***Official 2012 Where's my f***in money FTP Thread***

[TucoRamirez]

Originally Posted by juan valdez

serious questions

what makes gold a safe investment and what makes it valuable?

The fact that it has been a safe haven for thousands of years. It's valuable because we as humans have assigned it value, mostly. Silver on the other hand is used as an industrial metal in a lot of ways.

If **** hits the fan (major war, financial meltdown, catastrophe, asteroids) what use will people have for gold?

Bartering. Probably more the case for silver though, not gold.

Gold has a proven track record and seems stable in the short term but I don't get the market. gold gained popularity and value back in the day because we liked shiny stuff. what exactly do we need it for moving forward?

A safe haven for paranoid loons.

.

[TucoRamirez]

Originally Posted by juan valdez

lol give me some credit please. i realize that but im talking long term. from what i understand the value of gold seems to be determined by demand and the demand for gold isn't based on any need or use, but just public opinion. what if public opinion changes or the world has bigger problems? things like water and steel would seem a lot more valuable than gold at that point

People have always wanted gold. So I wouldn't worry about that. You could make the argument that it's currently overvalued though and that it's in a bear market. But it will always have value. The same can't be said for paper.

But you're right if SHTF, then you're going to want essentials like food, water, shelter, guns, ammo, med supplies, etc.

[TucoRamirez]

Originally Posted by thepizzlefosho

As far as I know gold isn't the most prevalent or necessary metal in current computers nor in most expected improvements in the future. But I could be wrong. Can someone show me where gold's value comes from it's demand in the electronics industry? because I was pretty sure that gold's value is essentially the same as the dollar's value in that we've assigned a theoretical bartering worth to it. Certainly it has more practical use as a pure metal than actual dollars have, but by that definition the copper in pennies is certainly more valuable than their actual worth as well as the paper dollar.

I believe my point still stands. If you believe that investing in the economy and private business (which is essentially what you are doing with most IRAs) is not a worthwhile investment because the American economy will collapse and your IRA account will be emptied within 40 years then I would suggest guns and ammo would probably be a more worthwhile investment. In as much as they always retain their value and would actually gain tremendous value in the case of a lot of the catastrophic events that would result in the collapse of our economy/country.

but gold's cool too, I just can't shoot zombies with it.

I think the bold is where we disagree. I think it's almost inevitable that inflation will be a big problem at some point in the future. Probably way before 40 years. And gold is certainly one of the best (the best?) hedges against inflation. We need Ron Paul!

[zachvac]

You see the graph I posted? Assuming it's accurate (and it's all over the place) how is that possibly a hedge against inflation? Obviously it's always going to do amazingly better than paper money which is continually inflated but it's not exactly holding its value and seems to be subject to a ton of swings. Isn't there something else that has actual intrinsic value that is more steady adjusted for inflation? I don't know the answer to this.

[TucoRamirez]

Originally Posted by zachvac

You see the graph I posted? Assuming it's accurate (and it's all over the place) how is that possibly a hedge against inflation? Obviously it's always going to do amazingly better than paper money which is continually inflated but it's not exactly holding its value and seems to be subject to a ton of swings. Isn't there something else that has actual intrinsic value that is more steady adjusted for inflation? I don't know the answer to this.

I can't really see it. Hedges against inflation are anything tangible. Gold, silver, farmland are really the best. The value of gold/silver is inversely proportional to the dollar afaik.

[TucoRamirez]

I'm waiting for Nick to come in and tell me how wrong I am about all of this.

Oh and my new year's resolution in case people were wondering is to have the most posts in this thread this year. I'm winning.

[thepizzlefosho]

Originally Posted by TucoRamirez

I think the bold is where we disagree. I think it's almost inevitable that inflation will be a big problem at some point in the future. Probably way before 40 years. And gold is certainly one of the best (the best?) hedges against inflation. We need Ron Paul!

yeah ron paul is great but I still don't by your argument. assuming you think some country is going to sweep in and take up the void in the global economy left by the collapse of the US system (and the subsequent loss in value of the dollar) it seems that foreign markets would be a better bet for your investments than gold. FWIW I do invest in emerging and established foreign markets as part of a rounded portfolio, and it will be interesting to see if it's suggested that those investments become a greater portion of my IRA over time.

also it's pretty easy to make the same argument about gold that you're making about the dollar. That it's value is essentially based on a system that overvalues it's worth as well as various people tinkering with the supply and demand. In real life gold has little to no actual value to most people. Whereas investing in companies that produce necessary or beneficial goods and services will always have value as long as a capitalist society exists in some form on the planet. And if it doesn't then guns and food are certainly going to be more valuable than gold or stocks.

Certainly the inability to simply manufacture more gold prevents the kind of inflation you're talking about relating to the dollar. But investments in stocks are really an investment in individuals work and ingenuity. If you believe those are things that will have value in the future I think you can also believe that they will exist or survive past any collapse in the dollar. I guess by the same token you could say that as long as there is some form of advanced global economy people will always desire gold and thus it's a safe investment. But again the downsides are I don't get tax deductions for buying gold, I have to keep a large portion of my net worth in something that it's actually very possible to have physically stolen, and I have to trust that human desire for something shiny will hold value for the rest of my life. I'm just not sure the EV of that gamble is really so much great than putting money in my IRA.

but again I'm no expert and this is all simply conjecture.

[thepizzlefosho]

Originally Posted by TucoRamirez

I can't really see it. Hedges against inflation are anything tangible. Gold, silver, farmland are really the best. The value of gold/silver is inversely proportional to the dollar afaik.

take another look at his graph. If you happened to have bought gold before 1970 relative to inflation you would have seen it grow to nearly 8x it's purchased value, then lose nearly all of that gain, and then gain nearly 6x that initial value back. And those 3 dramatic swings happened over 40 years. Who's to say that if you bought now you wouldn't see another 3 dramatic swings over the next 40 years that would result in your gold being worth 1/5th of what you paid for it now when you need to sell it for retirement. It's entirely possible. It's also worth noting that gold slowly and steadily lost value for nearly the entire middle of the last century. So I'm not sure that we can really safely predict what kind of trend it's value will have over the next 50 years. When considering the value of gold to humanity 50 years might not really be as much of a long run as we tend to think. I just don't know.

Simply put that the rise in value of gold in the last century was anything but steady and predictable when we take into account inflation of the dollar.

I guess again it all comes back to the fact that I can take tax breaks on IRA contributions. If someone can show me how to get deductions for buying gold I'm on board.

[TucoRamirez]

Originally Posted by thepizzlefosho

take another look at his graph. If you happened to have bought gold before 1970 relative to inflation you would have seen it grow to nearly 8x it's purchased value, then lose nearly all of that gain, and then gain nearly 6x that initial value back. And those 3 dramatic swings happened over 40 years. Who's to say that if you bought now you wouldn't see another 3 dramatic swings over the next 40 years that would result in your gold being worth 1/5th of what you paid for it now when you need to sell it for retirement. It's entirely possible. It's also worth noting that gold slowly and steadily lost value for nearly the entire middle of the last century. So I'm not sure that we can really safely predict what kind of trend it's value will have over the next 50 years. When considering the value of gold to humanity 50 years might not really be as much of a long run as we tend to think. I just don't know.

Simply put that the rise in value of gold in the last century was anything but steady and predictable when we take into account inflation of the dollar.

I guess again it all comes back to the fact that I can take tax breaks on IRA contributions. If someone can show me how to get deductions for buying gold I'm on board.

I'm almost positive you can add physical gold or silver to existing IRAs. I briefly looked into it a while back. You should check into it. Of course you wouldn't actually hold it. You would get a piece of paper saying it's stored for you in some vault so that really isn't a whole lot different than paper money in SHTF scenario.

Another way to get exposure to PMs is to buy mining equities with your IRA. I'm probably going to do this, have been putting it off. Supposedly, over 60% of Ron Paul's portfolio is in PM miners lol.

I'm going to bed I'll address your posts tomorrow. GL

[thepizzlefosho]

Originally Posted by TucoRamirez

I'm almost positive you can add physical gold or silver to existing IRAs. I briefly looked into it a while back. You should check into it. Of course you wouldn't actually hold it. You would get a piece of paper saying it's stored for you in some vault so that really isn't a whole lot different than paper money in SHTF scenario.

Another way to get exposure to PMs is to buy mining equities with your IRA. I'm probably going to do this, have been putting it off. Supposedly, over 60% of Ron Paul's portfolio is in PM miners lol.

I'm going to bed I'll address your posts tomorrow. GL

I'll definitely bring this up with my adviser. I knew about buying certificates but didn't realize that it was an option to add to an IRA. As to the mining equities that is something I had considered as my adviser has suggested researching some options to add more diversity to my IRA and he suggested reading up on mining equities as well as some other stuff. Me being the lazy poker player that I am I haven't actually done it.

FWIW even though I have some slight disagreements about this stuff I do appreciate the info and insight. Most of the good stuff I learn comes from people that I disagree with that educate me and (shock!) often times I find myself changing my opinions.

[zachvac]

On another note luckily no one here is dumb enough to use the argument but it's hilarious how a lot of people will look at a graph and decide they know what it's going to do. Even on the news all the time they talk about how something is rising or falling and then people will talk about whether the crash is over or whether it's going to continue and just don't even use logic. Like in general the price includes speculations so if everyone thought (and would risk their money on that fact) it was going to go up a ton, that in and of itself would cause it to go up immediately. So seeing a graph that's gone up and saying "and it's showing no signs of stopping" just makes me lol pretty hard.

[NCSU07]

Originally Posted by thepizzlefosho

If someone can show me how to get deductions for buying gold I'm on board.

Buy gold with money you "lost" in a casino.

Then get a collection like this guy - http://www.youtube.com/watch?v=UCDwOXBM0Wg

So I'm not sure that we can really safely predict what kind of trend it's value will have over the next 50 years. When considering the value of gold to humanity 50 years might not really be as much of a long run as we tend to think. I just don't know.

You cant really safely predict the future value of your IRA either. One thing is for sure - precious metals have always withstood the test of time, and as long as money exists, gold and silver will have value and lots of it if fiat currency gets fked. I'm not saying ditch the IRA and hoard gold, but I think it is a mistake to not physically hold some precious metals.

IMO - buy gold and store it in a foreign vault. Our current economic system is unsustainable and you dont want to have any gold laying around when the guvment issues another recall.

[zachvac]

@NCSU sorry if you were just joking but the irs realizes gold costs money, you can't claim to lose money then use that to buy gold that makes no sense lol. Also look at the graph I posted with gold. How is that always withstanding the test of time? And don't stocks gain value when the dollar is inflated as well? If I have stock in a really solid company and then the dollar collapses, as long as something replaces it or even if we just start paying $10 million for a gallon of milk, the stock will still retain its value right? Obviously any liquidity they have is ****ed but you get the point.

btw I'm a fish at this stuff I'm legit asking not trying to be condescending at all.

[NCSU07]

What I said about claiming a loss and buying gold isnt legal, but is def a way to get a deduction on buying gold. I guess the other way would be to buy paper gold in a SEP?

As for gold withstanding the test of time I'm not referring to fluctuations we have seen in the last few decades, I mean that gold will never be worth dirt like paper money can and might be at some point. Look back at any point in human history and find me a time where gold wasn't one of the most desired forms of money. I was just referring to pizzles comment about the possibility of humans not placing value in gold in the future. That simply wont happen as long as money exists imo.

For modest inflation stocks are def better than holding cash ldo, but I tend to think that in an economic doomsday scenario that stocks wont do so well, but I'm no expert. One thing I do know is that a company like Coke will stay ahead of inflation simply because they have a product that will always be desirable in mass quantities and people will pay inflated prices for it. As a side note they have also raised their dividends every year for the last few decades, not too shabby imo.

[R0b5ter]

This thread just started with one of my favorite topics. Tuco, you know what you are talking about. Here's my take:

I've been holding gold for a couple of years. Definitely not all in though, far from. Something like 15% physical Au, Ag and 10% miner equities. I'd feel comfortable increasing that a bit but I'd definitely not feel comfortable going all in like some gold bugs seem to be doing. I really don't see gold as a commodity but rather a currency. It's been a currency for thousands of years and as recent as 1971 when Nixon took the US off the gold standard gold was considered a currency by all nations since the dollar is the reserve currency of the world. With that said I understand arguments that gold doesn't have any value of is own etc. However no currency does. The fiat currency's all nations are currently on are backed by governments. Problems start when governments start mistreating the currency by debts spiraling out of control.

Here's where I get to slide into another favorite topic, peak oil. In my opinion what we are currently seeing is the cusp of the oil production. Even if production can hang in there a couple more years through oils sands and deep sea deposits we are currently seeing the EROI (energy return of investment) sink dramtically. In the beginning of the oil boom during the beginning of the last century a typical EROI of a oil well could be almost 100 to 1. You got 100 barrels of oil for 1 invested in the production. Now the EROI is bellow 10. Oil sands have an EROI of less than 5. This number will of course never reach 1 but it's a big enough problem that it's in the single digits. Our whole western society is built with cheap energy. Our economy is in its very essence a growth based entity. What we are seeing now is the western economy coming to a halt because growth can't be sustained. No cheap energy leads to less production and less growth. This coupled with Asian country's taking their fare share of the worlds resources has led to HUGE problems for the western world.

I personally think this is just the beginning. I could even go as far and say our life of living will be greatly reduced in the next coming decades. (as long as we don't get some kind of new super energy)

So back to gold. When the economy comes crumbling down I think there will be a lot of inflation. If countries can't grow their way out of debt they will inflate. And just as Tuco said you need to be owning tangible assets then. Not dollars. Not euros. Not Swedish kronors.

I have so much more I could say but I'll give it a rest here. Maybe I could tell you why I personally think silver could be great holding as well.