WSJ: SMALL INVESTORS are hoarding gold

[gilliam]

WSJ: SMALL INVESTORS are hoarding gold. “Individuals’ bullion purchases almost doubled last year, amid apocalyptic panic over the financial system, to 862 metric tons. Lately, that panic-driven demand has given way to a more subdued, yet still potent, fear that stocks will suffer as the recession grinds on for a long time, so gold makes sense. At the same time, there’s a rising anxiety about inflation among people like Dr. Van Steyn, resulting from the Obama administration’s massive stimulus spending.”

 

[didymus]

WSJ: SMALL INVESTORS are hoarding gold. “Individuals’ bullion purchases almost doubled last year, amid apocalyptic panic over the financial system, to 862 metric tons. Lately, that panic-driven demand has given way to a more subdued, yet still potent, fear that stocks will suffer as the recession grinds on for a long time, so gold makes sense. At the same time, there’s a rising anxiety about inflation among people like Dr. Van Steyn, resulting from the Obama administration’s massive stimulus spending.”

Th hell with gold, I’m hoarding canned goods!

 

[SamH]

Th hell with gold, I’m hoarding canned goods!

Canned goods, ammunition, silver coins, shoes, vegetable seeds, tires, diesel fuel…

 

[Ridgerunner]

Canned goods, ammunition, silver coins, shoes, vegetable seeds, tires, diesel fuel…

Don’t forget veterinary antibiotics. No Rx needed, and if you study them well, you can figure out what acts on what organisms, and what the right dosages are. They’re prepared in a manner similiar to that of human antibiotics; often at the same manufactories. Not for normal use, but in a total societal breakdown? Invaluable!

(I’m not a survivalist. But if I were, veterinary antibiotics would be third only to food and ammunition.)

 

[Ridgerunner]

Perhaps I should be persuaded about gold, but I’m less than convinced.

Expectations of the future value of gold are premised on the assumptions that there will be howling inflation resulting in enhanced value of tangible goods. But gold really isn’t a tangible good, in that it’s useless for any practical purpose nearly anyone would ever have. Its value relative to goods is based on the assumption that others will assume it has a value greater than that of currency. But it’s still banking on an assumption about others’ perception of value.

Back in the early 1980s (adjusted for inflation) gold hit about $2,000/ounce. It’s a long way from that right now, and some assume it will see $2,000 soon. Perhaps it will, relative to currency, but it must be remembered (and many will remember) that it plummeted shortly after reaching its high, as the perceptions changed.

But will its value increase relative to goods and services, or at least maintain a stable relationship with them? Again, that is an assumption that may or may not turn out to be true, as it rests on the perceptions of others. It is not an inherent relationship.

The value of dollars rests on perceptions and assumptions. So does the value of gold.

 

[SamH]

Perhaps I should be persuaded about gold, but I’m less than convinced.

I tend to agree. Our economy is so far removed from gold no one really knows how to trade in it, even as a supplement to the barter system. I have accumulated a small stock pile of silver coins (Morgan and Peace Dollars) because they seem to be a safe investment, I like collecting them and in the course of a financial crisis people would probably be more willing to accept them. They are in dollar denominations and weigh about .9 ounce, I think (personal belief only) that the familiarity of them as US currency and as a precious metal they would be more useful.

If not in 20-30 years my sons will open my safe deposit box and wonder why their crazy old man had so many of them.

 

[Ridgerunner]

I tend to agree. Our economy is so far removed from gold no one really knows how to trade in it, even as a supplement to the barter system. I have accumulated a small stock pile of silver coins (Morgan and Peace Dollars) because they seem to be a safe investment, I like collecting them and in the course of a financial crisis people would probably be more willing to accept them. They are in dollar denominations and weigh about .9 ounce, I think (personal belief only) that the familiarity of them as US currency and as a precious metal they would be more useful.

If not in 20-30 years my sons will open my safe deposit box and wonder why their crazy old man had so many of them.

I have often wondered what one would see if one had some kind of x-ray vision to see all the coins in the lock boxes in banks. Reminds me of the old saying, thought to be true, that there is more gold buried (and forgotten) in the back yards of France than in Fort Knox.

Cody Willard, the commentator sometimes seen on Cavuto and “Happy Hour” said something I’m still trying to digest. I’ll grant that he is a weird guy and a “pox on all houses” type. Still, his comment on gold was that it will go the way of all assets in time. His statements was that the direction the economy is headed means that soon “What you have will be worth less. (including gold) What you want will cost more.” In other words, the relationship between assets and the cost of consumable items, including necessities will slip in favor of the cost of the latter.

When one thinks about it, that could very well be true. I could easily see food, energy and all things requiring a significant energy (name removed by moderator)ut, and medical care, going up sharply in the near future. In the face of that, anything that merely “represents” tradeable value could (and in his estimation, will) be reduced in significance relative to those things that are absolute needs. Gold, as a “representative” of value, not having “intrinsic use” value in the hands of individuals, could share that fate as well as currency.

That’s an awful prognostication when you think about it.

 

[SamH]

That’s an awful prognostication when you think about it.

It is, but its also a possibility. The current administration seems to be repeating the steps made by the Weimar Republic. At least they printed money, the US government is borrowing money from the Fed created by a few keystrokes.

 

[exoflare]

When one thinks about it, that could very well be true. I could easily see food, energy and all things requiring a significant energy (name removed by moderator)ut, and medical care, going up sharply in the near future. In the face of that, anything that merely “represents” tradeable value could (and in his estimation, will) be reduced in significance relative to those things that are absolute needs. Gold, as a “representative” of value, not having “intrinsic use” value in the hands of individuals, could share that fate as well as currency.

So you think we would essentially return to the barter system?