you are unconcerned about this, fine, but don’t drag others down with you.  Some of us can’t afford to waste money.  Plus, anyone who says they do not care about wasting money has no business commenting on a financial thread.

    Here’s a few quotes you may or may not enjoy-

    “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions.”

    “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.”

    “This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard._

    -Alan Greenspan

    Again, if you have real information that might be adverse to owning gold, I’d be all ears, but so far there’s nothing of substance for that argument.

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  • Wed, Jul 20, 2011 - 12:14am

    #49

    sofistek

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    Posts: 557

    I certainly think it will be

    I certainly think it will be difficult to use, since most people won’t have it nor have equipment to test it. It may eventually have a more prominent place but that will take time.

    So far, I haven’t seen any evidence that it will be available for wide use by those who hold it. It simple seems to be a belief but based on presumably some kind of coherent society holding together. Certainly, I wouldn’t want to hold large blocks of gold or silver and I can’t imaging somehow spending even an ounce coin, in 10 years.

    But, as I’ve said, if people have extra cash available, by all means buy gold and silver – it’s no worse than anything else. Short term holding may even be of use.

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  • Wed, Jul 20, 2011 - 2:44am

    Reply to #49
    ao

    ao

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    sofistek wrote:I certainly

    [quote=sofistek]So far, I haven’t seen any evidence that it will be available for wide use by those who hold it. It simple seems to be a belief but based on presumably some kind of coherent society holding together. [/quote]
    Nope, no evidence.  Just thousands of years of history spanning thriving civilizations, collapsing civilizations, war, revolution, societal upheaval, plague, famine, etc. of gold and silver being used as money. 

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  • Wed, Jul 20, 2011 - 3:51am

    Reply to #49

    jrf29

    Status Silver Member (Offline)

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    Posts: 166

    ao wrote

    [quote=ao] Nope, no evidence.  Just thousands of years of history spanning thriving civilizations, collapsing civilizations, war, revolution, societal upheaval, plague, famine, etc. of gold and silver being used as money.[/quote]Let’s not be hasty; I think sofistek does have at least a tenable argument.  We have to remember that we are now dealing with a population that holds very little gold.  At this unique moment in history, the majority of citizens have never held a gold coin in their hands.
    Several months ago I had a very interesting conversation with user R.US, who experienced the economic collapse in Russia following the dissolution of the Soviet Union.  In the USSR the ownership of gold was (surpising to me) not prohibited, and gold and silver coins could be bought easily in the shops. 
    In the months leading up to the collapse, the prices of gold and silver increased rapidly as the currency began to collapse.  However, in the years after the collapse when paper money was worthless, gold was never used as a direct medium of exchange, even though it was plentiful.  Instead vodka and packs of cigarettes were the universal currency.
    According to Scott, people sold their gold coins at a coin shop in exchange for “money” (vodka and cigarettes):
    [quote] Sell gold for money, and immediately spent the money on food and clothing. The remaining money is preserved through the purchase of highly liquid commodities (vodka and cigarettes).[/quote]
    How could this be?  The reason was that after the collapse, enormous quantities of phony gold quickly appeared, and coins that contained a somewhat lesser purity of gold than they should have.  The Russian people were not experienced in handling gold or silver coin, and did not feel comfortable taking gold coins from a stranger for fear of being cheated.  So gold continued to be bought and sold only through the coin shops and bullion dealers.
    But everybody was comfortable with vodka and cigarettes, so they sold their gold coins for money, and immediately purchased vodka and cigarettes.  A side-effect was that the price of gold temporarily crashed as everybody tried to unload their gold.  As scott put it:
    [quote] Everybody needed money for simple food but salaries were not paid regularly. Gold and jewelry were the first thing to go. Gold was very plentiful on the shelves. Nobody wants to buy it, and everybody is trying to sell it. They sold gold at a fraction (1/4-1/2) of the price in terms of food. But those who had gold were glad to sell at any price for what small food it could buy . . . Two years later,the system stabilized. Emerging commerce requires sound money. That’s where the gold and silver could show its brilliance.[/quote]
    Two years later, after the system stabilized, anybody still holding gold made a handsome profit.  But those who had to sell their gold for goods during the two years of crisis suffered a heavy loss.
    Given additional time, as people grew familiar with it, maybe gold could have penetrated into the Russian marketplace and become a medium of exchange instead of vodka and cigarettes.  But as it happened the U.S. Dollar came to fill that role instead.
    I am not saying that over decades and centuries gold isn’t a superior store of value.  My point is this:  the majority of US citizens — like the people of Russia — are unfamliar with gold and may not accept it until they become comfortable spotting fakes.  There is at least a chance that — as in Russia — the familiarization process with gold may take years, during which time anybody attempting to sell would face steep losses. 
     

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  • Wed, Jul 20, 2011 - 4:48am

    Reply to #49
    robbie

    robbie

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    Posts: 57

    Liquid wealth

    So…..a well-diversified portfolio consisting of gold, vodka, and cigarettes. Any suggestions on how to explain this to the wife?

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  • Wed, Jul 20, 2011 - 7:45am

    Reply to #49

    sofistek

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    Joined: Oct 02 2008

    Posts: 557

    Thanks, jrf29, for a recent

    Thanks, jrf29, for a recent example of why gold may be unlikely to be usable widely as a means of exchange. Unfortunately, it seems to be perceived wisdom that those holding gold would be insulated against a collapse in fiat money, but I don’t recall seeing actual examples of how this will happen or how long it will take for it to happen.

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  • Wed, Jul 20, 2011 - 10:57am

    Reply to #49
    ao

    ao

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    Posts: 882

    jrf29 wrote:ao wrote: Nope,

    [quote=jrf29]
    [quote=ao] Nope, no evidence.  Just thousands of years of history spanning thriving civilizations, collapsing civilizations, war, revolution, societal upheaval, plague, famine, etc. of gold and silver being used as money.[/quote]
    Let’s not be hasty; I think sofistek does have at least a tenable argument.  We have to remember that we are now dealing with a population that holds very little gold.  At this unique moment in history, the majority of citizens have never held a gold coin in their hands.
    Several months ago I had a very interesting conversation with user R.US, who experienced the economic collapse in Russia following the dissolution of the Soviet Union.  In the USSR the ownership of gold was (surpising to me) not prohibited, and gold and silver coins could be bought easily in the shops. 
    In the months leading up to the collapse, the prices of gold and silver increased rapidly as the currency began to collapse.  However, in the years after the collapse when paper money was worthless, gold was never used as a direct medium of exchange, even though it was plentiful.  Instead vodka and packs of cigarettes were the universal currency.
    According to Scott, people sold their gold coins at a coin shop in exchange for “money” (vodka and cigarettes):
    [quote] Sell gold for money, and immediately spent the money on food and clothing. The remaining money is preserved through the purchase of highly liquid commodities (vodka and cigarettes).[/quote]
    How could this be?  The reason was that after the collapse, enormous quantities of phony gold quickly appeared, and coins that contained a somewhat lesser purity of gold than they should have.  The Russian people were not experienced in handling gold or silver coin, and did not feel comfortable taking gold coins from a stranger for fear of being cheated.  So gold continued to be bought and sold only through the coin shops and bullion dealers.
    But everybody was comfortable with vodka and cigarettes, so they sold their gold coins for money, and immediately purchased vodka and cigarettes.  A side-effect was that the price of gold temporarily crashed as everybody tried to unload their gold.  As scott put it:
    [quote] Everybody needed money for simple food but salaries were not paid regularly. Gold and jewelry were the first thing to go. Gold was very plentiful on the shelves. Nobody wants to buy it, and everybody is trying to sell it. They sold gold at a fraction (1/4-1/2) of the price in terms of food. But those who had gold were glad to sell at any price for what small food it could buy . . . Two years later,the system stabilized. Emerging commerce requires sound money. That’s where the gold and silver could show its brilliance.[/quote]
    Two years later, after the system stabilized, anybody still holding gold made a handsome profit.  But those who had to sell their gold for goods during the two years of crisis suffered a heavy loss.
    Given additional time, as people grew familiar with it, maybe gold could have penetrated into the Russian marketplace and become a medium of exchange instead of vodka and cigarettes.  But as it happened the U.S. Dollar came to fill that role instead.
    I am not saying that over decades and centuries gold isn’t a superior store of value.  My point is this:  the majority of US citizens — like the people of Russia — are unfamliar with gold and may not accept it until they become comfortable spotting fakes.  There is at least a chance that — as in Russia — the familiarization process with gold may take years, during which time anybody attempting to sell would face steep losses. 
     
    [/quote]
    This discussion gets so tiresome.  First of all, anyone who would keep ALL of their transactional wealth in PMs is an idiot.  That’s self evident.  Secondly, as has been said here, again and again ad nauseum on multiple threads, silver would be used for day-to-day exchanges and increasing wealth, gold would be used for storing and preserving wealth.  Russia is very different from the U.S.  Try using vodka and cigarettes as a medium of exchange in California when the time comes and see how far it gets you.  Also, the use of vodka and cigarettes is dependent upon the social circles one frequented and especially, the type of business one transacted.  There’s a big difference between an internet discussion with some relatively anonymous user and knowing someone who lived in, travelled around in, and did business in Russia during that time.  This person did use gold to bribe favors for business transactions.  He said It was largely small time, proletariat transactions that used booze and cigarettes. My guess is that one’s reliance (throughout history and throughout various societies) upon PMs would be somewhat dependent upon one’s net worth.  Someone with a lower net worth would not have the luxury on sitting on their PMs while someone with a higher net worth would.  You don’t hear of too many people in the ghetto loading up on gold and silver.  You do hear of hedge fund managers doing so for their personal assets. 

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  • Wed, Jul 20, 2011 - 12:56pm

    #50
    Doug

    Doug

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    Posts: 1364

    gold and silver

    As noted above, day to day transactions in a USD collapse situation would probably be done in silver, particularly junk silver as everyone is familiar with the coins and would be less fearful of fakes.  Also, the smaller denominations would be unlikely to be counterfeited, just as you never hear of problems with counterfeit $1 or $5 bills.  I think the use of vodka and cigarettes in Russia may be more a reflection of Russians’ apparent penchant for self-destruction than an indication of enduring value.  That doesn’t mean alcohol and tobacco won’t have value.  After all, addictive drugs always have a market.

    As was also noted, the Russian experience was a relatively brief transition period.  I don’t think we’re talking on this site of short term events with eventual return to some form of normalcy.  We are talking about permanent paradigm shift.  The USD was good in Russia because it was a stable world reserve currency, the ultimate store of value at that point in history.  That is clearly no longer true.  In the absence of a stable fall-back reserve currency, we look about for another store of value.  The default position, it seems to me, is a form of money with a long term history. 

    What oh what might that be? Innocent

    Doug

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  • Wed, Jul 20, 2011 - 1:01pm

    Reply to #50

    Dogs_In_A_Pile

    Status Platinum Member (Offline)

    Joined: Jan 04 2009

    Posts: 810

    Lemme guess...?

    [quote=Doug]As noted above, day to day transactions in a USD collapse situation would probably be done in silver, particularly junk silver as everyone is familiar with the coins and would be less fearful of fakes.  Also, the smaller denominations would be unlikely to be counterfeited, just as you never hear of problems with counterfeit $1 or $5 bills.  I think the use of vodka and cigarettes in Russia may be more a reflection of Russians’ apparent penchant for self-destruction than an indication of enduring value.  That doesn’t mean alcohol and tobacco won’t have value.  After all, addictive drugs always have a market.
    As was also noted, the Russian experience was a relatively brief transition period.  I don’t think we’re talking on this site of short term events with eventual return to some form of normalcy.  We are talking about permanent paradigm shift.  The USD was good in Russia because it was a stable world reserve currency, the ultimate store of value at that point in history.  That is clearly no longer true.  In the absence of a stable fall-back reserve currency, we look about for another store of value.  The default position, it seems to me, is a form of money with a long term history. 
    What oh what might that be?
    Doug
    [/quote]
    Is it hot peppers? 

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  • Wed, Jul 20, 2011 - 1:19pm

    Reply to #50
    Doug

    Doug

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    Dogs_In_A_Pile wrote:Doug

    [quote=Dogs_In_A_Pile]
    [quote=Doug]
    As noted above, day to day transactions in a USD collapse situation would probably be done in silver, particularly junk silver as everyone is familiar with the coins and would be less fearful of fakes.  Also, the smaller denominations would be unlikely to be counterfeited, just as you never hear of problems with counterfeit $1 or $5 bills.  I think the use of vodka and cigarettes in Russia may be more a reflection of Russians’ apparent penchant for self-destruction than an indication of enduring value.  That doesn’t mean alcohol and tobacco won’t have value.  After all, addictive drugs always have a market.
    As was also noted, the Russian experience was a relatively brief transition period.  I don’t think we’re talking on this site of short term events with eventual return to some form of normalcy.  We are talking about permanent paradigm shift.  The USD was good in Russia because it was a stable world reserve currency, the ultimate store of value at that point in history.  That is clearly no longer true.  In the absence of a stable fall-back reserve currency, we look about for another store of value.  The default position, it seems to me, is a form of money with a long term history. 
    What oh what might that be?
    Doug
    [/quote]
    Is it hot peppers? 
    [/quote]
    ding, ding, ding, give that man a cupie doll!!
     

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  • Wed, Jul 20, 2011 - 4:02pm

    Reply to #49
    capesurvivor

    capesurvivor

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    Russia

    I support gold ownership but if you read Dmitri Orlov’s “Reinventing Collapse”, I’m not sure that gold was even mentioned (I read 1st ed in 2008). Functional items such as vodka, cigarettes, food, gasoline…that’s what ran the daily economy. Orlov was there and I trust his judgement. I wouldn’t be so quick to rule them out. 
    CS

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  • Wed, Jul 20, 2011 - 5:26pm

    Reply to #50
    ao

    ao

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    Dogs_In_A_Pile wrote:Doug

    [quote=Dogs_In_A_Pile]
    [quote=Doug]
    As noted above, day to day transactions in a USD collapse situation would probably be done in silver, particularly junk silver as everyone is familiar with the coins and would be less fearful of fakes.  Also, the smaller denominations would be unlikely to be counterfeited, just as you never hear of problems with counterfeit $1 or $5 bills.  I think the use of vodka and cigarettes in Russia may be more a reflection of Russians’ apparent penchant for self-destruction than an indication of enduring value.  That doesn’t mean alcohol and tobacco won’t have value.  After all, addictive drugs always have a market.
    As was also noted, the Russian experience was a relatively brief transition period.  I don’t think we’re talking on this site of short term events with eventual return to some form of normalcy.  We are talking about permanent paradigm shift.  The USD was good in Russia because it was a stable world reserve currency, the ultimate store of value at that point in history.  That is clearly no longer true.  In the absence of a stable fall-back reserve currency, we look about for another store of value.  The default position, it seems to me, is a form of money with a long term history. 
    What oh what might that be?
    Doug
    [/quote]
    Is it hot peppers? 
    [/quote]
    Dogs,
    It sounds like you have a serious glycoalkaloid addiction.  There’s only one cure.  Get rid of all your hot peppers.  I’ll be glad to take them off your hands.

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  • Wed, Jul 20, 2011 - 5:59pm

    #51
    tictac1

    tictac1

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    So own some gold and junk

    So own some gold and junk silver, learn to brew and distill, grow some tobacco along with your other veggies, and you’re all set…:)

    Seriously though, food and gas make perfect sense, but vodka and cigarettes will only work in a society already addicted to them.  Here in CA, cigarettes probably won’t get you too far, not sure about the alcohol.  I think alcohol and other forms of distraction usually do well in hard times, no?

     

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  • Wed, Jul 20, 2011 - 7:55pm

    Reply to #50

    Dogs_In_A_Pile

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    Back off you solanine thief!!!

    [quote=ao]Dogs,
    It sounds like you have a serious glycoalkaloid addiction.  There’s only one cure.  Get rid of all your hot peppers.  I’ll be glad to take them off your hands.
    [/quote]
    Live on the edge.  More people should eat things from the solanacea family.  Nightshade should be a part of everyone’s diet. 
    I’m not sure I’m addicted, but there is something to be said for a self inflicted capsaicin dose.
    I’ll bet you didn’t know capsaicin is dissolved by milk fat or, ahem, alcohol, and not water????
    Pass the habaneros and a 12 pack of Sam Adams Noble Pils or Sierra Nevada Glissade……it’s time for another double blind. 

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  • Wed, Jul 20, 2011 - 8:13pm

    #52

    jrf29

    Status Silver Member (Offline)

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    Posts: 166

    media of exchange

    [quote=tictac1] Seriously though, food and gas make perfect sense, but vodka and cigarettes will only work in a society already addicted to them.[/quote]  I agree.  It may not even be possible to tell in advance what the most widely accepted media of exchange will be.  But it is worth noting that whatever the medium of exchange is, it is always a luxury item (even a luxury food item), since the demand for necessities is fixed (you can only eat so much food), but the demand for luxury is unlimited.  I’m going to come back to this in a second.

    [quote=doug] As noted above, day to day transactions in a USD collapse situation would probably be done in silver, particularly junk silver as everyone is familiar with the coins and would be less fearful of fakes [/quote]

    I’m not sure that the dynamic for silver coins would be that much different than gold.  Even if we assume that certain silver coins are easily recognizable by the populace, there would still have to be a period of price discovery.  How much is a silver dime really worth?  The paper markets put a number on it today, but if silver were to be used as money, the true value would be much higher.  But how much higher?  This would take time for the market to sort out.

    But setting that aside for the moment, to me the most interesting thing was the almost schizophrenic behavior of gold (and silver, and land, etc.) during the collapse in Russia.  Their value temporarily collapsed as well, because as R.US said,

    [quote] Everybody needed money for simple food . . . Gold and jewelry were the first thing to go. Gold was very plentiful on the shelves. Nobody wants to buy it, and everybody is trying to sell it. They sold gold at a fraction (1/4-1/2) of the price in terms of food. But those who had gold were glad to sell at any price for what small food it could buy . . . [/quote]

    [quote] My family had a silver cutlery weighing about 3kg. This silver was in the family over four generations and has been retained even in times of famine (1930-1933) and WW2 (1941-1945). It was sold in 1988 to purchase a small site of land (a quarter of an acre). I’m glad we have sold before the collapse (1998) otherwise in 1992, the silver would stand less than an annual crop of potatoes from that land [/quote]

    In other words, there was little demand for a luxury good among a population that didn’t have enough to eat.  Like a man dying of thirst (or hunger) who will trade a million dollars for a glass of water (or plate of food).

    So in Russia, if you sold your gold (or silver) during this two-year crisis period, you would have lost money.

    [quote=doug] The Russian experience was a relatively brief transition period . . . We are talking about permanent paradigm shift . . . In the absence of a stable fall-back reserve currency, we look about for another store of value.  The default position, it seems to me, is a form of money with a long term history.  What might that be? [/quote]

    Of course I agree with you, Doug.  Long term.

    After the crisis period ended, those who managed to hold onto their gold (or silver, or jewels) made out very handsomly.  But those who had been forced to sell these assets during the two years of the crisis for essentials such as food, clothing, and fuel suffered heavy losses.

    Gold (and silver, land, other commodities) might be superior stores of value over long periods of time, and they might be well suited as media of exchange.  But my point is this: no matter how well suited (even perfectly suited) these metals are for use as money, I think Russia gives us some evidence that the transition period during a true crisis could last 2 or more years, and during such a time the value of gold and silver might be lower than one would hope as people scramble for basic necessities such as fuel, clothing and food.

    My conclusion is only that holding gold, silver, and other valuable commodities is no substitute for ownership of productive assets that provide a direct source of essential products (productive farmland, woodlots, water, housing, etc.)  That’s all I’m saying: that owning gold and silver alone is not enough.

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  • Wed, Jul 20, 2011 - 10:35pm

    #53
    tictac1

    tictac1

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    Posts: 124

    Another possibility

    Another issue with Russia…

    Normally, hungry people migrate to where food is more plentiful.  This by itself causes massive upheaval, but in the USSR, border crossers were shot on sight, according to my friends in Slovakia.  I don’t know when this practice officially stopped, but that makes a pretty big difference to your survival tactics.  You are trapped within a collapsing empire, regardless of your ability to otherwise vacate.

    Sounds like owning arable land and knowing how to work it is worth quite a bit…  Being an apartment dweller in a big city in this condition would be a really bad choice, if it is a choice.

    For Dogs- “but there is something to be said for a self inflicted capsaicin dose.”

    Ever tried the aerosol version?  🙂

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  • Thu, Jul 21, 2011 - 1:36am

    Reply to #52
    ao

    ao

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    jrf29 wrote:My conclusion

    [quote=jrf29]
    My conclusion is only that holding gold, silver, and other valuable commodities is no substitute for ownership of productive assets that provide a direct source of essential products (productive farmland, woodlots, water, housing, etc.)  That’s all I’m saying: that owning gold and silver alone is not enough.
    [/quote]
    Your points were well made and valid except that Russia was, is, and always will be, fundamentally different from the US.  More importantly though, as I’ve previously stated to Sofistek (and will probably have to repeat), I can’t recall a single post ever made on CM where the poster stated explicitly or implicitly that gold and silver alone was enough.  Conversely, to do without PMs completely when one has a significant level of assets strikes me as foolishness.  Furthermore, productive assets are most definitely non-portable and for the most part, illiquid, a distinct liability in certain scenarios.

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  • Thu, Jul 21, 2011 - 3:27am

    Reply to #52

    sofistek

    Status Platinum Member (Offline)

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    Not Enough

    [quote=ao]s I’ve previously stated to Sofistek (and will probably have to repeat), I can’t recall a single post ever made on CM where the poster stated explicitly or implicitly that gold and silver alone was enough.  Conversely, to do without PMs completely when one has a significant level of assets strikes me as foolishness.  Furthermore, productive assets are most definitely non-portable and for the most part, illiquid, a distinct liability in certain scenarios.[/quote]Well, we agree on one thing, gold and silver is not enough.
    Some good recent discussion here. Notwithstanding ao’s belief that there is plenty of evidence that gold and silver will have widespread use as a means of exchange, post collapse, I haven’t actually seen any evidence, though I accept that there is evidence that PMs have had purchasing power at various times throughout civilised history. I think that’s possible again, though I doubt it will happen quickly once widespread collapse. The occurs. The Russia example is good but not perfect, as there was a coherent global society in which Russia could recover. That may not be the case as the dominoes fall.
    I still think there is a moral element to this. It seems that some people here look to PMs as a means of retaining (or just having) wealth, post collapse. That is, they want to feel that they still have wealth, as measured by something akin to possessions or money, that is greater than most others. If this view prevails, I don’t think there is any chance that we’ll learn anything from history and a new unequal society will emerge, with haves and have-nots, and power will be bought. No doubt others, including ao, will laugh at that suggestion, as a way of avoiding thinking about it. Given some of the comments here, I’m not too hopeful that humans will start using their much vaunted intelligence once the dust settles on our collapsed civilisation.
    But I’m keeping an eye on the debt ceiling situation. I might dip into silver and gold, as a short term measure, if it looks like the US dollar will collapse.

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  • Thu, Jul 21, 2011 - 6:30am

    #54

    Travlin

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    Think again

    [quote=sofistek]

    I still think there is a moral element to this. It seems that some people here look to PMs as a means of retaining (or just having) wealth, post collapse.

    [/quote]

    Sofistek

    After working all my life, without an exceptional income, we managed to accumulate some assets by living below our means.  This money is for our retirement, and maybe to pass on to our kids to help them when they have kids.  I am retired now and our life savings can’t be replaced.  To have them destroyed by the gross mismanagement of government is outright theft.   There is nothing immoral about wanting to retain the ability to pay our own way and I resent your implication.

    Travlin

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  • Thu, Jul 21, 2011 - 11:01am

    Reply to #52
    ao

    ao

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    poppycock

    [quote=sofistek]I still think there is a moral element to this. It seems that some people here look to PMs as a means of retaining (or just having) wealth, post collapse. That is, they want to feel that they still have wealth, as measured by something akin to possessions or money, that is greater than most others. If this view prevails, I don’t think there is any chance that we’ll learn anything from history and a new unequal society will emerge, with haves and have-nots, and power will be bought. No doubt others, including ao, will laugh at that suggestion, as a way of avoiding thinking about it. Given some of the comments here, I’m not too hopeful that humans will start using their much vaunted intelligence once the dust settles on our collapsed civilisation.
    [/quote]
    You never addressed my question in the past about this question of morality.  Specifically what financial behavioir do you deem as moral and what behavior do you deem as immoral?  The sense I get from your post is that you’re holding cash and therefore moral whereas those holding PMs are somehow immoral?  You also seem to imply that those who have more wealth than others are immoral?  Please be very precise and specific about your views on financial morality or immorality because the sense I’m getting it that you’re spouting absolute poppycock and I’d like to be corrected. 
      

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  • Thu, Jul 21, 2011 - 2:43pm

    Reply to #54
    tictac1

    tictac1

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    I thought we weren't

    I thought we weren’t supposed to discuss religion, but "morals" are OK?  Where, pray tell, do morals come from?Anyway, my morals dictate that a good man leaves his children an inheritance, something my father was unable to do.  I have no intention of failing in this, hence PMs.
    I also second Travlin’s thoughts.
    While some may see PMs as a get-rich-quick-after-the-bottom-falls-out ploy, I think most of us are just looking to avoid being stolen from.  Wealth preservation can be used for charity, too, and those unable to provide for themselves are also unable to provide charity.
    Fiat money IS theft, plain and simple.  It’s PURPOSELY designed as such.  PMs are simply one way to prevent that theft, or minimize it.
    I do agree with Sofistek on the fact that Russia had the rest of the world economy as a backstop, which would not be there in the event of a global fiat collapse.  In fact, such a collapse would be a historically unprecedented event, so there’s no way to know what might happen.

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  • Thu, Jul 21, 2011 - 2:56pm

    Reply to #54

    Dogs_In_A_Pile

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    Well, well, well....finally.

    [quote=tictac1]In fact, such a collapse would be a historically unprecedented event, so there’s no way to know what might happen.
    [/quote]
    Best argument in the thread for why people should own some amount of silver and gold – consistent with their situation and expectation for how things may unfold.  Of course bearing in mind that it will likely never have a value of zero.
    Game,
    Set,
    Match.

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  • Thu, Jul 21, 2011 - 3:49pm

    Reply to #54

    Poet

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    Yes, Morality. Let's Move On. Thank You.

    [quote=tictac1]I thought we weren’t supposed to discuss religion, but "morals" are OK?  Where, pray tell, do morals come from?
    [/quote]
    Morals can come from love, kindness, empathy, sympathy, logic, and the Golden Rule: "Do unto others as you would wish them to do unto you." Studies have shown that even babies can understand simple concepts such as fairness and kindness.
    http://en.wikipedia.org/wiki/Morality_without_religion
    Historically, some have used the "morality comes from religion" excuse to dehumanize others for a "lack of morals". And in dehumanizing, have made it easier to persecute others in the name of their own brand of morality.
    We all know people who are moral and amoral, and they are of all religious persuasions – and none. Some religions may also promote amoral behavior (as defined by other religions). Therefore, the two CAN be very mutually exclusive.
    Really, let’s NOT bring in religion into this. Thank you.
    Poet
    [Moderator’s note: Poet and the others are correct: religion cannot come in for reasons stated in the forum rules.  But there is no problem with morality, or even general spirituality if properly discussed.]

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  • Thu, Jul 21, 2011 - 5:16pm

    Reply to #54
    tictac1

    tictac1

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    Hmmm, I guess you are

    Hmmm, I guess you are unaware of the source for the "golden rule".  And morals are actually the source of information for DEFINING the qualities you mention, not the other way around, i.e. by what standard do you judge what is "love" or "kindness"?We can discuss morals and spirituality without religion?!?  Actually, that’s quite impossible.  I would be happy to take the time to logically lay out my case, but out of respect for the moderator, I will allow you your ignorance.  I do not mean that offensively.

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  • Thu, Jul 21, 2011 - 5:35pm

    Reply to #54
    ao

    ao

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    let's be consistent

    [quote=Poet][quote=tictac1]
    I thought we weren’t supposed to discuss religion, but "morals" are OK?  Where, pray tell, do morals come from?
    [/quote]
    Morals can come from love, kindness, empathy, sympathy, logic, and the Golden Rule: "Do unto others as you would wish them to do unto you." Studies have shown that even babies can understand simple concepts such as fairness and kindness.
    http://en.wikipedia.org/wiki/Morality_without_religion
    Historically, some have used the "morality comes from religion" excuse to dehumanize others for a "lack of morals". And in dehumanizing, have made it easier to persecute others in the name of their own brand of morality.
    We all know people who are moral and amoral, and they are of all religious persuasions – and none. Some religions may also promote amoral behavior (as defined by other religions). Therefore, the two CAN be very mutually exclusive.
    Really, let’s NOT bring in religion into this. Thank you.
    Poet
    [Moderator’s note: Poet and the others are correct: religion cannot come in for reasons stated in the forum rules.  But there is no problem with morality, or even general spirituality if properly discussed.]
    [/quote]
    Moderator:
    The Golden Rule is a fundamental precept of almost every major religion in the world.  So is it appropriate to discuss it when religion is banned?
    Poet,
    By discussing the Golden Rule, you wind up doing the very thing that you requested others not to do.  So who sets the standards for morals?  Who establishes what is moral and what isn’t moral?
    Historically, those who have divested morals from religion have often wound up dehumanizing and persecuting far more humans than those who have associated morals with religion.  The two biggest killers in history, Stalin and Mao, are classical examples of that mindset.

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  • Thu, Jul 21, 2011 - 6:22pm

    #55

    Moderator Jason

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    Let's stay on topic

    Let’s keep this thread on topic.  If the debate about the nature of morality has legs, it should go to a separate thread.  Post a link to the new thread if you want to.

    If anybody has questions or wants to discuss how I differentiate between religion and other related but permissible subjects, I’ll be more than happy to, but not at the expense of derailing this thread.  Click on the email button to send me an email and I’ll get back to you promptly.

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  • Thu, Jul 21, 2011 - 6:26pm

    Reply to #54

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    Gold Bugs And Silver Bears

    [quote=ao]By discussing the Golden Rule, you wind up doing the very thing that you requested others not to do.  So who sets the standards for morals?  Who establishes what is moral and what isn’t moral?
    Historically, those who have divested morals from religion have often wound up dehumanizing and persecuting far more humans than those who have associated morals with religion.  The two biggest killers in history, Stalin and Mao, are classical examples of that mindset.
    [/quote]
    Ao
    The very fact that one person will argue that morality is nothing without religion, while another person will argue that morality and religion can be mutually exclusive and that some religions are amoral… Leads me to conclude that any further discussion here (within this forum) is best discontinued. The process and result would likely be long, drawn-out, acrimonious and extremely counter-productive.
    So how about them gold bugs and silver bears, eh? Which team are you rooting for?
    Poet

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  • Thu, Jul 21, 2011 - 6:30pm

    #56
    Doug

    Doug

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    Joined: Oct 01 2008

    Posts: 1364

    body of literature

    There is an entire body of literature out there that discusses and debates whether morality is possible in the absence of a god.  I don’t think our meager attempts to discuss it here are worthwhile.  With no disrespect to the intelligence of this community, the subject has pretty much been discussed to death.  Here’s a list of publications on the subject if you’re really interested.

    http://www.infidels.org/library/modern/nontheism/atheism/ground-morality.html

    As to the bug vs. bear debate, I pick the bugs.  They’ll be thriving when the bears are all dead.

    Doug

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  • Fri, Jul 22, 2011 - 12:46am

    Reply to #56
    ao

    ao

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    Joined: Feb 04 2009

    Posts: 882

    Doug wrote:There is an

    [quote=Doug]
    There is an entire body of literature out there that discusses and debates whether morality is possible in the absence of a god.  I don’t think our meager attempts to discuss it here are worthwhile.  With no disrespect to the intelligence of this community, the subject has pretty much been discussed to death.  Here’s a list of publications on the subject if you’re really interested.
    http://www.infidels.org/library/modern/nontheism/atheism/ground-morality.html
    As to the bug vs. bear debate, I pick the bugs.  They’ll be thriving when the bears are all dead.
    Doug
    [/quote]
    Nice link Doug.  Should provide some interesting reading.  Every cloud has a silver lining and presents a golden opportunity for learning.;-)

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  • Fri, Jul 22, 2011 - 1:23am

    Reply to #54
    ao

    ao

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    Joined: Feb 04 2009

    Posts: 882

    Sofistekated Contrarian Buy/Sell Indicator System

    [quote=Poet]So how about them gold bugs and silver bears, eh? Which team are you rooting for?
    [/quote]
    I’m for reasonable and rational PM ownership for reasons including those so aptly stated by Travlin.  Based on my proprietary Sofistekated Contrarian Buy/Sell Indicator System, if Sofistek is bearish, I’m wildly bullish.  Following the corollary 3 day knock-down rule, if gold and silver are taken down further tomorrow (which seems probable at this juncture), I’m increasing my allocation to PMs beyond its present level.  As soon as I hear of him buying, I’m selling.;-)

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  • Fri, Jul 22, 2011 - 4:51pm

    #57
    tictac1

    tictac1

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    Posts: 124

    Back on topic

    So anyway…:)

    I have read that military pilots since WW2 carry gold coins with them in their emergency/SERE/survival gear.

    Can anyone confirm/deny this?

    If it’s true, it would mean that the military believes gold is more universally accepted than the US dollar, which since about the same time has been the baseline fiat.  I think it would say something about the usefulness of gold in an emergency.

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  • Fri, Jul 22, 2011 - 6:16pm

    Reply to #57

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    Gold And Other Useful Things, Not Only Gold

    [quote=tictac1]So anyway…:)
    I have read that military pilots since WW2 carry gold coins with them in their emergency/SERE/survival gear.
    Can anyone confirm/deny this?
    If it’s true, it would mean that the military believes gold is more universally accepted than the US dollar, which since about the same time has been the baseline fiat.  I think it would say something about the usefulness of gold in an emergency.
    [/quote]
    Tictac1
    Whether that is still true or not… Just remember that gold coins are not the ONLY thing in their survival kits, and we should keep that in mind.
    Besides, it’s more likely there are American dollars in the kit – not just ONE gold coin. Dollars are still widely recognized and accepted worldwide and have an advantage: There can be multiple bills of multiple denominations in a kit, which you may need to grease multiple palms or buy multiple items.
    What happens after you bribe the village headman for help and he gets you to the next town? At the next down, there may be a border guard who needs help looking the other way…
    Poet

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  • Fri, Jul 22, 2011 - 7:53pm

    #58
    tictac1

    tictac1

    Status Silver Member (Offline)

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    Posts: 124

    Plural not singular

    Coins, not coin.

    Turns out, yes, some kits did contain gold coins.

    http://www.donrearic.com/ww2kits.htm

    http://www.flyingeaglegold.com/international-gold.php

    http://www.cruzis-coins.com/sovs/sov.html

    You can even buy a kit-

    http://www.snyderstreasures.com/pages/spy.htm  (scroll about halfway down)

    It seems that various militaries have felt that gold is indeed liquid. 

    The rest of the contents of the survival kits are moot for this thread.

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  • Sat, Jul 23, 2011 - 6:26am

    Reply to #58

    Adam Taggart

    Status Platinum Member (Offline)

    Joined: May 25 2009

    Posts: 2548

    Another example of gold coin(s) in military kits

    Forwarded over by Chris Powell of GATA.org:

    http://www.scribd.com/doc/56288079/A-Long-Term-Survival-Guide-Military-Survival-Kits – cites gold coins were given to soldiers in WWII and Desert Storm. Another included example mentions bullion powder in Vietnam-era kits.
     

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  • Sat, Jul 23, 2011 - 7:25am

    #59
    plato1965

    plato1965

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    Joined: Feb 18 2009

    Posts: 86

     How I learned to stop

     How I learned to stop worrying, and embrace peak everything…

     http://www.youtube.com/watch?v=F5qqfsQGYus

     

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  • Sat, Jul 23, 2011 - 7:33am

    Reply to #58

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    One Day...

    [quote=Adam]Forwarded over by Chris Powell of GATA.org:

    http://www.scribd.com/doc/56288079/A-Long-Term-Survival-Guide-Military-Survival-Kits – cites gold coins were given to soldiers in WWII and Desert Storm. Another included example mentions bullion powder in Vietnam-era kits.

    [/quote]
    Okay. Nice to know if I ever get to be in a fighter jet or bomber one day… 🙂
    Poet

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  • Sat, Jul 23, 2011 - 1:59pm

    Reply to #57

    skytop

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    you're spot on Tictac1, in

    you’re spot on Tictac1, in fact, most survival kits in the Mil/Aero contain: food, water, firearms, ammo, medical, survival tools and communications to name a few — sound familiar?BR,
    Skytop
     

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  • Sat, Jul 23, 2011 - 2:40pm

    Reply to #59
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    we'll meet again

    [quote=plato1965] How I learned to stop worrying, and embrace peak everything…
     http://www.youtube.com/watch?v=F5qqfsQGYus
     
    [/quote]
    Love it!  One of my favorite movies of all time.   I think one of the funniest things is that Slim Pickens thought he was playing a serious role, LOL. 

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  • Sat, Jul 23, 2011 - 5:37pm

    #60

    jrf29

    Status Silver Member (Offline)

    Joined: Apr 18 2008

    Posts: 166

    Chewing gum

    🙂

    The nine packs of chewing gum in Slim Pickens’ survival kit was a humorous reference to heavy (and ultimately successful) lobbying by the Wrigley corporation during WWII to include a pack of Wrigley’s chewing gum in survivial kits.  Wrigley’s advertisements during the war recommended 5 sticks of gum per day for all war workers and servicemen, and claimed that their gum was stimulating and increased concentration while reducing fatigue.

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  • Sat, Jul 23, 2011 - 6:21pm

    Reply to #60

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    Chewing Gum Better Than Cigarettes!

    [quote=jrf29]:-)

    The nine packs of chewing gum in Slim Pickens’ survival kit was a humorous reference to heavy (and ultimately successful) lobbying by the Wrigley corporation during WWII to include a pack of Wrigley’s chewing gum in survivial kits.  Wrigley’s advertisements during the war recommended 5 sticks of gum per day for all war workers and servicemen, and claimed that their gum was stimulating and increased concentration while reducing fatigue.
    [/quote]
    Certainly, chewing gum is healthier than the 9 cigarettes that were included in the rations! I agree that gum can be stimulating – that extra little burst of sugar. 🙂
    Poet

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  • Sun, Jul 24, 2011 - 9:55am

    Reply to #54

    sofistek

    Status Platinum Member (Offline)

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    Posts: 557

    Travlin,I don't think the

    Travlin,
    I don’t think the phrase "paying one’s own way", is likely to be heard much post collapse. It is more likely to be about contribution to your community and/or self-sufficiency.
    Hey, I can understand why those nearing or at retirement (I’m less than 10 years away) would want to hope that what they’ve worked towards all of their working lives will still have some validity. I guess I’m not too different from you, in terms of what I tried to achieve, though I probably wasn’t as frugal as you, though we did live below our means. But I now have no expectation of a conventional retirement though I still cling, barely, to the hope that beyond all the carnage that collapse will wreak some kind of better way of living will emerge. If it’s to be sustainable, I think equality and fairness will be a key feature of a future community and, maybe, society. All I’m saying is that hanging on to some idea of wealth beyond what others have doesn’t sound like equality is at the forefront of thought. However, I really don’t think it matters in the period up to and through collapse since PMs will probably need to be a very long term holding if it is to realise the dreams of many here. It has worth, I think, only as a short term investment; those who want to get through the collapse need to prepare for the journey and a very long term investment isn’t going to help with that.
    Tony
    [quote=Travlin]
    [quote=sofistek]
    I still think there is a moral element to this. It seems that some people here look to PMs as a means of retaining (or just having) wealth, post collapse.
    [/quote]
    Sofistek
    After working all my life, without an exceptional income, we managed to accumulate some assets by living below our means.  This money is for our retirement, and maybe to pass on to our kids to help them when they have kids.  I am retired now and our life savings can’t be replaced.  To have them destroyed by the gross mismanagement of government is outright theft.   There is nothing immoral about wanting to retain the ability to pay our own way and I resent your implication.
    Travlin
    [/quote]

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  • Sun, Jul 24, 2011 - 11:11am

    #61

    Thomas Hedin

    Status Bronze Member (Offline)

    Joined: Jan 28 2009

    Posts: 99

    Money and government

    Travlin,

     

    I don’t know why you connect money and government since we have no government money and its a fact government has nothing to do with creating money.

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  • Sun, Jul 24, 2011 - 3:23pm

    Reply to #54
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    questions

    [quote=sofistek]All I’m saying is that hanging on to some idea of wealth beyond what others have doesn’t sound like equality is at the forefront of thought. However, I really don’t think it matters in the period up to and through collapse since PMs will probably need to be a very long term holding if it is to realise the dreams of many here. It has worth, I think, only as a short term investment; those who want to get through the collapse need to prepare for the journey and a very long term investment isn’t going to help with that.
    [/quote]
    sofistek,
    I have two questions.
    1) Does "hanging on to some idea of wealth beyond what others have" imply that they should distribute the wealth that they hold above and beyond others to those others?  If not, in your mind, how are they to dispose of said wealth?
    2) You’re saying the PMs will need to be a very long term holding if they are "to realise the dreams of many here" but then you say you think they have worth "only as a short term investment".  These two statements seem contradictory.  Could you please clarify?

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  • Tue, Jul 26, 2011 - 11:24am

    Reply to #54

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Answers

    [quote=ao]1) Does "hanging on to some idea of wealth beyond what others have" imply that they should distribute the wealth that they hold above and beyond others to those others?  If not, in your mind, how are they to dispose of said wealth?
    2) You’re saying the PMs will need to be a very long term holding if they are "to realise the dreams of many here" but then you say you think they have worth "only as a short term investment".  These two statements seem contradictory.  Could you please clarify?[/quote]
    1. No, but that’s an idea. Your question seems to be along the lines of, "I’ve managed to accumulate more wealth than I need to physically prepare for tumultuous times and to change my lifestyle to one more in tune with nature’s limits but I’d like to think I’ll still have that wealth for as long as possible – how can I hold on to that dream?" I’m afraid that’s not a question that particularly interests me.
    2. From my previous posts, you might deduce that my focus is on preparations. I recognise that preparations take time and that not everyone can make those preparations at the same pace or can change their lifestyles at the same pace. We certainly have uncertainty of money, at the moment – there is no guarantee that, even if you have it, you’ll have it over the short term; another financial collapse is entirely possible and banks, or other savings holders, may go out of business without your being able to get at all of your money. So, in the short term, gold may offer a way to retain some of your wealth in order to liquidate it as your preparations progress.
    Of course, short term is a gamble, like any investment and you’d have to be prepared to take a hit. Dealing prices may not be what you see in the commodities section of the financial press, if you’re a small investor, so buying and selling over a short period could lose you money even as gold continues to rise (i.e. you could pay more than the spot price to buy and sell for less than the spot price).
    I’m still considering gold and silver as a short term move, with all the uncertainty at the moment.
    Tony

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  • Wed, Jul 27, 2011 - 2:11am

    Reply to #54
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    sofistek wrote:Your

    [quote=sofistek]
    Your question seems to be along the lines of, "I’ve managed to accumulate more wealth than I need to physically prepare for tumultuous times and to change my lifestyle to one more in tune with nature’s limits but I’d like to think I’ll still have that wealth for as long as possible – how can I hold on to that dream?" I’m afraid that’s not a question that particularly interests me.
    [/quote]
    Actually, my question was more along the lines of "Does "hanging on to some idea of wealth beyond what others have" imply that they should distribute the wealth that they hold above and beyond others to those others?  If not, in your mind, how are they to dispose of said wealth?"
     
    [quote=sofistek]
    I’m still considering gold and silver as a short term move, with all the uncertainty at the moment.
    [/quote]
    So what would cause you to pull the trigger?

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  • Thu, Jul 28, 2011 - 12:01am

    Reply to #54

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    ao wrote:Actually, my

    [quote=ao]Actually, my question was more along the lines of "Does "hanging on to some idea of wealth beyond what others have" imply that they should distribute the wealth that they hold above and beyond others to those others?  If not, in your mind, how are they to dispose of said wealth?"[/quote]Any such implication is not of much interest to me, at the moment. If you have excess, perhaps you could distribute it to members of your family who might find it useful in preparations. After than, friends.
    [quote=ao] [quote=sofistek]I’m still considering gold and silver as a short term move, with all the uncertainty at the moment.[/quote]
    So what would cause you to pull the trigger?[/quote]
    Actually, I’ve pulled the trigger. I don’t think a US default will be quite as bad, overall, as the Obamas and Boehners of this world are trying to make out (but it will be terrible for some). However, I simply don’t know, and nor does anyone else. So I’ve opted to keep some cash and some silver and gold on hand, for the short term, in case the banking system goes into a tail spin. It’s not much because, even with some gold and silver, I don’t know if I’ll be able to liquidate any of it if the banking system is in turmoil.
    By the way, having bought, the price now has to rise by 10%-20% for me to get my money back (due to differences in buy/sell rates).
    I don’t think Chris goes into any of these side questions, which is a shame.

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  • Thu, Jul 28, 2011 - 1:14am

    Reply to #54
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    sofistek wrote:By the way,

    [quote=sofistek]
    By the way, having bought, the price now has to rise by 10%-20% for me to get my money back (due to differences in buy/sell rates).
    [/quote]
    Ouch!  I’m curious as to why you bought now, at a historic peak in gold prices?  Why didn’t you at least wait until the debt ceiling is raised?
    These "side questions" (including bid/ask spreads) were discussed at length probably 2 years ago, IIRC, on this forum.  I know because I was in the process of finishing up writing a white paper on gold for family, friends, and acquaintances at the time.  I posted some basic tips on when to buy gold.  Following that advice would’ve saved you a chunk of change.  Now that you have it, at least make sure you have your exit strategy in place.
    BTW, did you notice today’s news showing NZ’s inflation just hit a 21 year high of 5.3%? 
    http://tvnz.co.nz/business-news/perfect-storm-causing-high-vege-prices-growers-4325899 
    It reminds me of this discussion we had.
    [quote=sofistek]
    [quote=ao]And sorry but I sincerely doubt that your cash is outpacing inflation[/quote]You can doubt it all you like, it doesn’t bother me. Most of my cash is on term deposit, getting between 4% and 5% interest. Inflation, here in New Zealand, is about 4.5%. Up until the last month, I was getting 5%-5.5%. That’s fine with me. I don’t mind if it falls a little below inflation, that’s life. I’ve got more important things to worry about, unless inflation starts ratcheting up to double figures. Also, interest rates are expected to rise before too long, as the official economy is apparently doing quite well over here. Yes, the figures are probably wrong (though not as wrong as the US figures) but I’m doing OK.
    [/quote]
     
     

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  • Thu, Jul 28, 2011 - 1:50pm

    Reply to #54
    tictac1

    tictac1

    Status Silver Member (Offline)

    Joined: Sep 25 2009

    Posts: 124

    WHERE you buy or sell makes

    WHERE you buy or sell makes a huge difference.  Buy low/sell high for PMs means seeking out the lowest premiums when buying, then selling to private parties, usually.  IMO, eBay is an excellent resource to see the ACTUAL "street value" of your metals.  It’s what real people are willing to pay, and you can get an average very easily.  There have been times in the past couple years where one could walk down to the coin shop, buy a Krug and eBay it immediately, making a small profit.  You have to be smart about HOW you are doing your transactions.Sofistek, i wouldn’t worry about recouping your 10-20%.  If the rate continues at the same pace it has been for 10 years, you should be good after a year or so, or until the next emotional wave…:)
    ao is right on, never buy when the headlines are fear-laden, buy when the mantra is "everything is going to be just fine"…  Currently, if I was looking for metal, I’d wait til they make a debt ceiling deal (which they will), then buy on that dip.  If you want to get out, wait till the next flop-n-twitch about the housing market, debt level, insert panic here.  The good thing is, you are assured of this pattern by the fact that fiat IS in fact doomed, but it won’t go down without plenty of soothing propaganda from those in power. 

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  • Thu, Jul 28, 2011 - 10:43pm

    Reply to #54

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Gold not at historical highs in some countries

    [quote=ao]Ouch!  I’m curious as to why you bought now, at a historic peak in gold prices?  Why didn’t you at least wait until the debt ceiling is raised?[/quote]I’d already mentioned the uncertainty. You don’t know what’s going to happen with the debt ceiling, and neither do I. I don’t know what effect a failure to raise the ceiling will have. I don’t know what effect a short term agreement will have. I don’t know what effect increasing the US debt even more will have. Don’t worry, I haven’t bought much, just enough that, assuming I could sell it a little later, I’d be able to pay property taxes and buy essentials, for a while, if the banking situation deteriorates so much that I can’t get at the rest of my savings. I may dip in a bit more after the debt ceiling decision – again for the short term.
    By the way, gold is not at an historic peak in my country. It’s still lower than its peak in March 2009.
    [quote=ao]Following that advice would’ve saved you a chunk of change.  Now that you have it, at least make sure you have your exit strategy in place.[/quote]Hindsight is a wonderful thing. But I think you’re not reading me properly. My "exit strategy", as you call it, is self-sufficiency, or as close as I can get. I’m not bothered about monetary returns and even losing something on investments doesn’t bother me (though, of course, losing 100% of my savings would be pretty difficult to take). In a BAU world, an investment exit strategy might make sense, but we’re not living in that world any more. In any case, isn’t Chris talking about PMs as a long term strategy? If we’re talking many years, and the screaming fundamentals are right, I don’t think any need worry about losing on PMs – provided they can realise their nominal value.
    [quote=ao]BTW, did you notice today’s news showing NZ’s inflation just hit a 21 year high of 5.3%?[/quote]That news is a few days old but, yes, I noticed. There was a one off hit, in October, of a rise in sales tax (we call it GST), which added 1.5% to prices instantly. That is, the real (official) underlying inflation rate is 3.8%. If our leaders had been honest enough to put the tax on income, instead of spending, then the inflation rate would have been lower.
    I can still get term deposit rates of almost 6%, though that would be committing my money longer than I’m prepared to do. The expectation now is of a base rate rise of 0.5%, next review, so it’s likely that I’d be able to put my money in a term deposit that is higher than the current inflation rate, soon, and certainly higher than the underlying inflation rate (which I can do now).

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  • Thu, Jul 28, 2011 - 10:52pm

    Reply to #54

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    Thanks for the advice,

    Thanks for the advice, tictac. You’re absolutely right, in a BAU world. But I think that there is so much uncertainty, and that markets are often acting so irrationally, that it’s hard to know if normally good advice is good advice at any particular time. Were at the limits, in so many areas, that events can be chaotic.But don’t worry, my investment is small, at less than NZD$9000. If I lose a few thousand, which I don’t expect, it’s not the end of the world.
    Seling on eBay, or similar is good. I don’t mind doing that, and you’re probably right. However, for a first dip into this strange new world, I wanted to have absolute confidence that what I was buying was the real thing. My next purchase, if there is one, may be elsewhere.

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  • Fri, Jul 29, 2011 - 2:51am

    Reply to #54
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    sofistek wrote:ao

    [quote=sofistek]
    [quote=ao]Ouch!  I’m curious as to why you bought now, at a historic peak in gold prices?  Why didn’t you at least wait until the debt ceiling is raised?[/quote]
    I’d already mentioned the uncertainty. You don’t know what’s going to happen with the debt ceiling, and neither do I. I don’t know what effect a failure to raise the ceiling will have. I don’t know what effect a short term agreement will have. I don’t know what effect increasing the US debt even more will have. Don’t worry, I haven’t bought much, just enough that, assuming I could sell it a little later, I’d be able to pay property taxes and buy essentials, for a while, if the banking situation deteriorates so much that I can’t get at the rest of my savings. I may dip in a bit more after the debt ceiling decision – again for the short term.
    By the way, gold is not at an historic peak in my country. It’s still lower than its peak in March 2009.
    [quote=ao]Following that advice would’ve saved you a chunk of change.  Now that you have it, at least make sure you have your exit strategy in place.[/quote]Hindsight is a wonderful thing. But I think you’re not reading me properly. My "exit strategy", as you call it, is self-sufficiency, or as close as I can get. I’m not bothered about monetary returns and even losing something on investments doesn’t bother me (though, of course, losing 100% of my savings would be pretty difficult to take). In a BAU world, an investment exit strategy might make sense, but we’re not living in that world any more. In any case, isn’t Chris talking about PMs as a long term strategy? If we’re talking many years, and the screaming fundamentals are right, I don’t think any need worry about losing on PMs – provided they can realise their nominal value.
    [quote=ao]BTW, did you notice today’s news showing NZ’s inflation just hit a 21 year high of 5.3%?[/quote]That news is a few days old but, yes, I noticed. There was a one off hit, in October, of a rise in sales tax (we call it GST), which added 1.5% to prices instantly. That is, the real (official) underlying inflation rate is 3.8%. If our leaders had been honest enough to put the tax on income, instead of spending, then the inflation rate would have been lower.
    I can still get term deposit rates of almost 6%, though that would be committing my money longer than I’m prepared to do. The expectation now is of a base rate rise of 0.5%, next review, so it’s likely that I’d be able to put my money in a term deposit that is higher than the current inflation rate, soon, and certainly higher than the underlying inflation rate (which I can do now).
    [/quote]
    So you bought gold because of uncertainty (which is a good reason) but you bought it on an uptrend with the expectation that there would be no future corrections occurring that would offer a better buying opportunity?  This expectation defies the historical behavior of gold.  When you rationalize a faulty investment decision, unfortunately you’re extremely likely to repeat the faulty behavior.  While you’re unlikely to lose money on your gold in the long term, faulty entrance and exit points will diminish your returns and if you’re using those returns to fund preparations, your ability to fund your preparedness is obviously diminished. 
    Previously, you questioned the liquidity of gold when TSHTF but now you’re saying you’d use it to pay your property taxes and buy essentials?  What happened to the liquidity under duress issue?
    And you still think that your cash investments will outpace inflation?  Why would you bother with gold then?  Why not wait until they are no longer outpacing inflation and then buy gold?
    I’m just amazed at your ability to rationalize your decisions.  It’s preternatural.

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  • Fri, Jul 29, 2011 - 3:59pm

    Reply to #54
    tictac1

    tictac1

    Status Silver Member (Offline)

    Joined: Sep 25 2009

    Posts: 124

    I can certainly understand

    I can certainly understand apprehension about buying metals.  If you weren’t raised around it, it can defintely seem off-putting, and of course there is the concern about getting ripped off.  Fortunately, it’s easy to spot fakes using only a micrometer and an accurate scale, though I’ve never personally come across one.You’re right, the AU price spiked up pretty good in 2009, but the trend has been up for the last 10 years, same as the US.  Even if you were crazy enough to buy at that spike, in another year we’ll be seeing steady support at that level, assuming the music doesn’t stop before then.  There’s no way dollar price will continue to climb, while AU price gradually descends.  If our fiat crashes, so does yours.  Sorry about that, BTW.  There is no nation on earth right now that is doing anything fundamentally different, economically speaking, and there is no nation on earth willing to give up the power that fiat money holds for its government.  Heck, I don’t think there is even a group of people willing to forgoe debt capitalism (in its many forms) save perhaps the Amish or Mennonites.  We ALL want instant gratification.
    I don’t believe in chaos, nor coincidence, nor do I believe human nature changes.  This limits the amount of pie-in-the-sky scenarios I will entertain.  While details are certainly volatile, I believe there are certain "big picture" concepts that remain unchanging, and you can demonstrate that empirically through the study of history.

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  • Fri, Jul 29, 2011 - 5:18pm

    Reply to #54
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    tictac1 wrote:I don't

    [quote=tictac1]
    I don’t believe in chaos, nor coincidence, nor do I believe human nature changes.  This limits the amount of pie-in-the-sky scenarios I will entertain.  While details are certainly volatile, I believe there are certain "big picture" concepts that remain unchanging, and you can demonstrate that empirically through the study of history.
    [/quote]
    Exactly!

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  • Sat, Jul 30, 2011 - 11:05pm

    Reply to #54

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    ao wrote:So you bought gold

    [quote=ao]So you bought gold because of uncertainty (which is a good reason) but you bought it on an uptrend with the expectation that there would be no future corrections occurring that would offer a better buying opportunity?[/quote]No. The only expectation I have is that gold and silver would have some value, if I can’t get at my savings, in the short term. I bought a small amount simply to have that value. I may buy a similar amount later, when the latest crisis has toned down to a simmer and there is more certainty about the short term (one way or the other).
    [quote=ao]While you’re unlikely to lose money on your gold in the long term, faulty entrance and exit points will diminish your returns and if you’re using those returns to fund preparations, your ability to fund your preparedness is obviously diminished.[/quote]Indeed. But I already knew that. As I’ve said, no-one (not even you or Chris) knows how the future will play out. No-one can make the best decisions about "investments" all the time, least of all now. It’s easy to criticise any decision but all investment decisions are gambles, so I’m gambling but that’s all that can be done anyway.
    [quote=ao]Previously, you questioned the liquidity of gold when TSHTF but now you’re saying you’d use it to pay your property taxes and buy essentials?  What happened to the liquidity under duress issue?[/quote]Fair comment, except that I questioned the validity of gold post collapse, not short term. Very short term, I may find that I can’t use my PMs to pay anything. But I don’t expect total collapse for a few years yet (even though I expect continual deterioration that will feel like collapse to some people), so I would still expect to be able to sell my gold/silver for something that I can use to pay property taxes. Remember that I’ve also taken some cash out that will keep me going for a few months, even if I can’t cash my gold and silver.
    [quote=ao]And you still think that your cash investments will outpace inflation?[/quote]No. You continue to misunderstand what I’ve said. I have no solid expectations about anything, except a continued deterioration in societal institutions and the way the economy works. All I’ve said, with regard to cash investments, is that, so far, I’ve received returns that have outpaced official inflation. I don’t expect that to continue, nor do I expect it not to. I do the best I can in the safest way I can as I continue to prepare. My only expectation is that I probably won’t get full value for my cash before it becomes unavailable. I also expect that I’ll never retire in the conventional sense.
    [quote=ao]Why would you bother with gold then?  Why not wait until they are no longer outpacing inflation and then buy gold?[/quote]Hopefully, this is becoming clear to you now. All I’m trying to do is prepare and become as self sufficient as possible. I see very short term uncertainty and I’m trying to do something to reduce the likelihood that I can’t continue my preparations in the short term (over the next year or so). Perhaps I’m a victim of all of the gold/silver advertising here. I don’t know if buying some gold and silver will help but I can’t think of much else to do other than panic buying of everything that I think I could possibly need. However, there are other factors, which aren’t part of this thread, which make me unwilling, for now, to spend nearly all my savings in one go. That may well be a more sensible strategy later on, but not now.

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  • Sat, Jul 30, 2011 - 11:18pm

    Reply to #54

    sofistek

    Status Platinum Member (Offline)

    Joined: Oct 02 2008

    Posts: 557

    tictac1 wrote:I don't

    [quote=tictac1]I don’t believe in chaos, nor coincidence, nor do I believe human nature changes.  This limits the amount of pie-in-the-sky scenarios I will entertain.  While details are certainly volatile, I believe there are certain "big picture" concepts that remain unchanging, and you can demonstrate that empirically through the study of history.[/quote]Chaos(increasing entropy) is the norm, in the natural world. Societal chaos? Who knows? Some areas of the world could be described as chaotic, and some have been for quite some time. We’ve lived in a bubble, in the developed world, so probably haven’t got the personal or family experience to be able consider a total collapse. I’ve got no idea how that collapse, or the on-going process of collapsing, will affect people, especially as the numbers thrown on the scrap heap grows. I’m tending to the view of a longer collapse period but the steps down could engulf anyone much more quickly and how people react to the annihilation of their dreams and aspirations is an important, but unknown, factor. I actually am prepared to entertain almost any collapse scenario but I tend to favour some over others.I’m not sure what you mean by human nature not changing. You’re right, of course, but what does that mean? We’ve had all sorts of situations in all sorts of societies in the past, many of which we’d all find horrific right now. So I’m not sure what you mean by letting history be your guide. All it really shows is that total collapse of a civilisation typically takes many decades or centuries, and that it’s a case of gradual deterioration, with more stable periods for some parts of the declining civilisation. None of that means that some more distressing scenarios are not possible in a non-uniform way.

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  • Mon, Aug 01, 2011 - 4:14pm

    Reply to #54
    robbie

    robbie

    Status Bronze Member (Offline)

    Joined: Jul 16 2008

    Posts: 57

    Brief pullback in gold....

    Apparently I blinked and missed the 2 millisecond debt ceiling agreement drop in gold at the open. I would prefer not to buy into strength, but I’m beginning to wonder whether the August doldrums in metals is going to materialize this year. I’m also seeing a noticeable uptick in the common man’s interest in gold i.e. friends that are aware I follow "that Martenson guy" are asking for more information on the 3E’s and websites selling gold. Perhaps it was optimistic expecting a retrenchment to the 1600 level. Do others still feel it’s worth waiting until mid-August for a swoon, or does the quickly evolving change in public sentiment suggest I should be backing up the truck about now? Thanks-

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  • Tue, Aug 02, 2011 - 7:06pm

    #62
    tictac1

    tictac1

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    Joined: Sep 25 2009

    Posts: 124

    Personally, i subscribe to

    Personally, i subscribe to the dollar-averaging approach, it certainly makes more sense for me.  Apparently, the debt deal didn’t do much for people’s fears, otherwise you should have seen a bigger, longer-lasting drop…:)

    My opinion, worth price charged- don’t back up a truck just yet.  And I too am getting a "preparedness" vibe from most people i talk to, without me ever bringing up the subject.  Call it the collective unconscious.

    As for the comments on chaos as it applies to thermodynamics and societies, I cannot answer without dipping into philosophy/religion, so I will not answer.  I will say that one of the best societies that exemplifies what you’re talking about, modern day, is Somalia.  Somalia is not the result of "chance reigning supreme", but a CF of predictable proportions, given the "inputs to the system", to use thermo terms.

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  • Tue, Aug 02, 2011 - 7:18pm

    #63
    Doug

    Doug

    Status Platinum Member (Online)

    Joined: Oct 01 2008

    Posts: 1364

    today's action

    This is beginning to look like those long predicted days of hundred dollar moves in gold may not be far off.  People must be scrambling for safe havens.

    Doug

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  • Wed, Aug 03, 2011 - 2:40pm

    #64
    Doug

    Doug

    Status Platinum Member (Online)

    Joined: Oct 01 2008

    Posts: 1364

    Interesting analysis (with lovely charts) of gold vs. bubble

    http://www.zerohedge.com/news/gold-bubble-14-charts-facts-and-data-suggest-not

    [quote]

    Conclusion

    As a percentage of assets, gold ownership remains negligible vis-à-vis assets such as equities and bonds. Ownership of gold is likely to be less than 2% of global investable assets. This is in marked contrast to the end of gold’s last bull market when gold and gold stocks accounted for over 20% of global assets.

    Gold remains badly analysed, under-owned and under-appreciated. This will change in the coming months and years when the importance of gold as an investment and currency diversification and as a store of wealth is appreciated again.[/quote]

    Actual analysis is quite detailed supported by data.  Seems timely in light of recent moves.

    Doug

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  • Thu, Aug 04, 2011 - 10:53pm

    #65
    tictac1

    tictac1

    Status Silver Member (Offline)

    Joined: Sep 25 2009

    Posts: 124

    Mendacity

    Look at Yahoo’s "news" on the stock market drop.

    "By the end of the day there were few places left to hide. Gold, silver, crude and yields on Treasuries all fell sharply as traders looked for safety and were met by nothing but falling prices."

    I guess they figure none of us have calculators.  I figured gold’s "drop" to be about 0.8% from closing yesterday, which is nothing more than normal fluctuation.  Treasury yields, on the other hand…:)

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  • Wed, Aug 10, 2011 - 7:25pm

    #66

    Johnny Oxygen

    Status Gold Member (Offline)

    Joined: Sep 09 2009

    Posts: 454

    Why is silver not moving with gold?

    Anyone else think its really strange that silver is frozen while gold goes to the moon?

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  • Wed, Aug 10, 2011 - 7:52pm

    #67

    Tycer

    Status Silver Member (Offline)

    Joined: Apr 26 2009

    Posts: 206

     The margin requirements

     The margin requirements are different for paper silver than gold and perhaps it’s more viewed as a commodity than gold.

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  • Wed, Aug 10, 2011 - 10:23pm

    #68
    tictac1

    tictac1

    Status Silver Member (Offline)

    Joined: Sep 25 2009

    Posts: 124

    a possibility-  silver has

    a possibility-  silver has significant industrial demand, if industrial demand drops (or more accurately, the PROJECTED demand), so might silver?

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  • Thu, Aug 11, 2011 - 1:33am

    #69

    Johnny Oxygen

    Status Gold Member (Offline)

    Joined: Sep 09 2009

    Posts: 454

    Just ran across this.

    http://5minforecast.agorafinancial.com/financial-death-by-extraction/

     

     

    “Why isn’t silver following gold in its upward spiral?” a reader inquires somewhat breathlessly.

    “Could it be that when wealthy gold bugs saw the newly created ‘paper’ millionaires that played the silver market, they forced, behind the scenes, the major hikes in margin requirements needed to trade silver? That move wiped out many traders who could not afford a can of beans now, let alone invest in silver…

    “Gives you something to think about… the rich get richer, the poor get poorer and the middle class get wiped out on a billionaire’s whim or fear.”

    The 5: Um, either that or silver has more industrial uses than gold. If traders perceive the economy’s going back into the tank, there’ll be less industrial demand for it.

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  • Mon, Aug 22, 2011 - 7:29pm

    Reply to #69
    capesurvivor

    capesurvivor

    Status Silver Member (Offline)

    Joined: Sep 12 2008

    Posts: 210

    well

    I guess this thread got validated, at least in the short to medium term. 
    Begs the question…is gold parabolic and too late to buy now?
     
    CS

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  • Mon, Aug 22, 2011 - 7:53pm

    #70
    gregroberts

    gregroberts

    Status Gold Member (Offline)

    Joined: Oct 06 2008

    Posts: 305

    Schiff says no gold bubble

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  • Mon, Aug 22, 2011 - 8:00pm

    Reply to #69

    Johnny Oxygen

    Status Gold Member (Offline)

    Joined: Sep 09 2009

    Posts: 454

    capesurvivor wrote:I guess

    [quote=capesurvivor]
    I guess this thread got validated, at least in the short to medium term.
     
    Begs the question…is gold parabolic and too late to buy now?
     
    CS
    [/quote]
    PM’s are a very very small market. Once it’s widely understood that they are the only real safe haven these small markets will be flooded.
    At some point you won’t be able to buy physical at any price. So no. Its not too late.

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  • Fri, Apr 06, 2012 - 11:26am

    #71

    Arthur Robey

    Status Platinum Member (Offline)

    Joined: Feb 03 2010

    Posts: 1814

    Further on the Manipulation of Silver.

    It would be much better if things continued as they have to date, where great numbers of smaller investors grab a piece of the physical silver market.

    From Money morning.

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  • Tue, Aug 13, 2013 - 5:34am

    #72

    James Burke

    Status Member (Offline)

    Joined: Aug 13 2013

    Posts: 1

    BEWARE KITCO

    KITCO LYING

    This is how the uber elites do their dirty work: they create associations, institutions and organizations with innocuous names that the reader is hypnotized into believing that they seek to do good and support their beliefs.

    Silver Users Association, JStreet, World Gold Council, CFTC, Development Export Canada, Friends of the Middle East, Palestine4lovers, etc.. all which create an image in the head of the reader to placate them and then do the exact opposite. Brilliant.

    http://productivitymarket.com

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