What about buying gold now?

Discussion in 'Business & Economics' started by quantum_wave, Sep 23, 2008.

  1. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

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    After watching oil and gold fall for a couple of months as the dollar rose, I see the reverse occurred last week. Last Wednesday the financial community was looking into the abyss. What they saw was the impending collapse of the dollar along with the US economy as well as all the global repercussions.

    I remember the seventies when we went into recession as inflation went out of control. Oil prices soared and gold did too.

    Is this the time to consider gold? If so, what are the pros and cons of taking possession of gold, i.e. coins or bullion, vs. gold funds and gold stocks?

    Is anyone familiar with the PowerShares DB Gold Double Long ETN (DGP)? That is supposed to go up or down at twice the rate of the the underlying gold price. Is that a good idea if this turns into a serious prolonged economic crisis?
     
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  3. Carcano Valued Senior Member

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    The best thing to do (imo) is get out of debt.

    If you have significant savings I would choose silver over gold.
     
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  5. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

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    I don't get it. I get the part about getting out of debt

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    , but once out of debt, then why gold or silver?

    BTW, I would put gold and silver in the same category, commodities and hard assets.

    So let's consider gold/silver and would that be the thing to do now?

    Any thoughts on the 200% leveraged gold/silver funds?
     
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  7. Carcano Valued Senior Member

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    I would choose holding actual silver bullion over gold because silver is an industrial metal, aside from its jewelry and investment value. Far more so than gold.

    Silver-zinc batteries might be the next big thing.
     
  8. DubStyle I may be wrong, but I doubt it Registered Senior Member

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    Why?

    Assuming that you want to buy gold because you are concerned/expecting high inflation, it would be foolish to pay off your debt. You'll get inflated right out of debt.
     
  9. MacGyver1968 Fixin' Shit that Ain't Broke Valued Senior Member

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    I don't understand how that works. Mind explaining?
     
  10. spidergoat Liddle' Dick Tater Valued Senior Member

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    Isn't it best to buy low and sell high? If gold is high now, wouldn't it be better to wait?
     
  11. ashura the Old Right Registered Senior Member

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    The idea is that if the value of the dollar plummets as predicted, even buying high now would be better than paying off your debt or doing nothing at all. Your $1000 in US dollars will have less worth in say 2 months from now versus your $1000 in gold today which should be worth more.
     
  12. MacGyver1968 Fixin' Shit that Ain't Broke Valued Senior Member

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    Oh ok..thanks
     
  13. DubStyle I may be wrong, but I doubt it Registered Senior Member

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    Generally speaking - inflation transfers wealth from lenders to borrowers. Typically debt is set in nominal terms and doesnt adjust with inflation. Wages typically adjust. A rough example would be you oweing 25,000 - a relatively larg chunk of debt. Throw in a complete dollar collapse and the significant inflation some ppl here like to talk about and 25,000 may not be all that much money.

    Thats an extremely rough example and I may not be explaining it as well some can, but if you look at economies that have had very bad bouts of inflation - inflation tends make peoples debt dissapear just as fast as it does their purchasing power.
     
  14. nietzschefan Thread Killer Valued Senior Member

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    Exactly. This how fucking credit card people screw over us "savers".
     
  15. Carcano Valued Senior Member

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    I dont believe we are going to have hyper-inflation. In fact, inflation might go down to zero as happened in Japan during their 'lost decade'.

    When assets are wiped out hundreds of billions of dollars are erased from the money supply.

    http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

    The reason I would choose silver is simply due to supply and demand forecasting.
     
  16. nietzschefan Thread Killer Valued Senior Member

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    I would say Silver IS better, like someone said for industrial use if nothing else.

    I got my hands on some cold hard Silver and gold bullion last year. The only purpose for this is to trade for some food supplies and bullets when everything goes to shit. Then it's every man/family for himself. It might not happen, but it might.

    It is an investment for survival. The ultimate "insurance policy". It's not an investment within the confines of a "healthy economy". It's the ultimate short sell, buying precious metals for the purposes of "currency". You are betting on a disaster.
     
  17. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

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    Hyper-inflation would make gold/silver go up.

    Depression would make gold/silver go up.

    Recession and everything goes down; or do I have it wrong?
     
  18. nietzschefan Thread Killer Valued Senior Member

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    It's more complicated. Some countries could go to a gold/silver backed monetary system, and it could be boom times. Then gold/silver/whatever is backing it will ROCKET.
     
  19. one_raven God is a Chinese Whisper Valued Senior Member

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    As I understand it, the deeper in debt the government gets, the more money the Fed prints, the less the dollar is worth, the higher the value of gold goes.

    Is that about right?
     
  20. nietzschefan Thread Killer Valued Senior Member

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    That's generally how it goes, but I'd say it's more to do with the "Dollar" being on shaky ground in general. Especially a global currency like the U.S dollar having troubles.

    Why Gold is usually in an up and down drama, is later on these investors dump their gold and buy dollars back at a bargain. Just one more way for the rich to fuck the poor.
     
  21. DubStyle I may be wrong, but I doubt it Registered Senior Member

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    Dont you guys find it interesting there wasnt a dollar collapse last week? The wheels comepletely fell off the car and the rest of the world just smiled and stepped up their purchase of dollar assets.
     
  22. nietzschefan Thread Killer Valued Senior Member

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    My own conspiracy theory is someone way up, screwed up the timing of this. They are not quite ready to insert the "Amero" yet.
     
  23. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

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    That is exactly the scenario I am thinking about. The US bail out plan comes to maybe a trillion dollars. Printing presses will have to switch to thousand dollar bills to meet the demand

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    . Not really, but they will have to sell treasury bills and notes to foreign governments and sovereign funds at discount prices. Shouldn't that lower the value of the dollar?

    And then, what about oil. If oil gets squeezed, maybe by lower production, that also affects inflation and gold rises.

    What if Iran gets nuclear, wouldn't that mean possible disruption of the oil flow as Israel and the US enforce UN resolutions?

    With all of the uncertainty gold becomes a safe haven. I'm thinking the time is now or better yet, last month, to buy gold.
     

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