A depression and Gold......
Submitted by jz on Fri, 10/03/2008 - 21:04
I'm new to the gold market just like alot of other folks here. It seems to me that there will eventually be a serious period of deflation for our economy, even though with the amount of liquidity added, there should be hyperinflation. My question is, what to do with Gold during a depression? All assets fall drastically during this time..right?? How is Gold affected? Do you hold it through the deflationary period, or should you sell before it hits???? ANy insights???
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bump
good stuff
Great Art. on "Crack Up Boom" as per Mises, case for Inflation
On track so far! Written 7/08. Thanks Duff for the heads up re the Crack up Boom ... I'd never heard of it.
http://www.financialsense.com/fsu/editorials/andros/2008/072...
The trick of gold during a
The trick of gold during a crash like we face is to stop relating it in your mind to FRN's. It's true value will be in what you can trade it for in hard goods. We may all soon be taking FRNs to the store in a wheel barrow for a little bag of groceries. How much gold would that bag cost you?
Pat
BOHICA!!
Pat
BOHICA!!
Did people walk around with
Did people walk around with gold nuggets during the depression? I know my grandma traded sugar for gas and cigarettes for tires and sold moonshine, but dollars would have been great and highly valued.
There was a difference
During the depression the dollar was still a strong currency. The depression was necessary to reset the prices that had gone wild because of bubble brought on by the easy money of the earier decade. The depression lasted much longer than was necessary because the feds tried to keep prices up rather than let them adjust downward. This current situation has one thing in common with the depression and that is the need to reset prices from their unsustainable levels and the governments attempt to keep prices high. The additional bad news this time is that they have printed so many dollars and we owe so much to foreigners that this time around the dollar will no longer be a strong currency once holders of the currency finally realize that we can't pay them back. This will cause the dollar will go down. How bad it will be and when this will happen is not clear, but it will happen.
Roger Hermann
Chicago, IL
Roger Hermann
Chicago, IL
We did not really print many dollars, but we created a lot of
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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credit that is currently being destroyed as far as I can see. Meanwhile, people's debt obligations remian.
Today's situation is far more deflationary than during the 30's, in my opinion.
At least in the 30's, people had more money than today (less deflationary back then) before the economy crashed, but today, people didn't have money even when the economy was good, as far as I can see. The situation today is far more deflationary, in my opinion.
I think you can say something similar about Japan. At least, they had savings before they entered deflation, thus, their deflation has been mild, but we have much less money (much less savings) in the U.S., as far as I can see, and this is much more deflationary, in my opinion.
government of the people, by the people, for the people
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Dunno, not quite that old.
Dunno, not quite that old. Under the Constitution we have the right to have gold and silver coined by the mint into coins that show the amount of their metal content. Could be that private mints will do this if the government will not meet its responsibility. A bag of gold dust is certainly not a convenient medium for exchange.
Pat
BOHICA!!
Pat
BOHICA!!
We buy gold because it is a
We buy gold because it is a store of value against the debasement of the dollar. When the dollar becomes dear, like in deflation, gold will lose it's value. Mark Faber is calling for deflation and then run-away inflation. Von Mises calls this a "crack up boom". I and everyone should google this and then discuss.
for several weeks now...
i have watched intently the ebb and flow of silver in the market (and gold)...for several years now i have been going to my local coin dealer to buy the two metals..he has NEVER turned me down on purchasing silver...i repeat, never...until yesterday!
i had not been in to see him in a few months because i thought i had enough coin...the last time i was in his store he showed me a 100 ounce bar of silver and said this is what you need to buy (i didn't...couldn't afford it) but the offer was there along with as many 20 coin rolls as i desired (at 21 bucks per eagle)...fast forward to yesterday...he says he has NO SILVER EAGLES for sale...he was offered to buy some back from someone he had always sold to (at 5 dollars over spot)! he said he could not do that...he did let me have 5 silver eagles for 17.95 a piece...that's all he could offer me, he said...damn right i bought them!!
people, there is something rotten in denmark, i smell it, do you? this guy is up on everything...he is ALWAYS researching the internet every time i see him
what the hell is going on?
O Captain, My Captain, rise up and hear the bells!
its 'cos I owe ya, my young friend...
Rockin' the FREE world in Tennessee since 1957!
Why didn't he buy those Eagles back if he is so short of supply?
I don't get it.
good question...
makes you think
O Captain, My Captain, rise up and hear the bells!
its 'cos I owe ya, my young friend...
Rockin' the FREE world in Tennessee since 1957!
gold and silver can go down.
gold and silver can go down. and i suspect we will see it go down on paper, and eventually at retail too.
the masses can't buy bread with gold and silver.
the masses can't buy energy with gold and silver.
UNLESS
you see a collapse, or near collapse, or run away inflation
of the dollar.
....and Peter Schiff seems to be predicting that.
so at that point dollars are worthless and people will turn to commodities that they can fit in their hand, and trading
so I've got a small pile of silver coins, and i should sell them now while they're still going for near $400 on ebay.
and then buy some more later....but i don't think i will. the reason is, the dollar may not collapse this time...but what if it does?
I don't want to have all my eggs in one basket
i have 1/4 in a bank (in case my house is robbed)
another 1/4 in the mattress (in case the bank is run on)
another 1/4 in coins (in case the dollar becomes worthless)
and last 1/4 in some stocks (in case i end up with nothing, but perhaps in 10 years stocks will recover and i will have something)
i'm not trying to get rich...i'm just trying to make sure that no matter what, i still have something viable when it all goes to hell
become a long long on gold and silver
you're describing a long-short...trading.
it is for the preservation of purchasing power. buy at all times, but especially at low. then when you really really need it you can exchange it for whatever currency is afloat.
if you're more balsy, trade on it with mining stocks. Peter Schiff's "Crash Proof" has a step by step portfolio management.
peace
that's a very smart hedge
perhaps you might want to consider also putting some in an alternate currency?
look at the graphs and decide for yourself.
melikes the yuan but my girlfriend's chinese,
so it's more a personal choice than anything.
but asia's where it's at it seems.
excellent that you brought
excellent that you brought that up!
the dollar is going to gain strength short term.
might be time to pick up a few hundred euros
Questions
This topic is one that I've never felt extremely confident in. I do believe that gold and silver make good money, and I do believe that in the past it has proved itself as a good way to maintain wealth.
What about the following scenario: Many have speculated that the collapse of the dollar will be the gateway to an electronic currency system. If that is the case I could see the "real id" being used as your electronic wallet. You would have to account for all transfers of money to this new system. Money in your bank accounts would obviously easily transfer. What would happen to gold and silver? What if there were legislation to turn it in? What would happen to the price of gold at that point? This is just a thought I had. Comments are welcome.
Whats going on with Silver?
I admit I do not know a whole lot about buying silver but yesterday I went around to my local coin shops to price Silver 1oz eagle coins. And was told they sold from anywhere to 5 -7 dollars above spot. They say it's because they are hard to get a hold of and the Govt is charging them that rate? Is this true or are they just trying to rip me off? I understand they have to set a premium but 7 bucks? when the market value is only 11 an oz? I only have about 500 to invest right now so I cant buy online because they don't deal in that small of an amount any ideas?
the spot price of 11.30 is
the spot price of 11.30 is null and void! the true price of silver is 20.00 or more! THERE IS A SHORTAGE OF SILVER.. www.investmentrarities.com download butlers 61 page free ebook ALL is explained! you are not getting ripped off you had better what you can get under 20.00 here soon you will be lucky to find it under 50.00!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
-Mark Twain
-Mark Twain also said, " I hate to make predictions, especially on the future.".
bump
good comments
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Buy it and bury it.
Don't let the government confiscate it.
New Hampshire and Ecuador
look at the depression in
look at the depression in the 1930's..... you could not buy gold.. FDR the traitorous commie bastard confiscated it! so you can not look at the price of gold BUT look at what happened to the price of GOLD STOCKS during that time! Homestack mini9ng went from 2.00 a share or so to 600.00!that should give you an idea! don't beleive the BS about the price of gold falling during deflation! also were not heading into deflation right away.. we will have an infaltionary depression... todays congress vote on the bailout all but sealed the dollars fate!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
Gold is Money
Gold is Money plain and simple. At least it has served as such for 5000 years. You do not invest in gold. Gold is a store of wealth. Back in the day, when people said I'm holding cash or going liquid, it meant they just held gold.
The gold/goods ratio has stayed relatively constant for centuries. That means the amount of gold it took to purchase a basket of apples in 2000 BC is the same about of gold it takes to purchase the same apples today.
Forget about inflation or deflation. Federal Reserve Notes (aka USD) are an investment. They are IOUs and an investment in Fed. If the Fed prints more of them, then they will each be worth less. If the Fed starts burning notes, then they each gain more value.
they cant burn it!
our money is literally toxic.
Does my burka make my butt look fatwa?
Thanks
I appreciate the insight
Here is my opinion.
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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I need a certain amount of U.S. dollars each month to live a normal life. I currently meet this requirement by my income. But, in a depression, I would probably lose my job/income. Therefore, I first have to make a very conservative estimate of the time that is likely to take for me to find a new job. And, I feel that I must have enough U.S. dollars to survive this length of time. I set saving that much amount of U.S. dollars as my first priority.
My second priority is to protect this amount of U.S. dollars. This involves having cash in hand, finding safer banks and buying and revolving 3 months T-bills.
My third priority should be to protect amount of wealth beyond my first and the second priorities. That's where I should consider gold, in my opinion.
government of the people, by the people, for the people
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greed.. with all this
greed.. with all this liquidity being made in the system right now and a half point rate coming soon how can you keep your dollars when you know they are going to lose purchasing power.. your better to go with silver then as you need FRN's to pay bills go ahead and trade for the greenbacks! anyone who thinks the dollar is going to keep gaining strength is nuts!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
Hey McCain-----┌П┐(◣_◢)┌П┐
SHOW ME THE MONEY!
"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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Personally, I haven't seen any increase in liquidity. In fact, I'm seeing decrease in liquidity.
In my opinion, the liquidity increase numbers that you read about are not enough to make up the declining credit creation by the private sector.
government of the people, by the people, for the people
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