What if in December 2012...

renman95

...gold is $8,000, silver is $400 and platinum is....whatever...do you continue to "stack 'em" or dollar cost average or are you out and sell into the fiat of the day? What is your end game for the inevitable collapse of the dollar, or government debt (same thing)? I ask this because many here, me included, see our spending unsustainable and regardless of what happens November 2nd we have doubt the elected officials have the guts to do what is required to save the Republic. So when the collapse happens what will you do with all of your gold and silver rounds?

Who do you sell your numismatic gold and silver to?

edmundfitzgerald

I think people would sell if they had to, or sell if they felt their money could find safer haven somewhere else. It's
all about wealth preservation, or doing what's best with the money we have.

MoneyCollector

Good question. Unless there's a total meltdown and you need it to get across the river to the safe side, what good is exchanging nice PMs for a bunch of paper, even if its a wheelbarrow full of paper?

jmski52

Those numbers mean that I'd better be making close to half a million dollars a year, or else I'd better be finding new employment.

PreTurb

Great topic, one that I have a lot of questions about also. As in - what's the rest of the world going to look like at $8000 gold.

I think that most people who stack PM's acknowledge that the result is typically wealth preservation - the ounce of gold will buy a nice suit now, 100 years ago, and on into the future.

However, deep inside, everyone hopes that somehow the PM's will double in value - while the rest of the world stays the same (still $2.79 gasoline, $3.99 milk, etc). The result here being a huge increase in relative wealth, versus just treading water.

Also, if the dollar suddenly devalues relative to PM's, you still need to be able to legally sell/trade PM's on the "other side". There's always a concern that the government will do something funky.

All things considered, it's better to have PM's than to not have PM's.

But I sure don't know what it's going to look like on the "other side"...

secondrepublic

if it gets that high, sell and pay off your mortgage or other debts.

I'm not banking on an "end of the dollar" "this time is different" scenario.

roadrunner

Great topic, one that I have a lot of questions about also. As in - what's the rest of the world going to look like at $8000 gold.

Gold advanced essentially 10x minimum in the 1970's if you figure it really would have started around $60/oz if allowed to float before 1971 and it's average value either side of the 1980 peak was around $600. Even with the 10X change the world didn't change 10X, not even close. A relatively small amount of money funneled into a small market and pushed its prices up 10X. The rest of the world didn't see 1000% price appreciation over that decade. Your pay didn't fall by 90% nor did your expenses increase by 1000%. In reality, the overall price changes in the 1970's were quite manageable, possibly a doubling at worst. Tough? Yes. End of the world? No. The same thing is happening now. Even if gold reached 6X its current value, the rest of the world might see a doubling at best in overall average prices. Homes, cars, durable goods, etc. will be lucky to advance in price at all, and certainly not double. But a number of commodities like oil, ags, etc will likely double again and in some cases outpace gold.

It will all feel uncomfortable to most consumers but like the 70's, it will probably be manageable. Trying to ratio gold's price increase to determine one's misery index wouldn't be much different than assuming Beanie Baby price appreciation in years past was a perfect reflection of the overall economy's price changes. Both are tiny markets that pale in size to the overall financial sector. Relatively few people will take advantage of PM's. But there will be enough to radically change the supply/demand structure.

roadrunner

Overdate

I sell and invest in Mayan calendars!

dbcoin

If I could pay off my mortgage and kids college educations, I would. Having no debt and a clean slate is a nice state of mind.

dbcoin

edit double post out

yellowkid

I would have sold half at levels below that and put the profits into the numismatic collection!

OPA

<< <i>If I could pay off my mortgage and kids college educations, I would. Having no debt and a clean slate is a nice state of mind. >>



True, but on the other hand, you'd have to cash in some of your bundle for grocery's & everyday necessities such as utility bills. I wonder what the average price of a car would be or even gas to get you around town. I hope & pray that your "what if" never comes to fruition.

curly

Since I am on Social Security, I would certainly be out of the game at 8K. I hope to be able to hand my PMs over to my two curlyetts when I am unable to purchase more.

johnny9434

<< <i>I think people would sell if they had to, or sell if they felt their money could find safer haven somewhere else. It's
all about wealth preservation, or doing what's best with the money we have. >>



i dont know about the wealth preservation right now. everyones feeling it and its not takeing hostages for what i can see. jmo

Baley

12/21/12 is only a year away. Gold at $8000? Not seeing it.

Of course, don't have the gift of prophecy

cohodk

At those numbers, I mortgage the house, and go short. Gimme all those worthless fiat toilet paper dollars.


see our spending unsustainable


From Dictionary.com....

un·sus·tain·a·ble   /ˌʌnsəˈsteɪnəbəl/ Show Spelled[uhn-suh-stey-nuh-buhl] Show IPA
adjective
not sustainable; not to be supported, maintained, upheld, or corroborated.



So why does everyone think the definition will not hold true?

ricko

I seriously doubt $8K.... I do believe it will be well over $2K... however, that is gut feel based on readings and data... certainly have been wrong in the past (predicted gold at $2K by year end ). Cheers, RickO

Yukoncornelius1

If it got that high I would pay off all my debts, purchase some more farmland, buy a retirement place down south, go on a vacation, keep only my rare and unusual silver bars and rounds, keep my rare and unusual gold bars and rounds, put more money in the salvation army kettle.

jmski52

If gold looks to be headed for $8,000 - I will be paying off the remainder of my mortgage at $2,000 and I will start looking around my old stomping grounds for another rural property. At $3,000 I will buy the extra location, and start bleeding some pms off into dollars. I won't divest more than half of my pm holdings unless it goes over $4,000.

Same plan as cohodk, but separated by about $1,500/oz.

After re-reading this thread from the perspective of 1 year later, it struck me as a good idea to actually start thinking in terms of a real plan. If you do not have a plan, you will miss it.

Baley

What if, due to hyperinflation, the same forces that made gold go to $2000, 3000, 4000, or 8000 (and, presumably, beyond, since those problems won't be magically solved just because gold is more expensive), what if those same forces caused your target property to go from (for example) 2 million, to 3, 4 or 8 million or beyond?

Won't bread be $10, 20, 40 a loaf, and gas be $8, 15, or $50 a gallon (but priced the same in milligrams of gold)?

What happened to the old saw about an ounce of gold always buying a good pistol or a fine hand tailored business suit?

now an ounce buys TWO good guns or suits.

which one is suddenly mispriced?

jmski52

What if, due to hyperinflation, the same forces that made gold go to $2000, 3000, 4000, or 8000 (and, presumably, beyond, since those problems won't be magically solved just because gold is more expensive), what if those same forces caused your target property to go from (for example) 2 million, to 3, 4 or 8 million or beyond?

Won't bread be $10, 20, 40 a loaf, and gas be $8, 15, or $50 a gallon (but priced the same in milligrams of gold)?

What happened to the old saw about an ounce of gold always buying a good pistol or a fine hand tailored business suit?

now an ounce buys TWO good guns or suits.

which one is suddenly mispriced?

Baley, I think the world of you - but you can do the math as well as I. In general, your observations would hold. As far as the price of a fine suit, that ratio fluctuates just as the gold/silver ratio fluctuates as imbalances in the supply & demand reconcile themselves over time.

The problem with inflation, or hyperinflation is that it is not equitable across the population's economic spectrum. The primary beneficiaries are the ones who are first in line. By the time that the higher prices filter through the economy, the last ones in line get hurt the most. In this case, it is people who don't own assets find themselves awash in a sea of higher prices that they can't pay. The bankers get free money and are incidently - first in line. Nice arrangement, eh? For them, maybe - but not for most folks.

The insidious problem is that of taxes. If you are a farmer with $600,000 in land and that land goes to $3,000,000,000 - and your property taxes go from 1.0% to 2.0% - what happens to you if you don't have oodles of cash or own some gold? I don't know positively, but I'd be surprised if many farmers could protect themselves.

Just because you want to believe that such a scenario is simply ludicrous does not mean that it's not a real possibility. My point is always - what happens when the debt numbers just can't be controlled? (Actually, they are already uncontrolled.) What happens when the debt numbers are increasing faster and faster (which they are).

You tell me.

Baley

If you are a farmer with $600,000 in land and that land goes to $3,000,000,000 - and your property taxes go from 1.0% to 2.0% - what happens to you if you don't have oodles of cash or own some gold? I don't know positively, but I'd be surprised if many farmers could protect themselves.

well, I guess if he's a GOOD farmer, his wheat or corn or whatever is also a lot more valuable, in dollars per bushel. So he'll sell it, and pay his bills including production costs and taxes.

AND if he's also a smart farmer, he will not have refinanced his property as it went from $600k to $3Million (and wasted the money) and his mortgage will be ever easier to pay off, both because he's making more income in number of dollars, and because the interest is front loaded in a mortgage, so the later payment go more toward principal than interest.

So he's better off.

Unless he's a bad farmer, or dumb farmer, (or sometimes, if he's just an unlucky farmer)

jmski52

If you are a farmer with $600,000 in land and that land goes to $3,000,000,000 - and your property taxes go from 1.0% to 2.0% - what happens to you if you don't have oodles of cash or own some gold? I don't know positively, but I'd be surprised if many farmers could protect themselves.

<<well, I guess if he's a GOOD farmer, his wheat or corn or whatever is also a lot more valuable, in dollars per bushel. So he'll sell it, and pay his bills including production costs and taxes.

AND if he's also a smart farmer, he will not have refinanced his property as it went from $600k to $3Million (and wasted the money) and his mortgage will be ever easier to pay off, both because he's making more income in number of dollars, and because the interest is front loaded in a mortgage, so the later payment go more toward principal than interest.

So he's better off.

Unless he's a bad farmer, or dumb farmer, (or sometimes, if he's just an unlucky farmer)>>

Well, the number was $3 Billion, not $3 Million, but let's overlook that. The point of my post was that those who are first in line at the money creation window always get a bigger benefit from inflation, and the farmer is generally not first in line, or even second.

You've added a couple extra "ifs". His harvest might be more valuable, but it'd better be - because his production costs have gone up as well and his borrowing costs for this year's crop are much higher than last year's.

My point was that any asset is subject to higher taxes as the debt increases and the politicians grope for more free money. All this process does is put any business into a margin squeeze, and otherwise viable businesses will fail as a consequence.

When enough businesses fail, nobody's better off even if they were dumb managers.

TheRegulator

well, I guess if he's a GOOD farmer, his wheat or corn or whatever is also a lot more valuable, in dollars per bushel. So he'll sell it, and pay his bills including production costs and taxes.

AND if he's also a smart farmer, he will not have refinanced his property as it went from $600k to $3Million (and wasted the money) and his mortgage will be ever easier to pay off, both because he's making more income in number of dollars, and because the interest is front loaded in a mortgage, so the later payment go more toward principal than interest.

So he's better off.

Unless he's a bad farmer, or dumb farmer, (or sometimes, if he's just an unlucky farmer)


I know the original point of this thread has nothing to do with farmers and grain prices, but just wanted to say that I hope no one actually believes this...

Baley

Are we having a conversation? Regulator, do you want to explain what you mean, do you object to the whole premise of supply and demand

or should I counter your "no it isn't" with a "yes it is!"

57loaded

i'd guess DirecTv would be $400 a month

and gas oh, about $30 a gallon

still giddy?

in 365 days. gosh what could happen between now and then?

well, QE VII, Ben with a Saturn V equipped helicopter and a re-election for BHO...

jmski52

well, QE VII, Ben with a Saturn V equipped helicopter

mounted with 50mm rapid-fire cannons

Konahead

<< <i>I sell and invest in Mayan calendars! >>



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