Makes sense.
However, couldn't this be a sign that people are getting ready for if/when the current financial system fails?
However, couldn't this be a sign that people are getting ready for if/when the current financial system fails?
Even barring a catastrophic nosedive in the level of civilized trading, regular people aren’t equipped to store gold in their homes. The problem of securing such holdings isn’t something the average Joe will be able to solve well, and he knows it.
The issue with doing that, is it is an insurance policy and not a immediately liquidate-able asset that can be traded in seconds. I think it is a sound strategy to take possession and store enough gold that in the event of a reset you can reestablish yourself. It is the closest thing to a guarantee that, that portion of your wealth will carry over into what comes next, in the unlikely possibility that it happens in your lifetime.
I don't know if I buy that. Show me how I can guy a commodity on the market and have it delivered to my house. And the guarantee that process will work when the global financial system starts imploding. For the vast majority of people holding gold, their holdings are only on paper, and that's all they'll ever be.
If I'm stocking up on items with physical value to hedge a complete economic collapse, I'd rather have butane lighters, buckets, vacuum sealed sugar/salt/grains, water storage, and ammo.
Also for myself personally, I purchased a simple test kit that most jewelers use. It is an electronic test kit that is very accurate for gold and platinum and when I look to reallocate some of my wealth to gold I buy scrap gold and test it. The kit was about a $200 investment but It allows me to buy the gold at a deep discount (deeper if it is not 24K) under the spot price for the day, you can melt it with a propane torch, that can be purchased from Home Depot and they make plenty of bar molds. It takes me about 5-10 minutes effort (short of procuring the gold) to turn scrap into bars. But if one does not want to go thru the effort, it's pretty easy to buy gold bullion at the spot price for the day + shipping, even on ebay there are plenty of reputable sellers. I don't trade in millions of dollars in gold and I have yet to liquidate any that I hold as I only hold about 3% of my total wealth in gold and I try to keep that pretty stable. Again I view it as insurance, not an investment, that being said if I liquidated it all today, it would have turned out to have been a pretty good investment.
Do you write a letter to your broker asking, "Dear, Schwab, I have $1000 in a gold ETF and shit is crazy now! Can you please have one of your customer care folks briefly stop stocking up on water and food, use a generator to turn your servers back on and verify I have that security? Then please deliver the equivalent amount of physical gold to my address via the postal system which is partially working? Thank you and look forward to continuing business with you!"
Point is, if you ever really need the physical gold behind the security it will not be available. To me, that makes the security worthless.
When society collapses gold will be completely worthless as well.
I don't see why not?
I have never had a break-in, but if I did I'm sure I could hide a few kilos well enough that a regular burglar would never find it.
Either way, my gold is in a bank vault, which seems safe enough, but I honestly would not be too worried storing it at home.
Not on their own, but once they've found you, they've found the gold.
They could set up a trusted storage facility to hold the gold in a vault for them. It isn't that hard to imagine. They could call it a "bank" if they really wanted to be traditional.
Just because you don't feel like being imaginative doesn't mean that people won't be when large amounts of money are on the line. People are downright ingenious when it comes to securing their wealth.
https://www.reuters.com/article/us-markets-saft/saft-on-weal...
>perhaps fearful of confiscation by a successful enemy or a government tax on capital, a plan that was mooted in Britain in 1920 ...
Hard asset confiscation, in the US case of gold, has been mooted, passed into law, and enforced:
There is no difference except that in a crisis gold will retain its value, and the stacks of paper money will only remind you of the better days.
Now, of course neither of them is optimal. The best way of maintaining your purchasing power is with a competent government. But that is even more rare.
Most consumer gold trading is done in grams, tenths quarters and half an ounce, outside of numismatic (old real gold coins, not bullion) due to its insane cost, it's easier to move assayed grams@$50 than $2000 single ounce coins for "regular" people. Also because it's easier to fake in larger ingots and XRF devices are very expensive, smaller assayed quantities move fast and are traded heavily.
Most/all Federal Reserve Banks have a "Money Museum" attached to them. They will have $1 million in one dollar bills, which is a cube approximately 3 or 4 feet on each side. They will also have $1 million in twenty dollar bills, which fits on a 2-3 foot in diameter table, stacked perhaps 12 inches high.
Lastly, they will have $1 million in one hundred dollar bills, which fits in smallish suitcase that's probably less than twice the size of your stack of gold and weigh hardly anything at all.
They are really interesting - you should definitely go to your nearest one when you can, not least for the free shredded cash they give out; you can have the most baller confetti at your next party.
Also, IIRC, gold quickly lost its trading value in post WW2 Germany because, uh, you couldn't eat it.
If you are storing a million 'dollars' in assets then you are not storing a million 'dollars', you are storing assets currently valued at one million dollars OR also 500oz of gold.
Does that mean dumping money into Vanguard or something else?
But unless we are in global civilization ending circumstances gold is good longterm bet, physical gold though.
If solar flare wipes out all electronics, your 100tons of gold in Switzerland are meaningless.
Assuming you’re talking civilian tossed back to the Bronze Age. Whoever has access to the vault might make use of the gold in such situations, but ownership is unlikely to be tracked back to people in another city etc.
Now, if you personally want to store physical gold that’s a different bet. Though personally storing significant amounts of valuables like that has plenty of obvious downsides.
Crikey. What performance counts as good in your eyes? Gold has been a pretty rewarding investment for the last 20 years. I think the median annual performance for the last 20 years has been something like 10% in USD (worthless metric for an investor I know, but the point is that most years are very solid up years). That is a pretty reasonable performer in my low-risk book. 2010-2014 represented an unusual bad time to buy gold in a decade long trend of great years to buy gold.
In terms of actual return it depends when you pick your start and end date; but the fact that we sometimes have major crisis was always totally predictable and the major governments responses have been reasonably predicable. The only surprise at the moment is the specific fact that it is a pandemic and in 2020. The price pattern on the charts is not surprising.
Now it’s currently above the historic average so you do get 1% real returns from 1900 to 2020. But, stop in say 2010 and things look even worse.
There are extended periods when gold absolutely crushes everything, and periods when it is totally flat (or worse). In the long run, yes, it is a poor investment because it is an inert metal. But for certain periods of time it is absolutely a great alternative to bonds and equities.
As to gold having positive returns in some window, sure but if you can time the market you can make money investing in anything. It’s doing the timing that’s difficult not looking for windows in historic data.
Exactly. The 20 years range is cherrypicked for to make gold look good, it doesn't generalize.
If you had bought stock (and reinvested dividends) at the top of the market in 2008, you would've been better off with stock today. If you had bought gold at the top in 2011, you would've been better off with stock today. If you had bought gold at the bottom in 2008, you would've been better off with stock today.
Really, the only times where gold would've outperformed (to date) in the last 50+ years is around the time of the dotcom bubble and the last ~2 years.
Realistically though, you're going to buy the market at its highs and lows, you're going to exit at some point when you need to, so it's highly subjective.
Sure. And a horrible investment over the last 40 years. You’d still have a negative return if you bought in 1980.
Gold doesn't do much over a century, it's main property of interest is that it sits in an inert fashion wherever it is left. I'm not too surprised on worried if it has a near-0 return over 50 years.
I don't actually believe it has a positive return over the last 20 years either; but most people don't accept my "the inflation rate is meaningless, stop referring to it to value real returns" argument so I usually don't bother mentioning it.
In a normal environment it will not outperform.
That said, I don't know how much the gold price is affected by gold ETF vs physical transactions.
[1] example of gold coins that are very popular with easy liquidity: https://catalog.usmint.gov/coins/precious-metal-coins/gold/
[2] example of liquidity via ebay sales: https://www.ebay.com/sch/i.html?_from=R40&_nkw=gold+eagle+co...
[0] https://www.royalmint.com/invest/bullion/discover-bullion/ca...
It all went well for him until he started a payroll company to do the same thing in multiple states.
https://www.fff.org/2013/12/09/the-u-s-vs-robert-kahre-a-hor...
That said, I'm mainly playing with a hypothetical here. I'm highly skeptical the system will outright fail simply because the majority of the wealth (and thus power) belongs to those with a deeply vested interest in not letting it fail and there's generally not much power owned by those who actively want it to fail. Fiat has worked this long, so why not longer?
When the chairman of the Federal Reserve becomes a prepper, then you know it's time to find a shelter.
For total meltdown SHTF scenarios soap, alcohol, cigarettes, chocolate, and maybe seeds are much more practical as barter currencies.
Even without SHTF scenarios, physical gold is a poor store of value because selling physical gold to a broker is an expensive business.
A lot of prestige gold coins are sold at a price premium which brokers will just ignore when buying from you. Even on weight alone, you're very unlikely to get anything close to your purchase price unless the price has gone up by at least a double figure percentage.
The real question is how bad the Covid recession/depression is likely to get. If you're assuming there's a depression-scale downturn then "paper" gold makes more sense than a lot of other investment classes.
There are many, many scenarios other than Business-as-usual and Mad Max. Look at how hyperinflation has played out historically. In Argentina in 2001, imported things like medicine became very expensive. People sold small amounts of gold for fiat when these kinds of expenses came up.
Depends on what you mean by food. If you have enough time, food can be multiplied. One potato, properly handled, can turn into a field of potatoes. One walnut, properly handled, can turn into a forest.
I think the idea behind an apocalypse bunker is it will remain unsafe to go outside / farm using solar power for a few months to a couple of years but not forever.
I agree. You have to start farming at some point.