The Gold thread

Talking about gold seems to be quite taboo nowadays, which in of itself is mindboggling, given its relation with mankind during most of our history. A mere 40 years ago, it was synonymous with.., no that is the wrong term, it simply WAS money. Just as it has been for thousands of years. Two generations later and it is some hocus pocus being sold on late night infomercials. How the mighty have fallen.

The reason why I am making this thread is due to a recent anecdote. A friend of mine has a sum of money that he had "saved" away in some bonds. Due to the recent decline in the bond market, he now has it stashed away in cash. In the course of pointing out to him his egregious definition of "saving", the topic of gold was brought up. To me, there is a distinct separation between "saving" and "investing". Investing is putting your capital to work in a productive asset in the hopes of a future return, taking on the risk of a loss of capital. Saving on the other hand is simply the preservation of wealth. There should never be the risk of me losing what I saved away. Having heard that, my friend asks me where he should save his money, since interest rates are so low nowadays. I said, gold/silver, as it is really the only place you can save your money, period.

His response was that it was too risky. And, what if it went down?

His response was neither incorrect nor unreasonable. Gold has not been tied to money for decades, and today trades like a risk asset due to speculators. Certainly there is a chance for it to go down.

But just the way it came out from him, and knowing the history of our money, the response just seemed comical to me.

The original intentions of the dollars he has saved away in his bank account was a receipt to redeem for gold held in safe keeping. The keepers who one day said, JUST KIDDING!, seeing as our reserves are running dangerously low, we will back it with the full faith and credit of the US of A, instead.

The comedy to me is that today, one if not most, would rather save their wealth in the paper receipts that were once intended for the exchange for gold, which you can no longer tender for(making them defaulted, really), rather than the aforementioned-intended-for gold, itself. Because gold is the one that is too risky.

Does something seem terribly wrong here? Like, ass-backwards? Are we really living in Wonderland, or have the powers-that-be really pulled this Houdini act off?

What difference is there between these receipts compared to the hundreds that came before it? Especially since there are exactly zero examples of a successful fiat currency throughout human history.

Are people today really arrogant enough to believe that we are smarter than our ancestors, even though the one constant throughout history is how humans repeat their mistakes?

We have been debasing our currency since the time of Athens and Rome to the Weimar Republic to Zimbabwe. It is nothing new. And every single time it was either to fund an endless war, or social project that only further indebted the country. Just because back in Roman times they diluted gold with copper, and today we have a fancier name for it called "Quantitative Easing", doesn't make it any bit different.

Anyways, I encouraged my friend to invest, whether it is in a house, or some stocks(although probably not in the U.S.), or whatever he likes. But also to have a portion of his wealth put away in savings like members of any stable society. And those savings should be put in a preserver of value like it has for thousands of years. Not the paper receipts for them that lost their original purpose 40 years ago.

Sorry if this is D&D material. Which if it is, that's sad.

 

1. Absolutely stay away from ETFs such as GLD and SLV. Not only do they defeat the purpose, they are vehicles in conjunction with the Comex exchange that are manipulating the precious metals markets. In their own prospectus they spell it out clearly that their inventory is not subject to audit, and their custodians are the very bullion banks that are notorious for shorting selling the gold/silver that the ETFs supposedly own. It is all very shady.

2. I do not suggest an investment into bullion, but rather saving through it. As with any saving, you are not really planning on using/selling it unless for emergency. You should be able to live off of your investments after retirement. With savings something you can pass down to your children, or again for emergency.

3. I am almost positive that during our lifetime, your bullion will once again be used for a medium of exchange(in some limited way at least). In that case you wouldn't have to worry too much about capital gains tax I would think.(If you are using it to actually trade for things) The average life expectancy of the past 700 or so fiat currencies the world has seen has been 27 years or so. The US dollar in its current iteration is 42 years old. That does not necessarily mean it will be destroyed by the hyperinflation, but some monetary reform is inevitable. Whether that is going back on the gold standard or some new solution. Our current course has never, ever ended successfully.

 

Have rocks held their value through 5,000 years?

Do central banks and governments hold rocks in their national vaults as a guarantor of their national solvency?

What I find funny, the people who value and hold/hoard gold today are 1. the wealthy, and 2. the actual governments that rule us.

Yet, the common man sees it as being useless/worthless. Again, how have they pulled this off? This is the biggest con job in history. At no other time in the history of modern civilization has gold been viewed in such irreverence as it is today.

We are not talking about our ancestors. We are talking about our grandparents. A mere 2 generations have passed, and that is all it takes for people to forget. Yet any knowledge of history will tell you exactly how it ends. Which is most people handing their hard earned wealth to the very few. And you won't even know how it happened until its over.