Investing in physical gold – discuss

grinu · Post by **grinu** » 24 Feb 2006, 13:08

I still can't understand why gold wouldn't stay valuable as a portable source of wealth. I've made the post on this site in the past so won't go over things again. Basically, in my view you need a portable store of wealth to get by. Even before oil was ever found, gold was very valuable. Think abou tthe romans. I would hazard a guess that the reasons for gold jewelry being popular in various economic crashes, rather than coins, is the fact that most people do have some gold jewellry to sell. How many people do you know with a stash of gold coins??

grinu · Post by **grinu** » 24 Feb 2006, 17:57

What most people don't know about gold

[got it in the end Mike !!]

andyh · Post by **andyh** » 24 Feb 2006, 19:32

Nice article. I think people feel a lot of residual mistrust associated with gold as an investment; think misers sitting on a pile of it, Keynes comment 'that barborous relic' etc etc. Fact is though is that its merely now just beginning to re-fulfill the role that its had for thousands of years - and one that the US$ briefly captured in the last half of the last century.

But hey if you dont believe me look at the gold action today - a $10 spike off the back of the failed Saudi attack. If it had succeeded gold would have been up anything between $50-100.

Personally I think if you have the economic means, and are fully aware of peak oil in all its dismal glory then you would be doing yourself a grave diservice at the very least not to get some exposure to gold.

Edit: if I might add the mistrust about gold even extends to some of the financial world. My New Zealand bank manager was most perplexed as to why I was buying gold, when he had these nice safe term deposits on offer........

Post by **mikepepler** » 24 Feb 2006, 19:56

grinu wrote:What most people don't know about gold

[got it in the end Mike !!]

Interesting. I can see the point, I would just feel nervous about having at home, and just as nervous trusting someone else to look after it in times of trouble. There's some more interesting info (as always) on wikipedia:
http://en.wikipedia.org/wiki/Gold

Gold in antiquity was relatively easy to obtain geologically; however, 75% of all gold ever produced has been extracted since 1910.[2] It has been estimated that all the gold in the world that has ever been refined would form a single cube 20 m (66 ft) a side.

Because of its use as a reserve store of value, the possession of gold is sometimes restricted or banned. Within the United States, the private possession of gold except as jewelry and coin collecting was banned between 1933 and 1975. President Franklin D. Roosevelt expropriated gold by Executive Order 6102, and President Richard Nixon closed the gold window by which foreign countries could exchange American dollars for gold at a fixed rate.

A little disturbing that the government might just come and take it off you!

More on the currency application of gold here:
http://en.wikipedia.org/wiki/Gold_standard

Through most of human history, however, silver was the primary circulating medium and major monetary metal. Gold was the metal that was used as an ultimate store of value, and as means of payment when portability was at a premium, particularly for payment of armies. Gold would supplant silver as the basic unit of international trade at various times, including the Islamic golden age, the peak of the Italian trading states during the Renaissance, and most prominently during the 19th century.

I can't help wondering though that a local currency might be a better thing in the long run, with gold/silver only used when trading with people outside your local area? I wonder if one of the best measures to prepare for PO would be to live in a place which had set up a local currency over which the community had control. Of course, that would require a whole town full of peakniks, and I've no idea what the law has to say about it!

MacG · Post by **MacG** » 24 Feb 2006, 20:40

Everything is about "society". When people get together and form a "society" they agree on a number of common values and rules, such as "ownership" and "justice" and "mechanisms to resolve conflicts". As soon as some form of "society" is there, the medium of exchange and the rules of tradse are just sets of agreements.

Any goldbug is strongly recommended to read Bernard Lietaers "The Future of Money" which begin with a well researched historical expose of "money" in different societies.

It's not about "gold", it's about "society". The Egyptians were running a nice little empire for a couple of thousands of years using "money" in the form of.... pieces of clay!

Get me right now: As long as our current societies exist, gold might very well prove to be a good investment. I would not be surprised to se gold above $10000/Oz in the immediate future, or even $40000/Oz. But if (when) our societies break down in a chaotic discontinuity, other things than gold will be much more interesting to possess. Skills, relations and trusts for example.

Personally, I hoard silver!

andyh · Post by **andyh** » 24 Feb 2006, 20:47

Mac - $10,000 an oz? If only............

MacG · Post by **MacG** » 24 Feb 2006, 21:09

andyh wrote:Mac - $10,000 an oz? If only............

Any goldbug worth his weight in...razorblades... would know how much gold there is out there and how many dollars there are out there, and find something like $40000/Oz to be rather reasonable in a "blowout" situation. The important thing though, is how you position yourself for the day AFTER the blowout. Relatives, friends, trusts, relationships...

How about volcanic activity in NZ btw? Are there any historical or geological records? Do the island group blow up completely every thosand years or so?

andyh · Post by **andyh** » 25 Feb 2006, 09:03

Yes they are certainly volcanic (they are on the Pacific Rim of Fire), active volcanoes restricted to North island. Earthquakes both south and north.

Give me the potential risk of an earthquake over the definite of peakoil anyday.

SILVERHARP2 · Post by **SILVERHARP2** » 25 Feb 2006, 11:31

Bandidoz - I am aiming at having about 10% of my net worth in gold, silver and gold stocks plus energy, having a few gold coins wont help much to be honest

somebody mentioned ealier about storage, you should have a mix, hold some and maybe open a gold account eg goldmoney.com if you think you needed to spend it in the near future, has to be better then a deposit account where the interest is taxed.

MacG · Post by **MacG** » 25 Feb 2006, 19:22

andyh wrote:Yes they are certainly volcanic (they are on the Pacific Rim of Fire), active volcanoes restricted to North island. Earthquakes both south and north.

Give me the potential risk of an earthquake over the definite of peakoil anyday.

Sorry. Far beyond my capabilities. Bloody big black clouds around both events. Volcanoes have created quite some mess in historical time, and PeakOil will probably create an unprecendented mess in the future. No amount of risk management I know about got either event on the scale. Sorry all.

Bandidoz · Post by **Bandidoz** » 27 Feb 2006, 19:30

What do you Gold prospectors think about the idea of having multiple streams of income from RE projects?

http://www.powerswitch.org.uk/forum/vie ... php?t=1791

andyh · Post by **andyh** » 28 Feb 2006, 09:45

Depends what you mean by 'shares' I guess? If you mean if its on a local level as in you own a quarter share in a small local hydro plant at the bottem of your street then that has to be grand.

If its having a share in a renewables company on AIM (such as OCT for example, good comapny, I had shares in them for a while), then its also likely to be a good thing, but on a shorter term basis - ie on the timescale it takes for the city to jump properly on the renewables bandwagon. But on a longer term basis how well are shares traded on the LSE going to do? The market seems to be discounting the fact that we even have an energy crisis (hell maybe they are right!), so when they wake up to it is anyones guess.........

andyh · Post by **andyh** » 28 Feb 2006, 09:50

Depends what you mean by 'shares' I guess? If you mean if its on a local level as in you own a quarter share in a small local hydro plant at the bottem of your street then that has to be grand.

If its having a share in a renewables company on AIM (such as OCT for example, good comapny, I had shares in them for a while), then its also likely to be a good thing, but on a shorter term basis - ie on the timescale it takes for the city to jump properly on the renewables bandwagon. But on a longer term basis how well are shares traded on the LSE going to do? The market seems to be discounting the fact that we even have an energy crisis (hell maybe they are right!), so when they wake up to it is anyones guess.........

oobers · Post by **oobers** » 14 Mar 2006, 16:26

Been reading through this thread again, trying to make sense of the whole gold investment thing.

mikepepler wrote: I can't help wondering though that a local currency might be a better thing in the long run, with gold/silver only used when trading with people outside your local area? I wonder if one of the best measures to prepare for PO would be to live in a place which had set up a local currency over which the community had control. Of course, that would require a whole town full of peakniks, and I've no idea what the law has to say about it!

Well, with over 250 PS forum members now, I reckon we could all pool our cash, gold, silver, razor blades and turnips and have enough to purchase this place, then run to the hills:

http://www.timesonline.co.uk/article/0, ... 24,00.html

A village in Tuscany? To you, a mere ?40m
From Richard Owen in Rome

FOR SALE: a medieval village in Tuscany, complete with its own Medici-era church. No electricity or gas and no telephones. British buyer preferred, and must be keen on DIY. Price: about ?40 million....

Paolo Riani, an architect recruited to redevelop the village, said: ?If someone does buy the entire village they will be expected to honour the tradition of an annual festival at the village church, the Church of the Madonna of the Greenhouses.?

Anyone up for it?

skeptik · Post by **skeptik** » 14 Mar 2006, 17:37

grinu wrote:I still can't understand why gold wouldn't stay valuable as a portable source of wealth.

TSHTF and the plane crashes into the sea.

There are two survivors. One bloke ends up on one side of the island... he looks along the beach and sees an intact box amongst the rubble...it contains a fishing rod and reel, keep net, a float and hooks...great... because all else there is on the island are a few coconut trees and sand...

On the other side of the island the other survivor wakes up. He too looks up and down the beach. amongst the smashed aluminium and plastic debris he finds a box. It contains gold bullion. 'Great' he thinks ' 'a universal and portable store of wealth'

A few hours later he's starving hungry and meets the first survivor who is preparing sashimi on a palm frond with the Swiss Army knife he had in his pocket.

"Hi" says survivor two "I'm really hungry - could I buy some some fish, Ive got these gold bars"

"Sorry" says survivor One. "It took me hours to catch this one fish and I've already lost two hooks stuck in the reef. Theres only a dozen and I cant afford to lose them like that. Look - this fish is really small, theres barely enough for me. As soon as I've eaten this I'll be trying to catch some more"

" but Ive got a whole box of gold bars! You'll be rich"

"Look I said no! I'm not interested. Why dont you try throwing your gold at the coconuts and see if you can knock some off of the trees? If you can get me a coconut I might consider a trade."

...what gold stores depends on it's context - and the prevailing consensual delusion regarding its value in respect to other items., In some contexts it is just a soft heavy metal - even more useless than lead.