Metals, a Hedge or Investment Depending on Your Views... or a Sucker's Bet?

[Jacob Petersheim]

Things appear to be getting weird in banking and in precious metal prices. It is hard to predict the future of banking independent of a digital currency, or even the security of existing deposits. Gold has been going crazy, and silver is now rising. This despite a lot of people desperate for cash dumping so much on dealers that they and their wholesalers have a hard time accepting it all.

So what's up?

Do you "stack" Constitutional 90%-silver coinage for possible barter use if things get bad? Do you have a sack of silver Eagles, or some gold?

Is this all far too expensive and prices out of our control for us to really hold enough metals to matter? Is it a scam to lure in the gullible, profiting off dealer "premiums" on purchases and discounts on sale?

 

[Don Alaska]

Most people can't afford to "stack gold", but silver is much more affordable. Precious and non-precious metals are simply a hedge against inflation. The Federal Reserve has a target of 2% or 2.5% inflation every year. That essentially means they are stealing 2% of your wealth every year, mostly to supplement the wealth of those already in the top 1% of the elite. The Fed was founded to make a few people very rich , and was designed according to some to only last a century or so before collapsing. It was sold to the American people as a way to prevent depressions, but the establishment was followed a little over a decade later by one of the worst depressions in history...the Fed doesn't work.

Anyway, metals, real estate and a few other hard assets are simply ways to prevent the Fed from stealing your money, nothing more. There can certainly be scams involved, but if you buy from a reputable agent or dealer, there is little to no risk involved and lots of benefits. The only downside is that you have to be able to spend your wealth and it would be difficult to impossible to buy a week's groceries with gold coins or bullion. Many pawn shops and metals dealers will convert your assets back into currency, but it takes time and isn't always convenient. Real estate is even harder to convert back to currency as usually significant sums are involved.

 

[Jacob Petersheim]

Real estate is even harder to convert back to currency as usually significant sums are involved.

That's a good point.

Maybe real estate is for those the next level up in wealth, with metals for those below that.

In the videos I linked the guy seems to be making the point that silver and gold are fundamentally and practically different though. Gold for long-term wealth preservation but silver can be an investment of a sort and traded.

Gold seems expensive, true, but a 1 oz coin goes for less than 1/10th of a new car at today's prices. So high enough, for sure, but not out of range for a lot of people.

 

[Jacob Petersheim]

There are trends to be concerned about.

Globalization (1.0) exported jobs to low-wage labor. Globalization 2.0 imports low-wage labor to take remaining jobs.

The "masters" of these machinations want to use consumers' savings to accomplish the goals of Globalization 2.0 by providing incentives to turn away from saving to "infrastructure" investing.

BlackRock Wants YOUR Savings! Here's How They'll Take It

This is probably why interest rates are already falling within the EU, UK, and Canada. While rates might (might) be too high in the US, we might want to be careful not to wish for a substantial reduction in those rates. If your savings can't get 4 or 3.5 or even 2.5% you might be incentivized to move the funds into stocks of dubious net effect with nefarious intended purposes. Keep in mind that "infrastructure" probably means "Green New Deal 2.0" or something else of a similarly dubious nature.

So when they start to beat up savers, metals might be a possible escape. Assuming that hasn't been capped first, through revaluation and rapidly escalating prices rendering it impractical.

 

[Jacob Petersheim]

I'm just guessing, but I'm getting the idea that most of us can't afford to dabble in such things and the rest are too smart to talk about it online. I had the impression that your "gold bugs" love the topic and cannot resist talking about it and giving their opinions.

Most of us probably aren't investing in significant real estate either. It seems like few even maintain a second home, something I've never really imagined myself. Not even a small getaway cabin or isolated plot with a trailer on it.

Perhaps most of us are just down to Earth types from working class backgrounds, managing well enough to get by and maybe help our kids a little.

 

[Don Alaska]

Many of my friends have getaway cabins. I have toyed with the idea myself but never acted on it. One of my wealthier friends that I have mentioned in the past has three homes--one out here, one in Anchorage, and one on Maui. Another guy has a home here, one in Nevada, one in Mexico and one elsewhere that I can't remember where. The latter guy made a killing on his house in Anchorage that he bought many years ago. He sold it for $4 million or so and reinvested that money in other real estate. The guy with three houses has land everywhere. Whenever he has spare cash, he buys a lot , usually empty, somewhere if the price he can get is good.