[Windmills]

Racer,

I can see your points about gold, and I agree with you to a certain extent. Once economies begin to decline, gold may become as worthless as paper. It won't have any inherent value, just like paper. There are some practical uses for gold, but beyond those, it's just a social contract, an agreement among people to honor its value as a medium of exchange for other goods.

On the other hand, money was a technological breakthrough compared to barter. Having an agreed source of money will assist with the efficiency of any economy, and precious metals might find themselves once again the item of choice as they were for thousands of years.

[untothislast]

As seems to be the case with other opinions voiced here, I wouldn't rely on anything with an abstract, arbitrary value - particularly in the short term.
Whatever gold may have represented in the past, we are heading into what looks like unknown territory within the coming decade, where any sort of speculation beyond investing time and money in somewhere safe to live - with ready access to a supply of food and water - doesn't seem to make much sense.

[jaws]

You can't eat government bonds or gasoline either. In fact the only thing that you can eat is food, and yet we have never used food as money. The reason is that it spoils, large quantities of the stuff have low value, and it is not divisible. That's what makes precious metals money, they last a long time, they're small and you can split them up infinitely into smaller pieces.

Liquidity is what makes something money. Trust is what makes something the common money. If there is a tendency towards inflation (doesn't have to be hyperinflation) then gold remains the only form of money we can trust will not inflate. That will protect, and most likely increase, its value.

[jaws]

$this->bbcode_second_pass_quote('linlithgowoil', 'n')o, i dont think they will be. the next recession is going to be a worldwide one, and i believe that the value of everything will go down, nothing will be spared.

i suppose its just a matter of chosing things that wont lose their value as much as others. maybe it would be a good idea to invest in fine antiques or something? problem with that of course is that they are tangible and therefore destroyable.

[rogerhb]

$this->bbcode_second_pass_quote('jaws', 'I')n fact the only thing that you can eat is food, and yet we have never used food as money. The reason is that it spoils.

[MicroHydro]

Gold has always been worthless. It was despised by the ancient Chinese, Egyptians, Persians, Greeks, Romans, Aztecs, and Incas. It will not be worth anything after peak oil either. Since gold is worthless, no point in keeping any. Please send it to me, I will take that junk off your hands and give you some crisp pieces of paper!

[rockdoc123]

$this->bbcode_second_pass_quote('', 'G')old has always been worthless. It was despised by the ancient Chinese, Egyptians, Persians, Greeks, Romans, Aztecs, and Incas. It will not be worth anything after peak oil either. Since gold is worthless, no point in keeping any. Please send it to me, I will take that junk off your hands and give you some crisp pieces of paper!

[perplexd]

I think we need to distinguish between a "during the crisis" period and the "after that" period.

I'll be 65 in 2035. If we're really peaking today, then I expect a reasonable chance that there will be some economy rising out of the ashes by 2035. It might look a lot more like 1880 than 1980, but an economy is an economy, and owning gold in a working economy ain't a bad thing.

During the crisis? Sure -- in a world full of starving people you won't get a bucket of carrots or a pitcher of clean water for your ounce of bullion. During that time, I suppose your hundred dollar bills would at least be useful to start a cooking fire, and this would make them more useful than gold in the short term.

[ohanian]

$this->bbcode_second_pass_quote('jaws', 'Y')ou can't eat government bonds or gasoline either. In fact the only thing that you can eat is food, and yet we have never used food as money. The reason is that it spoils, large quantities of the stuff have low value, and it is not divisible. That's what makes precious metals money, they last a long time, they're small and you can split them up infinitely into smaller pieces.

[jaws]

Well there you go. The Samurai were paid in a commodity and the first thing they did was sell it for real money, because that commodity was too risky and illiquid.

It's like someone working for a bakery being paid in bread. The first thing they would do is sell the bread for real money. That would take a lot of time and be a big hassle, especially since they would be bidding against their employer. It's much simpler to pay them directly in money.

[rogerhb]

$this->bbcode_second_pass_quote('jaws', 'I')t's like someone working for a bakery being paid in bread. The first thing they would do is sell the bread for real money.

[spot5050]

$this->bbcode_second_pass_quote('MicroHydro', 'G')old has always been worthless. It was despised by the ancient Chinese, Egyptians, Persians, Greeks, Romans, Aztecs, and Incas. It will not be worth anything after peak oil either. Since gold is worthless, no point in keeping any. Please send it to me, I will take that junk off your hands and give you some crisp pieces of paper!

[Backtosteam]

If selling is what you've decided I think you are smart to trade some of your paper money for gold. Yeah, it may not be worth $500/oz, but it will be worth a lot more than paper if things really go bad. The worst thing to do is sell and keep paper money...at least with a house you have some sort of an asset...may not be worth half a million, but at least you have a roof.

[GoIllini]

$this->bbcode_second_pass_quote('linlithgowoil', 'n')o, i dont think they will be. the next recession is going to be a worldwide one, and i believe that the value of everything will go down, nothing will be spared.

i suppose its just a matter of chosing things that wont lose their value as much as others. maybe it would be a good idea to invest in fine antiques or something? problem with that of course is that they are tangible and therefore destroyable.

[GoIllini]

$this->bbcode_second_pass_quote('Backtosteam', 'I')f selling is what you've decided I think you are smart to trade some of your paper money for gold. Yeah, it may not be worth $500/oz, but it will be worth a lot more than paper if things really go bad. The worst thing to do is sell and keep paper money...at least with a house you have some sort of an asset...may not be worth half a million, but at least you have a roof.

[heimdall]

$this->bbcode_second_pass_quote('GoIllini', '')$this->bbcode_second_pass_quote('Backtosteam', '.')..
if you're saying that gold won't be able to buy you as much when peak oil hits, I suggest buying futures in commodities you'd be using after the peak- like timber, oil, coal, and maybe a few more useful metals.
...

[thuja]

Before investing in precious metals, you should be able to know what you want from it- do you want to cash out in 5-10 years if hyperinflation kills the dollar and gold and silver are worth a great deal more than their present value? Or do you want to keep it in case of a total crash as a new (old) form of currency that supplants paper money? In the first case it may be smarter to buy the metals in funds or have them kept with the distributor (Kitco does this and you don't have to worry about hundreds of pounds of metal). In the second case you may want to buy a certain amount of coins; gold and silver, to use as a proxy currency and keep it close at hand (so the govt. can't confiscate it.)

In my belief, the second possibility may not happen for quite a while (decades), but it sure is nice to have a little something stashed away in case of a quick collapse. In the long run, I may hand down the coins to my children or grandchildren who would need them when a new gold and silver based economy arises.

[RacerJace]

$this->bbcode_second_pass_quote('', '.').. do you want to cash out in 5-10 years if hyperinflation kills the dollar and gold and silver are worth a great deal more than their present value?

[jupiter422]

I have done lots of research on currencies and precious metals which ,I'm sure most of you all have too, .I understand the bullish case for them ,given the current economic outlook.I also undertsand the bullish case for silver , being that it is undervalued and there is the peak silver argument.
I personally own 100 or so ounces of silver ,but I have owned them for years.They are .999 pure silver rounds.
However I don't see why so many people are jumping on this bandwagon ,like it's going to save the day.Unless you own a reallyl arge holding .I'm talking holdings that can effect the markets.If you do have holding this large are they secure?Do you own the physival metals or just options on future contracts Or do you just have a pice of paper saying you own this much ,but have no clue if it's there?I suggest taking hold of the physical metal.

After tshtf ,what are you going to do with your metals?Do you plan on selling right before?If so then what?I think buying precious metals is a way o trying to dodge the incoming bullet of catastrophe,but if the whole system crashes and the dieoff begins to transcend wtf are you going to do with silver and gold?I am very intersted in making this a long thread that gets into the details of this topic.I have noticed the bullish attitude on metals by alot of users on this site.I can agree with the assessment that there is a bullish case for metals ,but I don't see it doing anything to divert the complete disorderly decay of our world as we have always known it.

[rogerhb]

The idea is that in the case of hyper-inflation or lost of faith in 'fiat' currencies people will prefer more tangible assets in exchange for goods and services.

Fiat currencies have a history of failing and there is no reason why the current system should be any different.

If you have wealth as money or as a number in a computer record and the banks crash or hyperinflation takes hold where will your wealth go?

Historically precious metals have been used as money for many reasons that you should already be aware of.

For this to be any use in a crash you need to physically have the gold in small recognizable units.