Holding Gold as "Doomsday Fund"

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Outer Marker
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Holding Gold as "Doomsday Fund"

Post by Outer Marker »

The last few months have been a financial education on things I'd never thought I'd see. Oil trading at negative prices, economy shut down, unprecedented levels of unemployment, wild market swings, etc. I've held fast with my 70/30 portfolio, bought on the worst dips, and come out of it relatively unscathed. But, it has me wondering if I have adequate downside protection if "the worst" were to happen. Coronovirus has a relatively modest mortality rate of 1-2%, and the Treasury has been able to prop up the country, and prop up the markets through this. But, its not inconceivable that we'll see a pandemic in my lifetime with a 20-30% mortality rate -- and who knows what will happen then.

I've got a high risk tolerance, and the rule of thumb around here has been that you need to be able to tolerate a 50% drop in the markets. But, especially after seeing what happened with oil, I'm not at all sure 50% is anywhere near the potential bottom. The markets and paper money could go to zero. Markets in Argentina and other countries have seen market drops in excess of 50% in a day. Loaves of bread in post war Germany were bought with wheelbarrows of money.

Which has me thinking . . . I'm considering buying $100,000 in physical gold and $10,000 in silver coins. I wouldn't consider it as part of my portfolio, but an insurance policy against "the worst." I know gold as an investment has generally been a stinker. It doesn't do anything productive; it doesn't turn a profit; it just exists. But, gold has been used as currency since at least 700BC, and will almost certainly never be worthless. If I have a stash in a safety deposit box, I can probably get to it before total pandamonium breaks loose. And, if I have such a stash, I'll be comparatively very wealthy to those who don't.

I recently came into a nice inheritance from my mom who was extremely conservative and risk adverse. Was a depression era child, very uncomfortable with the markets, and invested almost exclusively in CDs and stable value funds. I know money is "fungible" but somehow I feel I should treat mom's money with special care and not just fold it into my portfolio. Having a doomsday fund in gold seems a good use for this money . . .
Nummerkins
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Re: Holding Gold as "Doomsday Fund"

Post by Nummerkins »

I would not. If "the worst" were to happen, what exactly does gold do for you? You can't eat it. It doesn't grow anything. Who would want it?
Today's high is tomorrow's low.
stuper1
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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

I would do it, and am doing it. Gold makes up 20% of my portfolio. I wish most of it were physical, but alas much of it is ETFs currently. A lot of people talk about the benefits of diversification, but they stop at stocks and bonds. Gold is a third asset class that acts as an excellent portfolio diversifier and it can also be a form of insurance in case all of our digital assets vanish in a poof (imagine solar flare, meteor strike, or belligerent country unleashing a nationwide power outage or computer virus). I keep my physical gold in a bank safe deposit box.

You won't find much love for it on this forum, but it makes a lot of sense to me and many other people. If you want to find some more like-minded people (not evangelical gold bugs thanfully), check out gyroscopicinvesting.com.
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yangtui
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Re: Holding Gold as "Doomsday Fund"

Post by yangtui »

I would rather own guns, ammo, lots of food, and a secure self sustaining property in a high trust/functioning region. The other backup option would be to have a cold storage wallet with a substantial amount of crypto tucked away in a foreign safe deposit box.
Last edited by yangtui on Tue Apr 28, 2020 4:27 pm, edited 1 time in total.
livesoft
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Re: Holding Gold as "Doomsday Fund"

Post by livesoft »

I don't think anyone was able to use their gold bars to buy toilet paper recently.

If anything, this pandemic has shown that other assets put gold completely to shame.

And treating your inheritance with sentiment creates behavioral finance errors. I always just rolled inherited money into my asset allocation since the deceased's asset allocation had nothing to do with my asset allocation.
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Watty
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Re: Holding Gold as "Doomsday Fund"

Post by Watty »

Outer Marker wrote: Tue Apr 28, 2020 3:55 pm If I have a stash in a safety deposit box, I can probably get to it before total pandamonium breaks loose. And, if I have such a stash, I'll be comparatively very wealthy to those who don't.
I didn't look up a link but I am pretty sure that when owning gold in the US was made illegal in the 1930s that you had to have a safe deposit box inspected for gold before you could access it.

Keeping gold at home is also risky since even if you have a good safe you will open it if someone has a gun at your head. Someone like a kid or spouse who does not know the combination to the safe could be in a very bad situation if their lives were threatened if they did not open the safe.

There are lots of threads about gold that you can look up and I don't really recall a good way to own large amounts of physical gold.

Trying to barter with gold or silver coins would also attract a lot of unwanted attention. Somewhere I read a suggestion that you get gold wedding bands to barter with in the "Mad Max" scenario since they would draw less attention. There are apparently gold dealers that sell gold jewelry for just a bit more than the gold content since that is very popular and traditional with Indian people.

It is also generally recommended that people have 20% or more of their investments in international stocks and bonds. If all those collapse at the same time as the US markets then things will be dire indeed.

There have been posts by people that had relatives that used gold to bribe their way out of Vietnam when it collapsed or from Nazi Germany just before WW II so it is far from useless but I am skeptical about it.
stuper1
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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

Believe it or not, there's no rule that you can't own gold along with guns, ammo, food, etc.

Hey when that solar flare hits, and all your investment accounts are just zeroes with no non-zero numbers at the front, don't say I didn't warn you.

As for what this pandemic shows about gold, I would note that the gold price is up 34% over the last 12 months, and the stock market is down 2%. I'm not saying to own nothing but gold, but it does act as a great diversifier. It's good to hold some of it in an ETF, so you can easily sell some when it's high for rebalancing into stocks/bonds, or buy some when the gold price is low.
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Re: Holding Gold as "Doomsday Fund"

Post by BuckyBadger »

Outer Marker wrote: Tue Apr 28, 2020 3:55 pm The last few months have been a financial education on things I'd never thought I'd see. Oil trading at negative prices, economy shut down, unprecedented levels of unemployment, wild market swings, etc. I've held fast with my 70/30 portfolio, bought on the worst dips, and come out of it relatively unscathed. But, it has me wondering if I have adequate downside protection if "the worst" were to happen. Coronovirus has a relatively modest mortality rate of 1-2%, and the Treasury has been able to prop up the country, and prop up the markets through this. But, its not inconceivable that we'll see a pandemic in my lifetime with a 20-30% mortality rate -- and who knows what will happen then.

I've got a high risk tolerance, and the rule of thumb around here has been that you need to be able to tolerate a 50% drop in the markets. But, especially after seeing what happened with oil, I'm not at all sure 50% is anywhere near the potential bottom. The markets and paper money could go to zero. Markets in Argentina and other countries have seen market drops in excess of 50% in a day. Loaves of bread in post war Germany were bought with wheelbarrows of money.

Which has me thinking . . . I'm considering buying $100,000 in physical gold and $10,000 in silver coins. I wouldn't consider it as part of my portfolio, but an insurance policy against "the worst." I know gold as an investment has generally been a stinker. It doesn't do anything productive; it doesn't turn a profit; it just exists. But, gold has been used as currency since at least 700BC, and will almost certainly never be worthless. If I have a stash in a safety deposit box, I can probably get to it before total pandamonium breaks loose. And, if I have such a stash, I'll be comparatively very wealthy to those who don't.

I recently came into a nice inheritance from my mom who was extremely conservative and risk adverse. Was a depression era child, very uncomfortable with the markets, and invested almost exclusively in CDs and stable value funds. I know money is "fungible" but somehow I feel I should treat mom's money with special care and not just fold it into my portfolio. Having a doomsday fund in gold seems a good use for this money . . .
Gold may have been used as currency in the past, but even in the past, in "the worst" times, bartering (or guns) became the way to buy (or steal) something. Not metal. No different now.
Swivelguy
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Re: Holding Gold as "Doomsday Fund"

Post by Swivelguy »

If you want insurance against the sort of "paper money loses all value" crisis you describe, a financial asset won't give it to you. That's beans, bullets, and bandaids territory. Also, water filters and solar panels and gardening tools, but those don't alliterate.
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Re: Holding Gold as "Doomsday Fund"

Post by Outer Marker »

yangtui wrote: Tue Apr 28, 2020 4:15 pm I would rather own guns, ammo, lots of food, and a secure self sustaining property in a high trust/functioning region.
Thanks to my Dad, who was a Libertarian and 2nd amendment guy, I already have most of those. The house in the mountains is currently rented out. I'm not about to go out and dig a bunker, but a modest stash in gold would preserve financial liquidity, and many people invest in it considering it a legit asset class.
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Raymond
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Re: Holding Gold as "Doomsday Fund"

Post by Raymond »

yangtui wrote: Tue Apr 28, 2020 4:15 pm I would rather own guns, ammo, lots of food, and a secure self sustaining property in a high trust/functioning region. The other backup option would be to have a cold storage wallet with a substantial amount of crypto tucked away in a foreign safe deposit box.
+1

Don't forget to get along with your neighbors and friends = strength in numbers.

If the [abbreviated expletive removed by mod Misenplace], do you want to be known as "the guy with all the gold", with no friends, extended family, or liegemen :D to back you up?

I remember a half-serious joke that two groups in the United States would do a lot better than others in a Mad-Max-like post-apocalyptic world:

The Church of Latter-Day Saints and the Hells Angels.
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stuper1
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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

I have heard rumors that central banks even hold it. Does that buttress its claim to being a legitimate asset class? I don't know, but I figure if it's good enough for a big bank, maybe I should have some too.
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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

I wonder if many Latter Day Saints or Hells Angels hold gold? Wouldn't surprise me in the least.
BH_RedRan
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Re: Holding Gold as "Doomsday Fund"

Post by BH_RedRan »

Gold prices seem to be nearing 10 year highs. Seems like you would be risking a high price buy after many others have jumped on the idea already and inflated the price.

I always thought it would be "cool" to hold some physical gold but there are the practical storage/trading concerns and it seems like there can be extended periods where growth can be negative or flat relative to equities. Interestingly it took quite a dip at the same time as equities, at least for a few days in March 2020. Long story short, I won't be doing physical or paper gold myself.

In the asteroid/EMP/solar storm scenario wouldn't many many people be in the same boat with no money to buy the gold?

Best of luck with your decision making process.
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Re: Holding Gold as "Doomsday Fund"

Post by Outer Marker »

Watty wrote: Tue Apr 28, 2020 4:22 pm I didn't look up a link but I am pretty sure that when owning gold in the US was made illegal in the 1930s that you had to have a safe deposit box inspected for gold before you could access it.
***
There have been posts by people that had relatives that used gold to bribe their way out of Vietnam when it collapsed or from Nazi Germany just before WW II so it is far from useless but I am skeptical about it.
So, in my first few hours of thinking about this, there is a lot of nutty stuff out there on the internet. But, from what I can tell, the more credible sources say that there is nothing illegal about buying or holding gold, and so long as you don't purchase it with cash or cashier's check there is no obligation to report it or means for the government to track it. (Assuming, of course, someone in NSA isn't reading this post and registering it to me).
https://www.jmbullion.com/investing-gui ... reporting/

You're last point is the key. Gold has always had value, and has never been worthless. I'm pretty sure I'd never have trouble buying a roll of toilet paper with a 1 oz gold piece.

I'm not talking about a huge amount. 50 gold coins and 100 silver pieces ought to do it, and are small enough to engage in useful, material barter transactions.
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Re: Holding Gold as "Doomsday Fund"

Post by livesoft »

stuper1 wrote: Tue Apr 28, 2020 4:25 pmAs for what this pandemic shows about gold, I would note that the gold price is up 34% over the last 12 months, and the stock market is down 2%. I'm not saying to own nothing but gold, but it does act as a great diversifier. It's good to hold some of it in an ETF, so you can easily sell some when it's high for rebalancing into stocks/bonds, or buy some when the gold price is low.
So did you (and this question to goes to ANYBODY and EVERYBODY that owned gold) rebalance by unloading your gold and using the money to buy equities?

It is one thing to state that it is possible, but another thing to actually do it.
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Re: Holding Gold as "Doomsday Fund"

Post by Outer Marker »

BH_RedRan wrote: Tue Apr 28, 2020 4:42 pm Gold prices seem to be nearing 10 year highs. Seems like you would be risking a high price buy after many others have jumped on the idea already and inflated the price.
Completely agree. I'd wait until the current hysteria dies down and gold sinks a bit. It crossed my mind to buy some back in the '90s when it was $400/oz vs. $1,800+ now. But, I was just starting out and didn't have any real money - so 401K was clearly the way to go. . .
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Re: Holding Gold as "Doomsday Fund"

Post by fredflinstone »

Nummerkins wrote: Tue Apr 28, 2020 4:08 pm I would not. If "the worst" were to happen, what exactly does gold do for you? You can't eat it. It doesn't grow anything. Who would want it?
I have a lot of ammo. If the price were right, I'd trade ammo for gold.
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Re: Holding Gold as "Doomsday Fund"

Post by fredflinstone »

livesoft wrote: Tue Apr 28, 2020 4:20 pm I don't think anyone was able to use their gold bars to buy toilet paper recently.
livesoft, as it happens I have quite a bit of toilet paper. I would be willing to trade all of it to you in exchange for a gold bar. Deal?
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
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Re: Holding Gold as "Doomsday Fund"

Post by patrick »

Outer Marker wrote: Tue Apr 28, 2020 3:55 pmI've got a high risk tolerance, and the rule of thumb around here has been that you need to be able to tolerate a 50% drop in the markets. But, especially after seeing what happened with oil, I'm not at all sure 50% is anywhere near the potential bottom.
The worst case for stocks is indeed worse than a 50% drop, but so is the worst case for gold.

Gold was at $850 on January 21, 1980. It was down to $255.95 on April 2, 2001. In nominal terms that is a 70% loss. However, $255.95 in April 2001 had the same purchasing power as $112.57 in January 1980. In other words, gold lost 87% after adjusting for inflation.
stuper1
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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

Yes, I did actually rebalance recently out of gold (and 30-year Treasury bonds) into stocks. Worked out great.

To the OP, it's good that you want some silver too. A lot of people say that silver will be a lot better for barter during a catastrophe. The place for gold comes after the catastrophe has died down, and you are trying to rebuild your life. A lot of people may be trying to rebuild from virtually nothing. If you have 50 ounces of gold, that could be worth several hundreds of thousands of dollars, because presumably the price per ounce will have gone up quite a bit.
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Re: Holding Gold as "Doomsday Fund"

Post by livesoft »

fredflinstone wrote: Tue Apr 28, 2020 4:52 pm
livesoft wrote: Tue Apr 28, 2020 4:20 pm I don't think anyone was able to use their gold bars to buy toilet paper recently.
livesoft, as it happens I have quite a bit of toilet paper. I would be willing to trade all of it to you in exchange for a gold bar. Deal?
Thank you for the kind offer, but I have no gold and never have had a shortage of toilet paper.
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livesoft
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Re: Holding Gold as "Doomsday Fund"

Post by livesoft »

stuper1 wrote: Tue Apr 28, 2020 4:53 pm Yes, I did actually rebalance recently out of gold (and 30-year Treasury bonds) into stocks. Worked out great.
Most excellent! Thanks for answering my query.
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Silence Dogood
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Re: Holding Gold as "Doomsday Fund"

Post by Silence Dogood »

Outer Marker wrote: Tue Apr 28, 2020 3:55 pm Which has me thinking . . . I'm considering buying $100,000 in physical gold and $10,000 in silver coins. I wouldn't consider it as part of my portfolio, but an insurance policy against "the worst." I know gold as an investment has generally been a stinker. It doesn't do anything productive; it doesn't turn a profit; it just exists. But, gold has been used as currency since at least 700BC, and will almost certainly never be worthless. If I have a stash in a safety deposit box, I can probably get to it before total pandamonium breaks loose. And, if I have such a stash, I'll be comparatively very wealthy to those who don't.
Are people able to access their safe deposit boxes right now?

NYT: Safe Deposit Boxes Aren't Safe

Safe deposit boxes aren't even safe during normal times... never mind in a "doomsday" scenario.

In a true "doomsday" scenario, how would you make sure that the bank employees don't get to your safe deposit box first? Also, how would you safely transport and store the $100K worth of gold and $10K worth of silver once you get it from the bank?
Last edited by Silence Dogood on Tue Apr 28, 2020 5:52 pm, edited 2 times in total.
Turbo29
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Re: Holding Gold as "Doomsday Fund"

Post by Turbo29 »

Silence Dogood wrote: Tue Apr 28, 2020 5:30 pm In a true "doomsday" scenario, how would you make sure that the bank employees don't get to your safe deposit box first? Also, how would you safely transport and store the $100K worth of gold and $10K worth of silver once you get it from the bank?
Sneak it out like A.P. Giannini (founder of the Bank of America) did after the "doomsday" of the San Francisco earthquake in 1906.

Bank of America: The Humble Beginnings of a Large Bank

On the morning of April 18, 1906, a massive earthquake hit San Francisco. The ensuing fires burned down the large banks. Their superheated metal vaults could not be opened for weeks—lest the cash and paper records catch fire when oxygen rushed in.
As flames threatened his one-room bank, Giannini spirited $80,000 in coins out of town. He hid the precious metal under crates of oranges and steered his wagons past gangs of thugs and looters in the streets.
As other banks struggled to recover, Giannini made headlines by setting up a makeshift bank on a North Beach wharf. He extended loans to beleaguered residents "on a handshake" and helped revive the city.

https://www.occ.treas.gov/about/who-we- ... erica.html
Last edited by Turbo29 on Tue Apr 28, 2020 5:52 pm, edited 2 times in total.
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Re: Holding Gold as "Doomsday Fund"

Post by Rosencrantz1 »

If [abbreviated expletive removed by mod Misenplace] actually happens, I plan to retreat to my remote lake cabin - where there is plenty of water and food ( and we have a large stock ammo and rifles).

I do own some gold and silver coins.... but, if 'stuff' got really bad, I'd think a defensible space with a lot of ammo and food and water would be better than a pocket full of gold coins (and, even that, I think, would only be marginally better). Not much the 'average' person is going to do against marauding armed bandits. /0.02 cents
Mr. Rumples
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Re: Holding Gold as "Doomsday Fund"

Post by Mr. Rumples »

If pandemonium breaks out, I doubt physical gold is going to be of much help...display it and someone will take it and ransack your home in the process. In pandemonium it should be buried, slaughter livestock over it and act poor and eat a poke weed salad...that is what they did where I live during the War (Civil). (BTW, I still have some Confederate bonds and currency - I collect Benjamin $2 banknotes...on the market as an item of historical note, at least they are worth more than 10 Millionen mark circa 1923 Weimar.)

https://www.ebay.com/itm/164037761933
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Re: Holding Gold as "Doomsday Fund"

Post by Outer Marker »

Silence Dogood wrote: Tue Apr 28, 2020 5:30 pm NYT: Safe Deposit Boxes Aren't Safe

Safe deposit boxes aren't even safe during normal times... never mind in a "doomsday" scenario.

In a true "doomsday" scenario, how would you make sure that the bank employees don't get to your safe deposit box first? Also, how would you safely transport and store the $100K worth of gold and $10K worth of silver, once you get it from the bank?
1. I tend to think safety deposit boxes are pretty safe, though there are odd anomalies. Pretty low risk at the moment.

2. I'd access it before true pandamonium hit and bank employees started ravaging boxes.

3. With my Dad's .357 S&W.
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Re: Holding Gold as "Doomsday Fund"

Post by T4REngineer »

I am taking your "doomsday" and "the worst" literal in the sense that law and order goes out the window - I am guessing thats not what you meant but if so.....

Why on earth would anyone want your gold and silver in that kind of world? Guns, Ammo, Friends, Water purification, Solar Power, First Aid materials, Meds, Shoes, non perishable food - tools (hand tools mostly but with solar chargers Li batteries they could be around for awhile etc - those will have value. No one will care about 100k in gold.....

If you want it as another investment just like stocks, bonds, cash go for it
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Re: Holding Gold as "Doomsday Fund"

Post by Outer Marker »

T4REngineer wrote: Tue Apr 28, 2020 5:53 pm I am taking your "doomsday" and "the worst" literal in the sense that law and order goes out the window - I am guessing thats not what you meant but if so.....

Why on earth would anyone want your gold and silver in that kind of world? Guns, Ammo, Friends, Water purification, Solar Power, First Aid materials, Meds, Shoes, non perishable food - tools (hand tools mostly but with solar chargers Li batteries they could be around for awhile etc - those will have value. No one will care about 100k in gold.....

If you want it as another investment just like stocks, bonds, cash go for it
Not just another investment. I'd never invest in gold otherwise. Not talking post apocolpyse, like "the Road". But maybe even then, gold has value. More like Game of Thrones . . . "a Lannister always pays his debts" . . .

As a happy coincidence, many think gold has merit as an asset class even in "normal" times. Post inheritance, this "doomsday hedge" would be less than 3% of my wealth. And who knows, it may have a positive return. . .
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Re: Holding Gold as "Doomsday Fund"

Post by Silence Dogood »

bovineplane wrote: Tue Apr 28, 2020 4:27 pm
livesoft wrote: Tue Apr 28, 2020 4:20 pm I don't think anyone was able to use their gold bars to buy toilet paper recently.
They didn't use guns for TP either. Doesn't mean one shouldn't have a firearm if SHTF.
I'm pretty sure toilet paper would be more useful in such a situation.
Nummerkins
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Re: Holding Gold as "Doomsday Fund"

Post by Nummerkins »

fredflinstone wrote: Tue Apr 28, 2020 4:50 pm
Nummerkins wrote: Tue Apr 28, 2020 4:08 pm I would not. If "the worst" were to happen, what exactly does gold do for you? You can't eat it. It doesn't grow anything. Who would want it?
I have a lot of ammo. If the price were right, I'd trade ammo for gold.
Better yet, cast all your gold to bullets :)
Today's high is tomorrow's low.
Patzer
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Re: Holding Gold as "Doomsday Fund"

Post by Patzer »

Right now 5% of my portfolio is in gold as a hedge, but it's in an ETF, not physical. I held physical gold from 2008-2010 and it was expensive to trade in and out of. I also have a few hundred dollars in silver coins, just as a hobby.

I think an idea of a doomsday hedge is okay, but what will you be trading your gold and silver for?
Food, water, medicine, tools, ammo, alcohol, toilet paper (apparently)?
I think investing in having a surplus of those items would be more cost efficient.
After that, how much physical gold and silver do you really need? If the disaster was regional 25K could probably get you out of there and with a little bit of money to start over. If it's global, I am not so sure about trading with gold. It might make you stand out as rich and that probably would not be good in a world that has really gone down the drain. Whereas you could easily trade from a supply of 100 bottles of whiskey, without much notice and far less chance of getting robbed.

I used to play pool in a biker bar, and I quickly learned not to play for money, because some people would get real salty even at $5 bucks a game if they lost a few in a row.
Funny thing was, if I played for 1 beer/game, I could drink for free all week and no one ever complained about losing.

It's perfectly acceptable to "pay" your friends to do $300 in hard labor helping you move, with a 6 pack of beer and a $10 pizza.

While your plan to hold gold sounds very rational, it is probably good to consider that people are not entirely rational on a good day, and would be even less so during a major crisis. Bartering in that world would probably be more likely to instill a sense of goodwill and camaraderie than paying for stuff with gold.

Also, if the crisis is short-term you might make a few friends by having extra supplies around. I happen to have several months supply of paper products and have endeared myself to a few neighbors with free rolls of toilet paper.
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Re: Holding Gold as "Doomsday Fund"

Post by Slowtraveler »

As a financial hedge it may make sense* but for doomsday? Maybe 10k or so. Silver or tobacco are much easier to trade with than ounces of gold. Better yet, have a self sustainable farm with a private aquifer, take survival classes, and buy some guns.

* https://earlyretirementnow.com/2020/01/ ... s-part-34/
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Re: Holding Gold as "Doomsday Fund"

Post by sergeant »

Nummerkins wrote: Tue Apr 28, 2020 6:25 pm
fredflinstone wrote: Tue Apr 28, 2020 4:50 pm
Nummerkins wrote: Tue Apr 28, 2020 4:08 pm I would not. If "the worst" were to happen, what exactly does gold do for you? You can't eat it. It doesn't grow anything. Who would want it?
I have a lot of ammo. If the price were right, I'd trade ammo for gold.
Better yet, cast all your gold to bullets :)
Silver bullets have more utility. They can stop a werewolf.

I guess having some precious metals isn't the worst survival scenario insurance but having food, water, and security should be your primary focus. I definitely would keep them accessible and not in a safety deposit box.
Last edited by sergeant on Tue Apr 28, 2020 7:13 pm, edited 1 time in total.
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Re: Holding Gold as "Doomsday Fund"

Post by Jack FFR1846 »

I'd think rolls and rolls of recent, circulated quarters would be better than silver or gold coins. Why? There are tons of fake silver coins out there. If you buy them from a craigslist seller, bring a magnet. You'll catch the worst fakes with it (plated steel). I've never been a gold buyer or seller, but have to assume there are tons of fake gold coins out there too. Likely steel plated with gold but better fakes made from silver plated with gold.

I come for toilet paper with $10 in recent quarters and the teen aged cashier will be annoyed with me, but won't blink twice in taking them. Bring in your gold coins and he's likely going to say "those are fake" and send you on your way.
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Re: Holding Gold as "Doomsday Fund"

Post by MotoTrojan »

You’ve already been in a >30% mortality pandemic, MERS. The more deadly they are the less well they can spread by design.
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Re: Holding Gold as "Doomsday Fund"

Post by retired@50 »

Never mind, this thread is silly.

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Re: Holding Gold as "Doomsday Fund"

Post by Outer Marker »

I'm inclined to do it. This board has some of the best financial minds around and no strong arguments against it. Worst case, I have a small holding in gold, that many consider a desirable asset class to begin with. Best case, (well, not really) if "the worst" were to happen, I have durable currency and can start over when things get back to normal. The gold portion of the doomsday fund would be for major things when the world stabilizes. Silver would be for trading for things like food, gas, supplies. Having it in small portions would be desirable. Not gold bullion, but gold coins. Silver in dollars, quarters, dimes for daily trading. I had ancestors that had to flee a country 100 years ago and left behind everything but jewels and precious metals. That enabled them to start over and be successful. If its not a "terrible" investment to begin with, the "insurance" policy seems worth it.
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Re: Holding Gold as "Doomsday Fund"

Post by grettman »

Guns and ammo. You can use it to defend home and property. Use it for trade too. It has utility.... try finding ammo right now.. good luck. Gold is easy to get but what can it do for you?
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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

For anyone who likes good financial fiction, there's a great recent book called "The Mandibles" that is relevant to this thread and fun to read.
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Re: Holding Gold as "Doomsday Fund"

Post by Outer Marker »

retired@50 wrote: Tue Apr 28, 2020 7:17 pm Never mind, this thread is silly.
retired@50, I would respectfully submit that it is not silly at all. You generally give good and thoughtful advice. But, in this instance, I think you are wrong. I know people with multiple eight figure net wealth that hold large sums of physical gold as a hedge against this scenario. They are far better entrapeneurs and business people than me. I would not dismiss them as "silly."
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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

By the way, to the OP, if you do decide to buy physical gold, don't do it right now. The premiums right now are much higher than normal due to the pandemic. If you can wait a while, you hopefully will get much better pricing.
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Re: Holding Gold as "Doomsday Fund"

Post by gougou »

Watty wrote: Tue Apr 28, 2020 4:22 pm
Someone like a kid or spouse who does not know the combination to the safe could be in a very bad situation if their lives were threatened if they did not open the safe.
That's a very strange argument against holding gold at home. What if there's no gold in the safe? The kid or spouse still die because they can't open it. So your argument is against having a safe at home, it has nothing to do with gold.
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Re: Holding Gold as "Doomsday Fund"

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stuper1 wrote: Tue Apr 28, 2020 7:45 pm By the way, to the OP, if you do decide to buy physical gold, don't do it right now. The premiums right now are much higher than normal due to the pandemic. If you can wait a while, you hopefully will get much better pricing.
Completely agree. Now is not the time . . .
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Re: Holding Gold as "Doomsday Fund"

Post by retired@50 »

Outer Marker wrote: Tue Apr 28, 2020 7:44 pm
retired@50 wrote: Tue Apr 28, 2020 7:17 pm Never mind, this thread is silly.
retired@50, I would respectfully submit that it is not silly at all. You generally give good and thoughtful advice. But, in this instance, I think you are wrong. I know people with multiple eight figure net wealth that hold large sums of physical gold as a hedge against this scenario. They are far better entrapeneurs and business people than me. I would not dismiss them as "silly."
I think the silly part has to do with toilet paper.

If you want to hold a small percentage of your net worth in precious metal, have at it. I still have a coin collection from when I was a kid. I don't have the energy to look into what it might be worth, so I guess I'm keeping a small amount of precious metal (silver coins) myself.

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Re: Holding Gold as "Doomsday Fund"

Post by stuper1 »

Outer Marker wrote: Tue Apr 28, 2020 7:44 pm
retired@50 wrote: Tue Apr 28, 2020 7:17 pm Never mind, this thread is silly.
retired@50, I would respectfully submit that it is not silly at all. You generally give good and thoughtful advice. But, in this instance, I think you are wrong. I know people with multiple eight figure net wealth that hold large sums of physical gold as a hedge against this scenario. They are far better entrapeneurs and business people than me. I would not dismiss them as "silly."
Everybody preaches "diversification" as the only free lunch, but they only buy stocks and bonds. I have my opinion too about who is silly. The majority opinion isn't always the correct one. But in the end, everyone has to decide for themselves.
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Re: Holding Gold as "Doomsday Fund"

Post by arcticpineapplecorp. »

check out libertarian summer camp (planet money) then see how easy it is to transact with gold:

https://www.npr.org/sections/money/2017 ... ummer-camp
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Re: Holding Gold as "Doomsday Fund"

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arcticpineapplecorp. wrote: Tue Apr 28, 2020 8:01 pm check out libertarian summer camp (planet money) then see how easy it is to transact with gold:

https://www.npr.org/sections/money/2017 ... ummer-camp
Ehh. Well, I don't want to stray into forbidden political territory on the board. But although my Dad was a libertarian, he was one shrewd old dude. Smarter than me, Mesna society, and PhD from one of the best MidWestern Universities. I don't think I need a "bunker" but at the same time, I don't think that a safe reserve in precious metals is unreasonable.
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Re: Holding Gold as "Doomsday Fund"

Post by thermalfama »

I think the OP's argument is sound. Sure, giving special treatment to an inheritance just because of its source is a cognitive bias, but gold has a place as an investment.

Gold is much more than a Mad Max hedge. Just take a look at the Fed's balance sheet. They increased their balance sheet by 55% in 1.5 months and are committed to printing trillions more in short order, if you think that has absolutely zero chance of resulting in high inflation, I would call that wishful thinking. I'm not saying high inflation will happen for sure. All I'm saying is, it cannot be ruled out down the road. And if inflation does become a problem, it's unclear that the Fed has the leeway to raise interest rates to crush the inflation like Volcker did in the 80s, now that it's been 11 years since they've taken it upon themselves to keep the market happy by easing every time there's a problem, and now that the US simply cannot afford high interest rates on its debt. Countries have tried to run unlimited printing presses dozens if not a hundred times throughout history, and many of those ended badly. Now pretty much the entire developed world is trying that in unison. Well, gold is a hedge against that. It need not get to a zombie apocalypse for gold to do well.

William Bernstein had this to say about inflation in The Four Pillars of Investing:
"... it is entirely possible that the Fed’s unprecedented “kitchen sink” approach to both monetary and quantitative easing will savage long-term bond investors through hyperinflation. Or not. I know a lot of very smart folks on both sides of this question and am myself an agnostic on the issue."
And that was written in 2010, when the Fed's balance sheet was 1/3 its current size.

Patzer wrote: Tue Apr 28, 2020 6:50 pm Right now 5% of my portfolio is in gold as a hedge, but it's in an ETF, not physical. I held physical gold from 2008-2010 and it was expensive to trade in and out of.
Unless you want to trade in and out of gold ETFs and have the proceeds immediately available to deploy in day trading non-gold ETFs (which I assume you don't), or unless you want to own only a couple of grand in gold ETFs, I don't know why a gold ETF could ever be superior to something like BullionVault for long term investment in precious metals. With BV you pay 0.12% per year for storage and insurance, while GLD has a TER of 0.40%. With BV you are the direct owner of physical property that you cannot lose to creditors in case the company goes belly up, because it's not theirs to begin with. With gold ETFs you have a mess of counterparty liabilities. Plus, bid-ask spreads for trading in BV are generally minuscule during week days (order board), even now that markets are very volatile, and trading commissions start at 0.5% and fairly quickly drop to 0.1%. Finally, go read their terms and conditions. It's one of those rare companies that actually inspire confidence when you read their fine print. Instead of the fine print being designed to give them the right to screw you over in a million potential ways, it's designed to give you peace of mind at every turn. Then go read a gold ETF's prospectus and see if you notice a different vibe. And no, I don't have any financial interest in BullionVault, just a happy long time customer.
The one thing that can be a pain about BV is their requirement that you keep only one bank account linked to it at any time and that all withdrawals and deposits go to and come from the same bank account.

T4REngineer wrote: Tue Apr 28, 2020 5:53 pm Why on earth would anyone want your gold and silver in that kind of world? Guns, Ammo, Friends, Water purification, Solar Power, First Aid materials, Meds, Shoes, non perishable food - tools (hand tools mostly but with solar chargers Li batteries they could be around for awhile etc - those will have value. No one will care about 100k in gold.....
I don't think that such truly doomsday scenario is likely, and I don't own any gold or silver coins anyway, but if it were to happen and you had gold and silver coins, the reason why they would continue to function as money whereas cash would not, is that in such a scenario, goods like food would become scarce, while money chasing those scarse goods would be plentiful, therefore money would quickly lose value, potentially all the way down to zero. Precious metal coins and small bars would remain scarse, and would be valuable not because you can eat them, but because you can trade them in turn for other scarse goods (just like you can currently trade your $50 bills for food). And if this scenario never transpires, you can one day cash in your bullion coins for something on the order of a 10% round-trip loss on spreads.

stuper1 wrote: Tue Apr 28, 2020 4:13 pm I keep my physical gold in a bank safe deposit box.
Bank safe deposit boxes tend to be in low regard by gold bugs, because banks have a habit of closing at the precise time you most want access to your gold. Non-bank vault storage is preferred.

MotoTrojan wrote: Tue Apr 28, 2020 7:16 pm You’ve already been in a >30% mortality pandemic, MERS. The more deadly they are the less well they can spread by design.
That used to be the case throughout history. Then factory farming came along and mortality is no longer a limiting factor for a virus' ability to propagate when you have tens of thousands of animals crammed together unable to get away from each other. And guess what, most of the nasty viruses that hit humans come from animals. We have literally billions of small test tubes around the world working 24/7 to breed what could be the next pandemic, a really deadly and highly contagious one if we're unlucky. They are called chickens and they go for a few bucks (and other farmed animals too). Dr. Michael Greger did a great presentation on this topic.
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