The logic for buying gold/silver?

I about guarantee that if any form of federal goverment still exists after some sort of financial melt-down...they would be on your doorstep quick if you started buying stuff with gold and silver bullion/coinage!!
 
First off, why would they, especially if they haven't passed any laws against doing so? According to Article II Sections eight and ten of the US Constitution, they are legal tender. Also consider that 11 states either have, or are in the process of, passing their own laws making gold and silver legal tender.

Second, even if they did make using PM's illegal, would you rather have them hidden for a future day, or have all of your savings tied up in worthless paper?

Third, how would they track it? It is essentially a barter transaction, and given the counterparty would be just as liable as you for illicit trading, the incentive for keeping it sub rosa would benefit both. The same logic applies to selling/trading firearms and ammunition. Are you going to fore go having them because at some future date .gov may make them illegal? Will you turn them in should they do so? I know that I won't.

That's how black markets work. It is what is occurring in many countries around the world now, including the EU and Argentina. As government increasingly adds capital controls in order to keep a dying monetary system alive, more and more people will turn to black or grey market transactions in trade simply as a survival mechanism. I would hazard a guess that many in this country are doing so too, especially those that have skills, as a simple means of tax avoidance and privacy. In the future, it will become necessary for day to day life.
 
I have some silver coins and buy more as we can. It hasn't cost us that much over time and just another insurance policy should we ever need it.
I also have guns, ammo and my wife's medical skills for barter should that ever become needed. We have a decent supply of food, medical items and a generator for times without electricity due to storms and other causes as well.
We're thinking of investing more in silver and gold and am in the investigation stage now so threads like this are very interesting to me.
 
Why would they!!?...Really?...It's not without historical precident that guv's confiscate gold and silver. I would imagine that with the current state of politics in this country...gold and silver confiscation in the event of a financial collapse wouldn't be out of the question.

The Cypress thing I guess will be a sort-of example of guv deciding to 'redistribute' some wealth.

I'm not denying the black market or bartering..nothing like that. This a fact of life now....and has always been a fact of life.

Really..at least my veiwpoint being that hoarding large quanitys gold/silver for disaster use could be disasteous!...could be confiscated...stolen...killed and stolen...worth it's weight in beans, bread and toilet paper..etc

I do think that collecting-up some quanity of gold and silver is probably prudent...and fun too 'cause gold and silver bullion is cool...old Eagles, Francs. and Soverigns are too cool as old collector coinage as well as gold content. I own some gold and silver mainly just for the cool factor.

I can see how having a huge pile of prescous metal in the event of a total collapse...or maybe even a partial collapse would be a good thing...I also believe it would be hard to keep the guv out of your gold-stash!
 
Gold... eh... like anything else it's a matter of timing.

Gold was around $700 in the early 80s and it didn't rise above that for another quarter century. Meanwhile... the stock market went from around 1,000 to 10,000 as well as paying dividends. Gold... a hedge against inflation or a suckers bet? You decide the timing.
 
@Chattanooga Phil

Sure, and since 2000 when measured in constant year 2000 FRN$, the stock market has lost value. When measured against gold it has lost even more. Nominal gains due to unlimited quantitative easing and survivor bias in the indices do not reflect good value.

All gold does is reflect the ongoing debasement of the paper FRN$. When the purchasing power of the FRN$ was strong, and our debt to GDP ratio was well below 100%, it made sense to save in it and it's derivative products. Now, especially after the recent violations of contract law, (GM), the Sentinal decision, and the rewriting of the bankruptcy code in 2005, and with a debt to GDP ratio of 108%, not so much.

We had a bull market in both equities and bonds from 1982 until 2000. At that point equities entered a secular bear market and are still there. Since then the bonds, both Treasury and corporate, have continued to historical high valuations, but don't have much more room to run to the upside. If not for the constant intervention into the Treasury bond market by the Fed to keep interest rates suppressed and a decent bid to cover at Treasury auctions, the bond market would also be in a secular bear market. Once the Fed becomes the sole purchaser of Treasuries, it will be obvious to everyone that bonds are nothing but certificates of confiscation, especially when everyone who currently holds them begins to unload them into the market and yields begin to rise. Metals came out of their secular bear in 2000, and are in a secular bull now. They will be until real rates of interest are above the real rate of inflation, which will likely never happen until the bond market is allowed to find true market value. The trend is your friend, and the trend now is with the metals and against equities and soon to be against debt issues.

Paper financial instruments nowadays are fraught with all sorts of counterparty risk. The stocks that you purport to "own", you don't, unless you have the actual stock certificates in hand, which are increasingly hard to come by. Most stocks that people think they own are actually held by the DTCC under Cede&Co. What you have in your brokerage account is a derivative of the actual stock. The same applies to bonds. Unless you hold the actual Treasury certificate or corporate bond certificate in your hand, you don't own it. You own a digital derivative of it, which can be used as collateral by the brokerage company or their clearinghouse for their own purposes, and should they lose it, you are at the back of the line to get repaid, behind all of the senior counterparties of the derivatives ahead of you. This is called rehypothecation, and is what was behind the losses of customer funds at Sentinal, PFG Best and MF Global. After the Sentinal decision last year, the court essentially ruled that anything held by any financial entity-including banks and their regular checking/savings deposits-and used by them for collateral is legal, and if they lose it in proprietary trading, you are one of the last to recover your funds.

Unless you have actual possession of it, you do not own it. IMO, in this type of financial environment it makes more sense to hold cash for daily needs and save in metals. To each his own.
 
Stevie,
Until they do make another stab at a 6102 confiscation, I'm not concerned, and I find it difficult to see a circumstance under which it would happen, simply because they do not need the metals to expand the money supply, they aren't part of the current monetary system, and because so few people in this country actually own physical metals. It is less than 1/100th of one percent.

I am much more concerned about currency debasement through inflation of the money supply, violation of property rights and contract law, and 401k and IRA confiscation than I am confiscation of PM's, as they are a much easier target, and difficult to liquidate, especially 401k's. In order to confiscate metals it would require door to door searches etc., and I just do not see that happening, at least not until and unless they succeed in disarming the public. If they manage that, all bets are off as at that point all we're doing is negotiating for our position in the line to the gas chamber.
 
PM's are defacto currencies and have been since man started to trade for what he didn't have. When the fiat currencys become worthless your PM's will take their place. What you may also want to look at is present day coinage as a store of other metals one may need in bad times. We are talking zinc,copper and nickel.

Now in a modern day portfollio it is recommended that PM's make up 10% of the portfollio.

Ask yourself this question. If for some reason trucks are unable to deliver product to stores how will you handle it.
 
ChattanoogaPhil said:
Gold... eh... like anything else it's a matter of timing.

Gold was around $700 in the early 80s and it didn't rise above that for another quarter century. Meanwhile... the stock market went from around 1,000 to 10,000 as well as paying dividends. Gold... a hedge against inflation or a suckers bet? You decide the timing.
Click to expand...

Yeah, and the stock market went where in 1929? ( After it was at an all time TOP by the way.)

People have made fortunes off of gold and silver... Yes, even in the Hunt bros times. and lost them too. So your point is what exactly?



Do you honestly think the stock market will just climb into oblivion from here.

BTW the stock market has LOST if you figure in inflation, and it is definitely DOWN as compared to Gold.

MOST people on here have no clue about what money is, or what Gold is used for.

Central banks the world over ( Who are the biggest Gold buyers right now....for a reason) are going to stop their massive gold buying tomorrow I heard, and put the money into the DOW.

It's always good to buy at the top of a market. ( sarcasm)

Can the DOW go up from here? Sure. But it's a suckers bet that it goes up and never stops.

Someone owes 17 trillion that they don't have.


I guess I could sum this up and end it in one more sentence........... If you had money in the bank in Cyprus two weeks ago, would you wish you had gold in your hand instead?
 
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I like the idea of having some pm coinage on hand when life gets hard, but here's just a couple of thoughts to consider. I can easily see the value of our dollar dropping to nothing and inflation concurrently soaring – it's already happening now (whatever the Gov claims in its mind-boggling stats).

One problem, though, for planning to use pm coinage, bars, etc. in the future is how to establish the local, daily value of it.

In ancient times, money changers and merchants all had scales to weigh the "give and get" of each transaction. OK, so we all store a scale, but who is going to say that 1oz gold piece will get you one loaf of bread or 1000 loaves, etc.? Will your neighbors be the local market price setter? Many of these same people currently sell (give) their gold/silver to the local "Buy Your Gold Here" places for give-away-prices. If that becomes the local market price competition, then starvation won't be kept away for long, I think.

What about letting the Gov set the price for our ounces of gold? Remember Roosevelt - need I say more? How about that local bank branch box that can be found on every corner to set a price - no comment. In any case, how would that "value" be set for general commerce– in dollars? If so, then better stock up on Zimbabwe wheel barrows.

So, barter, you say. Possible, I agree, but one might also want to store a hack saw along with that scale in order to cut that ounce piece into quarter, tenths, etc. The local farmers' market would sell how many potatoes for a full ounce?

Alternatives? How about learning a skill? Convert that brick barbeque into a forge and buy a few hammers. Buy grazing land and raise mules. Purchase land with a salt lick or an artesian well. Stock up on sulfur, charcoal, and saltpeter with some repacking tools. Find a rich farm-wife and swap some toilet paper. Ok, I'm kidding on that one.

These are just some thoughts and easily might have no value except to me.
 
As I said in a previous post, small denominations of pre 1965 US silver coins or pre 1933 US gold $5 or $10 coins are one way, or using the "pieces of eight" method common in colonial America is another way in which you may get smaller amounts of metals for transactions. That and a powder scale. PM's are measured in Troy as are powder scales.

As an aside, by US law-specifically the Mint Act of 1794, one US Dollar is actually a specified weight of 416 gr total, of which 371.25 is pure silver, the rest copper. The paper FR note in your wallet is actually a debt instrument payable only in the assets of the Fed, which is more debt paper. Silver certificates were declared null after 1965, and gold certificates were null after 1933.

IRT supply and demand curves, that is usually dependent upon the market for a particular good or service. The more difficult or scarce, the higher the amount of whatever is being used to transact the exchange. The amount that you will have to pay in either silver or gold will be up to the parties involved, but you can use past costs as a rough guideline. Again, that will depend upon scarcity and demand. Ammunition is a very good example of that dynamic in action.

edited to add, past pricing is a good indicator of relative prices. For example, in 1963 a gallon of gasoline was around .20 to .25 cents. That was either two silver dimes or one silver quarter. At current spot silver pricing that would make the dimes worth $2.03 each in today's paper money. Two of those equals a gallon of gasoline in most markets today, more or less depending upon region.
 
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Absolutely true. Not just against inflation, but against all types of calamities such as natural disasters, job loss etc.
 
They say hindsight is 20/20. If that's the case, we don't have to look too far back to the Great Depression and see what happened there.

During the Depression, my father-in-law was one of 11 kids. They lived on a 13-acre farm. They had a little money when the Depression hit and, fortunately, were able to pay off the farm. On part of their farm, they raised sugar beets every year as their "tax crop" to pay off the annual taxes.

The rest of the farm was used for growing food, raising chickens, a couple of pigs, and two dairy cows.

As my father-in-law told me, "Our clothes were patched, but all the kids in my school had patched clothes. Our shoes had holes in them, but all the kids in my school had shoes with holes. But, because of our garden and animals, we never went hungry...and not all the kids in my school could say that."

He told me that story in passing one day, but I was fortunate enough to pick up on the subtle lesson he was trying to get across. Since that time, I've always put in a good-sized garden each year. I also have some fruit trees, berry bushes, and a small flock of laying hens.

Don't get me wrong, it's always good to have some cash on hand (whether it be gold, silver, or what have you), but when push-comes-to-shove, a bowlful of Krugerrands won't be nearly as satisfying as a plateful of meat and potatoes.

Also, as a side note...bartering was big during the Depression. I've already started. My neighbor has bees and markets the honey. My chickens produce more eggs than we need, so he and I swap...eggs for honey. You can't beat that.:)
 
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Peter M. Eick said:
Thanks for the comments.

So in general I had it right. Metal is good for holding value not gaining it. I have not really invested in metals much (other than a bunch of lead and copper) so I will keep watching and learning.
Click to expand...


#1 YOU take control of it. Almost all the big dealers will do you a favor by holding YOUR gold. or silver, for you at no cost.:eek: INSIST on it being sent to you.

#2 Don't over look e-bay. You can buy 1 ounce silver rounds, or bars, for less than $40 each delivered to you. Check shipping charges, some people/dealers knock you out with them.

#3 As with stocks, or Mutual Funds, dollar cost average.Set a amount, $25, $50, $100, and buy that same amount each month.
 
I see an advantage of buying gold or silver. I do not see the same advantage in buying paper that says you own gold and silver.
 
I would suggest getting only dimes,quarters,half dollars and silver dollars
for a medium of exchange. There are many coin dealers who sell the 90% silver coins in rolls. AKA junk silver. And as far as buying paper money forget it as its only as good as the gov't says it is. Just for grins and giggles when was the last time when an inventore of our gold reserves was done and publicly disemanated?. Frank
 
1954, under Eisenhower. The BS "inventory" that took place in 7974 was for show, and not done by an independent third party, so that doesn't count.

It's taking the Fed seven years to deliver a small (300T) portion of the gold that they supposedly hold for Germany in their vaults in NYC. The reality is that it isn't there and has been leased into the market, and they're scrambling to get enough of it back to make good on their obligations. That doesn't bode well for the 8200 tonnes that the US supposedly owns in Ft. Knox, West Point and the NY Federal reserve Bank. It also doesn't bode well for us as a country if we don't have the gold that we're supposed to if/when we have a currency crisis. IMO, we'll be finding out about this the hard way in about 12-15 months.
 
You're right, KJM, central banks have been net buyers of gold for the past couple years. Headlines told us that it's the biggest increase in 50 years after 20 years of net selling. TIME TO BUY GOLD!!! Was it? Interesting as it were, today's prices are pretty much where they were from the beginning of this reported mad gold rush by central banks. About the worst performing period (with a nice peak) for gold in the past decade.

Of course 'central bank' sounds impressive to the average guy, but who are these central banks? Well... according to UBS for the first two months of 2013 central banks bought about 50 metric tons of gold. Russia and S Korea account for about 40 tons. Other notable actors were Kazakhstan, Indonesia and Azerbaijan (China we don't know). Prices fell. Goldman and Citi had both predicted mild gains in 2013 and falling prices in 2014. We'll see.

You asked my point on my previous post. My point was that folks should not wander into gold with the notion it will necessarily protect their purchasing power during a given period. Sometimes not even during a quarter century where consumer prices more than doubled, stock market went 10x, as gold remained unchanged.

KJM said:
Do you honestly think the stock market will just climb into oblivion from here.
Click to expand...

Interesting way to ask a question.

I kinda like the forward view of the 'shale gas revolution'. I look forward to more predictable energy prices, global economic growth, growth in stocks and gold prices drifting.

Good luck.
 
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Ok, let's agree that all of us are smart enough to recognize what is happening to the dollar's trending (non)value and are logically planning ahead by buying gold, silver, and/or "90% coinage". Great!

But now, just for giggles, let's take our collective prescience a step farther down that road and think about how we will actually use our knowledge and stockpile of precious metals a few days after the shtf. Let's assume that that event actually occurs unexpectedly next Friday when after the markets close, the announcement is made that the USA has been declared "bankrupt" and its $US is no longer valid for market transactions.

Ah! You say, "Now I can take my two dimes and a nickel out of my "90%" bag and go buy a gallon of gas which for the sake of this discussion has a price that is correctly in accordance with daily melt values of such coins.

I then offer those coins to my local minute market operator and request a gallon of his gas. Unfortunately, the operator is typical in my neighborhood and speaks better Guatemalan than my version of English, so he refers me to a part-time worker who was born and educated in the US. Unfortunately, that person can't even figure simple change let alone convert my melt values to the price that is posted on the pumps (which btw is now in Yuan instead of dollars).

The operator then begs me to use my credit card for the transaction, and to my relief the transaction somehow is accepted.

But wait. How will I pay the bill when it comes? Do I mail a roll of coins that comes closest to the amount of the bill and then take a sharp fingernail clipper to one of my "Buffalo's" to make up the difference? Of course, given more time, pm's will be accepted by banks (for a fee of course) and debit cards might handle the daily conversion rates (for a fee of course) and did I mention the tax forms due on that transaction for the gain in value in that coinage, bar, etc..?

I've had some fun with this and I expect that some of you to try to box me around the ears. Hopefully, none of this will come to pass. Still, it's food for thought…
 
A good friend has recommended buying land, guns, and Harleys. He's never lost a dime on any of them! Of course, he hasn't tried to sell his land yet......:)
 
Making some pretty big assumptions there. First one is that the banks, ATM's, credit/debit cards etc will be open/work. They didn't for two weeks in Cypress, and that was one tiny country tied to the Euro. If the FRN$ does crash, I'm pretty sure that the banking system will be down worldwide for a fairly long while-say 4-6 months-until they, meaning .gov, the Fed, BIS, etc., come up with a replacement system. Even if they have one in place awaiting activation, it will take some time to implement, and will not be seamless or smooth.

The second assumption is that when this occurs that the supply chain will remain intact and there will actually be stuff to purchase from the local Guatemalan "stop and rob" after three or four days. Good luck with that, especially as most stores only have 3 days of inventory and no warehousing. If "it" occurs and the price of diesel goes through the roof, and replacement costs are higher than the current purchase price, most truckers will not be able to make enough money to earn a profit, and will likely refuse to attempt deliveries. Of course I'm sure that .gov in its infinite wisdom will repeat Nixon's wage and price controls and again that will result in shortages, also disrupting the supply chain.

What will happen short term is that cash, meaning actual physical paper FRN$'s will increase in purchasing power and be used until they too are no longer accepted as people finally tumble to the fact that they are trading scarce real goods for paper, and will probably refuse to do so in the future.

Then it is "Welcome to Bartertown". Once that point is reached and proves to be unwieldy, as it usually does, then that will be the time that silver etc. will be used to facilitate trade, and the market, be it black, grey, or otherwise, will shake out the various values that are placed for that trade.

Once the new monetary system is in place, if people have confidence that it is viable, which more than likely means it has some type of physical backing, then you may either trade physical for currency at your local coin shop or online auction site, and do business that way, or if we are once again on a PM coin standard, exchange your PM's for the current coins in use. I'd guess that if the latter happens that the old style coins/bullion will be accepted right along with the new, just adjusted based upon content.

That's how I think things could shake out when the FRN$ paradigm is finally over. Of course it's just rank speculation, but the advantage of having real physical bullion and coins is that you're ready for any eventuality, and if none of it happens, at least you will still be able to sell the metals for something, or pass it along to future generations. It's insurance against catastrophe, which judging by events in the world and the ignorati who lead it, will happen at some point in time. It always does.
 
There's gold, and it's haunting and haunting;
It's luring me on as of old;
Yet it isn't the gold that I'm wanting
So much as just finding the gold.
It's the great, big, broad land 'way up yonder,
It's the forests where silence has lease;
It's the beauty that thrills me with wonder,
It's the stillness that fills me with peace.


Robert William Service
Spell of the Yukon
 
I just don't see PMs being that fluid where I live. In a real SHTF situation I also can't help but feel developing a reputation for trading in PMs will open you up to long range sniping.
 
Actually, in my previous post, my biggest assumption was in thinking that the Fed won't quickly be taking charge of the situation.

First, an announcement will be made that it is all just a misunderstanding that was caused by the fact that all denominations of US currency look like Monopoly money. Henceforth, Parker Bros. will cease and desist in printing its counterfeit dollars.

Secondly, all rumors that there is nothing golden actually in our vaults are hereby officially declared to be false. Upon request, photographs of our newly installed 3d printing presses which are hard at work turning out "gold bricks" will be made available to the media.

Move on, nothing to see here. :D
 
The advantage to gold and silver of course is that they are always worth SOMETHING. Stocks, bonds, and paper money are just that, paper.

In a real SHTF situation I think silver coins woud be of more practical use then gold. But the truth is in a real SHTF situation, someone (Govt. or bandito) would probably take them away from me anyway.
 
walnutred said:
I just don't see PMs being that fluid where I live. In a real SHTF situation I also can't help but feel developing a reputation for trading in PMs will open you up to long range sniping.
Click to expand...


I think you need to separate SHTF from Mad Max. They are not inclusive.

Bob
 
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