Author Topic: Precious Metals  (Read 6468 times)

Dabnasty

  • Handlebar Stache
  • *****
  • Posts: 1361
Re: Precious Metals
« Reply #100 on: February 04, 2019, 07:15:46 AM »
if I really wanted to "cherry pick data" as claimed I would have picked the top of the dotcom bubble.

The key to good cherry picking is to not make it obvious that you are, in fact, doing that.

But feel free to prove me wrong:

Why do you feel that a 20 year time interval more informative than 5, 10, 15, 25, 30, 35, or 40, vand?

And, assuming you have a convincing argument why a 20 year time interval is so more informative than any of those others intervals, why is January 1999- Dec 2018 more informative '90-'09, '91-'10, .. etc?

I used 20 years because it's a nice round number. People tend to like round numbers.
Long enough to demonstrate that there there are other assets classes you may wish to consider for such timeframes.

What's your preferred timeframe? 50 years? that seems to be very "cherry picked" for stocks.  How about 2000 years? I can guarantee you that gold has outperformed stocks over 2000 years, and will outperform the S&P500 over the next 2000 years, because when the currency dies, all paper assets denominated in that currency will all die with it. History has shown this to be the case.

How about rolling periods of 1, 5, 10, 15, 20, 25, 30, 35, and 40 years? That would be a good place to start.

http://visualizingeconomics.com/blog/2014/5/16/rolling-returns-stocks-gold-2013?rq=gold

Unfortunately this only goes up to 2013 which leaves out the May 2013-present increase in the S&P 500* of ~70% and the slight decline in gold prices over the same period.

*S&P 500 with dividends is what this chart is referring to as "stocks"

waltworks

  • Magnum Stache
  • ******
  • Posts: 2998
Re: Precious Metals
« Reply #101 on: February 04, 2019, 07:19:44 AM »
But hasn't the return on gold (and ounce buys a nice toga, buys a nice suit today) been essentially zero for the last several thousand years?

If that's your base assumption, you can forget FIRE, because the whole world has and never will progress... economic growth of all sorts for all of human history is a sham. Am I interpreting you correctly?

-W

maizeman

  • Magnum Stache
  • ******
  • Posts: 3261
Re: Precious Metals
« Reply #102 on: February 04, 2019, 08:28:54 AM »
What's your preferred timeframe? 50 years? that seems to be very "cherry picked" for stocks. 

I have provided data for 10 years (even nicer rounder number), 30 years, and 84 years (not a round number, but dictated by the last time the US increased the price of gold through legislation). It's not that any one date is better than 20 years. It is that so many other dates (different intervals AND different start dates) all tell a different story from 20 years starting from 1999. Dabnasty provided even more timepoints and data to support this point.

Ultimately, it is your life and your money and you can choose to roll the dice is you so desire. Unfortunately the odds not in your favor.

Quote
How about 2000 years? I can guarantee you that gold has outperformed stocks over 2000 years, and will outperform the S&P500 over the next 2000 years, because when the currency dies, all paper assets denominated in that currency will all die with it. History has shown this to be the case.

Actually history shows quite the opposite, vand.

Let's look at one of the most recent currencies to die: Zimbabwe dollars. People who owned stocks and real estate in Zimbabwe before April 12th 2009 still owned them after April 12th, the value of the assets were just denominated in a different currency (US dollars, sometimes South Africa rand) than the day before. Bonds ... not so much, but hyperinflation destroys the value of bonds regardless of whether the currency survives or not.

Same when the Ecuadorian Sucre died on January 9, 2000.

We may get to see yet another example here with the Bolívar soberano in Venezuela here shortly. So far in that country, the local stock market has proved a much more effective store of wealth than leaving your money in currency, but we will have to see what happens when/if the currency actually dies and is replaced by something else.
« Last Edit: February 04, 2019, 08:32:30 AM by maizeman »

vand

  • 5 O'Clock Shadow
  • *
  • Posts: 48
Re: Precious Metals
« Reply #103 on: February 05, 2019, 02:41:19 AM »
What's your preferred timeframe? 50 years? that seems to be very "cherry picked" for stocks. 

I have provided data for 10 years (even nicer rounder number), 30 years, and 84 years (not a round number, but dictated by the last time the US increased the price of gold through legislation). It's not that any one date is better than 20 years. It is that so many other dates (different intervals AND different start dates) all tell a different story from 20 years starting from 1999. Dabnasty provided even more timepoints and data to support this point.

Ultimately, it is your life and your money and you can choose to roll the dice is you so desire. Unfortunately the odds not in your favor.

Quote
How about 2000 years? I can guarantee you that gold has outperformed stocks over 2000 years, and will outperform the S&P500 over the next 2000 years, because when the currency dies, all paper assets denominated in that currency will all die with it. History has shown this to be the case.

Actually history shows quite the opposite, vand.

Let's look at one of the most recent currencies to die: Zimbabwe dollars. People who owned stocks and real estate in Zimbabwe before April 12th 2009 still owned them after April 12th, the value of the assets were just denominated in a different currency (US dollars, sometimes South Africa rand) than the day before. Bonds ... not so much, but hyperinflation destroys the value of bonds regardless of whether the currency survives or not.

Same when the Ecuadorian Sucre died on January 9, 2000.

We may get to see yet another example here with the Bolívar soberano in Venezuela here shortly. So far in that country, the local stock market has proved a much more effective store of wealth than leaving your money in currency, but we will have to see what happens when/if the currency actually dies and is replaced by something else.


The wealth of those assets remains (for now), it is the *claims* on that wealth that eventually die. And that is exactly what paper assets represent - claims on wealth, not wealth itself. The problem with the monetary system it has created more claims on wealth than the amount of real wealth that actually exists. Nobody really knows how this will play out, but I think 2008-9 gave us a hint.


And over the long run, even those forms of real wealth rarely survive.. how many houses built or companies set up 200 or 300 years ago are still around? PMs are elemental, and aside for a small amount that is lost at the bottom of the ocean or used in industrial processes, what is mined is still in existence.
« Last Edit: February 05, 2019, 02:42:56 AM by vand »

Car Jack

  • Pencil Stache
  • ****
  • Posts: 951
Re: Precious Metals
« Reply #104 on: February 05, 2019, 06:44:53 AM »
To recap for physical gold.

Expensive costs to buy.
Expensive costs to sell.
Risk you are buying something other than gold and get ripped off.
Risk that you get robbed when trying to sell.
If you get through all that and make money, bad tax situation.

Sounds great.

maizeman

  • Magnum Stache
  • ******
  • Posts: 3261
Re: Precious Metals
« Reply #105 on: February 05, 2019, 08:14:25 AM »
The wealth of those assets remains (for now), it is the *claims* on that wealth that eventually die. And that is exactly what paper assets represent - claims on wealth, not wealth itself. The problem with the monetary system it has created more claims on wealth than the amount of real wealth that actually exists. Nobody really knows how this will play out, but I think 2008-9 gave us a hint.

It would seem that you're shifting the goalposts a bit now. Before you were saying the death of a currency meant the death of assets denominated in that currency. Specifically "when the currency dies, all paper assets denominated in that currency will all die with it." Do you wish to retract your original statement?

Quote
And over the long run, even those forms of real wealth rarely survive.. how many houses built or companies set up 200 or 300 years ago are still around? PMs are elemental, and aside for a small amount that is lost at the bottom of the ocean or used in industrial processes, what is mined is still in existence.

Actually a lot of houses built 200 to 300 years ago are still around. We build lots of new houses, sure, but in the big east cost cities, most houses are either the first property on their lot, or exist because the previous owner bought another perfectly viable building and tore it down to build something bigger. If you're out on the west coast or pretty much anywhere west of the Mississippi in the USA, sure there aren't a lot of 200 year old houses, but that's because most of the CITIES are less than 200 years old. Heck, even Chicago only dates back to 1833.

In addition, the fact that gold itself is generally not created or destroyed isn't much consolation given that it can certainly be appropriated, stolen, or confiscated. To be clear this is equally a feature of real estate and ownership of companies, but the point here is that, if your claim on assets is what is important. If the asset survives, but you lose your claim on it, that's as big a problem for you, as an individual, as if the asset vanished or was destroyed.

trollwithamustache

  • Pencil Stache
  • ****
  • Posts: 625
Re: Precious Metals
« Reply #106 on: February 05, 2019, 08:17:23 AM »

If you get through all that and make money, bad tax situation.

Sounds great.

Many would disagree  on the tax situation.  If its a cash transaction under the 10k threshold, a lot of gold bugs may not be reporting the gainz.  Assuming of course there are huuuge gainz.

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1493
  • Location: Seattle, WA
Re: Precious Metals
« Reply #107 on: February 05, 2019, 10:21:08 AM »

And over the long run, even those forms of real wealth rarely survive.. how many houses built or companies set up 200 or 300 years ago are still around? PMs are elemental, and aside for a small amount that is lost at the bottom of the ocean or used in industrial processes, what is mined is still in existence.

How many people are still around after 200 or 300 years? 

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1531
Re: Precious Metals
« Reply #108 on: February 06, 2019, 08:23:45 AM »
if I really wanted to "cherry pick data" as claimed I would have picked the top of the dotcom bubble.

The key to good cherry picking is to not make it obvious that you are, in fact, doing that.

But feel free to prove me wrong:

Why do you feel that a 20 year time interval more informative than 5, 10, 15, 25, 30, 35, or 40, vand?

And, assuming you have a convincing argument why a 20 year time interval is so more informative than any of those others intervals, why is January 1999- Dec 2018 more informative '90-'09, '91-'10, .. etc?

I used 20 years because it's a nice round number. People tend to like round numbers.
Long enough to demonstrate that there there are other assets classes you may wish to consider for such timeframes.

What's your preferred timeframe? 50 years? that seems to be very "cherry picked" for stocks.  How about 2000 years? I can guarantee you that gold has outperformed stocks over 2000 years, and will outperform the S&P500 over the next 2000 years, because when the currency dies, all paper assets denominated in that currency will all die with it. History has shown this to be the case.
You're making another straw man argument.  You suggest "50 years" and then call the words you're putting in someone else's mouth "cherry picked".  Well, then why did you "cherry pick" "50 years" since you brought it up?

Speaking of putting words in other people's mouths, you're also the one bringing up the S&P 500, not me.  I've said it's best to have a diversified mix of international and U.S. stocks.  I've corrected you and mentioned international repeatedly, but I'm guessing that destroys your whole argument, so you refuse to repeat it.  After all, when did all assets in the world die at the same time?  What event would turn worldwide stocks worthless?  Using a diversified portfolio really boxes you into a very narrow argument, which could explain why I've mentioned it twice, and both times you respond by putting words in my mouth.

Finally, "20 years is a round number" is not an explanation.  So is 10 years, or 30 years.  To me it still seems like you picked a time frame with the dot-com crash (but without the 1990s stock market) and the 2008 crisis.  But here's some other periods using "a round number" of 10 and 30 years.

For 10 years in gold, 2009 open 869.75 ... 2018 close 1281.65 = about 4% / yr
For 10 years in stocks, US market earned 13% / yr, international 6% / yr
(This period was immediately after the 2008 crisis)

For 30 years in gold, 1989 open 413.60 ... 2018 close 1281.65 = just under 4% / yr
For 30 years in stocks, US market earned 10% / yr, international just under 4% / yr
(This period started with very high interest rates)

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1531
Re: Precious Metals
« Reply #109 on: February 06, 2019, 08:27:41 AM »
As an aside, what source of gold prices do people use?  I picked 5 sources of gold performance / prices, and only 2 of them agree.  Take 2002 for example.

Portfolio Visualizer  +25.57%
macrotrends.net  +23.96%
onlygold.com  +23.96%
usagold.com  +25.11%
measuringworth.com  +14.37%

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1369
  • Location: West of the Mountains, East of the Sea
Re: Precious Metals
« Reply #110 on: February 06, 2019, 09:31:00 PM »
As for gold's sucky performance.. Gold has beaten the pants off the stock market over the last 20 years now, even if its *very* long term performance is not as good, and it is because of the relative price both stood at 20 years ago.. which shows you that valuations matter. Regression of relative valuations vs 10 year performance suggest that gold will outperform stocks and bonds over the next decade.   You can ask why there should be a relationship, but that is besides the point. Statistical analysis tell you that there IS a relationship. That's as much as you need to know. 
Numbers for December     2018   1998
Gold Price / CPI-U                  5.1      1.8
Gold Price / Cost to Mine       1.9      0.7    (2016 cost, vague and hand wavy, changeable, maybe "elastic" or something)
S&P500 Dividend / Price        48      73.5
S&P500 Earnings10 / Price   28.4    40.5

Funny you mention valuations over that period... looks to me like stock valuations have improved considerably over that time, while valuations for gold got a lot worse. Might be explanatory. If valuations are what you are after then they are saying gold is a worse investment now than it used to be.
« Last Edit: February 06, 2019, 09:33:36 PM by Radagast »

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1369
  • Location: West of the Mountains, East of the Sea
Re: Precious Metals
« Reply #111 on: February 06, 2019, 10:07:59 PM »
What's your preferred timeframe? 50 years? that seems to be very "cherry picked" for stocks.  How about 2000 years? I can guarantee you that gold has outperformed stocks over 2000 years, and will outperform the S&P500 over the next 2000 years, because when the currency dies, all paper assets denominated in that currency will all die with it. History has shown this to be the case.
Wow, thank you for that quote. I just finished reading "Big Debt Crises" by Dalio so I had this on my head.

Lets look at some German companies. Bayer, Siemens, Mercedes, Audi, and Allianz were all publicly traded companies prior to World War 1. Let's especially look at Allianz, first because they have a nice history of their company on their website https://www.allianz.com/en/about-us/who-we-are/history.html, and second because as an insurance company and (recently) owner of Pimco their business is literally paper assets which makes this especially fun.

In 1895 Allianz issued an IPO for 250 Marks. Then WW1 starts like 20 years later. Germany loses. There is a hyperinflation that causes all the marks in 1913 to be equal to the price of a sad loaf of bread in 1923 (or some year, not looking right now). The Mark dies, and is replaced with the Reichsmark. There is some deflation and Hitler. Germany goes on to lose WW2. It is divided and occupied by the US and the USSR. The Reichsmark dies, and is replaced by the Deutsche Mark. Germany nearly becomes Ground 0 for WW3 on a few occasions. Today Yahoo Finance reports that Allianz is worth $91,000,000,000 and pays 4.5% dividends, which you could totally trade for gold if you wanted to.

So, a company whose entire business is trading paper assets survived two currency deaths, billion-percent-grade hyperinflation, Hitler, loss of two world wars, communist occupation, and right now is one of the largest companies in the world paying a sweet, sweet dividend. Imagine if it was a company that owned real assets (actually maybe not, as I said that I thought that a company with real assets would have been very expensive to recapitalize after complete destruction, so maybe the paper asset company owner would have come out better, just goes to show that it is really hard to know how things will work out).

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1369
  • Location: West of the Mountains, East of the Sea
Re: Precious Metals
« Reply #112 on: February 06, 2019, 10:59:16 PM »
3) Therefore putting your savings into gold is superior buying solar panels, stocking up on bullets and dried beans, drilling your own water well, raising chickens, owning a blacksmith forge, etc.
I'd bet on straight barter. Gold requires a lot of actual civil infrastructure to be usable as currency.
I'm basically switching teams now. The "bullets" fallacy has always bugged me, because as waltworks says gold obviously requires civilized society to be of any use. All of the cases in Big Debt Crises involved continuously functioning societies or nearly so, so let's assume functioning societies are the norm for humans. In a functioning society bullets are not especially useful. Take the German examples above. Gold could have actually preserved purchasing power if you lived (most people did) and it stayed hidden and safe (not so sure) while bullets would have made little difference that I can see regarding your life or death and would have not functioned as a store of wealth at all. If bullets are to be useful in a failed society, you had also better count on having at least a million highly organized best buds with the best tech available (basically a functioning society). Further, it would take a shipping container of bullets to equal the value of a few gold coins so that rules out bullets in currency failures as well. I can see possible financial uses for gold, both imaginary and historical. I'm not really against somebody deciding to keep up to 10% of their investable assets in gold if it makes them feel good, more against making that decision in ignorance. I am always surprised that the reasons people come up with almost always seem to be terrible. For example, based on US data beginning in 1970, or since 1998, or by imagining that companies are made of paper, or dozens of other things.

JAYSLOL

  • Handlebar Stache
  • *****
  • Posts: 1072
Re: Precious Metals
« Reply #113 on: February 07, 2019, 12:34:16 AM »
@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments

vand

  • 5 O'Clock Shadow
  • *
  • Posts: 48
Re: Precious Metals
« Reply #114 on: February 07, 2019, 04:07:29 AM »
@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments

TBH the degree of skepticism and resistance shown to the idea of owning gold is not surprising to me and reaffirms my view that PMs are so well shunned they remain a terrific contrarian buy. I don't expect public sentiment to begin changing until gold prices have taken out the old 2011 high and only then will the bull market shift into the long "public awareness" stage.

I may not have his credentials or his track record, but much like Mr Buffett, I'm willing to put on a bet that over a 10 year period PMs will outperform stocks and bonds, and look forward to bumping this in 2029 to remind everyone.
« Last Edit: February 07, 2019, 04:28:53 AM by vand »

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1531
Re: Precious Metals
« Reply #115 on: February 07, 2019, 11:21:30 AM »
@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments

TBH the degree of skepticism and resistance shown to the idea of owning gold is not surprising to me and reaffirms my view that PMs are so well shunned they remain a terrific contrarian buy. I don't expect public sentiment to begin changing until gold prices have taken out the old 2011 high and only then will the bull market shift into the long "public awareness" stage.

I may not have his credentials or his track record, but much like Mr Buffett, I'm willing to put on a bet that over a 10 year period PMs will outperform stocks and bonds, and look forward to bumping this in 2029 to remind everyone.
Are you saying historical data is resistance?  You quote 20 year, I show a diversified US/international portfolio beats gold.  I mention 20 years contains the 2 biggest crashes of the century, and you say you use round numbers.  So I quote other round numbers of 10 and 30 years showing that again a diversified portfolio of US and international stocks beats gold.  At every turn, historical data is presented that shows gold doesn't perform better, and you call that "resistance".  I call that historical data, not resistance.  It's easier to learn from historical data than to resist it.

You are no Warren Buffet, which is why you don't have his credentials or track record.  Why would you compare yourself to someone when you have nothing in common with that person?  I'd also like to point out after trying to get to you admit international + U.S. stocks beat gold, you're now trying to change the rules and say "stocks and bonds".  That's not what you claimed earlier - you claimed gold beats stocks.

JAYSLOL

  • Handlebar Stache
  • *****
  • Posts: 1072
Re: Precious Metals
« Reply #116 on: February 07, 2019, 12:06:26 PM »
@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments

TBH the degree of skepticism and resistance shown to the idea of owning gold is not surprising to me and reaffirms my view that PMs are so well shunned they remain a terrific contrarian buy. I don't expect public sentiment to begin changing until gold prices have taken out the old 2011 high and only then will the bull market shift into the long "public awareness" stage.

I may not have his credentials or his track record, but much like Mr Buffett, I'm willing to put on a bet that over a 10 year period PMs will outperform stocks and bonds, and look forward to bumping this in 2029 to remind everyone.

Skepticism isn't "shunning", I'm very skeptical of what people who buy PMs tell me the reasons are that it's going to be a better investment that stocks or whatever the claim is.  That doesn't mean I shun the idea of PMs, in fact one of my hobbies/side-hustles is buying/collecting/re-selling old coins and currency.  Currently about 6% of my NW is in PM.  That said, I'm not willing to bet that PMs will outperform stocks over the next 10 years, or any other time period, even though there may be the occasional year where they do outperform stocks, that's not a reason to go all-in.  Own it for the stability, not the performance.  See you in Feb, 2029. 

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1493
  • Location: Seattle, WA
Re: Precious Metals
« Reply #117 on: February 07, 2019, 03:29:32 PM »
3) Therefore putting your savings into gold is superior buying solar panels, stocking up on bullets and dried beans, drilling your own water well, raising chickens, owning a blacksmith forge, etc.
I'd bet on straight barter. Gold requires a lot of actual civil infrastructure to be usable as currency.
I'm basically switching teams now. The "bullets" fallacy has always bugged me, because as waltworks says gold obviously requires civilized society to be of any use. All of the cases in Big Debt Crises involved continuously functioning societies or nearly so, so let's assume functioning societies are the norm for humans. In a functioning society bullets are not especially useful. Take the German examples above. Gold could have actually preserved purchasing power if you lived (most people did) and it stayed hidden and safe (not so sure) while bullets would have made little difference that I can see regarding your life or death and would have not functioned as a store of wealth at all. If bullets are to be useful in a failed society, you had also better count on having at least a million highly organized best buds with the best tech available (basically a functioning society). Further, it would take a shipping container of bullets to equal the value of a few gold coins so that rules out bullets in currency failures as well. I can see possible financial uses for gold, both imaginary and historical. I'm not really against somebody deciding to keep up to 10% of their investable assets in gold if it makes them feel good, more against making that decision in ignorance. I am always surprised that the reasons people come up with almost always seem to be terrible. For example, based on US data beginning in 1970, or since 1998, or by imagining that companies are made of paper, or dozens of other things.

That's what why was no Step 2 before getting to stocking up on bullets in Step 3.  People sometimes suggest that a potential societal collapse is a reason to own gold without explaining why that would likely be the case.     

Since Wiemar Germany came up again, it is instructive to look at what stocks did during that period of hyperinflation, and subsequent collapse of the mark.  IIRC, there at least two other versions of the mark that also collapsed before hyperinflation was tamed and the government issued the stable Deutchmark.   During that period German stocks did extremely well, better than U.S. stocks in fact.    Big industrial German companies like Siemens, Krupps, Bayer, BMW, Allianz, etc. all survived and their shareholders did fine.   The notion that stocks are necessarily rendered valueless in a currency collapse is false. 


flipboard

  • Stubble
  • **
  • Posts: 104
Re: Precious Metals
« Reply #118 on: February 07, 2019, 11:03:02 PM »
@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments

TBH the degree of skepticism and resistance shown to the idea of owning gold is not surprising to me and reaffirms my view that PMs are so well shunned they remain a terrific contrarian buy. I don't expect public sentiment to begin changing until gold prices have taken out the old 2011 high and only then will the bull market shift into the long "public awareness" stage.

I may not have his credentials or his track record, but much like Mr Buffett, I'm willing to put on a bet that over a 10 year period PMs will outperform stocks and bonds, and look forward to bumping this in 2029 to remind everyone.

Skepticism isn't "shunning", I'm very skeptical of what people who buy PMs tell me the reasons are that it's going to be a better investment that stocks or whatever the claim is.  That doesn't mean I shun the idea of PMs, in fact one of my hobbies/side-hustles is buying/collecting/re-selling old coins and currency.  Currently about 6% of my NW is in PM.  That said, I'm not willing to bet that PMs will outperform stocks over the next 10 years, or any other time period, even though there may be the occasional year where they do outperform stocks, that's not a reason to go all-in.  Own it for the stability, not the performance.  See you in Feb, 2029.
This is also my approach (although I haven't gone into gold yet because my NW seems too low - I'll start in a year or two maybe, and at most 5%. With a split between an ETF for rebalancing, and physical in a vault for safety for the portion that is highly unlikely to be needed for rebalancing.)

I found this following page to be quite relevant to this thread:
http://www.efficientfrontier.com/ef/adhoc/gold.htm

vand

  • 5 O'Clock Shadow
  • *
  • Posts: 48
Re: Precious Metals
« Reply #119 on: February 08, 2019, 01:47:49 AM »
3) Therefore putting your savings into gold is superior buying solar panels, stocking up on bullets and dried beans, drilling your own water well, raising chickens, owning a blacksmith forge, etc.
I'd bet on straight barter. Gold requires a lot of actual civil infrastructure to be usable as currency.
I'm basically switching teams now. The "bullets" fallacy has always bugged me, because as waltworks says gold obviously requires civilized society to be of any use. All of the cases in Big Debt Crises involved continuously functioning societies or nearly so, so let's assume functioning societies are the norm for humans. In a functioning society bullets are not especially useful. Take the German examples above. Gold could have actually preserved purchasing power if you lived (most people did) and it stayed hidden and safe (not so sure) while bullets would have made little difference that I can see regarding your life or death and would have not functioned as a store of wealth at all. If bullets are to be useful in a failed society, you had also better count on having at least a million highly organized best buds with the best tech available (basically a functioning society). Further, it would take a shipping container of bullets to equal the value of a few gold coins so that rules out bullets in currency failures as well. I can see possible financial uses for gold, both imaginary and historical. I'm not really against somebody deciding to keep up to 10% of their investable assets in gold if it makes them feel good, more against making that decision in ignorance. I am always surprised that the reasons people come up with almost always seem to be terrible. For example, based on US data beginning in 1970, or since 1998, or by imagining that companies are made of paper, or dozens of other things.

That's what why was no Step 2 before getting to stocking up on bullets in Step 3.  People sometimes suggest that a potential societal collapse is a reason to own gold without explaining why that would likely be the case.     

Since Wiemar Germany came up again, it is instructive to look at what stocks did during that period of hyperinflation, and subsequent collapse of the mark.  IIRC, there at least two other versions of the mark that also collapsed before hyperinflation was tamed and the government issued the stable Deutchmark.   During that period German stocks did extremely well, better than U.S. stocks in fact.    Big industrial German companies like Siemens, Krupps, Bayer, BMW, Allianz, etc. all survived and their shareholders did fine.   The notion that stocks are necessarily rendered valueless in a currency collapse is false.


hahaha. You're nuts.
You know what other stock market has done spectacularly well in recent years? Venezuela' stock market is "up" by many hundreds of % in recent years.
Well done Venezeulan equity investors. Maybe you'll be able to buy enough real wealth with your profits to fill the one shelf of your fridge.

Syonyk

  • Magnum Stache
  • ******
  • Posts: 3625
    • Syonyk's Project Blog
Re: Precious Metals
« Reply #120 on: February 08, 2019, 10:17:58 AM »
Further, it would take a shipping container of bullets to equal the value of a few gold coins so that rules out bullets in currency failures as well.

Ok... sorry, I have to ask, where are you buying a shipping container full of bullets for a few gold coins (presumably 1oz, since that's a common size)?

A 40' high top (9.5') shipping container alone is ~$4500, which is around 3.5oz gold.  You could get a regular height for about 3oz, or a 20' for about 1.5oz.

But ammo to fill it?  I can find .223 for $0.33/round easily, so call it $0.20/round in serious bulk.

An ounce of gold ($1300) is only 6500 rounds, which fits (physically, if not weight-wise) in a medium UPS shipping box or so.

It's going to take an awful lot of those to fill a shipping container.

Shipping containers are big.  This is from maybe 10' into mine...


waltworks

  • Magnum Stache
  • ******
  • Posts: 2998
Re: Precious Metals
« Reply #121 on: February 08, 2019, 11:24:31 AM »
I'd actually bet that holders of stock in Venezuelan companies (I include myself in that, since I'm guessing my Vanguard int'l fund has at least some exposure) will be just fine. Now, I'd certainly only *sell* such stock for dollars, but the fate of the bolivar is pretty irrelevant to me.

Even if all of my Venezuelan holdings go to zero, it's a rounding error in terms of the whole world, so just as I'm not worried about a company or two in the S&P500 going under, I'm not worried about Venezuela.

So if your point is that you'd rather have gold than bolivars (a very low hurdle), I'll concede. Just as I'll concede that gold is a better idea than hoarding large sums of cash of any kind at all.

-W

RWD

  • Magnum Stache
  • ******
  • Posts: 2807
  • Location: Mississippi
Re: Precious Metals
« Reply #122 on: February 08, 2019, 11:46:59 AM »

If you get through all that and make money, bad tax situation.

Sounds great.

Many would disagree  on the tax situation.  If its a cash transaction under the 10k threshold, a lot of gold bugs may not be reporting the gainz.  Assuming of course there are huuuge gainz.

Add IRS audits, structuring, and civil forfeiture to the list of risks...

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1369
  • Location: West of the Mountains, East of the Sea
Re: Precious Metals
« Reply #123 on: February 08, 2019, 09:04:14 PM »
@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments
Thanks :) I was able to read the thread's posts more than a day before I was able to reply, which probably helped improve the info-tainment properties.

@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments

TBH the degree of skepticism and resistance shown to the idea of owning gold is not surprising to me and reaffirms my view that PMs are so well shunned they remain a terrific contrarian buy. I don't expect public sentiment to begin changing until gold prices have taken out the old 2011 high and only then will the bull market shift into the long "public awareness" stage.

I may not have his credentials or his track record, but much like Mr Buffett, I'm willing to put on a bet that over a 10 year period PMs will outperform stocks and bonds, and look forward to bumping this in 2029 to remind everyone.

Skepticism isn't "shunning", I'm very skeptical of what people who buy PMs tell me the reasons are that it's going to be a better investment that stocks or whatever the claim is.  That doesn't mean I shun the idea of PMs, in fact one of my hobbies/side-hustles is buying/collecting/re-selling old coins and currency.  Currently about 6% of my NW is in PM.  That said, I'm not willing to bet that PMs will outperform stocks over the next 10 years, or any other time period, even though there may be the occasional year where they do outperform stocks, that's not a reason to go all-in.  Own it for the stability, not the performance.  See you in Feb, 2029.
Right. Likewise, far from shunning gold, I have more exposure to its price than probably anybody here even though I don't own any outside of miscellaneous electronics (DW and I even have silver and base metal rings). That leads me to view it from a very pragmatic viewpoint of "how will this help me pay rent over the next year?" and not "what price will shiny pretty speculative metal increase to in the happy imaginary unicorn future?." There are solid arguments for having a small exposure to the price of gold, but none of them involve knowing gold will increase in price by more than the total return of global stocks or bonds, starting-today-go.

Along those lines, it is funny that gold miners, both people and companies, don't seem eager to keep their gold right now. They trade it for cash ASAP with no regrets except that it took so friggin long to get the cash from it. They must believe it is pretty useless in the real world. I can personally attest that, as a person with both a mortgage and a rent, I am contractually obliged to not pay either of them with gold. The local grocer takes paper, plastic, and radio waves only.
« Last Edit: February 08, 2019, 09:43:51 PM by Radagast »

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1369
  • Location: West of the Mountains, East of the Sea
Re: Precious Metals
« Reply #124 on: February 08, 2019, 09:22:44 PM »
@Radagast I just want to say I'm thoroughly enjoying this thread and discussion, and these are some truly outstanding comments

TBH the degree of skepticism and resistance shown to the idea of owning gold is not surprising to me and reaffirms my view that PMs are so well shunned they remain a terrific contrarian buy. I don't expect public sentiment to begin changing until gold prices have taken out the old 2011 high and only then will the bull market shift into the long "public awareness" stage.

I may not have his credentials or his track record, but much like Mr Buffett, I'm willing to put on a bet that over a 10 year period PMs will outperform stocks and bonds, and look forward to bumping this in 2029 to remind everyone.
No, contrarian timing would have been when gold was at its lowest real price in more than 25 years since the world's governments ceased their conspiracy to depress it, technetcoms were known to be the future, and The Bank of England sold most of its remaining reserves of the useless archaic metal, around 1999 or so. Here in 2019, gold prices are well above their historical real market averages, everyone is expecting an imminent decline in stocks and bonds, mining companies invested in lots of new things in a recent price run up and then delevered so they are able to continue producing at low prices for well into the future, and the entire world just observed Russia try to load gold bullion, the last valuable asset in Venezuela, onto planes to Moscow. You are not buying the bubble anymore, but neither are you a contrarian. Now stocks, long term bonds, and gold all have annualized standard deviations of around 15% plus the odd freak event so things could very well go your way in the short term, but in the long term (US) bonds are priced to return 1maybe%, stocks 5%, and gold 0% (all post-inflation) and that is the prevailing wind direction. Contrarian moves are probably back in England's court. Or maybe Russia's. Or Venezuela's.

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1369
  • Location: West of the Mountains, East of the Sea
Re: Precious Metals
« Reply #125 on: February 08, 2019, 10:17:56 PM »
Further, it would take a shipping container of bullets to equal the value of a few gold coins so that rules out bullets in currency failures as well.

Ok... sorry, I have to ask, where are you buying a shipping container full of bullets for a few gold coins (presumably 1oz, since that's a common size)?

A 40' high top (9.5') shipping container alone is ~$4500, which is around 3.5oz gold.  You could get a regular height for about 3oz, or a 20' for about 1.5oz.

But ammo to fill it?  I can find .223 for $0.33/round easily, so call it $0.20/round in serious bulk.

An ounce of gold ($1300) is only 6500 rounds, which fits (physically, if not weight-wise) in a medium UPS shipping box or so.

It's going to take an awful lot of those to fill a shipping container.

Shipping containers are big.  This is from maybe 10' into mine...
So, I would say that a shipping container is the standard 20'X8'X8.5' unless otherwise noted. Would you believe I was going to do the numbers but couldn't find the dimensions on a retail box of ammo within a few minutes, so I just said "a few"? You probably would. In my head though I imagined that a box of 500ct .22LR bullets was a $20, and I had a nice imaginary youtube clip of a person carting in 10 of those boxes to pay for groceries, and the cashier counting out the change. Which was a good start.

Lets use your numbers though, but I will spare uninterested people the math. It looks like an ounce of gold is worth roughly 1 cubic foot of of 0.223 ammo. Let's call it 5,200 shells, and say gold is $1300 an ounce, so they can be $0.25 each. A shipping container can fit about 1,200 cubic feet inside. I will agree that most people would call 1,000 or 1,500 gold coins more than a few. The point is still valid though. A standard issue official coin box from the Treasury Dept. would fit 500 1-oz gold coins in 14.75" x 8.5" x 4.5" (but 42 lbs!). Three of them are a cubic foot. So that is about 1,500 times more compact than the equivalent value in 0.223 rounds and also a lot less volatile. In fact quite inert.

3) Therefore putting your savings into gold is superior buying solar panels, stocking up on bullets and dried beans, drilling your own water well, raising chickens, owning a blacksmith forge, etc.
I'd bet on straight barter. Gold requires a lot of actual civil infrastructure to be usable as currency.
I'm basically switching teams now. The "bullets" fallacy has always bugged me, because as waltworks says gold obviously requires civilized society to be of any use. All of the cases in Big Debt Crises involved continuously functioning societies or nearly so, so let's assume functioning societies are the norm for humans. In a functioning society bullets are not especially useful. Take the German examples above. Gold could have actually preserved purchasing power if you lived (most people did) and it stayed hidden and safe (not so sure) while bullets would have made little difference that I can see regarding your life or death and would have not functioned as a store of wealth at all. If bullets are to be useful in a failed society, you had also better count on having at least a million highly organized best buds with the best tech available (basically a functioning society). Further, it would take a shipping container of bullets to equal the value of a few gold coins so that rules out bullets in currency failures as well. I can see possible financial uses for gold, both imaginary and historical. I'm not really against somebody deciding to keep up to 10% of their investable assets in gold if it makes them feel good, more against making that decision in ignorance. I am always surprised that the reasons people come up with almost always seem to be terrible. For example, based on US data beginning in 1970, or since 1998, or by imagining that companies are made of paper, or dozens of other things.

That's what why was no Step 2 before getting to stocking up on bullets in Step 3.  People sometimes suggest that a potential societal collapse is a reason to own gold without explaining why that would likely be the case.     

Since Wiemar Germany came up again, it is instructive to look at what stocks did during that period of hyperinflation, and subsequent collapse of the mark.  IIRC, there at least two other versions of the mark that also collapsed before hyperinflation was tamed and the government issued the stable Deutchmark.   During that period German stocks did extremely well, better than U.S. stocks in fact.    Big industrial German companies like Siemens, Krupps, Bayer, BMW, Allianz, etc. all survived and their shareholders did fine.   The notion that stocks are necessarily rendered valueless in a currency collapse is false. 
Right, but in practice I have only seen that argument used by people trying to discredit gold, never by people who put their money in it. People I have seen putting money in gold are speculators/ignorants (ahem), hedgers, modern portfolio theorists, or in some cases people on the internet who think they will be able to get on a plane and use it somewhere safe. They all seem to assume there is a stable society involved. But then, I am probably limited in the types of gold proponents I have knowledge of.

There was a Rentenmark involved, but it was transitory.

clumlee

  • 5 O'Clock Shadow
  • *
  • Posts: 45
Re: Precious Metals
« Reply #126 on: February 14, 2019, 07:10:29 PM »
I buy my stuff from JM Bullion. Their selection isn't HUGE as far as miners and sizes but they have the standard stuff and I have had no complaints. Cheers!

Syonyk

  • Magnum Stache
  • ******
  • Posts: 3625
    • Syonyk's Project Blog
Re: Precious Metals
« Reply #127 on: February 14, 2019, 07:29:51 PM »
A shipping container can fit about 1,200 cubic feet inside. I will agree that most people would call 1,000 or 1,500 gold coins more than a few.

Find me one person who would call 1000-1500 gold coins "a few."

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1493
  • Location: Seattle, WA
Re: Precious Metals
« Reply #128 on: February 14, 2019, 08:21:51 PM »
That's what why was no Step 2 before getting to stocking up on bullets in Step 3.  People sometimes suggest that a potential societal collapse is a reason to own gold without explaining why that would likely be the case.     

Since Wiemar Germany came up again, it is instructive to look at what stocks did during that period of hyperinflation, and subsequent collapse of the mark.  IIRC, there at least two other versions of the mark that also collapsed before hyperinflation was tamed and the government issued the stable Deutchmark.   During that period German stocks did extremely well, better than U.S. stocks in fact.    Big industrial German companies like Siemens, Krupps, Bayer, BMW, Allianz, etc. all survived and their shareholders did fine.   The notion that stocks are necessarily rendered valueless in a currency collapse is false. 
Right, but in practice I have only seen that argument used by people trying to discredit gold, never by people who put their money in it. People I have seen putting money in gold are speculators/ignorants (ahem), hedgers, modern portfolio theorists, or in some cases people on the internet who think they will be able to get on a plane and use it somewhere safe. They all seem to assume there is a stable society involved. But then, I am probably limited in the types of gold proponents I have knowledge of.

There was a Rentenmark involved, but it was transitory.
[/quote]

I might not be making myself clear.  In the event of a currency collapse and a functioning society still exists, owning gold is definitely preferable to owning cash, but in the past people who owned productive asserts like stocks or incoming producing real estate have generally still done okay.  As I mentioned earlier, in times past people have even created their own currencies like leather tokens issued by inn keepers or farmers that circulate like regular money.   So you don't really need a central currency to do business, and history tells us you might not even need to do much barter.   In other words, the notion that gold is a necessary backstop to protect against a currency collapse isn't completely true.  You won't need gold to be able to trade and there are other, better stores of value.  So what's the point of owning gold? 

In the event of currency collapse and there is no functioning society, then you definitely want bullets and dried beans--not gold.  Because being unable to conveniently trade for stuff will be the least of your problems.  So what's the point of owning gold? 

JAYSLOL

  • Handlebar Stache
  • *****
  • Posts: 1072
Re: Precious Metals
« Reply #129 on: February 14, 2019, 09:28:47 PM »
I buy my stuff from JM Bullion. Their selection isn't HUGE as far as miners and sizes but they have the standard stuff and I have had no complaints. Cheers!

I like to buy mine from garage sales, availability is very sporadic, but the prices can't be beat!

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1369
  • Location: West of the Mountains, East of the Sea
Re: Precious Metals
« Reply #130 on: February 14, 2019, 11:13:53 PM »
I might not be making myself clear.  In the event of a currency collapse and a functioning society still exists, owning gold is definitely preferable to owning cash, but in the past people who owned productive asserts like stocks or incoming producing real estate have generally still done okay.  As I mentioned earlier, in times past people have even created their own currencies like leather tokens issued by inn keepers or farmers that circulate like regular money.   So you don't really need a central currency to do business, and history tells us you might not even need to do much barter.   In other words, the notion that gold is a necessary backstop to protect against a currency collapse isn't completely true.  You won't need gold to be able to trade and there are other, better stores of value.  So what's the point of owning gold? 
Only locals are likely to find value in your leather coinage, so that would be of limited use. Real estate is great for preserving real wealth while receiving cashflow (depending on the type and circumstances), and I am a proponent, in fact I own 1 cashflow property versus 0 gold coins. I think we covered stocks enough earlier. But as usual, it is hard to transport real estate or exchange small parts. The idea is to have something that is valuable and easily transportable, which also has value to people who are far away. I see it like this: stocks give 6% real returns each year plus a go on the roulette wheel (you lose a percentage equal to red numbers, gain a percentage equal to black numbers). Long term government bonds give you 3% real return (well not right now) plus a spin of an independent roulette wheel. Gold gives you 0% real returns in exchange for a spin of a third entirely independent roulette wheel each year, for people who want that. Even if your currency and bonds are approaching 0 while stocks are down 95%, gold will still give you the same ol' 0% return plus a spin of the wheel.

So there you have it. Gold combines a transportable exchangeable inert 0% return asset with the variability of a roulette wheel. If that doesn't make you want to run out and buy it / turn you away from ever buying it, then I don't know what will. Though I expect its value to rarely fall outside of the range of 1-10 consumer price indexes, I guess it will be constrained by the cost of mining more. But who can say.

Excel formula for the "roulette wheel" model of financial returns: =(1+(RANDBETWEEN(-36,36)+?)/100)*A1 where ? is the placeholder for real expected return. Drag it through 50 cells, make a graph, and refresh a few times.
Quote
In the event of currency collapse and there is no functioning society, then you definitely want bullets and dried beans--not gold.  Because being unable to conveniently trade for stuff will be the least of your problems.  So what's the point of owning gold?
Right, and like I said I think that is a fallacy, a product of watching too many TV shows. I can't think of any examples of that in history, but I am happy to be informed. The closest I can come is... Somalia?, but I bet gold has value there.
« Last Edit: February 15, 2019, 12:01:26 AM by Radagast »

flipboard

  • Stubble
  • **
  • Posts: 104
Re: Precious Metals
« Reply #131 on: February 14, 2019, 11:47:42 PM »
Quote
I might not be making myself clear.  In the event of a currency collapse and a functioning society still exists, owning gold is definitely preferable to owning cash, but in the past people who owned productive asserts like stocks or incoming producing real estate have generally still done okay.  As I mentioned earlier, in times past people have even created their own currencies like leather tokens issued by inn keepers or farmers that circulate like regular money.   So you don't really need a central currency to do business, and history tells us you might not even need to do much barter.   In other words, the notion that gold is a necessary backstop to protect against a currency collapse isn't completely true.  You won't need gold to be able to trade and there are other, better stores of value.  So what's the point of owning gold? 

In the event of currency collapse and there is no functioning society, then you definitely want bullets and dried beans--not gold.  Because being unable to conveniently trade for stuff will be the least of your problems.  So what's the point of owning gold?
People in some countries with stocks or real-estate _didn't_ do OK. Russian stocks 1918 anyone? Or even property in a country that disposses you? Similar things could happen in any country (perhaps not immediately, but no one expected Russia to do what it did at the time either).

The likelihood of society worldwide collapsing isn't that great. The likelihood of a single country falling apart however is much greater, and this happens somewhat regularly.

If one happens to have gold in multiple countries, that's probably a good backup if you manage to get yourself out of the place you live. Diversifying stocks acros the world meanwhile has the failure point of the country where your funds are domiciled falling apart (which is why you'd probably want to own funds in multiple domiciles).

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 1199
Re: Precious Metals
« Reply #132 on: February 15, 2019, 01:05:42 PM »
The oft-stated reason for owning PMs instead of more efficient hedges like TIPS, options, or a broadly diversified portfolio is that all these other hedges might fail in a societal/currency collapse scenario like Russia 1918, Zimbabwe, Venezuela, Somalia, Yemen, Haiti, or the Weimar Republic.

In the event of a societal breakdown, rules about property ownership and crime usually cease to be enforced. Without a functioning government to punish rule breakers or award damages, ownership amounts to possession and the only consequence of crime is the potential for retaliation by survivors of the victim's clan or tribe. This is the way of life in slums around the world, including neighborhoods in the U.S. where the police cannot be trusted and justice is not effectively administered.

The dream of being the rich person in a collapsed society can be tested to ensure it is a workable plan. March into a slum and buy food, shelter, or clothing with a piece of gold in Rio de Janero, Baltimore, Caracas, Port Au Prince, south Chicago, or Harare.

Did you become a crime victim - i.e. robbed of your gold on the spot?
Was the transaction successful?
At the exchange rate offered, how long would the supplies you obtained last?

flipboard

  • Stubble
  • **
  • Posts: 104
Re: Precious Metals
« Reply #133 on: February 15, 2019, 01:12:43 PM »
The oft-stated reason for owning PMs instead of more efficient hedges like TIPS, options, or a broadly diversified portfolio is that all these other hedges might fail in a societal/currency collapse scenario like Russia 1918, Zimbabwe, Venezuela, Somalia, Yemen, Haiti, or the Weimar Republic.

In the event of a societal breakdown, rules about property ownership and crime usually cease to be enforced. Without a functioning government to punish rule breakers or award damages, ownership amounts to possession and the only consequence of crime is the potential for retaliation by survivors of the victim's clan or tribe. This is the way of life in slums around the world, including neighborhoods in the U.S. where the police cannot be trusted and justice is not effectively administered.

The dream of being the rich person in a collapsed society can be tested to ensure it is a workable plan. March into a slum and buy food, shelter, or clothing with a piece of gold in Rio de Janero, Baltimore, Caracas, Port Au Prince, south Chicago, or Harare.

Did you become a crime victim - i.e. robbed of your gold on the spot?
Was the transaction successful?
At the exchange rate offered, how long would the supplies you obtained last?
False comparison. People of sufficient means didn't go use gold in their own society, they went and used it in a stable society elsewhere in the world. (Most likely, they already had wealth stored outside of their current country.)

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1493
  • Location: Seattle, WA
Re: Precious Metals
« Reply #134 on: February 15, 2019, 03:07:47 PM »

People in some countries with stocks or real-estate _didn't_ do OK. Russian stocks 1918 anyone? Or even property in a country that disposses you? Similar things could happen in any country (perhaps not immediately, but no one expected Russia to do what it did at the time either).

Right.  That's why I said in that scenario you want bullets and beans.  In the case of something like the Russian Revolution where an angry mob of peasants is coming for you a big pile of gold isn't an asset, it is a liability.  The Romanovs didn't escape by being rich.  They didn't escape because they were rich. 

I mention that because many gold proponents point to the collapse of society as a reason to own gold.  In that event, it probably isn't a bad thing to own gold, but there is other stuff you will want to own a lot more.   Like guns. 

The angry mob of peasants scenario isn't what happened in Wiemar Germany.   In that scenario, owning gold wouldn't have been a bad thing, but owning stocks would have been better.  In fact, part of the reason why German stocks did well in that period is because of inflation.  It made German exports cheaper, so big industrial companies did well. 

I mention that because many gold proponents point to the collapse of currency as a reason to own gold because it is both a store of value and a medium of exchange.   Which it is!  Again, probably not a bad thing to own gold in that event, but there were better stores of value, and people will simply move to other media of exchange.  I gave several examples previously, but another would be from Wiemar Germany (since we're on the topic), where some cities simply issued their own currency and the local people used that as a medium of exchange. 

I knocked around Ecuador for a bit not long before the collapse of the Sucre.  At that time, anything above about the equivalent of $30 was quoted and paid for in US Dollars.  It was automatic.  They didn't even tell you the price in sucres.   I never saw or heard of anyone using gold to make transactions.   As an aside, there is a raging debate about whether or not to pay off your mortgage early.   I'm firmly in the "not" category.   If the USD collapses, having debt denominated in dollars would be the best thing you could possibly have.  I don't think that's likely, but it would be way better than owning gold. 

If you want to own gold, knock yourself out.  More power to you.  Seriously.   However, I find the reasons most people give as to the benefits of owning gold to be paper thin.  And most gold proponents don't seem to have a clear understanding of what actually happens during a currency collapse.    Hence their logic isn't very compelling.