Gold has intrinsic value, paper currency does not.
Gold cannot be inflated to worthlessness, paper currency can be.
Gold cannot be declared worthless or "reverse split" by government fiat, paper currency can be.
Gold maintains its purchasing power over centuries, paper currency always goes to zero purchasing power.
Gold is real money, paper currency is currency and there is a difference.
I don't look at physical gold or silver as an investment. Holding physical gold and silver is an insurance policy.
That is an interesting way to look at it. I have been a long time holder of silver coins and I do not plan on selling them anytime soon.
And our Constitution mandates that money is to be in gold and silver. Currency is paper and legally the paper has to be backed in gold. Roosevelt illegally took us off the gold standard and we have been having trouble ever since.
I tend to look at gold as insurance and silver as insurance/investment. I’m a rank amateur on this stuff, but my logical, reasoning brain tells me that if silver is selling for less than what it costs to produce it and that it is being used heavily in production processes...at some point the value has got to go up.
But at the end of the day, the “insurance” aspect makes it a no lose proposition.
Agreed. And I hope it stays a 'poor' investment - because otherwise it means that the other investments have burned down and it is time to break out the insurance policy. Insurance is good to have - but you really hate to have to use it.
Why? It's a shiny metal. It's got no more intrinsic value than does green inked paper. You can't eat it. It's probably got less industrial uses than paper.
"Gold cannot be inflated to worthlessness, paper currency can be.
During the California gold rush, Gold have serious inflation problems. But for the most part, you are right, short of finding a massive gold deposit, gold is largely immune to inflation. Which means using it as a basis for currency almost guaranteeds deflation, and the deflationary depressions that go with it. When we were on the gold standard we had severe business crippling depressions every 20 years. Thank goodness for fiat currency.
The inflation on our fiat currency has been well managed in the past and averaged only about 2% a year. Of course if you look at a 100 year chart that looks terrible. But it really should be scary only to idiots hoping to hoard cash for 100 years in their mattress and not even draw interest.
Gold cannot be declared worthless or "reverse split" by government fiat, paper currency can be.
Sure it can. Our own government even outlawed gold at one point and consficated it. Every time the government had a major war they came off the gold standard. So a gold standard will always exist only at the whim of Congress.
"Gold maintans its purchasing power over centuries, paper currency always goes to zero purchasing power. Gold is real money, paper currency is currency and there is a difference.
Money is whatever we say it is. Whatever facilitates the trade. There is no difference in gold, paper, or electronic blips.
Gold has intrinsic value, paper currency does not.
Gold has some intrinsic value, but not much. You can make some electronics with it better than with other materials. Pretty much every other use of gold is driven entirely by supply and demand. People want gold jewelry instead of aluminum because of gold's extrinsic value (i.e., people want gold jewelry more than they want aluminum jewelry because they just do).
Gold cannot be inflated to worthlessness, paper currency can be.
Gold can be inflated to worthlessness if any of the gold producing countries decide to dump a ton of gold on the market all at once.
Gold cannot be declared worthless or "reverse split" by government fiat, paper currency can be.
Gold cannot be declared worthless by government fiat, but it can be made almost worthless if a country has a ton of gold and dumps it on the market. Also, gold can be made almost worthless for most people in the U.S. by government fiat if the government makes it illegal to own, buy or sell it (which it has done in the past).
Gold maintains its purchasing power over centuries, paper currency always goes to zero purchasing power.
Gold has maintained most of its purchasing power, but the price of gold has fluctuated a hell of a lot over the past centuries.
Gold is real money, paper currency is currency and there is a difference.
There is a difference, but again not that much. Gold has value because people want it. The price is entirely a function of current supply and demand. Massively increase the supply or prohibit ownership and cut demand and most of its value will be gone.
I don't look at physical gold or silver as an investment. Holding physical gold and silver is an insurance policy.
I agree with you 100% on this. I think everyone should own some gold, along with some silver and other commodities, real estate, mineral interests, stocks, bonds and cash. The key is diversification.
If you want to invest, put your money into things that earn more money - company stocks, productive land, mineral interests, etc.
If you want to protect yourself as much as possible from the inevitable economic downturns, depressions and/or financial armageddon, then also put some of your money in gold, silver and several other commodities.
If you invest in commodities hoping to make money by correctly betting whether they will rise or fall in value, then you would do better going to Las Vegas and betting on red or black on the roulette wheel. At least in Vegas you can also get drunk and take in a show.
I buy both every so often.......if I can’t sell this in 20yrs to finance something or other, I’ll just leave it to my kid and let her sell it.
I started buying it as soon as BO was elected to protect against him, now I do because I like some of the coins and turns out some hold good value.
if you were stranded on a deserted island never to be rescued which would you rather have a million dollars in gold or a million dollars in paper currency?
And you can make pretty jewelry with it. My daughter hand-crafts jewelry. The other day she showed me a small handful of gold and silver wire, cost her hundreds of dollars. She makes side money on rings, earrings, necklaces etc. She also has made origami foldings with paper money but there's no profit in that! She hammers away on metals at night and enjoys the profits. If you have gold, people will always want to wear it.
Bingo!
All well said FPC. Regarding #7. I don’t either. My PM’s held, (physically by myself), are for the sole purpose of converting some, not all, of it into the ‘next’, (whatever that next might be), currency to be established following the crash of the dollar. I pray I will never need to do that but according to a lot of the financial gurus, the collapse of the dollar is not to far off. If my PM’s are not ever needed for a conversion scenario.....well having a good amount stashed is still not a bad thing!
Let's say that the economy really did collapse and paper money became worthless overnight.
Do these people really think that they can grab a gold bar out of their safe, head on over to the supermarket, load their carriage full of food and then slam a gold bar on the counter to pay for it?
How would they get their change?
“Holding physical gold and silver is an insurance policy.”
It’s even better when you buy insurance in 1999. (Yes - I was a Y2Ker. My generator still runs too. When I need it.)