The recent silver market

[CO skier]

Every person who ever sold you gold had the same opinion -- they would rather have currency and then spend it on something more useful than gold.

The same thing can be said for ... idk, coffee or lots of other commodities.

 

[ScoopKona]

The same thing can be said for ... idk, coffee or lots of other commodities.

Absolutely correct. Which is why I sell coffee, only holding back enough for myself. And even then, I blend. Because rule #2 from Scarface applies -- Never get high on your own supply.

 

[CO skier]

Absolutely correct. Which is why I sell coffee, only holding back enough for myself. And even then, I blend. Because rule #2 from Scarface applies -- Never get high on your own supply.

Think of all the money wasted on coffee. It does not pay any dividends; it just ends up in the garbage. Gold ... well, no one throws that away.

 

[ScoopKona]

Think of all the money wasted on coffee. It does not pay any dividends; it just ends up in the garbage. Gold ... well, no one throws that away.

Food isn't an investment either. Or water. There are lots of things which aren't investments. Gold, for instance.

PS -- You should compost your coffee (if you even drink the stuff). Then it does some good in your garden. One of the best ways to amend soil.

 

[easyrider]

Food isn't an investment either. Or water. There are lots of things which aren't investments. Gold, for instance.

PS -- You should compost your coffee (if you even drink the stuff). Then it does some good in your garden. One of the best ways to amend soil.

Actually, gold is an investment for many countries. The USA has between 7500 - 8000 metric tons of gold in it's reserve and this gold is considered to be an asset that is used to balance loans between the Fed, banks and other countries. Considering that there is only about 46,666 metric tons of gold bullion available globally the USA holds a good portion. About 20% of all the known gold bullion is in private stacks.

A good way to tell that gold is an investment is to look at how much gold is in the investment world and is held privately. About 20% of all the known gold bullion is in private stacks. The top 20% of these stacks would be considered small investors with an average of 16 troy ounces. The bottom 80% I would consider collectors with stacks of about 2.7 ounces.

Interesting is when the stacks are compared the top 5% of stacks are about 53 troy ounces while the bottom 95% is about 3 troy ounces . Even more interesting is when that the top 5% is compared about 99% of this top 5% has an average stack of 4 troy ounces while the top 1% has an average of 164 troy ounces.

To me this means that most people with gold are not investors but are collectors. I guess many would consider an ounce of gold an investment but if you had any other investments the gold would seem like a novelty collectable.

Bill

 

[Ralph Sir Edward]

How much in monthly/quarterly dividends has gold paid throughout your life?

I always compare it to having a supermodel who has taken a vow of chastity living with you -- attractive to look at, doesn't actually do anything.

Many stocks that have performed well over time didn't pay dividends for long periods of time. Was Microsoft a bad investment in 1987 because it didn't pay a dividend? Or Google when it came out?

This doesn't mean I don't like dividend paying stocks, but dividends aren't the be-all of investing.

As to that "supermodel" she might have a kind, winning personality that makes you happy just to be around her. She also might have the same hobbies as you, and have an intellect that filled the gaps in yours. Sex, like dividends, isn't <everything> in life. . .

 

[ScoopKona]

This doesn't mean I don't like dividend paying stocks, but dividends aren't the be-all of investing.

BRK-A also doesn't pay dividends. It's a better investment than gold -- because they own the insurance companies. But since they don't pay dividends, I don't hold any BRK-A (except through a few index funds).

With automatic dividend reinvestment, I don't ever have to think about this. Retirement has been on autopilot for my entire life. And while others have retired earlier than the age of 50, I'm quite happy with my results. With the time saved by not plexing about investments, I do my real estate thing. (Or did, more accurately.) Now I just worry about being a farmer.

If I had taken that same capital and put it into gold, I would have to work into my late 60s, at least. And I wouldn't enjoy the same lifestyle I enjoy today. That is the opportunity-cost of gold.

 

[Carolinian]

Here's the thing. We're not Zimbabwe. We're not Venezuela. We're not the Weimar Republic. If the US Dollar utterly collapses, gold isn't going to be worth [excrement], either.

What will be worth having? Defensible arable land, crops, ammunition, the ability to create antibiotics from scratch or set a broken bone, breathable atmosphere and most of all, potable water.

Gold is the lazy prepper's hedge against a Mad-Max dystopia. Preppers in name only who don't want to do any homework. "Well, I have guns and gold. What else could I possibly need?"

Most gold coins do nothing other than take up space. And if they truly were the be-all-and-end-all of investment vehicles, nobody would willingly sell it. They would horde their bullion like Scrooge McDuck. Instead, we have a cyclical trade system where overpriced gold is sold to people who think the world will collapse. And then the gold is repurchased at a deep discount, only to be resold to the next person who has read too much Ludwig von Mises.

Not only do I think that gold isn't a good investment, I don't consider it an investment, period. The only thing I would do with a ton of gold (if I were to find some hidden in a cave on my farm) is sell it and use the proceeds to invest in something that actually appreciates and pays dividends.

Most hyperinflation situations do not involve a total collapse of society as in your scenario. Even with the current hyperinflation in Venezuela, for example, flakes of gold are being used as a medium of exchange.

Some of those who are big buyers of gold recently are central banks, including some in Europe. Don't you think they know what they are doing in putting gold in their vaults instead of other paper currencies?

 

[Carolinian]

Every person who ever sold you gold had the same opinion -- they would rather have currency and then spend it on something more useful than gold.

Wrong. I suspect, like most of us who hold some gold or silver, he buys primarily from bullion dealers, who take the money we pay them to buy more bullion to sell. They pay a wholesale price for it and sell it at retail. The money they receive is used to buy more bullion.

Bullion dealers are like stock brokers or the sellers of any other investment, they make their money on transaction fees or costs of one sort or another, but they keep buying or selling whatever it is they specialize in.

 

[ScoopKona]

Most hyperinflation situations do not involve a total collapse of society as in your scenario. Even with the current hyperinflation in Venezuela, for example, flakes of gold are being used as a medium of exchange.

Some of those who are big buyers of gold recently are central banks, including some in Europe. Don't you think they know what they are doing in putting gold in their vaults instead of other paper currencies?

Considering the banking news of late, no, I don't think they know what they're doing. And as Warren Buffett so famously noted, "The cemetery for seers has a huge section set aside for macro-economists."

I could turn this around -- Since the Fed manages the largest economy in the history of humankind, they of COURSE can be trusted to make the right decisions. Right? Appealing to authority isn't going to change anyone's mind.

I have explained, at length, why gold isn't really an investment at all. No more than diamonds or quartz or amber. Frankly, I'd rather be sitting on tones of rare earths than a massive gold vein. Gimme a few tons of rhodium. THAT has value, thanks to the world's insatiable demand for the stuff. That's why Rhodium isn't getting any ads on TV networks. And gold is being slung like timeshares any time I click through the bogus "news" channels.

 

[Carolinian]

Considering the banking news of late, no, I don't think they know what they're doing. And as Warren Buffett so famously noted, "The cemetery for seers has a huge section set aside for macro-economists."

I could turn this around -- Since the Fed manages the largest economy in the history of humankind, they of COURSE can be trusted to make the right decisions. Right? Appealing to authority isn't going to change anyone's mind.

I have explained, at length, why gold isn't really an investment at all. No more than diamonds or quartz or amber. Frankly, I'd rather be sitting on tones of rare earths than a massive gold vein. Gimme a few tons of rhodium. THAT has value, thanks to the world's insatiable demand for the stuff. That's why Rhodium isn't getting any ads on TV networks. And gold is being slung like timeshares any time I click through the bogus "news" channels.

Gold is in demand by people all over the world, unlike rhodium. While some demand is jewelry, most of it is as a store of wealth. Silver, on the other hand is an industrial play as well as a store of wealth. Indeed if the eco-zealots have their way on a flood of new solar panels, that alone will hugely drive up the demand for silver.

Should people put all their money in precious metals? Of course not. Diversivication is a good thing. We are invested much more heavily in real estate than precious metals, and that pays rental income. But our silver and gold have appreciated significantly, too.

 

[ScoopKona]

But our silver and gold have appreciated significantly, too.

Not all that significantly when inflation is factored in.

Here's just one of a bazillion articles: https://www.fisherinvestments.com/e...mmentary/inflation-is-up-gold-hasnt-glittered

 

[Carolinian]

Even major currencies, dominant in their era can blow up from heavy spending. Without a last minute bailout from the Rothchilds, it would have happened to the British pound some years after the Napoleonic Wars as a result of the borrowing for those wars, and it started with a run on a rather small bank.

The degree of borrowing now on both sides of the Atlantic could easily blow up currencies, and no that would not likely put us in a Mad Max type of situation. And however vulnerable the dollar is, the euro is in worse shape. A good friend of mine who has done economic and financial analysis for a living for years, on both sides of the Atlantic, has pointed out what he regards as the best fiat currencies to be holding in current conditions, and neither the dollar nor the euro is among them. What he is currently accumulating is gold, along with a few foreign currencies. The son of another good friend works in a Wall Street Hedge Fund in the section that deals with currencies. Short term they are still bullish on the dollar, but much less so for medium and long term. He shared with me some of the currencies they liked on a longer term and they corresponded with what my other friend says.

Civilization tends to survive hyperinflation. I have travelled in countries undergoing hyperinflation and society still functioned. What often does not survive, however, is paper assets.

 

[ScoopKona]

Even major currencies, dominant in their era can blow up from heavy spending. Without a last minute bailout from the Rothchilds, it would have happened to the British pound some years after the Napoleonic Wars as a result of the borrowing for those wars, and it started with a run on a rather small bank.

Ignoring that it makes no sense to discuss pre-industrial monetary policy as it applies to today, you have just made the best-ever argument why nations need to get off, and stay off the gold standard.

 

[Carolinian]

Ignoring that it makes no sense to discuss pre-industrial monetary policy as it applies to today, you have just made the best-ever argument why nations need to get off, and stay off the gold standard.

The problem was not the gold standard, but excess borrowing, and that can get us in similar trouble today. Although nobody is on the gold standard today, central banks sure have been buying a lot of gold. A couple of decades ago, the Brits sold off their gold reserves, and drove down the gold price when they did it, but now regret that move. They were the only ones to do something really stupid like that.

If I were still working in Europe full time, where it is easier and cheaper to buy and sell currencies, I would probably have some nice stacks of certain currencies in a safe deposit box, too.

 

[ScoopKona]

The problem was not the gold standard,

I 100% disagree. The world population has made the gold standard impossible.

It is a subject best studied in history classes -- along with serfdom and mercantilism. Not economics classes (except for the chapter -- "How things went horribly wrong -- 10 cases of blowing up the economy using faith-based economic notions such as praxeology. Lesson 1: Rome leading their gold coins."

 

[CO skier]

[DELETED]

 

[Brett]

[DELETED]

I believe gold or silver is not a good long term investment but it could make one feel good in the short term

"over the longer term, stocks outperform gold by about 3-to-1, but over shorter time horizons, gold may win out. Indeed, if we go way back to the 1920s through today, stock returns blow gold away."

https://www.investopedia.com/ask/answers/020915/has-gold-been-good-investment-over-long-term.asp

 

[Carolinian]

I have mentioned paper gold and paper silver as ways to invest in precious metals, but there is a third way that some use, and that is investing in gold and silver mining stocks. There is even an index of them, the GDX, and the GDX has performed better so far this year than the S&P.

 

[Ralph Sir Edward]

[DELETED]

I believe gold or silver is not a good long term investment but it could make one feel good in the short term

"over the longer term, stocks outperform gold by about 3-to-1, but over shorter time horizons, gold may win out. Indeed, if we go way back to the 1920s through today, stock returns blow gold away."

https://www.investopedia.com/ask/answers/020915/has-gold-been-good-investment-over-long-term.asp

Except when you read the details of the article, they don't match the claim you quoted from the article. Some quotes from the article:

"Using the set gold price of $35 (January 1971) and the price of $2,000 per ounce as of the first quarter (Q1) of 2022, a price appreciation of approximately 5,700% can be computed for gold.
From 1971 to Q1 2022, the DJIA has appreciated in value by around 4,500%." (see my earlier post about this)

"From January 1971 (when the dollar became unlinked to gold) to December 2019, gold had average annual returns of 10.6%. Over the same period, global stocks returned 11.3%." (Less, yes , but not "blown away". About a 6% underperformance 11.3-10.6=.7 .7/10.6 x 100 = 6.6%)

The one glorious period where stocks "blew away" gold was 1950 to 1961, where the Dow went up over 4 fold and gold remained pegged at $35/Oz. That also was the period where virtually every country in Europe has a large portion of its industrial capacity destroyed by WWII, and the US was fully intact. I don't see that happening ever again. . .

 

[ScoopKona]

Except when you read the details of the article, they don't match the claim you quoted from the article. Some quotes from the article:

You are cherry picking the absolute best date for gold -- when gold prices stopped being regulated. Pick some random date in the 1980s and try again.

Gold Bugs ignore the fact that if we go back on the gold standard, all the old rules (including riff-raff not being allowed to own any) will go right back in place. Google "Executive Order 6102."

 

[e.bram]

How do know the gold you buy is gold?

 

[Carolinian]

I 100% disagree. The world population has made the gold standard impossible.

It is a subject best studied in history classes -- along with serfdom and mercantilism. Not economics classes (except for the chapter -- "How things went horribly wrong -- 10 cases of blowing up the economy using faith-based economic notions such as praxeology. Lesson 1: Rome leading their gold coins."

You might want to study current events, especially economic ones, a little closer. Old-style merchantilism, and some would add serfdom, is what has allowed today's communist China to eat our lunch economically. China has applied the old Merchantilist concepts to push western economies to the curb in a number of industries.

 

[Carolinian]

Gold Bugs ignore the fact that if we go back on the gold standard, all the old rules (including riff-raff not being allowed to own any) will go right back in place. Google "Executive Order 6102."

The gold standard existed for centuries in America without Roosevelt's unconstitutional EO, as it continued without similar measures to do elsewhere in the world. Other than communist countries, nobody else took up gold other than Roosevelt.

The best way to get around that possibility today is to buy numismatic gold coins, not bullion gold coins. That avoided the problem under Roosevelt, as did owning foreign gold coins here in the US. I sold the one US modern bulliion gold eagle I once owned. All of my gold is numismatic from Germany, Austria, Italy, France, Switzerland, the Netherlands, Denmark, Canada, and the UK, as well as some US Liberty (pre-1907) eagles and half eagles. Except for my Canadian 1967 $20 gold pieces, they were all intended as circulating money when they were struck, but their premiums are not a lot different, and sometimes better, than the bullion coins struck today.

 

[Ralph Sir Edward]

How do know the gold you buy is gold?

The cheap way: https://www.thefisch.com/
Drawback. Only certain coins have a tester. There isn't one for 20 francs or German 20 marks.

The expensive:

Precious Metal Verifier | Sigma Metalytics

Quickly and easily authenticate your precious metal coins and bars with the Precious Metal Verifier made by Sigma Metalytics.

www.sigmametalytics.com

Drawback: still doesn't easily test all gold coin type. It's so sensitive that differences in alloy will cause different readings. Still if you know your coin type, you can adjust for it.
(You can get some funny results. I have several $5 US commemoratives that are supposed to be .900 fine, that spec out as .916 (22K) fine.More silver in the alloy? Mint used the wrong planchet? Who knows?)