[HN Gopher] Gold price rises above $2k for first time
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Gold price rises above $2k for first time
Author : MindGods
Score : 90 points
Date : 2020-08-05 10:28 UTC (12 hours ago)
(HTM) web link (www.bbc.com)
(TXT) w3m dump (www.bbc.com)
| namelosw wrote:
| It's people vote "I agree that things are really bad now and
| probably stay the same in the near future" by their own actions.
| [deleted]
| grizzles wrote:
| Gold: If you don't have the physical gold in your IMMEDIATE
| possession, you don't own gold.
| stingraycharles wrote:
| I feel like I'm missing some underlying point here, since
| you're assuming there is a financial difference between buying,
| say, 100 gram of gold on the stock market vs having it stored
| at home.
| grizzles wrote:
| The history of paper and leather money is that it was
| originally considered receipts for the storage of precious
| metals like gold. In fact this was the case in the US until
| the 1970s. I'm not a gold bug suggesting a return to the gold
| standard, just pointing out that the concept of money, value,
| storage and ownership can shift and be redefined over time.
| mattmanser wrote:
| He's implying if there were some serious financial disaster,
| digital records saying you own gold are going to mean little.
| neilv wrote:
| If all the precious metals chatter I heard when I was into
| collecting, e.g., Peace Dollars is true, you can't actually
| take delivery of Comex gold you "own", even in non-panic
| times, and also that there was many times more "ownership"
| than there was actual corresponding gold. And then the
| conspiracy theories go up from there. :)
|
| Not knowing how much this is true, my impression, as a
| layperson, is that the claims would mean investment gold
| was more of a financial mechanism that only works because
| everyone is playing along that it has certain value
| governed by certain rules. If that's true, I don't know
| when the rules would stop or change. I decided I'd rather
| just plow my savings into total-market index investing of
| US stocks, than blindly guess about how and when gold would
| help.
| orthecreedence wrote:
| If there's a serious financial disaster, cans of beans are
| going to be worth more than physical gold anyway.
| 01100011 wrote:
| If there is a serious societal collapse, gold is going to
| be the last thing on your mind. Bullets, fuel, tools...
| trust relationships with other people... all infinitely
| more valuable than gold in a crisis. People who own
| physical gold are preparing for an extremely unlikely
| event, where society has collapsed in a very specific way.
|
| A HAM radio and the skills to operate it would be worth
| more than its weight in gold in many disaster scenarios.
| danhak wrote:
| Not everybody holds gold as a hedge against complete and
| utter collapse. It can be a sensible hedge against a
| weakening dollar, such as is currently happening.
| 01100011 wrote:
| Right, in which case you do not need to physically
| possess it, which is what we're talking about here.
| hammock wrote:
| >If there is a serious societal collapse, gold is going
| to be the last thing on your mind. Bullets, fuel,
| tools...
|
| The three precious metals for a balanced portfolio. Gold,
| silver and lead
| danhak wrote:
| Which is nonsense. Hyperinflation can occur without the
| financial system crumbling. And in that scenario you'll be
| glad you had a position in gold, even just digitally.
| grizzles wrote:
| Your broker could change their T&Cs to enact a 1%
| conversion to USD fee. If you own 100 gold bricks, that's
| the same as them walking in and confiscating 1 of them.
| Presumably that's something that wouldn't happen if you
| owned the actual physical commodity.
| danhak wrote:
| Storage, security / insurance and exchange of physical
| gold is not free either.
| pcdoodle wrote:
| People lose confidence due to the shutdowns.
| lasermike026 wrote:
| No, people have lost confidence because the US has not gotten
| Covid-19 under control.
| s1t5 wrote:
| Not really. If that was true, stocks would be tanking but
| they're also at a high. There's just a lot money around and low
| interest rates so all assets increase in price. I just wonder
| how long that can last for and how it will end.
| kyboren wrote:
| Not surprising. The money supply has increased sharply:
| https://fred.stlouisfed.org/series/M2
| baryphonic wrote:
| And yet velocity of M2 has decreased sharply.[1] Therefore,
| hyperinflation seems unlikely unless the real economy
| unexpectedly recovers rapidly. However, since money is not
| neutral in the short run[2], we could actually get additional
| output from the increased money supply. That said, I'm
| personally skeptical of that claim in this crisis. Additional
| M2 can have zero effect on output when the law itself has
| forbidden workers from showing up and producing goods, and in
| some cases has discouraged them from trying to do so.
|
| [1] https://fred.stlouisfed.org/series/M2V
|
| [2] https://en.wikipedia.org/wiki/Monetary-
| disequilibrium_theory
| kyboren wrote:
| Indeed, velocity has decreased sharply. I also do not think
| hyperinflation is likely, even if the economy recovers
| quickly. But I do expect to see asset price inflation.
| ogogmad wrote:
| Cryptocurrencies are rallying as well. Some of them tap into the
| same economic logic as gold.
| NicoJuicy wrote:
| I thought so as well, but I'm starting to believe it's more
| looks civilians running away from faultering currency (
| Venezuela, turkey, Russia, HK ).
|
| Which has very similar market conditions.
| ngcc_hk wrote:
| Someone said what is to be watched is gold to silver price ratio.
| Not sure.
| sawaruna wrote:
| I was thinking of buying some gold mining company or gold ETF
| shares a while ago. Still time for the ETF buy I suppose, but
| maybe wait for a dip before buying the former.
| rapsey wrote:
| > but maybe wait for a dip before buying the former.
|
| No real dips for the last 60 days. There might be one that goes
| below current level in the near future but there also might not
| be.
| perfunctory wrote:
| > There might be one that goes below current level in the
| near future but there also might not be.
|
| Insightful.
| Humphrey wrote:
| Or just buy the real thing? The problem is since we can't know
| the future, it's hard to tell if it's a dip or not. I've bought
| a small amount in the past year by deciding on a price that
| I'll buy at if it drops below that. It worked out for me, buy
| it could have equally not dropped or plunged.
| #prettyMuchGambling
| johnyzee wrote:
| The real thing is the best thing, but typically you lose
| about 10% in transaction costs (dealers have around 5% spread
| on both the buy and the sell). You can decrease that somewhat
| with larger transactions, but you'll take a pretty big hit
| upfront.
| Humphrey wrote:
| Absolutely! Although I've been getting closer to 2-3% for
| gold. Silver though has a much larger spread, the price has
| to increase significantly to not loose money.
| Kenji wrote:
| Don't buy when it's high! You're way too late now.
| [deleted]
| DrAwdeOccarim wrote:
| If Milton Friedman is right, and inflation is always and
| everywhere a monetary phenomenon, it will be interesting to see
| how this plays out. There is a huge fight right now between
| deflationary forces caused by an unprecedented collapse in both
| supply and demand, and inflationary forces from both fiscal and
| monetary stimuli. The risk I've read over and over is that the
| stimulus overshoots the deflation risk and we get higher
| inflation--I think that's what gold is starting to respond to.
| But the most interesting thing to me is that gold does best when
| deflation takes hold because it forces a massive inflationary
| push from the government to reflate the currency (e.g., Executive
| Order 6102 and the Gold Reserve Act of 1934 changing the price of
| gold from $20.67 to $35 overnight). Talk about an inflationary
| shock! How would they do it now a days? Direct helicopter money
| into everyone's bank account...oh, wait, we are doing that...But
| the scary part is that demand is crimped by fear of going out and
| spending, so we see Amazon beat EPS by 10x because everyone
| simply spends online instead. What a time to be alive! But joking
| aside, how do you inflate if people don't want to spend? I guess
| if/when a vaccine comes, and everyone rushes back out is when we
| could see inflation jump.
| devalgo wrote:
| >Direct helicopter money into everyone's bank account...oh,
| wait, we are doing that
|
| Except the amount is peanuts, peer countries are doing 2k/mo
| without issue but its somehow a struggle or hyperinflationary
| for the US to do 2400 over 6 months?
| Humphrey wrote:
| I bought some about 10 months ago as a practice investment, as I
| figured it was easier to understand than the share market and it
| had given an average 10%/year return over the past 10 years (well
| at least in Australian dollars). Kinda wish I bought more though,
| but who would have predicted a worldwide shutdown?
|
| That said, the gold price has barely moved compared to how much
| silver has skyrocketed the past few weeks.
|
| The question I'm pondering is, is the value of gold/silver
| skyrocketing, or is the real tangible value of the USD crashing?
| I guess only time will tell [?]
| topspin wrote:
| > The question I'm pondering is, is the value of gold/silver
| skyrocketing, or is the real tangible value of the USD
| crashing?
|
| A strong decline in the value of USD would be reflected in the
| prices of all commodities and their is no general commodity
| price inflation at the moment; the gold and silver price
| increases are an outlier. The price of gold and silver is
| increasing because the demand for gold and silver is
| increasing.
| Humphrey wrote:
| That's a good observation! While not a commodity, I'd just
| add that where I live (Australia) the price of housing has
| also been sky rocketing the past few years.
| lasermike026 wrote:
| I've always thought of the gold prices as a fear index.
| wdb wrote:
| I have some gold and the storage is more expensive than I thought
| :)
| Humphrey wrote:
| Whoops! As long as it's less than the rate of return I guess?
|
| I managed to find a company that offers "pool allocated
| storage" for free, with an option to "cast" it to a shippable
| product for a small fee. Perhaps it's worth you shopping around
| for cheaper storage?
|
| I wonder if that's where the programming term cast comes from.
| wdb wrote:
| Yeah, I will have a look into that. I bought my gold in 2009
| so not much to complain. Luckily, if it's securely stored
| it's hard to get stolen. 100% sure gold is better protected
| than your typical bonds/stock at the high street bank.
| johnyzee wrote:
| What kind of storage? A safe deposit box in a bank runs like
| $20 a month around here.
| wdb wrote:
| I pay around ~0.2% of the worth of gold per year for storage
| and insurance.
| Humphrey wrote:
| could be worth shopping around!
| shanehoban wrote:
| This got me thinking.
|
| If our currencies and financial system were completely based off
| the value of gold and/or other precious metals where the amount
| on the planet is finite, wouldn't this eventually cause the
| opposite of inflation where the prices of goods and services go
| down as less and less gold is available as the population grows?
|
| Wouldn't that also mean that wealth inequality and hoarding of
| gold make things even cheaper as less and less can afford to
| buy/sell at higher prices?
| TheOtherHobbes wrote:
| Arguably this is what caused the Great Depression. A Gold
| Standard artificially constrains the money supply, which leads
| to a drop in economic activity - often after a bubble.
|
| The real problem isn't the amount of money in the system, it's
| the amount of useful work being done, and the way the gains
| from that work are distributed throughout the economy. The
| ideal is a virtuous circle where distributed gains create more
| activity which creates more opportunity and invention which
| creates more gains.
|
| The current system is based on control of the money supply, and
| is the opposite of that. Effectively it's just the Gold
| Standard without the gold. It leads to the same kind of
| hoarding and rent-seeking, both of which are economically
| destructive.
| DrAwdeOccarim wrote:
| Yes, this is part of the reasoning Nixon ditched Bretton Woods
| and unpegged the dollar from gold.
| alexmingoia wrote:
| I think it's worth pointing out that abandoning the gold
| standard had little to do with gold and everything to do with
| the practice of fractional reserve banking. The government
| simply had more foreign dollar debt than they had backed by
| gold, and foreign governments began to demand redemption of
| their dollars for gold. It wouldn't matter what the reserve
| is, fractional reserve banking inevitably results in bank
| runs.
|
| Nixon had to either devalue the dollar or completely default,
| and he chose to default and abandon fractional reserve
| banking altogether (though at the time promised it was only a
| temporary suspension of gold redemptions).
| tomalpha wrote:
| IIRC: Broadly yes. We tried doing this before and called it the
| Gold Standard[0].
|
| [0] See https://en.wikipedia.org/wiki/Gold_standard
| baconandeggs wrote:
| Prices do go down. Smartphones for example, or clothing, tvs,
| music and entertainment via netflix, etc. Even food is now more
| attainable than ever. Technology and efficiencies in production
| naturally generate deflation, but _for some reason_ governments
| insist on enforcing an inflationary policy.
| Qasaur wrote:
| They insist on enforcing inflationary monetary policy because
| it is thinly-veiled regulatory capture. No matter what the
| academics say to try and justify it (it is not justified and
| does not hold up to critical analysis, see the Cantillon
| effect), inflation is phenomenon that redistributes
| purchasing power from the people to those who are relatively
| closer to the central bank and the printing press (they can
| purchase assets and spend money before inflation hits the
| rest of the economy).
| [deleted]
| hydroreadsstuff wrote:
| The rate of new gold being dug up roughly matches global
| population increase. ~2% p.a.
| baconandeggs wrote:
| Gold price soaring represents the failure of the political
| establishment to manage a fiat currency. Populist proclamations
| via money printing, corporate welfare, and the corrupt
| dismantling of the rule of law (basically stealing TikTok for
| example) will only aid in the descent of the current fiat system
| into new lows and hence take gold into all time highs.
| nine_zeros wrote:
| Underrated comment. One of the reasons third world countries
| continue to remain third world is because of gangster
| corruption such as this. It is really sad that America has
| fallen to such levels and is no longer the shining beacon.
| devalgo wrote:
| >basically stealing TikTok for example
|
| 'Stealing' it for 30 Billion? Give me a break... TikTok is not
| the hill to die on...
| fredfoobar wrote:
| Gold is the oldest ponzi scheme that exists out there!
|
| * The practical uses of it are totally diminished because of this
| "novelty premium".
|
| * Can't use it online
|
| * Can't use it offline either (Can I buy a starbucks with it?)
|
| * Securing it and moving it around is risky
|
| I don't get it, who's buying this crap?
| scumcity wrote:
| The US federal government is making poor choices in monetary
| policy - it's "fixing" the covid problem by printing US money,
| which, until now, was the new gold standard. As result, people
| are going back to an old, albeit, archaic gold standard. If the
| US government could have fixed covid with a real solution, we
| would not be observing extremely retarded stuff like people
| investing in gold. Sigh.
| frodo_77 wrote:
| If a financial bubble lasts 5000 years, is it still a bubble?
| gniv wrote:
| I read this recently and found it insightful, especially if you
| believe bitcoin is valuable: https://ofdollarsanddata.com/why-
| is-gold-valuable/
| baron816 wrote:
| The only way for your gold assets to increase in value is to
| convince other people they need to own gold. Usually, this is
| done with fear mongering.
| [deleted]
| dnprock wrote:
| Gold probably started out as a toy. Humans learned to
| manipulate metal with gold around 40k years ago. It sparked
| metallurgy industries (e.g. Bronze Age, Iron Age). They
| advanced human civilizations. Gold use as money probably
| predated any written history. It's likely making a comeback
| after a 30-year recession.
|
| https://bitflate.org/post/2019/11/29/how-gold-became-money.h...
| wqTJ3jmY8br4RWa wrote:
| Paper currency is the oldest Ponzi scheme that exists out
| there. I can wipe my nether regions with it. If there is a
| collective delusion that it has value, I can exchange goods for
| it.
|
| My point being, Gold is a delusion, just like paper.
| fredfoobar wrote:
| That, is something I can agree on. The value we put on things
| like gold comes from our minds, not gold itself.
| baddox wrote:
| True, but there are some things that we observe minds
| tending to value consistently.
| WillPostForFood wrote:
| Nothing to do with ponzi scheme though.
|
| _A Ponzi scheme is a form of fraud that lures investors
| and pays profits to earlier investors with funds from more
| recent investors._
|
| https://en.wikipedia.org/wiki/Ponzi_scheme
| fredfoobar wrote:
| Isn't that exactly how the price is going up though?
| Nasrudith wrote:
| Not when the supply of gold isn't fixed even disregarding
| relative economic values.
|
| A bit pedantic but even if the value of gold rises from
| increased demand the fact one can mine it and get in on
| it means they would have gained from it while being
| newer. Furthermore it technically takes from the older
| holders by reducing the demand slightly.
| adventured wrote:
| The price is going up for two reasons: 1) fear due to the
| virus and its economic consequences 2) the USD is falling
| rapidly.
|
| Gold as a commodity is almost exclusively priced in
| dollars globally. If the dollar plunges, gold will spike
| higher accordingly.
|
| US spending being out of control right now (pointing to
| aggressive dollar debasement as the Fed 'prints' - runs
| QE infinite to monetize the ever expanding debt) and
| concerns about the condition of the US economy near-term
| with the virus, have pummeled the dollar lately.
|
| So the price of gold is up due to the drop in the dollar,
| and there is a considerable fear premium on gold right
| now as well (likely to the tune of several hundred
| dollars). As that fear fades you'll see a drop in gold,
| from whatever new high it puts in, as in 2011-2016. It'll
| set a new higher low due to the dollar losing real value
| it will never recover from the spending spree going on
| (there is probably going to be $5+ trillion in unexpected
| spending that will occur over several years due to the
| virus, which was not baked into the dollar or price of
| gold previously).
| fredfoobar wrote:
| > 1) fear due to the virus and its economic consequences
|
| so, in "lures investors and pays profits to earlier
| investors with funds from more recent investors", the
| mechanism of "luring" is fear.
|
| > 2) the USD is falling rapidly
|
| seems to be a part of 1)
|
| > Gold as a commodity is almost exclusively priced in
| dollars globally. If the dollar plunges, gold will spike
| higher accordingly
|
| Isn't gold priced by a market? if the market has to move,
| the people must be willing to pay more dollars (or to say
| it another way: they have access to cheap dollars). It
| seems like people are exchanging their cheap dollars for
| gold, this is the part that doesn't make sense to me.
| dllu wrote:
| A Yuval Noah Harari quote I quite enjoy:
|
| > Indeed, money is probably the most successful fiction
| ever invented by humans. Not all people believe in God, or
| in human rights, or in the United States of America. But
| everybody believes in money, and everybody believes in the
| dollar bill. Even Osama bin Laden. He hated American
| religion, American politics and American culture -- but he
| was quite fond of American dollars. He had no objection to
| that story.
| dnprock wrote:
| I think Harari is wrong when he suggested gold is a
| collective fiction. The first metal humans worked with
| was gold. This happened 40k years ago. Through gold,
| humans accumulated knowledge and invented metal
| technologies. We then progressed through metal ages,
| e.g., Bronze Age, Iron Age. Gold was an icon of metal
| technologies. It's not just a fiction.
|
| https://bitflate.org/post/2019/11/29/how-gold-became-
| money.h...
| Nasrudith wrote:
| And paper money really exists as a physical thing and
| required technological and societal advancement to exist.
| Currency is an abstracting fiction to make trade easier.
| Confusingly they are separate in the same way money has
| no utility in itself but is portable and may easily be
| exchanged giving it high utility.
| dnprock wrote:
| I think paper money is a novelty. It's a good invention.
| It detaches the concept of money from gold. It makes
| money easily transported. But that can run amok. The Gold
| Standard was in place to protect societies from detaching
| too far from physical reality. "Good" paper money should
| be backed by physical reality. The US has a large gold
| reserve, education, research, military etc. But we're now
| at the verge of running amok with paper money.
| anoraca wrote:
| Gold has been abstracted into a digital form so anyone who
| wants to invest in options and futures can now own digital
| gold, which makes it easier to trade, since no physical
| delivery or storage is required. Greed is extremely powerful.
| As is fear.
|
| https://www.marketwatch.com/investing/fund/gld
| pvfffghhr wrote:
| So the only conceivable reason people invest or create
| financial instruments is greed?
| fredfoobar wrote:
| Who's guaranteeing that this is backed by real gold? how can
| we verify? can I take delivery whenever I want?
| yesplorer wrote:
| Most of the people trading Gold are trading it as a CFD
| asset anyway, so they shouldn't have any expectation of
| having it backed by real gold.
| legulere wrote:
| Pro points of gold:
|
| * It's relatively rare and production is naturally very limited
| (in contrast to e.g. diamonds that can be produced from carbon)
|
| * It has a special tax-free status in some legislations.
|
| * It can hardly be destroyed (you can easily loose your bitcoin
| when your hard disk dies)
|
| * it's beautiful and you can use it for jewelry and art
|
| Seems like a good choice if you see the risk of inflation, or
| of a state taking your money.
| adventured wrote:
| Another important point is that it can be blended.
|
| Also, to add to the jewelry point, humanity has a nearly
| unlimited desire for luxury and will always seek out status,
| which is why so many thousands of years later humanity still
| has such an immense desire for gold jewelry when we very
| obviously don't need it. Status seeking is not going away.
|
| The continued expansion of human population, rising living
| standards and finite quantity of gold, ensures it will grow
| more scarce per capita (driving up its perceived value
| persistently).
|
| At the median our soon to be eight billion people will have a
| higher standard of living than when we had only one billion
| people. There isn't nearly enough gold to match that
| extraordinary change.
| fredfoobar wrote:
| > "Status seeking is not going away"
|
| you are correct, but what is high status now may not be
| high status in the future. For example: it used to be high
| status to have gout, but not so much now.
| maerF0x0 wrote:
| other pros * It's very divisible allowing smaller
| denominations
|
| * It's soft enough to divide
|
| * You can carry a lot of value in a small volume/weight
|
| * It doesn't corrode (you can bury it, burn it) so it can be
| passed along generations
| fredfoobar wrote:
| > * It's very divisible allowing smaller denominations
|
| So, you're telling me that I go up to buy something that is
| worth .25 oz in gold with a 1 oz gold coin, I can break it
| up on the spot and hand it the cashier?
| fredfoobar wrote:
| > It's relatively rare and production is naturally very
| limited (in contrast to e.g. diamonds that can be produced
| from carbon)
|
| What about the gold-rich asteroids we can mine?
|
| > It has a special tax-free status in some legislations.
|
| This is a non-starter for me, someone can lobby the
| government to undo this easily
|
| > It can hardly be destroyed (you can easily loose your
| bitcoin when your hard disk dies)
|
| You can literally lose gold, just like how you can "loose"
| your bitcoin (who stores bitcoin on their hard-drive now
| anyway, it's 2020, there are paper wallets too, in fact, I
| can literally memorize 12 words)
|
| > it's beautiful and you can use it for jewelry and art
|
| Sorry, I don't wear jewelry.
| eMSF wrote:
| >What about the gold-rich asteroids we can mine?
|
| Which asteroid(s) are you speaking of?
| fredfoobar wrote:
| https://www.bloomberg.com/opinion/articles/2019-07-08/ast
| ero...
| SilasX wrote:
| Good points, but you're being a little too hard on the offline
| uses. You can't directly spend it at Starbucks, but wherever
| (or whenever) you are, you can go any pawn shop (and they're
| ubiquitous) and sell the gold for the local currency, and then
| use that.
| fredfoobar wrote:
| Have you actually done this before? did you get a fair price?
|
| If you're thinking about doing this with jewelery: Do you
| know that gold jewelery mixes other metals to make it a bit
| more durable? and you pay fees on making it too
|
| if you're using gold bars: How do you make sure things like
| this don't happen: https://www.bloomberg.com/news/articles/20
| 20-07-15/chinese-j...
| SilasX wrote:
| >Have you actually done this before? did you get a fair
| price?
|
| I got a quote, yes. It was a little below market, but not
| significantly.
| mbesto wrote:
| Gold has little to no utility. There are a few practical uses
| for it, and very limited when compared to other precious metals
| (silver for example).
|
| The price is based purely on speculation that it will go up.
| Which is frankly not much different from Bitcoin in its current
| form.
|
| In order for gold to have more utility it either needs to be
| used as a medium of exchange or other new uses that utilize its
| precious metal properties.
| GlennS wrote:
| I personally avoid gold because I think the price is
| distorted by the nutters.
|
| But I don't really have any evidence to support my position.
| Do the nutters have enough money to move the price?
| fredfoobar wrote:
| With Bitcoin, I can at least use it for transactions online.
| Which is almost 100% of my method of procuring stuff now, I
| also work for a company that facilitates that!
| mbesto wrote:
| I can also use gold to barter in person.
|
| The point is that Bitcoin reach as a medium of exchange is
| limited. I would argue on a global scale, it's as limited
| as gold.
| fredfoobar wrote:
| Yeah, you're not gonna give me a fake gold coin in
| exchange for whatever you wanted from me. I'll trust you
| to be honest and give me 100% pure gold.
| ndesaulniers wrote:
| Yeah, too illiquid for my tastes. That's what ETFs are for! GLD
| overbought?
| Humphrey wrote:
| In the modern world people don't buy gold to make transactions
| but to store wealth. No wealthy person would store their
| fortune in fiat (paper) currencies such as dollars, but in
| things with real value such as shares in a companies, property,
| or other things of value such as gold or silver. At any time
| these floating currencies can change their value (think
| hyperinflation, or just exchange rates).
|
| Compared to other "real" things, gold can be liquidated into
| dollars VERY quickly if you need to make a transaction, and
| since it's a real thing, it cant disappear.
|
| Also, often gold is stored by the company you bought it from on
| your behalf, so you can sell it back instantly online. So no
| need to have to have a home safe.
|
| Also, at an average return of 10%/year over the past 10 years
| (at least in australian dollars) it's has been out performing
| many other investment options.
| piinbinary wrote:
| It has been consistently regarded as valuable for thousands of
| years, and there is very little chance of the value dropping to
| near zero.
|
| Edit: In response to child comment, I mean in the sense of the
| Lindy effect, not in the sense that age implies realness
| fredfoobar wrote:
| Next, you're gonna tell me that "god" is real, because
| religions are old or something.
|
| There are untouched tribes out there in the Amazon who've
| been around for 1000s of years, it doesn't make their way of
| life better.
| gnusty_gnurc wrote:
| as though everyone hopelessly consumed by anxiety,
| existential meaninglessness and insecurity nowadays isn't
| argument enough in favor of the religions you're
| discounting...old things aren't inherently simple-minded or
| useless
| fredfoobar wrote:
| Whatever floats your psychology man, do what you have to.
| Loughla wrote:
| I find this argument interesting. I want to focus on the
| anxiety portion.
|
| Is there proof that people are more anxious today than in
| the past? Is there proof that religious morals and
| expectations didn't have a negative impact on folks'
| anxiety levels in the past? What about religion means
| individuals would be less anxious, and how do you prove
| that?
| gnusty_gnurc wrote:
| It's not that we believe _nothing_ now; it seems clear
| that nowadays many people will believe _anything_. It 's
| unwise to assume that forgoing the complex and slowly
| evolved structures of the past is going to liberate
| people...many just replace it with nonsense.
|
| My original point was that discounting past things like
| "religion" in black/white terms ignores that these things
| were the basis of advanced civilizations that led us to
| today and managed to withstand circumstances much worse
| than what we're facing today. Tons of horrible issues,
| but focusing on the bad parts is too easy and narrow-
| minded.
| ozankabak wrote:
| No, but s/he might tell you that it is safe to count on God
| being an important concept to many people for the
| foreseeable future. In the same vein, gold will likely be
| perceived as a good store of value for the foreseeable
| future, which is what matters in this context.
| fredfoobar wrote:
| > God being an important concept to many people for the
| foreseeable future
|
| Just like those tribes in the Amazon, they will exist,
| but most of humanity will fork off that, it's already
| happening. Like someone else in this thread said: "You
| seem to be under the impression that only 'better' things
| exist. That is wrong." -> I agree with this 100%, old
| things will continue to exist, but they will be left
| behind.
| jmcqk6 wrote:
| You seem to be under the impression that only 'better'
| things exist. That is wrong.
|
| The fact of the matter is that for literally millenia,
| humans have considered gold to be valuable. That is
| unlikely to change any time soon, though obviously the
| extent that we value it is always in flux.
|
| It doesn't have anything to do with 'better'. It's a
| description of reality.
| fredfoobar wrote:
| ok, I don't see people lugging around a bunch of gold
| coins in their purses in the future. It doesn't make
| sense.
|
| edit: I actually agree 100% on "You seem to be under the
| impression that only 'better' things exist. That is
| wrong."
|
| Worse things will also exist, but won't be adopted by the
| majority.
| droffel wrote:
| In terms of weight, gold is a bit more valuable than
| twenty dollar bills, pound for pound. And its density is
| much higher. In no sense would the average person be
| 'lugging around' a bunch of gold coins for day to day
| activities.
|
| There are many (better) arguments against the readoption
| of a gold standard. This one doesn't hold its weight
| (heh).
| ffggvv wrote:
| for most of history you could use it offline, and it was
| actually the primary currency. until governments starting
| banning domestic redemption in gold. it's only the last 100
| years or so that we got off the gold standard. and it wasn't
| until the 70s that the US got off the gold exchange standard
| internationally.
| obayesshelton wrote:
| Might be a good time to sell then.
|
| "While sitting in the shoeshine chair, Kennedy Sr. was alarmed to
| have the shoeshine boy gift him with several tips on which stocks
| he should own -- yes, a shoeshine boy playing the stock market.
|
| This unsolicited advice resulted in a life-changing moment for
| Kennedy Sr. who promptly went back to his office and started
| unloading his stock portfolio.
|
| In fact, he didn't just get out of the market, he aggressively
| shorted it -- and got filthy rich because of it during the epic
| crash that soon followed.
|
| They don't ring bells at the top, but apparently when shoeshine
| boys start giving stock advice it is time to head for the exits."
|
| https://www.businessinsider.com/how-to-spot-stock-market-bub...
| [deleted]
| ALittleLight wrote:
| Isn't it way more likely that the shoeshine boy was just
| repeating what previous clients had said rather than playing
| the market himself?
| thanhhaimai wrote:
| And that's exactly the reason: when the information is so
| widely circulated, you no longer have the information
| advantage. The market should have priced those information
| in. At that time, it's best to exit. Otherwise, the investor
| is no longer "investing". It's plain gambling without
| information.
| bmmayer1 wrote:
| By your logic, this is precisely the time to sell non-gold
| equities -- with comments like Portnoy's "put any 3 letters
| together and buy that"[1], not the time to sell gold, which is
| behaving exactly as you would expect it to behave when
| confidence in other asset classes (especially the US dollar) is
| sinking.
|
| Disclosure: I own gold.
|
| [1]https://twitter.com/stoolpresidente/status/12728866210300149
| ...
| czechdeveloper wrote:
| If you would sell every time something reaches all-time high,
| you would really not make any money.
| IgorPartola wrote:
| You by definition would make money. If you sell at max price
| that means you had to have bought it for lower than that.
| Assuming you didn't buy for so close to max such that
| transaction fees are larger than your margin.
| blaser-waffle wrote:
| That would depend on when you bought it.
|
| Picked up 200 shares right before the peak? a modest gain, if
| that. Maybe you miss the worst of the downturn, though.
|
| Bought 200 shares 10 years ago and now it's peaking? Get them
| ducets, son.
| peteretep wrote:
| I have successfully used "has my mother heard of this" as a
| reason to sell a few times, notably Bitcoin and selling out a
| political bet position on Pete Buttigieg -- essentially at the
| point my not-especially-well-informed mother has heard of
| something, I no longer have any kind of information advantage.
| WrtCdEvrydy wrote:
| I worked in a company that has a decent mixture of technical
| and non-technical folks.
|
| I consider it like the DEFCON level.
|
| DEFCON 5 - Technical people who were aware of Bitcoin
| speaking
|
| DEFCON 4 - New technical people who were not aware of Bitcoin
| (we are currently here)
|
| DEFCON 3 - Business people
|
| DEFCON 2 - Non-technical people
|
| DEFCON 1 - Bathroom chats (last time I saw this was around
| the $17,000 mark)
| lebed2045 wrote:
| very interesting mental model. Coincidentally enough, I got
| request from janitor (very nice person btw) to help him to
| buy bitcoin when it cost about $18k. I explained him to do
| not to, but the fact itself was clearly alarming.
| LanceH wrote:
| As a kid, our handyman told us to get out of the market
| in Fall '87. He enjoyed his work and was always driving a
| new corvette.
| [deleted]
| ta1234567890 wrote:
| This anecdote illustrates how the market could be seen as a big
| society-level pump and dump scheme. The guys at the top invest
| early at a low price, then pump the investment downstream as
| much as possible, then dump when things start looking too much
| like a bubble (i.e. "the shoeshine boys start giving stock
| advice"). If enough people at the top dump at the same time,
| the bubble bursts and there's a crisis.
|
| Even if some of the guys at the top couldn't get out in time,
| they are unlikely to get ruined by playing the game. The guys
| at the bottom on the other hand, usually end up literally
| paying the price for their risk-taking.
| misiti3780 wrote:
| I experience a very similar moment in line waiting to go
| through TSA a few years back listening to a group of agents (on
| break, trading w/ Coinbase on their phones) talk about bitcoin
| going to the moon (one of them said 100K/coin) when it was
| already hovering at 17K/coin. I knew how unrealistic bitcoin
| was back then, as it is now, and once I was through security, I
| promptly liquidated my entire coinbase account someplace near
| the peak
| oleganza wrote:
| isn't talking about 100K/coin in 2017-2020 is as unrealistic
| as talking about 10K/coin in 2013-2015?
| jakeva wrote:
| I would say so. Same as talking about 1k/coin in 2011. That
| said, I wish I had unloaded near the last peak. I would
| have been positioned to quadruple my stake near the last
| low.
| ivalm wrote:
| In 2013-2015 sitting on my uni's shuttle I didn't hear
| about Bitcoin, in 2017 I did.
| leetcrew wrote:
| yes, but the point of the anecdote is _who_ is saying it,
| not what is being said.
| gruez wrote:
| Not really. price going up 10x is much easier when it's
| around $10, than when it's $1000. The higher the existing
| price, the more money that's required to pump the price, so
| it only makes sense that 10k->100k is harder than 1k->10k.
| IgorPartola wrote:
| Why? I mean I got $10 in my pocket. You really think
| it'll be worth $100-worth any time this year? Ford is
| currently trading at around $7. Think it can possibly go
| to $70 any time soon?
|
| You have to look at market cap, not individual price. Why
| would all the BTC that's around be suddenly 10x the value
| it was a year ago? What would drive that?
| gruez wrote:
| >You have to look at market cap
|
| I thought that was implied, but yes you're right.
| IgorPartola wrote:
| How is it implied? You basically said going from $1 to
| $10 is easier than from $10 to $100. They are both a 10x
| increase in market cap. Why would one be easier than the
| other, aside from the mild psychological effect on retail
| buyers?
| alasdair_ wrote:
| > Not really. price going up 10x is much easier when it's
| around $10, than when it's $1000
|
| I'm not sure this line of reasoning applies to altcoins
| whose maximum quantity can be set by the creator.
| j_walter wrote:
| The real questions is: Why has gold risen so much and platinum
| (which is much rarer than gold) stayed relatively flat recently
| (down since 2009) and is currently worth less than have as much?
| Platinum was > $2K/oz during the 2008-09 financial crisis...it's
| now under $1K/oz. What makes gold's intrinsic value so much
| higher?
|
| "The price of platinum changes along with its supply and demand;
| during periods of sustained economic stability and growth, the
| price of platinum tends to be as much as twice the price of gold;
| whereas, during periods of economic uncertainty,[7] the price of
| platinum tends to decrease because of reduced demand, falling
| below the price of gold, partly due to increased gold prices."
|
| https://en.wikipedia.org/wiki/Platinum_as_an_investment#:~:t...
| Nasrudith wrote:
| Perhaps platinium prices arr more set by practical uses for
| things like catalytic converters and the demand is down with
| the rest of the economy?
|
| Of course gold's speculation value is essentially memetically
| driven by history and platinium tends to lack that.
| j_walter wrote:
| Platinum prices have declined every year, more or less, for
| the last decade. Car manufacturing world wide has increased
| in that same time frame (even excluding EV that wouldn't need
| platinum).
| DoreenMichele wrote:
| The article seems to suggest it's rising because of the
| lockdown. In other words: we aren't mining it currently, or not
| mining it very much.
|
| My general impression is that gold is going up because of its
| use in electronics. Platinum is also used, but in smaller
| amounts.
|
| _A typical iPhone is estimated to house around 0.034g of gold,
| 0.34g of silver, 0.015g of palladium and less than one-
| thousandth of a gram of platinum._
|
| https://www.bbc.com/future/article/20161017-your-old-phone-i...
| fortran77 wrote:
| I'm not a gold bug, and I certainly won't buy it now at the all-
| time high prices.
|
| That being said:
|
| I have enough Krugerands and similar gold coins in a very secure
| safe (in ground, in concrete) so I could GTFO if I had to and go
| somewhere else. All 4 of my grandparents had to pack up and leave
| suddenly and having something small you can pawn/hock/sell is
| handy. (Two fled Lithuania, one fled Belarus, and one fled Gaza
| City in 1929 when all the Jews were suddenly expelled. The
| families had all been living comfortably in the respective
| location for hundreds of years--or thousands in the case of
| Gaza.)
| miohtama wrote:
| The inflation adjusted price of gold is still below 2008 and
| 1980 peaks.
| lkrubner wrote:
| I forget where he said it, but at some point Paul Krugman makes
| the point that the price of gold will tend to rise when real
| interest rates are low. He makes a similar point here (written in
| 2019):
|
| "After all, the price of gold soared from 2007 to 2011... So why
| did gold soar? The main answer seems to be plunging returns on
| other assets, especially bonds, which were the product of a
| depressed world economy."
|
| https://www.nytimes.com/2019/07/13/opinion/goldbugs-for-trum...
|
| So we should expect the price of gold to rise while the pandemic
| is out of control. Once the coronavirus is defeated, we should
| expect the price of gold to fall.
| rbinv wrote:
| That implies that interest rates will actually rise
| significantly again. That's anything but guaranteed.
| mytailorisrich wrote:
| No, it's not directly related to interest rates remaining low
| or not. As economical situation improves after Covid-19,
| money will flow back to other assets and the price of gold
| will mechanically decrease because people will sell to invest
| back in those assets. This is what happens during and after
| every crisis, and what OP meant.
|
| The upwards trend of 2020 is due to Covid-19. There will be a
| correction when that crisis ends.
| taneq wrote:
| *if the economic situation improves
| mytailorisrich wrote:
| It will after the Covid-19 crisis. It's not 'if', it's
| 'when'.
| gridlockd wrote:
| > That's anything but guaranteed.
|
| It's guaranteed _not_ to happen in the short to mid-term.
|
| Rising interest rates during a recession when the economy is
| massively over-leveraged and even the _low-interest_ debt can
| barely be serviced would result in an even greater wave of
| defaults.
|
| Low interest rates and QE are here to stay. The dollar will
| depreciate significantly, easing the burden of debtors and
| making American labor more competitive. Good for exports, bad
| for people who earn a dollar salary.
|
| Gold appreciating (in dollar terms) is just a side-effect of
| this development.
| joncrane wrote:
| The dollar will only depreciate if interest rates in other
| countries/currencies are higher, right? What leads you to
| believe interest rates in the US will be significantly
| lower than in other countries?
| gridlockd wrote:
| That's not true, there are various factors that determine
| currency valuation.
|
| You can have high interest rates, but if the market
| believes you are going to increase the money supply, that
| may not be enough to stop depreciation. That's why debt
| monetization through QE without QT is such a dangerous
| game.
|
| Interest rates in the US right now are higher in the
| Eurozone, yet the dollar has depreciated against the
| Euro.
|
| Lastly, while it is possible that the dollar will not
| depreciate against other currencies, currencies will
| still depreciate against assets.
| daodedickinson wrote:
| There are other catastrophes pending than COVID-19. It can't
| really compete with the repression of schooling or church
| service or bars or thrift stores or, or, or...
|
| Krugman's first piece post 9/11 was about how getting to
| rebuild a skyscraper was somehow going to be a tremendous
| economic stimulus, as if the loss of so many knowledgeable and
| wise people being murdered all at once didn't occur to him...
| AT ALL!
|
| In college I read the NYT everyday, thought it was the best
| paper in the world. Then one morning I opened my copy to see a
| full color photo of my rapist attached to a hagiography of how
| she had been elected to public office.
|
| Now the NYT CEO is still Mark Thompson, who got the job because
| as Director-General at the BBC he covered up Jimmy Saville's...
| I don't have a word for it yet.
|
| Walter Duranty won a Pulitzer for using the NYT to cover up
| Stalin's genocide of Polish people so that American media
| didn't seriously cover it until the 1980s.
|
| Don't get me started on how many people with Gilead financial
| ties are acting as if financial incentives might somehow
| statistically significantly effect their behavior because it
| seems to just give me sleep deprivation.
| gridlockd wrote:
| > So we should expect the price of gold to rise while the
| pandemic is out of control. Once the coronavirus is defeated,
| we should expect the price of gold to fall.
|
| Gold has been rising steadily for years, interest rates have
| been low for years. That's a lot of excess liquidity already in
| the market, it's just exacerbated.
|
| Coronavirus disappearing from the news won't make all that
| excess liquidity disappear.
|
| Gold and other assets will drop when that excess liquidity is
| removed through rate hikes and QT.
|
| When will that happen? My money is on "never".
| bildung wrote:
| Why never? Gold was down over 40% between 2011 and now.
| gridlockd wrote:
| "Gold _and other assets_ "
|
| Investors generally don't like gold and would rather put it
| into any other asset class. When the fear wanes, the
| liquidity moves from gold into other assets.
| awinder wrote:
| Krugman argues that there's a special nature to the bond-gold
| relationship but I would argue that it's because gold is an
| asset of last resort. The only thing special is that bonds have
| typically been an asset of last resort, but governments have
| sort-of taken them off the table in crisis situations.
| daodedickinson wrote:
| Assets of last resort include things like water, food, air...
| alasdair_ wrote:
| The thing is, at the beginning of the pandemic panic, this
| didn't happen at all. Instead everyone sold gold and the price
| dropped (same with bitcoin, which went to $3.5k) because they
| wanted liquidity rather than a speculative investment.
| jkhdigital wrote:
| Same thing happened in 2008--gold dropped along with
| everything else after Lehman, but quickly turned around and
| was already making new highs while stocks were still
| bottoming out. Liquidity crises are anomalous events which
| don't say much about the long-term forces that move asset
| prices.
| jkhdigital wrote:
| Yes, this is elementary economics--and I'm not trying to say
| that pedantically, it's just easily overlooked. Gold is an
| inert metal that pays no dividend and incurs storage costs, so
| any rational market participant who believes that they can
| achieve a risk-adjusted real return above 0% will not own gold.
| A poor economic outlook reduces expected real returns on
| equities, and currency devaluation (i.e. inflation) reduces
| real returns on fixed-income securities (bonds). Combine the
| two and you've got a perfect storm for skyrocketing gold prices
| --just look at the 1970s.
| lma21 wrote:
| What if... we don't really defeat it? no, maybe that's too
| pessimistic... What's the worst case scenario in case we have
| to live with Covid-19 for a few more years?
| eloff wrote:
| Likely a serious recession or even an economic depression,
| judging from the economic knock on effect of lockdowns,
| whether involuntary or just people curtailing their spending
| and activities, that we have observed so far. 10-30%
| contractions in GDP in the second quarter, in dozens of
| countries.
|
| I won't touch the market with a stick because it's going in
| the opposite direction to the economy. There has to be a
| correction coming. I know there aren't good alternatives,
| interest rates are so low, etc. But I still think there's a
| correction coming, that's my two cents.
| karlkatzke wrote:
| The worst case scenario is that 10-15% of our population that
| comes down with COVID-19 over the age of 40 has some sort of
| permanent organ damage.
|
| https://jamanetwork.com/journals/cardiology/articlepdf/27689.
| ..
| hydroreadsstuff wrote:
| Yes, this is indeed about the low bond yields paired with
| inflation expectation - low real yields.
|
| But I would not hold my breath that this changes much after
| Corona. In 2019 the Fed tried quantitative tightening, which
| resulted in the December stock market correction, and a big
| overnight lending spike. From there they resumed QE (Which was
| one day supposed be a temporary measure in the great financial
| crisis). They did drop interest rates again in response to
| Corona, though. Not before.
|
| J Powell already promissed rates would stay as low as they are
| for 2 years.
|
| But right now the yields of the 10 year, e.g. are going below
| what a new issue should yield I believe.
|
| Gold/Silver should lose some steam when the DXY goes up, or
| bond yields increase. (Both of which should also have a
| negative influence on stock and bond prices).
|
| Also don't marry the idea of inflation to the CPI. There is
| asset inflation (think housing market and stock market), and
| inflation in certain products like food. But other things like
| transportation (perhaps of lower importance to poorer than for
| rich). It's not a black and white matter.
| alasdair_ wrote:
| Taleb makes this same point about inflation repeatedly - that
| the things he plans on spending money on in the future may
| inflate far more than the CPI.
| jkhdigital wrote:
| Yeah, almost like inflation is concentrating into a handful
| of Giffen (I'm using the term loosely) goods--healthcare
| and education most notably.
| plmu wrote:
| It depends. Once the coronavirus is defeated, it will have
| accelerated the economic cycle downturn, we might see a very
| deep and long recession, maybe even one like we have not seen
| in recent centuries.
|
| And since the world is progressing in a direction of depletion
| of natural resources, the next deep recession might be the
| last.
|
| We have seen many recoveries after many recessions, but there
| is no guarantee that there is a recovery. Sooner or later the
| earth will be in such a bad condition, that it will be
| impossible to recover.
| whb07 wrote:
| Krugman, the same fella who commented on the internet and on
| bitcoin?
|
| He represents everything that's wrong with government excesses
| and theft of its citizens via inflation.
|
| 50 years ago an ounce of gold was $35/oz. Today that very same
| 1 oz gold coin is at $2000.
| ac29 wrote:
| You've very conveniently picked a time frame where gold was
| at a century-long low, to a century-long high. One could
| easily pick an opposite period, such as 1980-2000, where
| values dropped precipitously.
| lebed2045 wrote:
| aside of Krugman, $35 worth of goods and services in 1970
| worth about $233 according to
| https://www.officialdata.org/us/inflation/1970?amount=35, so
| it's not currency problem but the gold itself went up.
| AnimalMuppet wrote:
| It's not that simple. The government fixed the price of
| gold at $35 in (IIRC) 1933 or so. [Edit: 1934.] They kept
| the same price until 1970 or so, when they allowed gold to
| float. Then all the inflation from 1933 to 1970 showed up
| in a sudden run-up in the price of gold.
|
| That is, the price of gold in 1970 was highly distorted. It
| was _not_ a market price. You can 't use that price as your
| starting point.
| Qasaur wrote:
| Krugman in his usual arrogance neglects to consider the price
| and indeed monetary history of gold. It is and always has been
| "real money" and most people either consciously or
| subconsciously trust gold more than the pieces of paper we call
| money, and its price is not a reflection of people chasing
| returns but rather people having less faith in the current
| monetary system (which is backed by nothing). The record
| physical delivery orders at Comex proves this [1].
|
| If the dollar hyperinflates, where would people go? Crypto is
| obviously interesting, but gold is the supreme form of money
| that requires zero trust (while crypto is near trust-less, you
| still need to trust the cryptography to be secure).
|
| [1] https://reuters.com/article/gold-cme/102-tonnes-of-gold-
| chan...
| gridlockd wrote:
| > If the dollar hyperinflates, where would people go?
|
| The dollar is inflating right now, where are people going,
| besides gold? Why would the dollar _hyperinflate_?
| blaser-waffle wrote:
| > where are people going, besides gold?
|
| As with stocks, the acronym TINA applies. As in, There Is
| No Alternative.
|
| Yes, there are literally plenty of alternatives, but most
| of them have (dealbreaking) shortcomings.
| ivalm wrote:
| CPI is fine...
| alasdair_ wrote:
| CPI is also a measure that is altered over time by groups
| with a vested interest in keeping "inflation" low.
|
| As a very simple example of why this may be misleading,
| consider that house prices are not considered in the
| "basket of goods" that Americans buy, despite this being
| literally the most expensive purchase most people ever
| make.
|
| The formula itself is also changed from time to time. If
| we were using the "old" formula, inflation would be MUCH
| higher (shadowstats.com for current numbers).
| baconandeggs wrote:
| Because the dollar is the reserve currency of the world, it
| will hyperinflate if and when the international community
| begins transacting _en-masse_ in other currencies or even
| in gold, and dumping us bonds. Then all those dollars
| outside the US, which are most dollars, will go back to the
| US and hyperinflate. This could happen if the current
| instability in the US continues.
| Qasaur wrote:
| Hyperinflation is the phenomenon when people wake up and
| realise that real estate and prices rising is not a
| function of real prices increasing but rather their money
| losing value. We already have extreme asset price inflation
| (not to mention the rapid expansion of the monetary base).
| In my opinion it is only a matter of time before people
| realise what is going on, start dumping their
| dollars/euros/pounds/etc., and use something else for their
| daily transactions and savings, probably crypto at first.
| It is worth noting that _every_ fiat currency throughout
| history, without exception, has eventually hyperinflated
| and collapsed to nothing.
| gridlockd wrote:
| > Hyperinflation is the phenomenon when people wake up
| and realise that real estate and prices rising is not a
| function of real prices increasing but rather their money
| losing value.
|
| That is not actually what hyperinflation means.
|
| > We already have extreme asset price inflation...
|
| Sure, but we don't have asset price _hyper_ inflation.
|
| > In my opinion it is only a matter of time before people
| realise what is going on, start dumping their
| dollars/euros/pounds/etc., and use something else for
| their daily transactions and savings, probably crypto at
| first.
|
| Dump the dollars for _what_? Most people have no savings,
| they have a monthly paycheck that goes right to expenses
| for the most part. That alone greatly limits the velocity
| of money and therefore the rate of inflation.
|
| Those people that (rightly) expect inflation (not
| _hyperinflation_ ) have already piled into other asset
| classes.
|
| Either way, there can't be _hyper_ inflation without a
| commensurate increase in money supply, which can't be
| achieved just by people spending their money more
| quickly.
|
| > It is worth noting that every fiat currency throughout
| history, without exception, has hyperinflated and
| collapsed to nothing.
|
| That is untrue. Hyperinflation is exceptional. Inflation
| over a long time can erode a lot of the value, but that
| isn't hyperinflation and it's not necessarily a problem
| either.
| qubex wrote:
| There's no actual definition of ' _hyperinflation_ ' that
| I'm aware of in the macroeconomic literature, beyond it
| being a quantitatively large value of inflation. What you
| purport to be the discriminante (economic agents'
| perceptions, presumably households'?) isn't actually
| tenable either, since famously "you need two cretins to
| make a transaction" (a buyer and a seller, both of whom
| think they're getting a good deal).
| alasdair_ wrote:
| > There's no actual definition of 'hyperinflation' that
| I'm aware of in the macroeconomic literature
|
| There are plenty of definitions, just none that are
| universally accepted.
|
| It's similar to "recession", which in the USA means two
| quarters of negative GDP growth but isn't a universally
| agreed definition.
|
| Colloquially, in the USA, "hyperinflation" refers to
| Average price increases of over one hundred percent per
| year for a "basket of goods".
| daodedickinson wrote:
| There have been plenty of stories of hollow gold bars and,
| true or not, they've been trending again lately.
|
| Gold hasn't always or everywhere been real money, I've
| personally worked on an archeology site where I sifted out a
| tiny shell bead with an even tinier hole punched in it so it
| could attached to a string like ancient Chinese coins and so
| on.
|
| I once read a claim that J.P. Morgan said something like
| money is only worth the character of the person who wields
| it.
|
| I feel more like interactions with other people are more
| precious than precious metals.
|
| If the dollar hyperinflates, some people will go into
| bunkers. I'd maybe starve or hide... I don't have a plan, I'm
| way behind on stuff as it is.
| Qasaur wrote:
| There have absolutely been cases in history where other
| forms of "money" have been used, but in a long enough
| timescale of a civilisation, gold and silver are
| organically adopted as money due to their unique properties
| that make them suited for it. Fiat, shell beads, and other
| forms of currency are exceptions to the rule.
| daodedickinson wrote:
| I dunno, I feel like Potosi being the highest population
| city in the Spanish Empire in the 1600s, even larger than
| Madrid, even though its elevation was about 13,000 feet,
| even though Denver's elevation is only about 5,000
| something feet high, suggests an inorganic impetus, an
| illogical fetish for silver
| ribble wrote:
| you feel this, you feel that - your feelings are not
| facts.
| coder1001 wrote:
| Makes sense.
|
| However, couldn't this be a sign that people are getting ready
| for if/when the current financial system fails?
| arethuza wrote:
| If the current financial system fails how does it help to
| have bits of paper saying that you "own" gold in a warehouse
| somewhere?
| cinquemb wrote:
| And a lot of those papers saying that you "own" gold have
| similar issues compared to those that say you "own"
| stock/bonds... rehypothecation, leverage, liquidity, etc.
| indigochill wrote:
| Although generally I agree with the thrust of this
| question, supposing someone is adequately prepared to
| weather the failure of the financial system to some
| anticipated recovery (and they are correct at predicting
| the recovery), then a failure is an opportunity to amass
| wealth by trading actual useful commodities for these bits
| of paper at extortionate rates, expecting to be able to
| collect a greater return once the recovery arrives.
|
| 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.
| jasode wrote:
| I didn't downvote your comment but a lot of regular people
| do buy physical gold (coins & bars)[1] and store the
| precious metals in a safe.
|
| 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.c
| om/sch/i.html?_from=R40&_nkw=gold+eagle+co...
| tomalpha wrote:
| One interesting advantage for UK buyers of gold coins
| specifically, is that if they're legal tender they're
| exempt from (Capital Gains) taxation[0]. Even if the gold
| content is worth significantly more than their face
| value, which is almost universally true.
|
| [0] https://www.royalmint.com/invest/bullion/discover-
| bullion/ca...
| alasdair_ wrote:
| This reminds me of the guy who paid his employees in
| silver dollars and paid taxes on the nominal value paid
| instead of the market price. He also ran a separate
| business that bought all the silver dollars back for the
| market price right next door.
|
| It all went well for him until he started a payroll
| company to do the same thing in multiple states.
| baconandeggs wrote:
| It doesn't much. But you could own actual, uhm you know,
| gold.
| TheOtherHobbes wrote:
| You could, but unless you have tiny 1gm slivers you'll
| find it hard to buy food with it.
|
| 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.
| dmm wrote:
| > For total meltdown SHTF scenarios
|
| 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.
| arethuza wrote:
| To be fair my comment up thread was wondering about a
| _failure_ of the financial system - which I interpreted
| to be more like _Threads_ than _The Big Short_.
| Humphrey wrote:
| I guess it depends on whether the company with your
| precious metal in a vault chooses to honour your piece of
| paper or not. I guess the trick is to tap the "ship me my
| gold now" button before Mr Robot wipes their database.
| arethuza wrote:
| More like whether the employees of the company who runs
| the vault realise that they aren't going to paid at the
| end of the month and simply run off with "your" gold. In
| a serious collapse it would seem the logical thing for
| them to do.
| Retric wrote:
| No, gold is a poor asset should the financial system actually
| fail. It's simply a hedge because it doesn't move the same
| direction as other assets.
| rapsey wrote:
| Gold will retain its value in any financial system reboot.
| Paper money will not.
| gridlockd wrote:
| The question is will gold outperform _other asset
| classes_? Historically, gold isn 't that great, but
| that's past performance.
| roenxi wrote:
| > Historically, gold isn't that great, but that's past
| performance.
|
| 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.
| gridlockd wrote:
| > In terms of actual return it depends when you pick your
| start and end date
|
| 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.
| Retric wrote:
| It's only over short time periods that gold might look
| like a good investment. Inflation adjusted gold is flat
| over the last 40 years. That's a real ROI of 0 from 1980
| to 2020. Which means for every good investment someone
| else lost money.
|
| 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.
| jkhdigital wrote:
| This is the best chart I've encountered for such
| comparisons: https://www.longtermtrends.net/stocks-vs-
| gold-comparison/
|
| 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.
| rapsey wrote:
| We are talking about a financial system reboot. Gold has
| been valuable since civilization existed.
|
| In a normal environment it will not outperform.
| D895n9o33436N42 wrote:
| Gold is a poor asset no matter how you turn it. Most
| people don't hold physical gold when they trade in it. If
| the current financial system were to fail, do you really
| believe that people will begin taking delivery of their
| physical gold positions in their garages? They'll simply
| get wiped out, and that will be the end of it.
|
| 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.
| baconandeggs wrote:
| The problem of storing gold is the same as the problem of
| storing paper money, there is no difference. Have you
| tried storing a million dollars in your own home? It is
| not for the faint of heart.
|
| 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.
| mmmrk wrote:
| It's no different until raiders show up at your door.
| Your million dollars can be stored in assets outside your
| home.
|
| Also, IIRC, gold quickly lost its trading value in post
| WW2 Germany because, uh, you couldn't eat it.
| baconandeggs wrote:
| Sure, neither can paper money be eaten. Well, it can, but
| it is not nutritious. All the problems of gold are the
| same with paper money, there's no need to type the
| wheelbarrow story again. And gold might've not been
| useful in germany, but other places did take your gold.
| No one took Reichsmarks.
|
| 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.
| gravitas wrote:
| Gold is very dense. $1M in gold is 25x 20-coin tubes of
| 1oz coins @$2000 per coin, which is probably around an 8"
| square surface area 6" tall. Bottom of pretty much any
| standing safe you can buy (typical gun safe, e.g.).
|
| 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.
| OldHand2018 wrote:
| > Gold is very dense. $1M in gold is 25x 20-coin tubes of
| 1oz coins @$2000 per coin, which is probably around an 8"
| square surface area 6" tall.
|
| 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.
| roenxi wrote:
| > do you really believe that people will begin taking
| delivery of their physical gold positions in their
| garages
|
| 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.
| arethuza wrote:
| The story of Alan Turing and his plan for securing his
| wealth comes to mind:
|
| https://www.reuters.com/article/us-markets-saft/saft-on-
| weal...
| kls wrote:
| Unless you are storing the majority of your wealth in
| gold, it is not that hard to take possession of gold and
| store it in a decent removal resistant and fire resistant
| safe in your home. Your average smaller stand up gun safe
| can store more wealth in gold that I personally have. I
| personally take delivery of any gold I hold, but I really
| only hold enough as a unlikely but not impossible to
| happen insurance policy that society completely
| collapses.
|
| 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.
| blaser-waffle wrote:
| > it is not that hard to take possession of gold
|
| 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.
| billylindeman wrote:
| apmex.com
| wcoenen wrote:
| > _Show me how I can guy a commodity on the market and
| have it delivered to my house._
|
| Go to google maps and search for "gold exchange" near
| your location.
|
| > _And the guarantee that process will work when the
| global financial system starts imploding._
|
| You should not wait until your house is on fire to get
| fire insurance. You get insurance long before anything
| goes wrong.
| rapsey wrote:
| There are plenty of physical gold dealers. Either bullion
| or coins. Anywhere in the world.
| daodedickinson wrote:
| >civilized trading
|
| Does that mean dumping money into Vanguard or something
| else?
| johnyzee wrote:
| > regular people aren't equipped to store gold in their
| homes
|
| 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.
| boudewijnrempt wrote:
| "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."
|
| Not on their own, but once they've found you, they've
| found the gold.
| robjan wrote:
| If people routinely stored gold bars at home it would
| improve the cost-benefit ratio of breaking into people's
| homes.
| arethuza wrote:
| What would a global "financial system reboot" actually
| look like though?
| rapsey wrote:
| The dollar is the worlds reserve currency. It would start
| with the dollar being severely devalued. What happens
| after that is unpredictable. One thing holds true
| however, gold will still be valuable after that.
| me_me_me wrote:
| To be precise, you can't eat gold.
|
| 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.
| [deleted]
| jkhdigital wrote:
| People have been using money since before recorded
| history, and bronze age technology is sufficient for gold
| to be used as reliable money. If any kind of financial
| system is to arise from the ashes of civilizational
| collapse, it will almost certainly use gold. So I
| wouldn't say "meaningless"... just not immediately
| useful, perhaps.
| blaser-waffle wrote:
| The last one -- Bretton Woods -- happened at the tail end
| of WW2. I'd imagine WW3 or something equally destructive
| would be required to totally upend the system.
| [deleted]
| malandrew wrote:
| Guns, ammo, food and fuel are good assets to have in a
| collapsed economy.
| minerjoe wrote:
| The most valuable asset in a collaped economy is a strong
| local community.
| aflag wrote:
| Food spoils too fast. Guns and ammo are not legal to
| purchase for most. Fuel is a better asset, but takes a lot
| of space. One good thing about gold is that it's compact.
| minerjoe wrote:
| > Food spoiles too fast.
|
| 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.
| mcny wrote:
| What kind of fuel? Everyone I know tells me
| gasoline/petrol will start to go bad in six months and
| will start damaging my car in two years. Crude oil will
| last millions? of years but we would need access to a
| refinery and like you said takes a lot of space anyways.
| devalgo wrote:
| In a SHTF scenario I think the idea that you would be
| able to reach, operate or maintain a refinery is
| fanciful.
| autokad wrote:
| I use to scoff at gold investors, I was one of those 'only the
| sp500 is the right asset class, it always beats every other asset
| class over the long run' type people.
|
| then in 2019, I saw a chart of asset prices over the last 20
| years. Gold, oil, and real-estate out performed the sp500 over
| that 20 year period (to me, a reasonable 'long period of time').
|
| its actually still true today in 2020, probably will remain so
| for a long time.
|
| gold aug-2000:aug-2020 = 409:2000 or 4.89x sp500
| aug-2000:aug-2020 = 1471:3327 or 2.26x
|
| that is serious under performance over a 20 year period, which
| has been true for ever a year now. not true with oil anymore
| though.
| prepend wrote:
| Compare that to all the other 20 year windows. So unless you
| think this 20 year period is useful for predicting the next 20
| year window, it's not very helpful.
|
| Gold really sucks over long term investing windows (eg 30-50
| years) although it, like pretty much everything, will have
| specific windows of outperforming the s&p.
| jcheng wrote:
| For stocks[1], August 2000 is just about the high water mark of
| the dot-com bubble; for gold[2], August 2000 is the bottom of a
| "V" that extends 20 years in either direction.
|
| I'm not saying you cherry-picked August 2000 as a starting
| point to make gold look good (20 years is a nice round number
| and a reasonable time span), but if you were cherry-picking you
| couldn't do better than that.
|
| [1]
| https://www.google.com/search?q=sp500+historical&oq=sp500+hi...
|
| [2] https://www.macrotrends.net/1333/historical-gold-
| prices-100-...
| dnprock wrote:
| Gold is not simply a shiny metal or a collective fiction. I think
| many historians (e.g. Harari) got this wrong. Humans first
| learned how to manipulate metal through gold around 40k years
| ago. It sparked the metal industries that advanced human
| civilizations. Humans progressed through Bronze Age, Iron Age.
| Gold was an icon of metal technologies. Its use as money probably
| predated written history.
|
| https://bitflate.org/post/2019/11/29/how-gold-became-money.h...
| IgorPartola wrote:
| That's true, but history of something does not equal it's value
| today. Otherwise companies like DEC would still be around, no?
| dnprock wrote:
| Harari sees history as fiction. But I think we need to make a
| distinction between fiction and physical reality. Gold is a
| physical reality that got married into human's fiction.
|
| DEC technologies are still around. They just got replicated
| and extended into other technology stacks. It's not easy to
| replicate gold. The easy way is to mine more gold.
| Technologies are ideas. Gold is physical.
|
| Bronze and iron became less popular after BC. Will steel go
| away any time soon? No. Humans have worked with gold much
| longer. Gold has had its ups and downs. It has always come
| back for thousands of years. This suggests it's not going
| away (Lindy effect).
| onetimemanytime wrote:
| IMO: if you have tens of millions, buy 10KG of gold and 100kg of
| silver and bury it just in case. As an investment it sucks when
| compared to the rest but then a tiny percentage of your networth
| is nothing when considering that it may be useful if SHTF
| minerjoe wrote:
| I heard once that their still finding caches of gold from the
| fall of the Roman empire. It didn't help those rich papos, why
| would it help you?
|
| I truly don't see gold being of any use in a collapse where
| suddenly food is the most valuable asset.
| onetimemanytime wrote:
| >> _I heard once that their still finding caches of gold from
| the fall of the Roman empire. It didn 't help those rich
| papos, why would it help you?_
|
| Maybe some where helped by it, we don't know. But better to
| have it than not to, unless you announce to the desperate
| masses that you have lotsa gold
|
| >> _I truly don 't see gold being of any use in a collapse
| where suddenly food is the most valuable asset._
|
| You can do without food for weeks, and many will trade food
| for gold ("I have enough food" etc etc). plus, you can
| provision for food too. The idea is to make believe you don't
| have x% of your networth and buy gold/silver/guns/food/land
| with it for that one moment in time.
| johnyzee wrote:
| FWIW, during the (first) IMF default in Argentina, when the
| local economy and monetary system was in total collapse, gold
| was the most sought after item for trade and barter. People
| consistently said afterwards that they wished they had kept
| more savings as gold.
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