Gold Bugging
I'm considering buy some gold or silver or other relatively stable commodity as a hedge against the dollar (and other fiat currencies), but I don't know very much about it. Is anyone else on this blog knowledgeable about what the best way is to make such a transaction?
I'm drawn to some of the digital gold currencies like e-gold or GoldMoney. These are companies, where you have a gold account. You buy a number of grams of gold, they are supposed to keep them in a vault for you, and then you can perform digital transactions (like paypal) or maybe even debit transactions against the account. At the time of each transaction, the dollar amount charged is converted from gold at the going exchange rate.
Are these companies safe?!? Are they trustworthy or fly-by-night? If they are legit, they seem safer than buying gold stocks (won't move as fast), and more convenient than buying bullion. I'm considering moving about 20% of my savings into gold or silver just in case we see INFLATAGEDDON.
Thanks in advance.
I'm drawn to some of the digital gold currencies like e-gold or GoldMoney. These are companies, where you have a gold account. You buy a number of grams of gold, they are supposed to keep them in a vault for you, and then you can perform digital transactions (like paypal) or maybe even debit transactions against the account. At the time of each transaction, the dollar amount charged is converted from gold at the going exchange rate.
Are these companies safe?!? Are they trustworthy or fly-by-night? If they are legit, they seem safer than buying gold stocks (won't move as fast), and more convenient than buying bullion. I'm considering moving about 20% of my savings into gold or silver just in case we see INFLATAGEDDON.
Thanks in advance.
Comments
I would lean towards buying gold mining operations, if you aren't one to lean toward the apocalyptic.
Personally, I think it's a pretty poor investment.
You can never have enough guns, remember this. Also, consider an underground compound for storage of your canned goods, rations, bottled water, 55 gallon drums of gasoline and armament. I would also have an action plan for a rally point for family and a FEW close friends to meet up with. That way, no one will get followed to your underground compound. Consider reloading kits, as this will be much easier to store and the reuse of your brass shells will be a necessity in the later years (when the real decay of society occurs). Always remember your ammunition supply, this is your lifeblood, you will go through more ammo than food or bottled water. Get a good survivalist book, because by God you will need it. I'm not talking Baer Grylles film in the wilderness sleep in a hotel type survivalist book. Something that will go into detail on how to snare small game and spear/catch fish. You won't be able to purchase these items anymore either. Water filtration is key.
Gold will only be useful as a nifty trinket.
Good luck. Start digging today before it's too late.
I also recommend purchasing a bicycle power generator. You can use it to recharge flash lights, to power pumps (for water), and at least at first to listen to the radio. Also, it's good exercise, which is important because you'll be laying low to avoid the brigands.
I'm thinking a lot more of a middle ground, something akin to 1970s hyperinflation. I have money which is for near term savings (example, buying a house at some time), which I distinguish from my long term retirement savings. As the stock market goes south, so goes the 401k, but it's got 40 years to recover so that's alright.
The short term savings may only have a few years to recover, so I hesitate to put so much of it into stocks. So my choices for that are going to be relatively stable things. The best is something stable that beats inflation (5% CD in a 3% inflation market). But if that inverts too terribly, I'd at least like to have something that tracks inflation. I think gold, silver, and other metals have pretty closely tracked inflation since about forever. So I'm just looking for something simple that's a hedge against a declining dollar, as opposed to an investment that I want gains out of. Does that make sense? I would agree with you that if I want to make a profit, gold probably sucks.
That's an interesting idea. I did what all rational people do when they don't know about something, and I Googled TIPS. I thought this quote I found was especially humorous.
I just find it amazing that despite everyone knowing that CPI isn't entirely credible, that Greenspan or other economists might argue that it's overstated.
What's your timeframe for buying gold and when/how will you sell it? These questions determine whether goldmoney is a good idea for you.
This is not all I want to do with Gold. Despite the common myopic comments like Jazen's, there have been many financial blowups throughout history, and Germany's in 1923 only took a few years.
Paper money represents a promise that someone will give you something real in exchange for the promise. It is possible for a promise to be broken, but if you actually have the thing the promise stands for (or used to stand for) then you don't have to put your faith in the people who print the promise notes. We can count on those promises today, but gold is for a time when those promises might collapse.
I know lots of people think "that was then" and point out that these things don't happen anymore, but I actually think of it as an extreme longshot on the law of averages. It's not that it won't happen again: it gets more likely every day. Plus, as we look back in 10-20 years, it will become pretty obvious that the U.S. economy was pretty much destroyed before 9/11, and the damage was put off a few years by allowing money printing and enormous runup of debts that could/would never be payed.
So, if you are keeping gold for a collapse of some kind, not a bad idea. If you want it for an investment, biliruben is right: terrible investment. But this points to the heart of the matter, you make an investment to grow your wealth. Gold doesn't grow. But the point of gold is that it doesn't shrink either, it just sits there.
So, who thinks we're going to have positive GDP for the next 8 quarters? If you understood about the coming net-oil-export crisis that is going to hit importing nations, how does that show of hands change? Mmmm hmm.
Anyway, one more thing I want to address. Maybe it is because I am a "buy and hold" gold investor and I don't plan on spending it until things are real bad, but I don't understand the convenience argument. A few years ago, I tried to make this counterpoint argument.
Suppose you want to buy a house for $250,000 and gold is $650/oz. You would need 400 (troy) ounces. I have a cardboard box with 400 silver rounds and it weighs 31 lbs. At 9x12x5 inches (gold is more dense and would be a bit smaller even), I could strap it onto my bike and go down to the bank to buy the house whehever I wanted.
I'd say a stable, non-inflatable, totally free (in the freedom sense) money that is portable in single family home amounts by one person -- that's pretty darn convenient! Of course, I think the fact that other people control the value of my paper money is highly inconvenient. The fact that we're all forced to "invest" and make sure our money "grows" just so it can buy the same amount of stuff -- isn't that pretty damn inconvenient? I hate how much I have to think about my money, put it at risk and try to match inflation. I NEVER think about my gold. It just conveniently sits there.
So that's my perspective. Thoughts?
And yes, I have guns, too if all we're going to do here is crack jokes.
Yes, you have guns, but they are worthless without the underground compound, duck and cover, get digging!
Also, you mentioned you could cart your metal down to the bank and buy a house. When buying/selling physical gold, is it actually that easy? I had gotten the impression that it was a little bit more effort to do than that. What is the best way to actual buy and sell physical gold?
It was that easy. It would probably be similarly easy in the other direction, though you might want to shop around to avoid a large service fee.
So, then you could go to the bank.
Basically, this is my 401(k) plan because I can't possibly imagine hitting the housing bust, peak oil, dollar collapse, the boomer generation retirement, social security's death, bird flu or some outbreak, China's coming economic dominance, plus whatever we don't already know is coming! -- I don't see how we get to 2035, when I turn 65, without a major economic crisis that wipes out traditional 401(k) plans.
I must admit I've never sold any metal, but the guys I buy from tell me where theirs comes from sometimes. Often estate sales and such. It is pretty easy to trade and in Washington there is no sales tax on bullion trading. I suspect you can probably get paid cash when you sell until you get to a certain point -- but depends where you go, too. I go to northgate sometimes, and there is a place up north called westgate gold in edmonds that I used to go to a lot before I moved. Have not bought any since spring -- waiting for the big credit unwind to take metals down with it.
Have not heard of Pecunix until now, but I'm not into the digital side so that's not very meaningful.
Jazen, the guns aren't worthless if I can find your above ground compound, so keep waiting and not digging.
Sorry.
It always amazes me how much tougher people think they are when they have a pistol.