by smiley » Fri 17 Sep 2010, 17:58:44
$this->bbcode_second_pass_quote('', 'I') advise those who listen to move from cash to commodities.
I am hesitant. I'm starting to believe that the commodities are a trap as well.
Current society is characterised by a unprecedented level of consumption and consumer ownership. We have more stuff than any generation before us. Unless you're an ascetic of some sort this will be true for you. You will own: Televisions, radio's, computers, cameras, Ipods, Ipads, Iphones, game consoles..... and that is just the electric stuff. Just compare the number of kitchen appliances you have with those your grandmother had in her time.
Break that down into its constituents and you own a lot of commodities.
I think you will also agree that many of these items are not strictly necessary for your survival, rather they are acquired for your convenience or pleasure.
So from a survival standpoint you own a lot of expendable commodities. And so does everyone else.
A simple law states that the price of an item is set by demand and supply. I think that if you jolt the system demand will go down. and supply will barely move or even go up. If I take an electric toaster as a proxy. When you have a sudden increase of the price of bread you might consider not buying a new toaser as buying the bread will take priority. You will also consider putting your current toaster on e-bay, thereby increasing supply. Investing in toasters would in hindsight not be such a smart idea.
That is the thing with most commodities. Investing in them is investing in the consumption society. And that is not a very smart thing if this form of society is about to radical reform.
There are exceptions. Gold, because it is one of the rare elements which has little to no use. But buying gold means betting on gold to take over the role of currency. that is in no case a given. And don't forget the gold confiscation act.
Even oil might become very cheap in the case of a currency crisis. They wont buy the oil if they cannot afford the car.
Probably the only thing that is virtually bullet proof in any recession are the perishables (foodstuff). If you have a real collapse of the system in the form of hyperinflation, a big backyard and some pigs would be your best asset.
Pigs don't care about their market value.