Gold?

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nick2302
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Gold?

Post by nick2302 » Sun Nov 26, 2017 11:44 am

Does holding actual gold coins make sense as part of an overall strategy for long term investments? The older generations in my family, being from the old country, had a strong urge to hold gold. Not gold stocks but the real deal coins. I inherited my share of the family gold and have added a bit to it over the years. It is a very small percentage of the total but I keep it and did add to it more because it was a belief held by previous generations. At the time I added to it gold was about 300.00 per ounce. I have no intentions to add more to the collection but am wondering if I should go ahead and buy a 1oz American Eagle for each grand child, even thought the price per oz. has probably topped out, barring a world calamity.

Thoughts?

Thanks

livesoft
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Re: Gold?

Post by livesoft » Sun Nov 26, 2017 11:54 am

So your elders before you did nothing with their gold except die with it. I see no more reason to own gold than to own beanie babies or Hummel figurines.

It seems no one ever sells their gold. Why is that?

I'd like to see some instances how gold actually helped people. I am thinking that folks in Syria, Libya, Yemen, Iraq, and other failed states might have been helped, but I actually do not see how because of its weight which makes in hard to move to a safe place.

The Ecstacy of Gold
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nick2302
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Re: Gold?

Post by nick2302 » Sun Nov 26, 2017 12:08 pm

I have about a fair collection and it doesn't take up much room and is not that heavy. If I sold off the gold I bought back in the 70's and 80's I could make a handsome profit. But I think of gold as a last firewall in case of emergency, break glass type of holdings. I won't even call it an investment. It is just something that is pretty to look at and in some ways (maybe??) a comfort. Not exactly sure how to describe the feeling it engenders.

There has to be a reason that gold means something, as FDR made it illegal for US citizens to own gold and wanted everyone to turn their gold in for paper money. Most immigrants did that and some, who ignored it were long time residents of the US and held on to it. My Dad always hated FDR and that turn your gold in was one of the many reasons.

Klapamos
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Re: Gold?

Post by Klapamos » Sun Nov 26, 2017 12:13 pm

I personally think holding 5-10% in gold/silver is a good financial insurance incase the dollar drastically drops in value. With that said take a look at some videos on youtube by "BELANGP" this guy is a world of information on the topic.

nick2302
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Re: Gold?

Post by nick2302 » Sun Nov 26, 2017 12:28 pm

Very interesting site on You Tube. Thanks for sharing it.

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Sandtrap
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Re: Gold?

Post by Sandtrap » Sun Nov 26, 2017 12:47 pm

There's gold in most of the ground and mountains where I live. Site of one of the second gold rushes after California. Looks pretty in a sluice and a gold pan. I think it's around $36 a gram or so. But, you have to dig it up.
A Vanguard fund is a lot easier on the back. Good enough for me. :D

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cinghiale
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Re: Gold?

Post by cinghiale » Sun Nov 26, 2017 1:14 pm

I can be easily persuaded that gold has been a crappy investment during all our our lifetimes.

Also, I can be easlily persuaded that the unfathomable levels of federal, state, municipal, corporate and personal debt in this country and around the world simply cannot be sustained.

So, I hold just around 5% of total investable assets in gold and silver via Central Fund of Canada (CEF). It’s as much disaster insurance as it is an investment. If we somehow bounce merrily along without any great monetary crisis or disruption for another few decades with trillions upon trillions of dollars of debt added to the already incomprehensible aggregate total, I’ll be happy to come back to this forum and engage in all appropriate mea culpas.
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Optmst
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Re: Gold?

Post by Optmst » Sun Nov 26, 2017 1:20 pm

Like others have said, I view holding physical precious metals in much the same way as having fire insurance on my house and auto insurance on my car. Neither of those insurance policies are intended to produce an investment profit, but to reduce the loss when something bad happens. Having a portion of assets in gold and silver will reduce the overall risk profile of a portfolio. My guess is the grand kids will be very happy to have a gold eagle when they are old enough to appreciate its value, but they would likely be happier with 60 silver eagles after the price of silver increases faster than gold. I will not worry about the price of gold or silver "topping out" until the USA begins to pay down its 20 Trillion debt and interest rates are raised to higher than the true rate of inflation.
I'm not as concerned about the return on my money as I am the return of my money. (Often attributed to Will Rogers)

livesoft
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Re: Gold?

Post by livesoft » Sun Nov 26, 2017 1:25 pm

Optmst wrote:
Sun Nov 26, 2017 1:20 pm
..., but to reduce the loss when something bad happens.
I am still trying to understand how gold helps "when something bad happens." Bad things have happened to people around the world and gold would have been no help to them even if they had gold, so I'm skeptical that gold will help in the US if bad things happen. There are probably saner things to have around than gold for when bad things happen.
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Uniballer
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Re: Gold?

Post by Uniballer » Sun Nov 26, 2017 2:02 pm

livesoft wrote:
Sun Nov 26, 2017 1:25 pm
There are probably saner things to have around than gold for when bad things happen.
You can mold gold into bullets, assuming you have powder, casings, primers and a reloading setup. Just saying.

Valuethinker
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Re: Gold?

Post by Valuethinker » Sun Nov 26, 2017 2:04 pm

nick2302 wrote:
Sun Nov 26, 2017 11:44 am
Does holding actual gold coins make sense as part of an overall strategy for long term investments? The older generations in my family, being from the old country, had a strong urge to hold gold. Not gold stocks but the real deal coins. I inherited my share of the family gold and have added a bit to it over the years. It is a very small percentage of the total but I keep it and did add to it more because it was a belief held by previous generations. At the time I added to it gold was about 300.00 per ounce. I have no intentions to add more to the collection but am wondering if I should go ahead and buy a 1oz American Eagle for each grand child, even thought the price per oz. has probably topped out, barring a world calamity.

Thoughts?

Thanks
You will note that the "disaster preppers" have switched to bitcoin, apparently. Certain in the knowledge that bitcoin will be safe in the event of a collapse in civilization, no doubt.

Gold is something we have discussed here ad nauseum. Check the threads.

A couple of points:

- if you have to get your money out of a country, diamonds are a lot more portable. This is how many Jewish families got their wealth out of Continental Europe in the late 1930s (they would not have been able to smuggle gold past the border guards)

- William Bernstein wrote a paper "The Most Patient Asset" on Efficient Frontier. That's the best analysis I know of re Gold as a portfolio component.


- again from an academic viewpoint, this paper by Campbell Harvey and Claude Erb, is the best one that I know of.

http://www.nber.org/papers/w18706

https://faculty.fuqua.duke.edu/~charvey ... nstant.pdf

Valuethinker
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Re: Gold?

Post by Valuethinker » Sun Nov 26, 2017 2:05 pm

Uniballer wrote:
Sun Nov 26, 2017 2:02 pm
livesoft wrote:
Sun Nov 26, 2017 1:25 pm
There are probably saner things to have around than gold for when bad things happen.
You can mold gold into bullets, assuming you have powder, casings, primers and a reloading setup. Just saying.
Silver generally credited with more uses: against vampires, werewolves etc.

grettman
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Re: Gold?

Post by grettman » Sun Nov 26, 2017 2:06 pm

When the you know what hits the fan, you just need one or more guns and plenty of ammo. Those items will help you keep what you have and help you acquire more from those who don’t have those tools.

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Optmst
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Re: Gold?

Post by Optmst » Sun Nov 26, 2017 2:23 pm

My guess is that workers in Germany in the 1920s, or Zimbabwe in the 2000s, would have been happier if they had a few silver or gold coins than fist fulls of paper money that quickly became worthless trash. Yogi Berra said "Predictions are hard. Especially about the future." I don't know what will happen over the next few years, but I think it is prudent to place bets on several different possibilities. I certainly hope that the USA will not experience hyperinflation, or very high taxes which might be the only alternative our politicians can think of when it becomes obvious to all that the USA cannot repay any of its debts. Unfortunately, the paragraph below sounds to me a lot like the USA situation could become. The link below is interesting reading.
Economists believe that hyperinflations are caused by large persistent government deficits financed primarily by money creation (rather than by borrowing or by increasing taxation). As such, hyperinflation is often associated with some stress to the government budget, such as wars or their aftermath, sociopolitical upheavals, a collapse in export prices, or other crises that make it difficult for the government to collect tax revenue. A sharp decrease in real tax revenue coupled with a strong need to maintain government spending, together with an inability or unwillingness to borrow, can lead a country into hyperinflation.
https://en.wikipedia.org/wiki/Hyperinflation
I'm not as concerned about the return on my money as I am the return of my money. (Often attributed to Will Rogers)

livesoft
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Re: Gold?

Post by livesoft » Sun Nov 26, 2017 2:47 pm

Hyperinflation is happening in Venezuela right now. Gold does not appear to be helping anybody there.
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Optmst
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Re: Gold?

Post by Optmst » Sun Nov 26, 2017 3:05 pm

Most people in Venezuela don't have enough food to eat, and many cannot afford things we consider essential. I doubt that many of the workers there have gold or silver, but I must agree with you. Gold and silver will not help a person who does not have any when he wishes he did.
I'm not as concerned about the return on my money as I am the return of my money. (Often attributed to Will Rogers)

suemarkp
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Re: Gold?

Post by suemarkp » Sun Nov 26, 2017 3:43 pm

I too see PHYSICAL silver, gold, and platinum more as insurance and not as an investment. When hyperinflation comes to the US, I think the rest of the world will have experienced it prior, so the US will most likely be the last place to suffer hyperinflation (you'll know its coming). We may even get deflation here first so that will present a PM buying opportunity. Doing a financial reset with gold is a long long term hold (the coming disaster has been 5 to 10 years away for 50+ years now).

But there are other benefits of gold. If you physically hold it, few people should know you have it. Most other things (bank accounts, brokerage accounts, foreign accounts) the government knows about. To me, there is value in having something no one knows you have (should you be sued, should accounts be seized or frozen in a banking and investment "holiday"). It should be better than cash, as cash in the mattress has a negative yield. Gold can have a positive, negative, or neutral yield so it is best do be able to do some timing when you buy and sell. It is typically easy to sell at local gold/silver places, local coin shops, local refiners, or online. Best to research who gives the better deal in your area so you know who to go to when its time to liquidate. Most cash for gold places were a horrible place to sell to during the 2011 peak.

There are also some negatives. If you're going to cash it out legally, it is taxed as a collectable and not as a capital gain (so a higher tax rate). Some states also tax the purchase or the gains of some types of bullion and not others. So learn what is and is not taxed in your state and possibly adjacent states if they are close. Some foreign countries (typically Asian) really focus on .999 fine gold, and your 22K gold eagle would not be as valuable as a .9999 fine canadian maple leaf (assuming both contained one troy ounce of gold). Getting it out of the country is also reportable (like cash) if you have $10K or more in your possession. Don't try to say you only have $1000 in face value gold so you're not reporting it which in reality is $20K+ of gold. That typically won't work anymore.

Another negative is it could be stolen. So best to shut up about it and keep it in some sort of hidden safe. Keep your disaster cash in a similar place.

Right now, platinum and silver are at a rather low prices in their cycles of price. Palladium is high priced in its cycle but do not know where the peak will be). Gold is kind of in a rut, but I'm still buying dips, and waiting for the next dip below $1250. The peaks and valleys in PM cycles can be quite long -- 10 to 20 years at times.

I would keep your gold and not sell it.

Mark
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Mark | Kent, WA

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patrick013
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Re: Gold?

Post by patrick013 » Sun Nov 26, 2017 3:52 pm

One old story :

"It is stated that the late P. D. Armour cabled from Europe
early in 1893 to his representatives in America, instructing
them to secure and store away in vaults one million dollars in
gold. It is known that during the panic, later in that year,
Armour & Co. were well supplied with ready money."

In modern times many people stockpile treasuries. But gold
bought at a good price will appreciate also during the panic.
age in bonds, buy-and-hold, 10 year business cycle

smesman
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Re: Gold?

Post by smesman » Sun Nov 26, 2017 4:32 pm

The main thing gold has going for is that it is small/easy to store and transport, valuable and somewhat keeps up with inflation. It is not an investment but probably does better than cash (unless in case of deflation, but the government knows how to cure that.)

However, in pretty much any conceivable situation another solution would be better. E.g. In case of calamity, "prepping" type items would be more valuable, because you won't have to leave the house and buy/trade those items (who will know your gold coins are genuine anyway? and how will they give you change for a gold coin). If you just want to leave something to your grand kids, why not some beautiful art or things with sentimental value together with inheritance money? If you're afraid of (hyper)inflation, why not get TIPS?

In the end, investing in an index fund is probably the safest thing you can do because people will always value companies, as they are in the business of generating value for people.

technovelist
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Re: Gold?

Post by technovelist » Sun Nov 26, 2017 4:50 pm

smesman wrote:
Sun Nov 26, 2017 4:32 pm
The main thing gold has going for is that it is small/easy to store and transport, valuable and somewhat keeps up with inflation. It is not an investment but probably does better than cash (unless in case of deflation, but the government knows how to cure that.)

However, in pretty much any conceivable situation another solution would be better. E.g. In case of calamity, "prepping" type items would be more valuable, because you won't have to leave the house and buy/trade those items (who will know your gold coins are genuine anyway? and how will they give you change for a gold coin). If you just want to leave something to your grand kids, why not some beautiful art or things with sentimental value together with inheritance money? If you're afraid of (hyper)inflation, why not get TIPS?

In the end, investing in an index fund is probably the safest thing you can do because people will always value companies, as they are in the business of generating value for people.
TIPS are not designed to cope with hyperinflation. They would have to reset daily to do that.

Gold coins are not appropriate for use as hand-to-hand money during a crisis. Their value in a crisis that does not require fleeing the country is to preserve wealth until normality returns.

And those who had gold when they had to flee Germany, Vietnam, or many other places during a social collapse did much better than those who did not.

Silver dimes are far more appropriate for hand-to-hand money in a crisis, as their value is small enough to be useful in such a case.

However, gold has stabilizing value in a portfolio even if no existential crisis occurs; see the 1970's in the US for a domestic example.
In theory, theory and practice are identical. In practice, they often differ.

luckybamboo
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Re: Gold?

Post by luckybamboo » Sun Nov 26, 2017 5:03 pm

livesoft wrote:
Sun Nov 26, 2017 1:25 pm
Optmst wrote:
Sun Nov 26, 2017 1:20 pm
..., but to reduce the loss when something bad happens.
I am still trying to understand how gold helps "when something bad happens." Bad things have happened to people around the world and gold would have been no help to them even if they had gold, so I'm skeptical that gold will help in the US if bad things happen. There are probably saner things to have around than gold for when bad things happen.
It sure would seem like that living here in USA. Our neighbor is originally from India. Her mother-in-law's parents lived in Pakistan had to flee their home during Indo-Pak separation, and migrated to a different country with a suitcase full of gold ornaments. They raised 6 children for 7 years until the MIL's father found a way to make a steady income. The mom would go out and sell one piece of ornament and get 'ration' for that week using the money. So, they have tremendous affinity towards gold and she gave her daughter 500 grams of gold for her wedding as an 'emergency money'. It might seem bizarre to us here in USA but the culture is very different in Asia it seems.

livesoft
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Re: Gold?

Post by livesoft » Sun Nov 26, 2017 6:07 pm

^Yes, that is the kind of story that I read about gold every so often.

I have never heard of anyone from Vietnam getting out with their gold.

It seems like having some assets held in a foreign account might be helpful. For folks not in the US, it seems that having a stash in the US would be better than gold in their hands.
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technovelist
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Re: Gold?

Post by technovelist » Sun Nov 26, 2017 6:16 pm

livesoft wrote:
Sun Nov 26, 2017 6:07 pm
^Yes, that is the kind of story that I read about gold every so often.

I have never heard of anyone from Vietnam getting out with their gold.

It seems like having some assets held in a foreign account might be helpful. For folks not in the US, it seems that having a stash in the US would be better than gold in their hands.
"“After the fall of Vietnam, 180,000 refugees passed through Guam leaving behind a unique treasure — the gold tael. Thousands of these pure gold wafers were converted into U.S. currency on Guam. Most were then melted down. Only a few of the original taels remain today. We have them available in a very limited edition.”

Gold was one of the few things of wealth that could be carried out of the country by those South Vietnamese who escaped in panic just before the Communist victory in 1975. Most of the relatively few who managed to get on the lastminute airlift were processed for immigration to the United States through camps on Guam."

http://www.nytimes.com/1979/11/11/archi ... arket.html
In theory, theory and practice are identical. In practice, they often differ.

TomCat96
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Re: Gold?

Post by TomCat96 » Sun Nov 26, 2017 6:47 pm

nick2302 wrote:
Sun Nov 26, 2017 11:44 am
Does holding actual gold coins make sense as part of an overall strategy for long term investments? The older generations in my family, being from the old country, had a strong urge to hold gold. Not gold stocks but the real deal coins. I inherited my share of the family gold and have added a bit to it over the years. It is a very small percentage of the total but I keep it and did add to it more because it was a belief held by previous generations. At the time I added to it gold was about 300.00 per ounce. I have no intentions to add more to the collection but am wondering if I should go ahead and buy a 1oz American Eagle for each grand child, even thought the price per oz. has probably topped out, barring a world calamity.

Thoughts?

Thanks

There are people on this website that hold a small allocation into gold. This has been debated time and time again, and the consensus is that Gold is a mixed bag. Some are for it, some against it.

Life is short. For me the utility I can derive from the money I would have to pay for an ounce of gold far exceeds what the Gold can provide for me.
For that reason, I personally don't have any gold or silver in my portfolio. At best I see it as a durable store of value.

Frankly I would choose enduring renovations my house over buying gold.

livesoft
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Re: Gold?

Post by livesoft » Sun Nov 26, 2017 7:02 pm

technovelist wrote:
Sun Nov 26, 2017 6:16 pm
"“After the fall of Vietnam, 180,000 refugees passed through Guam leaving behind a unique treasure — the gold tael....
Thanks for the link. I learned something new to me.
But many who set out on small boats were relieved of their gold by pirates.
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livesoft
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Re: Gold?

Post by livesoft » Sun Nov 26, 2017 7:12 pm

There are probably more Puerto Rican refugees now on the Mainland than those 180,000 Vietnamese that went through Guam. I haven't heard of the P.R. folks being helped by gold.
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Re: Gold?

Post by brad.clarkston » Sun Nov 26, 2017 7:15 pm

livesoft wrote:
Sun Nov 26, 2017 11:54 am
So your elders before you did nothing with their gold except die with it. I see no more reason to own gold than to own beanie babies or Hummel figurines.

It seems no one ever sells their gold. Why is that?

I'd like to see some instances how gold actually helped people. I am thinking that folks in Syria, Libya, Yemen, Iraq, and other failed states might have been helped, but I actually do not see how because of its weight which makes in hard to move to a safe place.

The Ecstacy of Gold
I would suspect they held there gold for the same reason I do. It's not all about "ME, ME, ME" I don't need the money and can afford what I want right now. It's for my son or his kids if everything goes off the rails for some reason. They can sell the coins and cards and make it over whatever hump they are facing.

I have my eagles & leaf's in a deposit box that he kid has access to that has instructions on when and how to sell them. That and I like collecting them.
Last edited by brad.clarkston on Sun Nov 26, 2017 7:24 pm, edited 1 time in total.

technovelist
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Re: Gold?

Post by technovelist » Sun Nov 26, 2017 7:21 pm

livesoft wrote:
Sun Nov 26, 2017 7:12 pm
There are probably more Puerto Rican refugees now on the Mainland than those 180,000 Vietnamese that went through Guam. I haven't heard of the P.R. folks being helped by gold.
That's probably because the Puerto Rican currency is the US dollar, which still has value, unlike the South Vietnamese currency that collapsed with the South Vietnamese goverment's collapse.

But it is important to recognize that gold is not an investment.

It is money.

To be precise, it is the only money that has value independent of any government.
Last edited by technovelist on Sun Nov 26, 2017 7:23 pm, edited 1 time in total.
In theory, theory and practice are identical. In practice, they often differ.

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Re: Gold?

Post by brad.clarkston » Sun Nov 26, 2017 7:22 pm

livesoft wrote:
Sun Nov 26, 2017 1:25 pm
Optmst wrote:
Sun Nov 26, 2017 1:20 pm
..., but to reduce the loss when something bad happens.
I am still trying to understand how gold helps "when something bad happens." Bad things have happened to people around the world and gold would have been no help to them even if they had gold, so I'm skeptical that gold will help in the US if bad things happen. There are probably saner things to have around than gold for when bad things happen.
It's not a hard concept folks, we are not talking about the end of the world and/or zombie apocalypse type of bad things. Bad things comes in all form:

1.) The main money maker in the family losing his or her job and skilled positions takes times to find again.
2.) A child or spouse gets sick long term.
3.) The loss of a home to fire or flood and the insurance payout taking longer than normal.

I think of my gold and silver as being a second or third emergency fund for way in the future.

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Re: Gold?

Post by arcticpineapplecorp. » Sun Nov 26, 2017 8:39 pm

i like this article by Ben Carlson called "A History of Gold Returns". I think it's well balanced and honest. Give it a read and see if your feelings about gold remain the same:

http://awealthofcommonsense.com/2015/07 ... d-returns/
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

nick2302
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Re: Gold?

Post by nick2302 » Sun Nov 26, 2017 8:54 pm

After reading that article he said a lot and ended saying he had no clue about the future. Well yeah who does have a crystal ball to see what I going to happen? I am finding out there are as many who think of Gold as an insurance and others who think it is a giant waste of time. I am not anticipating a collapse of the US economy and the paper becoming worthless like what happened in pre-war Germany. But it COULD happen so there is no reason not to have some small amount in the overall financial picture.

So as I started out saying gold is insurance not an investment. Still seems, to me anyway, gold has a place. I would rather have it and not need it than need it and not have it.

Very interesting discussion thanks to all who have commented.

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Re: Gold?

Post by CZjc1330 » Sun Nov 26, 2017 9:39 pm

To the Point!

Trumpet Blare: Gold is a poor investment!
Drum roll: Bogleheads to the rescue!
"Rich and Poor Alike Invest In The Three Vanguard Fund Portfolio"

Happy Ending! :sharebeer

suemarkp
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Re: Gold?

Post by suemarkp » Sun Nov 26, 2017 11:47 pm

nick2302 wrote:
Sun Nov 26, 2017 12:08 pm
There has to be a reason that gold means something, as FDR made it illegal for US citizens to own gold and wanted everyone to turn their gold in for paper money. Most immigrants did that and some, who ignored it were long time residents of the US and held on to it. My Dad always hated FDR and that turn your gold in was one of the many reasons.
The reason he "confiscated" gold was because our money system was gold based and he wanted to revalue it. If 1oz of gold suddenly went from $20 to $36, you wouldn't care if you held it. But he wanted people to convert it to paper so when the devaluation came that paper didn't revalue -- a $20 stayed a $20. This was necessary to break the deflation cycle that started, but I'm sure it upset many people. So that's one reason to hold it, even if illegal. There were exceptions though to the gold confiscation -- people were allowed to keep 4 ounces each and numismatic items. If it were me, I'd keep "finding" that 4 ounces over and over again if it needed to be sold off.
Mark | Kent, WA

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JoMoney
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Re: Gold?

Post by JoMoney » Mon Nov 27, 2017 12:05 am

I'm not a fan of any commodity as an investment for its own sake. Even real estate, unless it's rented out, farmed, or put to some use doesn't really interest me. I'm not sure of what practical use gold would be to me.
I have a gold dental crown and some gold-plated audio cables. I don't think it's noticeably better than alternatives for even those applications.
I've heard gold is a big deal for dowries in parts of Asia. I don't like sharing personal info, but I will reveal that I don't identify as an Asian woman.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Gold?

Post by Call_Me_Op » Mon Nov 27, 2017 7:45 am

brad.clarkston wrote:
Sun Nov 26, 2017 7:22 pm
livesoft wrote:
Sun Nov 26, 2017 1:25 pm
Optmst wrote:
Sun Nov 26, 2017 1:20 pm
..., but to reduce the loss when something bad happens.
I am still trying to understand how gold helps "when something bad happens." Bad things have happened to people around the world and gold would have been no help to them even if they had gold, so I'm skeptical that gold will help in the US if bad things happen. There are probably saner things to have around than gold for when bad things happen.
It's not a hard concept folks, we are not talking about the end of the world and/or zombie apocalypse type of bad things. Bad things comes in all form:

1.) The main money maker in the family losing his or her job and skilled positions takes times to find again.
2.) A child or spouse gets sick long term.
3.) The loss of a home to fire or flood and the insurance payout taking longer than normal.

I think of my gold and silver as being a second or third emergency fund for way in the future.
Wouldn't cash be as good (or better, since it is more liquid) for all of those things?
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alfaspider
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Re: Gold?

Post by alfaspider » Mon Nov 27, 2017 9:02 am

It seems to me that if you are worried about a localized calamity, you are far better off relying on an asset class tied to your identity rather than physical possession (i.e. a foreign bank account or investment fund).

One problem with attempting to actually spend gold in a crisis is that there will be little means to verify authenticity or assess value. Moreover, who do you trust? If you are trying to bribe your way out of the country in a calamity, revealing that you have something very valuable on your person seems juts as likely to make you a target as anything else. If I were trying to escape from Syria, I'd much rather have 50k Euros in a German bank than the equivalent value in gold on my person.

If you are worried about inflation in the U.S., I'd still prefer foreign assets or real estate. In fact, highly leveraged real estate investors would make out like bandits in a hyper inflationary environment.

Valuethinker
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Re: Gold?

Post by Valuethinker » Mon Nov 27, 2017 9:12 am

Optmst wrote:
Sun Nov 26, 2017 3:05 pm
Most people in Venezuela don't have enough food to eat, and many cannot afford things we consider essential. I doubt that many of the workers there have gold or silver, but I must agree with you. Gold and silver will not help a person who does not have any when he wishes he did.
People have been mugged for their tooth fillings, which says they have some value.

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Location: Kansas City, MO

Re: Gold?

Post by brad.clarkston » Mon Nov 27, 2017 10:31 am

alfaspider wrote:
Mon Nov 27, 2017 9:02 am
It seems to me that if you are worried about a localized calamity, you are far better off relying on an asset class tied to your identity rather than physical possession (i.e. a foreign bank account or investment fund).

One problem with attempting to actually spend gold in a crisis is that there will be little means to verify authenticity or assess value. Moreover, who do you trust? If you are trying to bribe your way out of the country in a calamity, revealing that you have something very valuable on your person seems juts as likely to make you a target as anything else. If I were trying to escape from Syria, I'd much rather have 50k Euros in a German bank than the equivalent value in gold on my person.

If you are worried about inflation in the U.S., I'd still prefer foreign assets or real estate. In fact, highly leveraged real estate investors would make out like bandits in a hyper inflationary environment.
I'm not worried about anything particularly and I do not live in third world countries so selling gold to a reputable buyer during a market correction or personal "bad thing" isn't going to be a problem ever.

I'm a bit fuzzy on your logic it seems your trying way to hard to me.
Do you really think anyone on this forum would have all of there money in gold eagles under the bed?

livesoft
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Re: Gold?

Post by livesoft » Mon Nov 27, 2017 11:16 am

So did anybody with GOLD actually sell said gold in early 2009? If so, what did you do with the money from selling the gold? Buy equities?
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Re: Gold?

Post by alfaspider » Mon Nov 27, 2017 11:42 am

brad.clarkston wrote:
Mon Nov 27, 2017 10:31 am
alfaspider wrote:
Mon Nov 27, 2017 9:02 am
It seems to me that if you are worried about a localized calamity, you are far better off relying on an asset class tied to your identity rather than physical possession (i.e. a foreign bank account or investment fund).

One problem with attempting to actually spend gold in a crisis is that there will be little means to verify authenticity or assess value. Moreover, who do you trust? If you are trying to bribe your way out of the country in a calamity, revealing that you have something very valuable on your person seems juts as likely to make you a target as anything else. If I were trying to escape from Syria, I'd much rather have 50k Euros in a German bank than the equivalent value in gold on my person.

If you are worried about inflation in the U.S., I'd still prefer foreign assets or real estate. In fact, highly leveraged real estate investors would make out like bandits in a hyper inflationary environment.
I'm not worried about anything particularly and I do not live in third world countries so selling gold to a reputable buyer during a market correction or personal "bad thing" isn't going to be a problem ever.

I'm a bit fuzzy on your logic it seems your trying way to hard to me.
Do you really think anyone on this forum would have all of there money in gold eagles under the bed?
I'm not suggesting anybody would have all of their money in gold eagles under the bed- my point applies to any personally significant quantity. Other posters were talking about calamities, which is why I brought it up. Of course holding any significant quantity is going to create security concerns. You either need to store it in a safe in your home (could be stolen or make you a robbery target), or you need to store it in a safety deposit box (the cost of which will drag on any returns). If you aren't worried about calamity, why bother with the physical stuff and the associated storage and transaction costs? There are plenty of financial instruments that will provide similar exposure.

Calamities aside, I'm also not sure I understand the logic of holding gold to sell during a market correction. Why does one need to sell anything at all during a market correction? The BH philosophy is "time in the market" not "timing the market." The money sitting in gold waiting for the stock market crash or hyperinflation is going to statistically under performing the rest of the time. What are you supposed to do with that gold when you sell? Buy equities? But you don't know what's going to happen to equities over the short term. Better to just stick with the BH buy and hold 2 or 3 fund portfolio. A mortgaged personal home can be leveraged real estate ballast for inflation.

brad.clarkston
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Re: Gold?

Post by brad.clarkston » Mon Nov 27, 2017 4:26 pm

alfaspider wrote:
Mon Nov 27, 2017 11:42 am
brad.clarkston wrote:
Mon Nov 27, 2017 10:31 am
alfaspider wrote:
Mon Nov 27, 2017 9:02 am
It seems to me that if you are worried about a localized calamity, you are far better off relying on an asset class tied to your identity rather than physical possession (i.e. a foreign bank account or investment fund).

One problem with attempting to actually spend gold in a crisis is that there will be little means to verify authenticity or assess value. Moreover, who do you trust? If you are trying to bribe your way out of the country in a calamity, revealing that you have something very valuable on your person seems juts as likely to make you a target as anything else. If I were trying to escape from Syria, I'd much rather have 50k Euros in a German bank than the equivalent value in gold on my person.

If you are worried about inflation in the U.S., I'd still prefer foreign assets or real estate. In fact, highly leveraged real estate investors would make out like bandits in a hyper inflationary environment.
I'm not worried about anything particularly and I do not live in third world countries so selling gold to a reputable buyer during a market correction or personal "bad thing" isn't going to be a problem ever.

I'm a bit fuzzy on your logic it seems your trying way to hard to me.
Do you really think anyone on this forum would have all of there money in gold eagles under the bed?
I'm not suggesting anybody would have all of their money in gold eagles under the bed- my point applies to any personally significant quantity. Other posters were talking about calamities, which is why I brought it up. Of course holding any significant quantity is going to create security concerns. You either need to store it in a safe in your home (could be stolen or make you a robbery target), or you need to store it in a safety deposit box (the cost of which will drag on any returns). If you aren't worried about calamity, why bother with the physical stuff and the associated storage and transaction costs? There are plenty of financial instruments that will provide similar exposure.

Calamities aside, I'm also not sure I understand the logic of holding gold to sell during a market correction. Why does one need to sell anything at all during a market correction? The BH philosophy is "time in the market" not "timing the market." The money sitting in gold waiting for the stock market crash or hyperinflation is going to statistically under performing the rest of the time. What are you supposed to do with that gold when you sell? Buy equities? But you don't know what's going to happen to equities over the short term. Better to just stick with the BH buy and hold 2 or 3 fund portfolio. A mortgaged personal home can be leveraged real estate ballast for inflation.

So I think our problem here is your refusing to even entertain the argument.

1.) I keep a safe deposit box as a matter of course. I would have it for important "things" no matter if I had coins in it or not.
2.) There is no "drag on returns" as they are not part of my retirement portfolio.
3.) Again .... my coins have no baring on my port. I will never buy positions into the market with them.
4.) It might be easier to think of them as a second or third tier to a emergency fund you never hope to use.

As I said before it's not always about "ME, ME, ME!!!" there is more things to life than mini-maxing a portfolio.

alfaspider
Posts: 1234
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Re: Gold?

Post by alfaspider » Mon Nov 27, 2017 4:41 pm

brad.clarkston wrote:
Mon Nov 27, 2017 4:26 pm
alfaspider wrote:
Mon Nov 27, 2017 11:42 am
brad.clarkston wrote:
Mon Nov 27, 2017 10:31 am
alfaspider wrote:
Mon Nov 27, 2017 9:02 am
It seems to me that if you are worried about a localized calamity, you are far better off relying on an asset class tied to your identity rather than physical possession (i.e. a foreign bank account or investment fund).

One problem with attempting to actually spend gold in a crisis is that there will be little means to verify authenticity or assess value. Moreover, who do you trust? If you are trying to bribe your way out of the country in a calamity, revealing that you have something very valuable on your person seems juts as likely to make you a target as anything else. If I were trying to escape from Syria, I'd much rather have 50k Euros in a German bank than the equivalent value in gold on my person.

If you are worried about inflation in the U.S., I'd still prefer foreign assets or real estate. In fact, highly leveraged real estate investors would make out like bandits in a hyper inflationary environment.
I'm not worried about anything particularly and I do not live in third world countries so selling gold to a reputable buyer during a market correction or personal "bad thing" isn't going to be a problem ever.

I'm a bit fuzzy on your logic it seems your trying way to hard to me.
Do you really think anyone on this forum would have all of there money in gold eagles under the bed?
I'm not suggesting anybody would have all of their money in gold eagles under the bed- my point applies to any personally significant quantity. Other posters were talking about calamities, which is why I brought it up. Of course holding any significant quantity is going to create security concerns. You either need to store it in a safe in your home (could be stolen or make you a robbery target), or you need to store it in a safety deposit box (the cost of which will drag on any returns). If you aren't worried about calamity, why bother with the physical stuff and the associated storage and transaction costs? There are plenty of financial instruments that will provide similar exposure.

Calamities aside, I'm also not sure I understand the logic of holding gold to sell during a market correction. Why does one need to sell anything at all during a market correction? The BH philosophy is "time in the market" not "timing the market." The money sitting in gold waiting for the stock market crash or hyperinflation is going to statistically under performing the rest of the time. What are you supposed to do with that gold when you sell? Buy equities? But you don't know what's going to happen to equities over the short term. Better to just stick with the BH buy and hold 2 or 3 fund portfolio. A mortgaged personal home can be leveraged real estate ballast for inflation.

So I think our problem here is your refusing to even entertain the argument.

1.) I keep a safe deposit box as a matter of course. I would have it for important "things" no matter if I had coins in it or not.
2.) There is no "drag on returns" as they are not part of my retirement portfolio.
3.) Again .... my coins have no baring on my port. I will never buy positions into the market with them.
4.) It might be easier to think of them as a second or third tier to a emergency fund you never hope to use.

As I said before it's not always about "ME, ME, ME!!!" there is more things to life than mini-maxing a portfolio.
What argument am I refusing to entertain? I am simply making the case against holding physical gold. Making a case against something doesn't mean someone can't be persuaded. Isn't the purpose of this subforum to discuss investment options?

In any event, I'm not sure any of those points are really complete. If gold isn't an investment, but an emergency fund, what purpose does it serve that is not filled by standard BH emergency fund options such as high-yield savings accounts or TIPS? Or, if one really feels that gold is an important holding, what does holding physical gold accomplish that is not accomplished by financial instruments that track gold prices?

brad.clarkston
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Location: Kansas City, MO

Re: Gold?

Post by brad.clarkston » Mon Nov 27, 2017 4:55 pm

alfaspider wrote:
Mon Nov 27, 2017 4:41 pm
brad.clarkston wrote:
Mon Nov 27, 2017 4:26 pm
alfaspider wrote:
Mon Nov 27, 2017 11:42 am
brad.clarkston wrote:
Mon Nov 27, 2017 10:31 am
alfaspider wrote:
Mon Nov 27, 2017 9:02 am
It seems to me that if you are worried about a localized calamity, you are far better off relying on an asset class tied to your identity rather than physical possession (i.e. a foreign bank account or investment fund).

One problem with attempting to actually spend gold in a crisis is that there will be little means to verify authenticity or assess value. Moreover, who do you trust? If you are trying to bribe your way out of the country in a calamity, revealing that you have something very valuable on your person seems juts as likely to make you a target as anything else. If I were trying to escape from Syria, I'd much rather have 50k Euros in a German bank than the equivalent value in gold on my person.

If you are worried about inflation in the U.S., I'd still prefer foreign assets or real estate. In fact, highly leveraged real estate investors would make out like bandits in a hyper inflationary environment.
I'm not worried about anything particularly and I do not live in third world countries so selling gold to a reputable buyer during a market correction or personal "bad thing" isn't going to be a problem ever.

I'm a bit fuzzy on your logic it seems your trying way to hard to me.
Do you really think anyone on this forum would have all of there money in gold eagles under the bed?
I'm not suggesting anybody would have all of their money in gold eagles under the bed- my point applies to any personally significant quantity. Other posters were talking about calamities, which is why I brought it up. Of course holding any significant quantity is going to create security concerns. You either need to store it in a safe in your home (could be stolen or make you a robbery target), or you need to store it in a safety deposit box (the cost of which will drag on any returns). If you aren't worried about calamity, why bother with the physical stuff and the associated storage and transaction costs? There are plenty of financial instruments that will provide similar exposure.

Calamities aside, I'm also not sure I understand the logic of holding gold to sell during a market correction. Why does one need to sell anything at all during a market correction? The BH philosophy is "time in the market" not "timing the market." The money sitting in gold waiting for the stock market crash or hyperinflation is going to statistically under performing the rest of the time. What are you supposed to do with that gold when you sell? Buy equities? But you don't know what's going to happen to equities over the short term. Better to just stick with the BH buy and hold 2 or 3 fund portfolio. A mortgaged personal home can be leveraged real estate ballast for inflation.

So I think our problem here is your refusing to even entertain the argument.

1.) I keep a safe deposit box as a matter of course. I would have it for important "things" no matter if I had coins in it or not.
2.) There is no "drag on returns" as they are not part of my retirement portfolio.
3.) Again .... my coins have no baring on my port. I will never buy positions into the market with them.
4.) It might be easier to think of them as a second or third tier to a emergency fund you never hope to use.

As I said before it's not always about "ME, ME, ME!!!" there is more things to life than mini-maxing a portfolio.
What argument am I refusing to entertain? I am simply making the case against holding physical gold. Making a case against something doesn't mean someone can't be persuaded. Isn't the purpose of this subforum to discuss investment options?

In any event, I'm not sure any of those points are really complete. If gold isn't an investment, but an emergency fund, what purpose does it serve that is not filled by standard BH emergency fund options such as high-yield savings accounts or TIPS? Or, if one really feels that gold is an important holding, what does holding physical gold accomplish that is not accomplished by financial instruments that track gold prices?
No point of continuing this conversation then as I also see no valid argument from you.

alfaspider
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Re: Gold?

Post by alfaspider » Mon Nov 27, 2017 5:01 pm

brad.clarkston wrote:
Mon Nov 27, 2017 4:55 pm
alfaspider wrote:
Mon Nov 27, 2017 4:41 pm
brad.clarkston wrote:
Mon Nov 27, 2017 4:26 pm
alfaspider wrote:
Mon Nov 27, 2017 11:42 am
brad.clarkston wrote:
Mon Nov 27, 2017 10:31 am


I'm not worried about anything particularly and I do not live in third world countries so selling gold to a reputable buyer during a market correction or personal "bad thing" isn't going to be a problem ever.

I'm a bit fuzzy on your logic it seems your trying way to hard to me.
Do you really think anyone on this forum would have all of there money in gold eagles under the bed?
I'm not suggesting anybody would have all of their money in gold eagles under the bed- my point applies to any personally significant quantity. Other posters were talking about calamities, which is why I brought it up. Of course holding any significant quantity is going to create security concerns. You either need to store it in a safe in your home (could be stolen or make you a robbery target), or you need to store it in a safety deposit box (the cost of which will drag on any returns). If you aren't worried about calamity, why bother with the physical stuff and the associated storage and transaction costs? There are plenty of financial instruments that will provide similar exposure.

Calamities aside, I'm also not sure I understand the logic of holding gold to sell during a market correction. Why does one need to sell anything at all during a market correction? The BH philosophy is "time in the market" not "timing the market." The money sitting in gold waiting for the stock market crash or hyperinflation is going to statistically under performing the rest of the time. What are you supposed to do with that gold when you sell? Buy equities? But you don't know what's going to happen to equities over the short term. Better to just stick with the BH buy and hold 2 or 3 fund portfolio. A mortgaged personal home can be leveraged real estate ballast for inflation.

So I think our problem here is your refusing to even entertain the argument.

1.) I keep a safe deposit box as a matter of course. I would have it for important "things" no matter if I had coins in it or not.
2.) There is no "drag on returns" as they are not part of my retirement portfolio.
3.) Again .... my coins have no baring on my port. I will never buy positions into the market with them.
4.) It might be easier to think of them as a second or third tier to a emergency fund you never hope to use.

As I said before it's not always about "ME, ME, ME!!!" there is more things to life than mini-maxing a portfolio.
What argument am I refusing to entertain? I am simply making the case against holding physical gold. Making a case against something doesn't mean someone can't be persuaded. Isn't the purpose of this subforum to discuss investment options?

In any event, I'm not sure any of those points are really complete. If gold isn't an investment, but an emergency fund, what purpose does it serve that is not filled by standard BH emergency fund options such as high-yield savings accounts or TIPS? Or, if one really feels that gold is an important holding, what does holding physical gold accomplish that is not accomplished by financial instruments that track gold prices?
No point of continuing this conversation then as I also see no valid argument from you.
:confused

I was asking the questions above in good faith. I wasn't trying to make an argument per-se, so much as trying to understand your position.

livesoft
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Re: Gold?

Post by livesoft » Mon Nov 27, 2017 5:19 pm

alfaspider wrote:
Mon Nov 27, 2017 5:01 pm
I was asking the questions above in good faith. I wasn't trying to make an argument per-se, so much as trying to understand your position.
I came away with the idea that brad.clarkston's position is neither rational nor understandable. Once you accept that, that's the end of any discourse.
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brad.clarkston
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Re: Gold?

Post by brad.clarkston » Mon Nov 27, 2017 6:13 pm

livesoft wrote:
Mon Nov 27, 2017 5:19 pm
alfaspider wrote:
Mon Nov 27, 2017 5:01 pm
I was asking the questions above in good faith. I wasn't trying to make an argument per-se, so much as trying to understand your position.
I came away with the idea that brad.clarkston's position is neither rational nor understandable. Once you accept that, that's the end of any discourse.
O please that's rich coming from you of all people :shock: That really did make me laugh, thanks!
I made my potion as clear as I can but people just love to argue green vs purple blindly at each other.

Lets sum my side up one more time, again.

1.) Gold coins are fun to collect.
2.) Gold coins are not part of my port ***The never get factored in as such***.
3.) Gold coins are a future emergency fund probably (hopefully) not for me.
4.) Bad things in life happen, being able to drop $30k'ish at it is nice when it doesn't come from a retirement port liquidation.

This is more than likely a generational issue.

DanMahowny
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Re: Gold?

Post by DanMahowny » Mon Nov 27, 2017 6:28 pm

I have $60,000 cash in a bank safe deposit box. Just because it makes me feel good.

I also have physical gold coins in there too- protect my cash if hyperinflation hits.

I don't care about zombies, or SHTF scenarios. I have trained protection dogs and lots of guns.

livesoft
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Re: Gold?

Post by livesoft » Mon Nov 27, 2017 6:54 pm

I think it will be easier to sell the guns than to sell the gold in the event of future problems. What do you think?
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cinghiale
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Re: Gold?

Post by cinghiale » Tue Nov 28, 2017 3:08 am

What seems like a long time ago in this thread, Valuethinker offered the following,
- William Bernstein wrote a paper "The Most Patient Asset" on Efficient Frontier. That's the best analysis I know of re Gold as a portfolio component.

- again from an academic viewpoint, this paper by Campbell Harvey and Claude Erb, is the best one that I know of.

http://www.nber.org/papers/w18706

https://faculty.fuqua.duke.edu/~charvey ... nstant.pdf
Returning to the question posed by the OP, the Harvey and Erb essay is essential reading. So is Bill Bernstein’s essay on gold volatility within the average investor’s lifetime. (Regarding the Bill Bernstein piece, might it be titled “The Longest Discipline?” That was the only Bernstein essay on gold I found in my search.) VT chimed in with similar wisdom and perspective in this thread, viewtopic.php?t=163035 from two years ago, though that thread discussed adding a gold fund (gold mining shares, not the physical metal) to a portfolio.

It is often said that at the end of the day discussions such as this move nobody. Gold aficionados will hold gold, and will marshal their reasons for doing so. Those who consider precious metals a waste of time and of portfolio space will do likewise. I would dissent from this view. Sound arguments can and do challenge and change one’s view. This thread... well, parts of this thread... provide those arguments. Keep ‘em coming!
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Valuethinker
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Re: Gold?

Post by Valuethinker » Tue Nov 28, 2017 5:51 am

DanMahowny wrote:
Mon Nov 27, 2017 6:28 pm
I have $60,000 cash in a bank safe deposit box. Just because it makes me feel good.

I also have physical gold coins in there too- protect my cash if hyperinflation hits.

I don't care about zombies, or SHTF scenarios. I have trained protection dogs and lots of guns.
Yikes. $60k of cash? Losing 2% per annum to inflation? Also old USD are very hard to spend-- in fact, unspendable in places that use the USD as a parallel currency (or so I found in Turkey and in Eastern Europe when I was younger). They won't touch old bills.

All a new government has to do is announce a reconstitution of the currency, and everyone with cash has to bring it in to exchange it. See India recently with the removal of big notes from circulation. Then you get to answer questions about source, amount, etc. This has been done innumerable times btw.

Cash, physical, is a lousy asset. Maybe you keep 1 month's expenses that way? I know due to negative interest rates Swedes were cashing out SKR and putting it in the microwave oven, and Greeks were keeping it under floorboards during the banking freeze (and having it eaten by mice, in one case) but Americans? Bank account interest rates are positive in America, and so are short term bond yields?

You are aware that Anti Money Laundering rules do apply to cash over $10k (actually all cash in an "at risk" transaction, but $10k is the default reporting level)? Assuming you have not already, make sure you have a very clear trail to show to the authorities as to the sources of the cash and the tax correctly paid on it.

The police in London, UK, opened a number of safety deposit boxes. Cash went missing, but since the owners could not prove they had it, they received no compensation. A bank job which takes out your safety deposit box?

As to protection dogs and guns. You are kidding, right? Because if it hits the fan, what will emerge will be regional or local militias, based on local National Guard, State Troopers etc. I imagine. Reread Lucifer's Hammer (Larry Niven and Jerry Pournelle) and Systemic Shock (Dean Ing) and the other Dean Ing (about post atomic survival). You will be toast if you live in an urban area or even an exurban one. In fact, more vulnerable-- because someone will want those guns. Oh, and you have to feed the dogs.
Last edited by Valuethinker on Tue Nov 28, 2017 8:32 am, edited 1 time in total.

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