Gold at $10000 per ounce?

[moosensquirrel]

Trying to measure value in a fiat currency like the USD is like trying to measure length with an elastic tape measure. Regardless, he does have some insights worth noting from a man whose advice I give weight.

ymmv

https://www.kitco.com/commentaries/2020-07-15/What-if-gold-does-go-to-5-000-or-10-000.html

 

[james357]

Well I bought and sold gold and silver 2009, 2010.
I had a year severance to enjoy.
Then I could sell gold and silver at spot.
I bought less than spot with an ad on Craig's list.
Now sellers want 5% over and buy 5% or more below spot.
So, youbuy silver, gold and it goes up 25% or more. Where you going to sell?
Send it to Kitco? What if the dont want to buy.
You got an ounce of gold and I have a bucket of food. Food cost me 50.00.
I want an ounce of gold and if you are hungry, guess what???
The flood in New Orleans and people cut holes on through the roof. No water. I come by in my boat with 3 of my brothers heavily armed. You have 6 ounces of gold. I want 2 ounces for 5 gallons of water and 3 days of food.
You have not eaten or drank in 2 to 3 days.
What is the value of your gold?
I will take food, water, guns. Ammo.
If people lose value in their money then death and violence will be beyond anything you can imagine.
Look at your 5,000 gold. I laugh.
Give me your gold and you can live....until I want your food.
then you can read Donovan's pass.

 

[AmbiEncE]

Well I bought and sold gold and silver 2009, 2010.
I had a year severance to enjoy.
Then I could sell gold and silver at spot.
I bought less than spot with an ad on Craig's list.
Now sellers want 5% over and buy 5% or more below spot.
So, youbuy silver, gold and it goes up 25% or more. Where you going to sell?
Send it to Kitco? What if the dont want to buy.
You got an ounce of gold and I have a bucket of food. Food cost me 50.00.
I want an ounce of gold and if you are hungry, guess what???
The flood in New Orleans and people cut holes on through the roof. No water. I come by in my boat with 3 of my brothers heavily armed. You have 6 ounces of gold. I want 2 ounces for 5 gallons of water and 3 days of food.
You have not eaten or drank in 2 to 3 days.
What is the value of your gold?
I will take food, water, guns. Ammo.
If people lose value in their money then death and violence will be beyond anything you can imagine.
Look at your 5,000 gold. I laugh.
Give me your gold and you can live....until I want your food.
then you can read Donovan's pass.

That only works with a end of civilization senario. Until then, stack away and use.

 

[TheGman]

I agree is end days come , its people whom you trust, guns , ammo , food water and shelter and The Lord.

 

[MacTavish]

Invest in LEAD

 

[spencer60]

Honestly, if you're looking at investment then just buy and sell gold futures or stocks.

If you think the world is ending, sell that gold and buy something useful.

 

[moosensquirrel]

Most folks miss the point: Physical gold (and silver), i.e. coins, bars, etc. in your possession, have a 6000 year history of being a reliable medium of exchange. Fiat currencies, not so much. One does not buy physical gold for an investment, but as a reliable store of value for the future, and as a life insurance policy on their fiat savings that are constantly being de-valued by inflation.

Folks generally intelligent enough to buy gold, are also intelligent enough to store food, water, ammo,useful things, when fiat currencies around the world collapse. They are also intelligent enough to get out of large cities like Atlanta, New Orleans, etc.

Gold and silver will never go to zero value, and have no counter-party risk. it is also the harbor for "scared money" hence the daily swings in perceived value reflected in the markets.

here is what one thinker said a while back (322 BC) about the properties of money: "it must be.....

1. Durable- the medium of exchange must not weather, fall apart, or become unusable. It must be able to stand the test of time.
2. Portable- relative to its size, it must be easily moveable and hold a large amount of universal value relative to its size.
3. Divisible- should be relatively easy to separate and put back together without ruining its basic characteristics.
4. Intrinsically Valuable- should be valuable in of itself, and its value should be totally independent of any other object. Essentially, the item must be rare.

https://seekingalpha.com/article/295877-aristotles-money-criteria-support-gold-precious-metals

 

[spencer60]

The fact is that there is a very narrow window of human history where gold was the universal medium of exchange, and even there it was only used by governments as partial backing for their 'fiat' currencies.

To take your last point first, Gold has no more inherent worth than the seashells used by many American Indian tribes, and it's only true value (aside from technical uses) is due to it's scarcity and usefulness in jewelry.

I fact it's worse than seashells.

Great minds from Issac Newton to Ben Franklin have been placed in charge of attempts to keep circulating gold currency from being debased. None of them succeeded. It's simply too easy to dilute the purity of gold too hard for the average person to verify it's purity, which is it's value.

Just look at the case a week or so ago where Chinese banks got scammed for billions in loans based on gold-plated copper bars they were holding as security for these 'loans'. If a large national bank can't avoid this kind of problem, what chance would a person with a $20 'gold' piece in their pocket have.

To address your other points, gold is hardly 'portable'. Aside from lead it's probably the least portable metal found in nature. Lugging around a heavy sack of gold to pay your bills each month will not be a lot of fun, and it kind of makes you a target as well. Most likely you would keep your gold in a bank and write checks off of it... so right back to a paper currency.

As for divisibility... You simply can't split a coin up to get an exact fractional value. And while gold dust might be very finely divisible, you run into the problem of weights and measures.

How much do you trust the scale at the local grocery store to measure out an accurate weight of your gold? And how does the store owner know whether you salted your dust with gold painted lead dust?

Again, you would simply keep your gold in a bank and write a check or some other paper document (i.e. 'fiat money') to pay exactly what you owe.

There certainly have been times when gold was useful as currency over fiat money. The Civil War is one good example. People used gold to buy things that simply were not available using the Confederate dollar.

But that was because there was a very porous border with the Union states, where gold was a perfectly acceptable and stable medium of exchange. If the US dollar were to completely collapse, where would you trade your gold for goods and services? Canada? Mexico?

That being said, I do think precious metals as a whole might have uses in a lot of scenarios.

Personally, I think silver will be more useful than gold in almost all of them, because it has a lot more medical and technical uses than gold does. It's also far easier to accumulate for a lower cost, and doesn't suffer the same mind-boggling price swings gold does.

But even there I would say a hundred ounces or so (physically) would be enough to keep stashed away. And as an inflation hedge I'd argue that silver's price stability makes it a better candidate than gold as a way to preserve paper wealth.

To each their own though. If we do see a major crash my gut feeling is that gold won't be especially useful, but I also didn't by Google at $100/share because I couldn't see how a search engine would ever make a profit.

 

[moosensquirrel]

The fact is that there is a very narrow window of human history where gold was the universal medium of exchange, and even there it was only used by governments as partial backing for their 'fiat' currencies.

To take your last point first, Gold has no more inherent worth than the seashells used by many American Indian tribes, and it's only true value (aside from technical uses) is due to it's scarcity and usefulness in jewelry.

I fact it's worse than seashells.

Great minds from Issac Newton to Ben Franklin have been placed in charge of attempts to keep circulating gold currency from being debased. None of them succeeded. It's simply too easy to dilute the purity of gold too hard for the average person to verify it's purity, which is it's value.

Just look at the case a week or so ago where Chinese banks got scammed for billions in loans based on gold-plated copper bars they were holding as security for these 'loans'. If a large national bank can't avoid this kind of problem, what chance would a person with a $20 'gold' piece in their pocket have.

To address your other points, gold is hardly 'portable'. Aside from lead it's probably the least portable metal found in nature. Lugging around a heavy sack of gold to pay your bills each month will not be a lot of fun, and it kind of makes you a target as well. Most likely you would keep your gold in a bank and write checks off of it... so right back to a paper currency.

As for divisibility... You simply can't split a coin up to get an exact fractional value. And while gold dust might be very finely divisible, you run into the problem of weights and measures.

How much do you trust the scale at the local grocery store to measure out an accurate weight of your gold? And how does the store owner know whether you salted your dust with gold painted lead dust?

Again, you would simply keep your gold in a bank and write a check or some other paper document (i.e. 'fiat money') to pay exactly what you owe.

There certainly have been times when gold was useful as currency over fiat money. The Civil War is one good example. People used gold to buy things that simply were not available using the Confederate dollar.

But that was because there was a very porous border with the Union states, where gold was a perfectly acceptable and stable medium of exchange. If the US dollar were to completely collapse, where would you trade your gold for goods and services? Canada? Mexico?

That being said, I do think precious metals as a whole might have uses in a lot of scenarios.

Personally, I think silver will be more useful than gold in almost all of them, because it has a lot more medical and technical uses than gold does. It's also far easier to accumulate for a lower cost, and doesn't suffer the same mind-boggling price swings gold does.

But even there I would say a hundred ounces or so (physically) would be enough to keep stashed away. And as an inflation hedge I'd argue that silver's price stability makes it a better candidate than gold as a way to preserve paper wealth.

To each their own though. If we do see a major crash my gut feeling is that gold won't be especially useful, but I also didn't by Google at $100/share because I couldn't see how a search engine would ever make a profit.

Those were Aristotle's points, not mine.

At least with gold you have a prayer,
Fiat currency, nothing but air.

Yikes, I'm a poet!!!

 

[spencer60]

LOL.

And as you point out with paper currency it's just that, paper, without backing.

Gold does have some intrinsic value as a metal, just not today's equivalent of $10K.