Posted on 07/27/2015 4:19:44 AM PDT by expat_panama
A little less than four years ago, the world looked like it was about to end and gold hit an all-time high of $1,895 an ounce.
The United States had manufactured a debt crisis, and Europe hadn't been able to manufacture a solution to its actual debt crisis, so panicky investors sought safety...
[snip]
That didn't mean, though, that gold wasn't a good short-term investment. It was. Just not for the reason goldbugs thought. Now, the problem with gold is it doesn't pay any interest or dividends, but it does cost money to store. So you have to pay up in the hope that it will pay off by going up in price. That usually makes it a pretty lousy investment. That calculus changes, though, when you're being paid to borrow—that is, when you're paying a negative real interest rate. But when does that happen? Well, when inflation is high but interest rates aren't quite as high, like in the 1970s, or when inflation is low but interest rates are lower still, like today. And that, as Paul Krugman and Larry Summers argued, is why gold prices were going up so much even though inflation wasn't.
It almost makes you feel bad for the goldbugs, until you remember that some substantial number of them are just trying to scare seniors out of their money. But the ones who aren't really thought the 1970s showed that gold went up when inflation did, so the fact that gold was going up now meant inflation couldn't be far behind.
[snip]
That sound you hear is goldbugs insisting that this is just a flesh wound.
[snip]
But don't feel too bad for the goldbugs. The best thing about predicting the apocalypse is you get to try again and again and again.
(Excerpt) Read more at washingtonpost.com ...
And werewolves, don’t forget the ‘wolves!
I haven't seen this mentioned, but when junk silver is touted, it is always via face value as compared to actual weight in 90% silver. I have run across dimes and quarters that were worn so thin that they were worth much less in value.
Mebbe there aren't as many of them, but I'd hate to buy a sealed $100 bag for $1,500 and risk finding that many of 'em were so worn down that they were worth a couple of hundred bucks less.
Yes, but then 20 silver $1 would do the same. Today...not so much
Right after the Nixon administration allowed U.S. gold ownership, there were discussions all over the map about gold's usefulness in modern day fiat economies. The best comment was that gold was "stored sweat", while the worst was Paul Samuelson (Nobel Memorial Prize winner in Economic Sciences) stating that gold only had value because you could trade it for U.S. dollars. Others predicted that gold would go "as high as $350 an ounce".
I fell into that last category, buying in at $40 an ounce and bailing at $350 - there was NO WAY it would go any higher. Got back in when it hit $450 and rode it to $800 and bailed out again, saying the same thing. Luckily, that one worked out.
I've stayed out of it since, but wished I had a time machine set to 2005. Ah well. :-)
Inflation.
I traded my big bag of Peanut M&Ms for TP.
I could be wrong but for example today AMPEX is offering a $500 face value bag for $7,035.60 and boasting that is as little as $4.99 over spot... that is a 36% mark-up.
BTW, there is 357.5 oz of silver in the bag and that makes it $19.68 per oz today...
Good luck finding a $500 face value bag of 90% silver coins by just going to the bank and asking for it and getting it for $500.00... won’t happen without buying a lot of coins.
In my experience in mining rolls of coins, that died out YEARS ago. I remember when the silver coins started to be replaced with the slugs we have today. When I read that I started hoarding silver coins, especially rolls of quarters. We were just starting out in life then and had to spend most of them so wife and I just kept the earlier dates - 1964s could be had by the barrel and were spent with no remorse.
About early '65, I held one up and told my wife "Some day even these are going to be scarce - "some day" being 10 years in the future.
Gresham's Law struck with a vengeance and by late '65 we were wetting our pants if we found a '64. The last big hit I made was in '88 when I stumbled across a couple of rolls of Walkers and Franklins. We always asked for rolls that didn't come from the Feds as we knew they would be slugs.
[sidebar] A few years later I needed some bucks and decided to put up $1,000 worth as security for a bank loan. The officer said they would lend me $900. ??? I said it was lunacy to loan only $900 on cash. For a change, he was a pretty good guy and told me why.
In 1965, when the Treasury discovered bags of silver dollars in their vault, they redeemed the silver certificates with them. People began turning them in for the bags, going to the banks, getting a loan of $1,000, stripping out the certs, and repeating the process. The govt didn't see that as "fair" and pressured the banks into the 90% rule.
Not much time after '65, they ran out of the dollars and redeemed with little bags of silver granules.
Yes it is....Gold is way down as a commodity trade due to currency issues and news that China had not horded as much gold as thought. So supply is a factor as well with all the usual headwinds in your face these days. Oil is in the same boat as is copper, etc.. Like anything else in the markets, what goes down may continue to go down or go up depending..
Well, gold is not very liquid as a currency, but it can be bartered for something that is....nor is silver for that matter.
If SHTF day comes, the currency will not be dollars, it will be things that you would never expect..
Exactly, gold and silver cannot be created so they become a storage of labor.
You say inflation, charts say not necessarily.
It seems sensible and about time too. “Two bits” died as an expression a few decades ago, and “pieces of eight” has been gone for generations except in the mouths of fictional pirates and parrots.
“Ammo in standard calibers will be traded like money if there’s a currency collapse.”
I wouldn’t want to trade ammo to anyone - they could use it to rob me later.
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