gold and silver = horse and buggy, ie relics of a past era

lseecon

While I like looking at gold and silver coins and bullion as much as the next gold bug, I have finally come to the realization after 35 years of collecting and investing in precious metals, that all gold and silver really are these days are relics of a bygone era, and really just something to enjoy and think of as an end of the world, shtf insurance policy (and even in that case, aren't ammo, guns and food much more valuable?) I have been buying gold and silver since I was a kid (in my 40s now) always thinking that was the way to accumulate wealth. However, had I simply taken the money I "invested" in gold and silver (even when gold was at 400 and silver at 6 bucks) and put it in the S&P 500 I would have immensely more wealth than I do now. I am sure some of you have done the same. But after working in the real world for 20 years, mostly with very wealthy families, individuals, business owners, etc. I have never once encountered someone who obtained their wealth or success through buying gold or silver or "precious metals. In fact none of the wealthy families I work with (ranging from $5m to $300m+) even have 1% of their wealth in any type of precious metals investments. They all got wealthy through the capital markets or real estate. Mostly by their companies going public or being bought out by private equity or by other companies. Even those inheriting wealth, usually inherited stock portfolios that have appreciated by leaps and bounds throughout generations. I have seen individuals and families inherit modest parcels of real estate or stock portfolios, have held those assets over time and now are unbelievably wealthy. This is the world we live in and have lived in since the industrial revolution.
Many buying gold and silver are serial pessimists, just waiting for a stock market crash or doomsday scenario that will never happen in their lifetime. This country has survived through a revolutionary war, civil war, world wars, natural disasters, great depression, etc. and guess what, life always goes on and the capital markets and stocks and businesses always recover. After every stock market crash or depression or recession, there is always a recovery to greater highs and greater wealth creation. Even if the stock market crashed 75% back down to where it was after the 2008 crash, guess what, it would eventually make new highs again during our lifetime. Always has, always will.
For anyone to think that during their lifetime is when the "big" one will happen and the SHTF and life as we know it ceases to exist, is living in a fantasy world and naïve.
Lots of gold bugs talk about hoarding gold to hedge against the dollar collapse. Guess what that aint gonna happen in your lifetime. Its just not possible. There is no alternative to the US dollar for the forseeable future. You are more likely to get hit by lightning or win the lottery than to see the US dollar suddenly collapse over your lifetime. Could the US dollar weaken over time? Sure that's possible, but it will never collapse abruptly. Could it someday be worthless? Perhaps but that would be hundreds of years from now when we and our kids and likely our grandkids are long dead.

Gold and silver are not really places to "invest" your money. Never have been and never will be. I suppose there is nothing wrong with keeping a % of your wealth in gold as a shtf insurance or as a hobby or collectible, but that's all gold and silver really is, gold more so than silver.

I have no plan on selling my gold and silver, but I certainly have no plan on really ever buying more (though when gold gets back down to $400 and silver $6, I would buy some more coins as I like the collecting aspect of gold and silver). Its just a little insurance policy, much like the flood insurance or homeowners insurance or life insurance I have.

I used to think what a great asset to pass on to my kids someday, some gold and silver. But in reality, the best thing to pass on to them would be shares of Facebook stock or Apple or Chevron or Disney. Or a house or parcel of real estate, or commercial building. That's where real wealth creation is made.

So enjoy your gold and silver much as you would enjoy sports cards, or collectibles. As a hobby. They are nice to look at and enjoy, but as far as a legitimate store of wealth or accumulation of wealth, that era is gone. Rather than fight change, embrace it.

That's my 2 cents for the day.

As mentioned above, if the doomsday scenario really does happen, make sure you have guns, ammo and food, that is really the best insurance policy.

Baley

You've made some very good points.

Welcome to the boards

yellowkid

Rising gold was a help after 2008 when my paper investments were hammered, although I wasn't holding "enough", or anywhere near to offset my losses. I just sold the rest of my "paper" gold, I'm going to buy an equivalent amount of slabbed gold buffalos to put in the SDB. Why? I don't know, inflation hedge? SHTF funds? It's just nice to have.

jmski52

It's nice to have new input in this forum. Welcome!

You seem to have made the same point over and over, that silver and gold aren't investments and that they won't take the place of conventional investments to make you wealthy. You're entitled to your opinion, even though you are wrong.

I personally know of at least one person since 2009 whose net worth has increased nicely, and he did especially well from 2006-2008 as he was getting much heavier into precious metals.

Incidently, in 2000-2001 when I was entirely pumped up from nice gains in my stock holdings (much like stock market investors are right now), I lost 100% of my SEP-IRA holdings during the dot.com bubble popping. I admit that it was my mistake in not paying closer attention. For the record, the stock market can and does have terrible moments.

I would suggest that many or most of the people you cited above have had staying power and THAT is as much a root of their success as what they actually invested in. Anyone with staying power in the metals has done very well since 1998, and it is likely that won't change either.

MGLICKER

<< <i>However, had I simply taken the money I "invested" in gold and silver (even when gold was at 400 and silver at 6 bucks) and put it in the S&P 500 I would have immensely more wealth than I do now. >>



Are you stating this after carefully evaluating the worth of stocks vs metals, or just caught up in the froth of the equities market?

Every market bubble features those with little knowledge of the investment looking like a genius and the wise money looking like a fool.

.....that always reverses itself as markets offer very few free rides.

When Silver traded near $50 in the late 70's, the guy who bought in at $30 was brilliant and the fellow who got in at $40 looked smart.

A few years later silver dropped to under $10 and then under $4 an ounce.

PerryHall

I'm convinced. I'll be selling all my gold and silver and I'll use the money to buy bitcoins. They are the wave of the future.

VanHalen

When we can print as much money as we need who needs gold or silver?

Remember none of the issues that led to the 2008 crash have been resolved. We've poured $10 trillion on the problem and parked interest rates at 0% for 6 years.

We'll soon have 70% of our population in the low income category. We're currently at 50% which is triple what it was 40 years ago and up 20% in the last 10 years. Where does this end? It ends when 99% of the money is in the hands of 1% of the population. For 6 years Fed policy and deficit spending have kept half the country out of a depression, there's a reason why so much cash hoarding is going on by those in the know.

That is the end game. Happy playing.

coolest

Before the year 2015 is over you see the contanental dollar (Red curency) devalued by 30% and then another 30%, only then when its to late you will realize that If I only had some gold or silver I might be able to find a meal. The reason you feel gold is useless is because you have been braiwashed by the mainstream media that is only interested in crushing metal prices to keep the illusion of the petro-dollar alive, just long enough to be able to blame the "terrorists", or ebola, or the veterans, or the patriots, for the colapse the dollar. Most likley however you are a CIA troll and allready know all this.

roadrunner

October 2015- January 2020 is going to be a difficult time for the stock market. While it's been a great ride from 2009-2014 so far, the next phase will be pretty much the opposite of those 5 years. We've gotten used to gold and silver being barbarous relics again. They will do much better during the Oct 2015-Jan 2020 phase.

hchcoin

Very interesting perspective. I would say that gold and silver are not relics of a past era. Rather, gold and silver are one asset class that can be used to diversify your investments along with equities, real estate, cash, bonds, guns, food, etc........ Each asset class has its day in the sun over time as the economy chugs along through business cycles. If you study the history of financial markets one thing is certain, all markets go up and down over time. Unlike the horse and buggy, gold and silver still are used on a daily basis by governments as reserves, in industry and in making jewelry. When my wife does not crave gold, silver and platinum jewelry, then I will agree with you that precious metals have become relics

tneig

Its healthy to stretch the thinking on this subject.

GrumpyEd

PMs have their place and if or when SHTF comes then they shine.

If a person bought safe insured fixed income investments (that can not lose unless the gov bellies up) in 1964 they would be about equal to silver today. The old EE bonds that doubled in 10 years (the ones you buy today take 19 years) but since most of the time it was still 10 years just for rough math:

$1 in 1964 - $2 in 1974 - $4 in 1984 - $8 in 1994 $16 in 2004 - $32 in 2014.

If you do it with the exact numbers of when they started stretching the 10 years the result is less but still ahead of silver today.
You would have paid tax on the gains as each 10 year period ended but even with hoarding silver there is tax liability when you sell.

RMLTM79

I think people get turned off by metals when they are outperformed by another investment or they become stagnant. No doubt the OP made very valid points but just like everything else, metals rise, fall or just stay put. If one is fortunate enough to be into the right investment at exactly the right point in time then its easy to say that this is where your money should be.

tneig

You can have a stack of gold coins 5 feet high and either feel, rich and feeling great, or down and losing.

I've learned a lot here on this forum about relationships to value, money, PMs, savings, security, and holding.

Sometimes I can't remember if I took the red pill or the blue pill. I can't tell you which pill to take.
Just be sure to follow it with a stiff drink...

cohodk

<< <i>

<< <i>Most likley however you are a CIA troll and allready know all this. >>

Can't speak for the OP, but I can point to at least one on this board (either that, or he's a "success story")....

"We'll know our disinformation program is complete when everything the American public believes is false."

Cheers, >>



Let him who hath understanding reckon the number of the beast...

DeepCoin

I understand the reasoning some people have for keeping gold as a primary investment and everyone gets to vote with their money. I would raise a couple of points that the OP obliquely addressed. If you look at the total money supply (use your own definition among the many choices and then compare that to the total value of all the gold above ground and then you see that on a comparative basis, gold is a much smaller percentage than it was 100 or 50 years ago.

One gold based website, OnlyGold, estimates that all the existing gold in the world is worth about 7 trillion dollars. A substantial sum of money, but certainly a drop in the buck compared to all the other assets in the world. The US GDP in 2013 was over 16 trillion dollars and that is just one economy. I have not attempted to deal with world wide GDP, but just wanted to provide a baseline of how much gold there is above ground versus economic activity.

Clearly it will always be a great store of value in hard times. Transactionally, it is probably not of great use in a SHTF scenario. If you look at countries with runaway inflation, people do not commonly use gold to transact any business. They use a different currency. In many places of high inflation the US dollar becomes the currency of choice.

Gold will most likely never dominate economies as it once did, but it will always have useful purposes. When I lived in Amish country I noticed the horse and buggy still in use earlier this year.

mhammerman

Guess they didn't get the news about horses and buggies.

"Hey buddy, can you spare an ASE?"

Overdate

Money is a store of value, a unit of account and a medium of exchange. For all three purposes, gold and silver have a lot more competition than they did in the 19th Century. Government-issued currency, not gold, is a universally accepted medium of exchange and unit of account. Banking is safer, more convenient and more trusted than was the case a century ago. Buying and selling with gold and silver coins is more difficult than in the pre-1933 era, as it usually involves converting such coins into FRN's, or at least looking up and calculating the exchange rate. Instant liquidity makes other commodities, bonds and equities competitors to gold as a store of value, which was not true 150 years ago when buying and selling such items was more difficult and more costly.

Gold and silver are still useful as an inflation hedge, but today other commodities (such as oil and base metals) can serve this purpose also and they are much easier to own, buy and sell than they were when the gold standard reigned supreme.

OPA

<< <i>Money is a store of value, a unit of account and a medium of exchange. For all three purposes, gold and silver have a lot more competition than they did in the 19th Century. Government-issued currency, not gold, is a universally accepted medium of exchange and unit of account. Banking is safer, more convenient and more trusted than was the case a century ago. Buying and selling with gold and silver coins is more difficult than in the pre-1933 era, as it usually involves converting such coins into FRN's, or at least looking up and calculating the exchange rate. Instant liquidity makes other commodities, bonds and equities competitors to gold as a store of value, which was not true 150 years ago when buying and selling such items was more difficult and more costly.

Gold and silver are still useful as an inflation hedge, but today other commodities (such as oil and base metals) can serve this purpose also and they are much easier to own, buy and sell than they were when the gold standard reigned supreme. >>



As Derryb has mentioned numerous times before: Gold has a tendency, I can't say it's pecked to the US $, to go up on a weak $ and down on a strong $. The $ has risen for 10 consecutive months, the most since LBJ days.

291fifth

If you bought gold at $2000 and silver at $50 they are not a "good inflation hedge".

lcoopie

Nice buy about 10 years ago

derryb

"We are living through unprecedented times, and if there is one lesson to keep in mind it is this: The failure of a monetary system is never a smooth road paved with gold. It is rocky and undulating, with twists and turns that don't appear on any map.

But the destination is always without question: Gold inevitably responds to an expanding fiat currency supply. That simple." -- Mike Maloney

Metals are useless in a SHTF senario unless they are in the form of silver bullets.

fishcooker

Interesting. The truly wealthy people I've met..... none of them bother with the stock market. Returns are too low and the outcome too rigged.

greghansen

I only agree with you 100%. You didn't make a single point that I thought suffered from a false assumption.

secondrepublic

I appreciate your insights - thanks for sharing. Much of what you've written I agree with. Nonetheless, I don't think gold is anywhere near being a hobby-type relic. Government central banks hold a surprisingly large percent of their assets in gold... the U.S. has 70% of the value of its so-called foreign exchange assets in gold. They're not holding Euros, Yen, stocks, or other "paper" for the long term. Those massive gold holdings are not just a relic of the past; the Chinese, Russians, and others are today actively building up their central bank holdings of gold. So no, I don't think gold is a relic. It's an asset which in some circumstances can also be used as a currency and which in all cases can settle debts and be used as collateral and exchange.

Yes, there are other ways for individuals to get rich, and probably a lot easier / more effective ways to do so. Real estate can be great. Even better is starting a business which does well. Being someone else's employee is usually the worst way to try to get rich.

Gold will probably shine brightest when we experience a period of high inflation. Right now, and for the past 30+ years, all we've seen is relatively low, consistent inflation. That's not the norm and it's not a permanent condition. In the 1970s we had 10%+ inflation in this country. Eventually that'll happen again, and it could even be worse. That's not some crazy unlikely, SHTF, asteroid-hitting-the-earth scenario. High inflation is actually really likely to happen again in your lifetime, and perhaps more than once. At that point you'll be glad you have gold.

jmski52

If you bought gold at $2000 and silver at $50 they are not a "good inflation hedge".

Your timing must be impeccable. How much $2,000/oz gold and $50/oz silver are you holding, 291fifth?

Unknown

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Icollecteverything

Some people talk about when TSHTF here. If the grid goes down a horse and buggy could be a very valuable thing to have. Not so sure about silver and gold.

Overdate

<< <i>Right now, and for the past 30+ years, all we've seen is relatively low, consistent inflation. >>


All we've seen lately are government-created numbers manipulated to make it appear that inflation is low.

OPA

<< <i>

<< <i>Right now, and for the past 30+ years, all we've seen is relatively low, consistent inflation. >>


All we've seen lately are government-created numbers manipulated to make it appear that inflation is low. >>



Yup...most conspiracy advocates would agree with you.

VanHalen

<< <i>

<< <i>Right now, and for the past 30+ years, all we've seen is relatively low, consistent inflation. >>


All we've seen lately are government-created numbers manipulated to make it appear that inflation is low. >>



The 3%+ inflation we've experienced (by the CPI) for 40 years has those $0.99 value meals now at $4.99 when they're on sale. A 400% increase (by CPI number).

With $10 trillion in freshly created greenbacks out there and another $10 trillion coming in the next ten years? Get ready for the $10 value meal.

konsole

Do as the banks do, not as they say. Gold is their savings and fiat is their play money. They hold gold and play with fiat, you should do the same. Gold is the ultimate enemy to fiat currency, and if you only needed one reason to keep pm's then here it is...



JP Morgan was key in the creation of the Federal Reserve, and the businessman with the top hat on the "monopoly" board is Morgan himself.

There is a reason they call them the "Precious Metals"
chemist explains for us

If stocks and pm's are going up together then the media claims that metals are inflation hedges. If stocks go down and pm's go up then pm's become safe havens. If stocks go up and pm's go down then the economy is great and the metals are barbaric relics. See the games that are being played?

Educate yourself fully about pm's, then watch daily price movements of pm's relative to news stories for atleast a few months, and then decide for yourself if something about the way the metal prices move seems strange.

veryfine

<< <i>Nice buy about 10 years ago >>


So true

Overdate

<< <i>

<< <i>

<< <i>Right now, and for the past 30+ years, all we've seen is relatively low, consistent inflation. >>


All we've seen lately are government-created numbers manipulated to make it appear that inflation is low. >>


Yup...most conspiracy advocates would agree with you. >>


I'm not a conspiracy advocate. The government's been manipulating the CPI right out in the open.

Link.

guitarwes

<< <i>If you bought gold at $2000 and silver at $50 they are not a "good inflation hedge". >>



You only get hurt on a rollercoaster if you jump off.

cohodk

<< <i>

<< <i>If you bought gold at $2000 and silver at $50 they are not a "good inflation hedge". >>



You only get hurt on a rollercoaster if you jump off. >>



Unless you get stuck at the top. One could starve to death waiting to be rescued.

jmski52

Nobody bought at the top. The only thing that happened at the top was a few unsold offers. There were no bids, or it wouldn't have been the top.

OPA

<< <i>

<< <i>

<< <i>If you bought gold at $2000 and silver at $50 they are not a "good inflation hedge". >>



You only get hurt on a rollercoaster if you jump off. >>



Unless you get stuck at the top. One could starve to death waiting to be rescued. >>



You do not need a parachute to skydive. You only need a parachute to skydive twice.

cohodk

..

cohodk

Lots of folk named nobody right here on these boards.

3stars

In a SHTF scenario, PMs are useless. Why would I want a shiny disc of metal that serves no purpose in trade for food, fuel, medicine, etc? Trade me something I can actually use... If you think that once the scenario is over (it would need to be an apocolyptic scenario, not a localized issue) and the markets come back you'll even be alive, well, best of luck to you.

3stars

Point being that traditional currencies will be useless (PMs. cash, stocks, etc) and that necessities will be the new currency (food, medicine, fuel, etc). Money and its equivalents will be just paper and metal bits usefull for plugging a ho;le in your fuel tank or as fire starter.

Yacorie1

<< <i>

<< <i>In a SHTF scenario, PMs are useless. Why would I want a shiny disc of metal that serves no purpose in trade for food, fuel, medicine, etc? Trade me something I can actually use... If you think that once the scenario is over (it would need to be an apocolyptic scenario, not a localized issue) and the markets come back you'll even be alive, well, best of luck to you. >>

I guess I missed your point. Do you believe that stocks/bonds/T-bills/"cash"/deed to property/Bitcoin/etc. will be more useful than PMs? PMs have a longer history as "money" than anything else, and would likely be one of the first forms of "money" when society is re-established. However (IMO), one should address water/food/shelter/defense before "storing" excess in PMs. Suggest Rawles' "Patriots" for such a scenario.

Cheers, >>



Water, food, guns, ammo - all great and I agree. However, 1 guy with all the guns in the world isn't going to stop a mob of people who decide they're coming to take his stuff. If this type of scenario actually came to be, you'd have to band together in groups to have a chance IMO

Baley

This type of thread often leads directly to a "what about SHTF scenario", here are a few previous discussions on this board regarding definitions, probability, and PM utility intherof

SHTF?

SHTF??

SHTF???

No SHTF!

OPA

It's always interesting to review some of these older threads. I wonder what happened to all the SHTF Doomsday Preppers who were predicting imminent Armageddon. I don't see them post anymore. Must still be locked in their bomb shelters with rifles and ammo near by.