Posted on 05/20/2011 10:34:24 AM PDT by republicanbred
PMs are better than a hedge, though they are certainly that.
Their buying power against any given asset class (real estate, stocks etc) rises and falls in well defined cycles.
For instance: in the year 2000, it took 45 oz of Gold to buy the DOW. Right now it takes only 8.4 oz. That’s a rise in real buying power, not merely in price.
We can expect the buying power of Gold to rise to at least 1 oz of Gold = the DOW, and to briefly spike at about twice that (1/2 oz to the DOW)
As inflation kicks in the DOW and Gold both go up in terms of fiat currency. But if you look at the DOW/Gold ratio there is a pattern you can see from across the room.
Sorry, I don’t have that chart to hand. But suffice to say: Gold will stop increasing in buying power against the DOW or against real estate when Gold (briefly) touches about 1/2 oz to the DOW. Then would be a good time to divest your PM holdings into other hard assets.
It is fair to say (as you do) that PMs are NOT an investment. They are MONEY. The world is about to wake up and realize the crucial difference between currency and money - which is that money acts as a store of value, whereas currency is merely an IOU. This means that PMs are going to shoot up in buying power - and you are going to become very rich :0)
No stamps.
My friends wonderful collection was sold by weight!
Use the other half of the money to buy her a boob job.
Why, you ask? Perhaps she’ll be able to land a wealthier husband that way and HE’LL be her hedge against economic collapse.
That is an excellent list, kudos!
But don’t forget this is for RepublicanBred’s daughter. I would bet an ounce of real money that - like many FReepers - RepublicanBred already has all the usual ‘domestic arrangements’ in hand.
On a side note: silver is the best water purifier on earth. Leave a one oz silver coin in tainted water overnight, and any bacteria/pseudomona will die. Pioneers in the Midwest used this trick to deal with bad water.
Has she had her wisdom teeth pulled yet?
I know that sounds odd, but, to me, at the $5000 level it makes more sense than gold or any other kind of investment. I am assuming that she is covered by insurance now and would only need to pay a copay. If not, it probably makes sense to wait until she is covered.
Okay, I’m not really suggesting having her wisdom teeth pulled. I’m suggesting to think about it. Just like thinking about other things that she will spend money on no matter what happens, that can be stored for a long time, and are not overly difficult to protect.
For example, if you are convinced that inflation is going to be pretty bad, but not to the point of societal collapse, consider buying a couple years worth of toothpaste using today’s dollars.
I would also think about transportation, if she doesn’t already have something reliable and cheap to drive. A bicycle might be a good backup plan as well. What other things will she need to be able to “get to work” (maybe she doesn’t need transportation, but does need certain tools to provide for herself)?
That’s too bad!
Hmmm ... how do I say this?
One stamp alone that is valuable, yes ONE could sell for more than you could imagine ... it is very dependent on the individual stamp ... purshasing by the weight tells me they weren’t valuable.
Ah, but they are NOT intangible ... it's down to a science.
“The markup from wholesale to retail is huge, meaning if you try to sell, no jewler will give you anything close to what you paid, so you will have to find a private buyer, and the price will go down in hard times.”
You need to have it certified. A knowledgeable jeweler DOES pay up. In “hard times” there is ALWAYS a buyer that has money and WILL pay up. THAT is when they BUY UP. Not all are hurting and when they see something they like - they KNOW when to buy it and HOW much they will spend for it.
“Finally, DuBeers and other producers have huge reserves and could flood the market at any time.”
They are NOT going to do that and they NEVER have done that. They will not cut their own throats like that. They control the supply to keep the value UP.
“The only reason that the price fo diamonds is high is that litterally tons of them are held back.”
Yes, they hold back. Less out there brings higher prices and good diamonds command even more. This is timeless truth with the diamond industry.
“Precious metals are not manipulated in that way, and the markup from wholesale to retail is a few percent.”
It is less but who would want silver over a diamond that is spectacular. There is NOT as much demand for silver and the price of silver reflects that fact.
Those so-called “picture water filters” will not filter out 2 micron bio-organisms. (Which is most of them)
Believing that this will work is foolish as well as ignorantly dangerous. I do like the “Silver in water” trick though. But the “Pioneers” in my family boiled their water and then strained it.
As far as substituting alcohol from a still, which is about 20% water, good luck burning that in your vehicle when fuel becomes scarce. Especially since about 99.9% of all vehicles on the road cannot run straight ethyl alcohol, especially when it is raw distilled and contains so much water. But nice try anyway.
And do you have any idea how difficult and how much work that would be to create sour mash, ferment it and distill it? (It yields barely 5% alcohol by volume.)
But Kudos anyway, it was worth a good laugh.
No, no!!! Gems are for pleasure and to wear, they're not investment vehicles. How do I know? I'm a gem merchant.
Yes, gems fluctuate in price and people "in the know" can make money on them. But they're not fungible market commodities with established trading venues. Unless you're an expert in the gem business with a lot of knowledge and can buy at source levels, you'll have no idea what you're buying or of how to sell when the time comes. There's a good chance you'll be buying at retail and trying to sell at wholesale.
Third party laboratory reports on diamonds are ultimately subjective and are often faked. While most dealers in my business are honest there many gem investment scams that take advantage of consumer ignorance. They usually work out of phone banks in boiler rooms from across international borders.
Think of precious metal "investment" as a hedge against dollar inflation. It preserves the dollar's buying power while the Fed dilutes it by creating more and more dollars out of thin air. Inflation's a time honored method used by governments to devalue people's savings and pay off debts with printing press money. But metals markets can be as unpredictable as rattlesnakes on crack. Big players can move markets overnight and little guys can get badly hurt. At least that's my experience.
At 18 w/ $5,000, seems like investment in learning a trade skill would pay a lifetime of dividends.
My daughter is going to school for Biology, but on the side got her Cosmetology license. She cuts, styles and colors hair on the side for barter and cash. She spent a Saturday recently doing hair for a wedding party and pocketed $1,500 cash.
Hugin is correct. To add to his list, the quality of stones available is terrible, especially diamonds, unless you are going to spend upwards of $50k for a small, but perfect stone. Prices go up from there. Colored stones such as sapphire and ruby are almost always treated at the mine head. Emeralds are delicate and the best color is in old stones from Brazil, not the dirty green ones available from Columbia. We often looked for emeralds for our clients at estate sales and then had them recut, if they were terribly worn. It is difficult to distinguish wild from created stones and the created stones are gorgeous and very cheap. We still have some nice gem-quality stones and until the economy recovers, we have no idea how to sell them other than to set them in an elegant setting designed specifically for a particular person.
When we were in the business, we had one dealer we trusted. We knew him from the days when he would spend literally months in Chiang Mai, waiting for decent stones to be available. Then, he would make the rounds of trusted jewelers, looking for all the world like a dirty hippie with a worn backpack. Eventually, he worked out of a relatively difficult-to-find residential building with a lot of security, most of it invisible. He would always take us step-by-step through why we should or should not purchase a specific stone. He was allowed to receive packets of diamonds on sight from primary dealers and would send us a selection when we had an order for them. I always trusted that whatever he sent was exactly as advertised. I would then go shop pricey retail shops and be amazed at what they could ask for inferior stones from unsuspecting retail customers.
Most retail gem dealers are not going to treat a retail customer like a wholesale one.
Keep the $5k invested and watch the markets. Let it appreciate while looking around for something solid. No way the government is going to let the market crash or rates rise until 2013.
bump to check some charts when I get home...
I think you meant to reply to someone else’s post. I liked the useful reminders he gave about binoculars and bolt cutters etc - I didn’t particularly notice the still and filter advice. Perhaps you should re-address your post to him.
The use-of-silver-to-purify-water was my post though. In a true Mad Max world (which is not where we are going, but it does no harm to prepare) everyone should own a silver coin.
Agreed that silver is good against biologicals, but the Mexicans had an old trick that took out the biologicals, particulates, most toxic metals, corrected pH and neutralized arsenic.
They hollowed out a block of limestone, then tapered the other side, then fill the well with water and wait. It wasn’t fast, but it was constant.
http://water.usgs.gov/nawqa/trace/pubs/geo_v46n11/fig2.jpeg
70% of all dollars are held outside of the US.
If Bambi tried to ‘nationalize’ Gold holdings, the dollar would devalue by 80% that same week. This is because foreign dollar holders would immediately run from the dollar.
Also: he would only be able to seize the gold of those who held it in safety deposits. Everyone else could wait - claiming they’d ‘lost the gold in a poker game’ or ‘given it away as a wedding present’ - until Palin got in.
And if push came to shove and corrupt LEOs turned up on your doorstep to seize your gold: you would defend your gold as if your families’ life and freedom depended on it. Because it would.
Basically Obama’s putative seizure of Gold would end very badly.
That’s useful to know, thanks!
This is good advice - a slow averaging in of price (buying when you have spare cash) works well with silver.
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