what to buy if inflation returns

[billyjoerob]

Quote from peilthetraveler:

The answer to the price of milk has to do with supply & demand. In 1999 the production of milk in the US was around 70 million tonnes. In 2010 the production was 87 million tonnes. Thats almost a 25% increase in production, yet the population only grew about 10% in the same time period. So what happens when you have more supply than demand? The price goes down (or stays the same). Now if milk production only increased 10% instead of 25%, I think we would be seeing much higher milk prices today.

But that's the nature of productive assets. They grow. Gold never grows. An ounce of gold is always an ounce of gold. Even if the ounce of gold appreciates, it doesn't create more gold. Productive assets do. In the past, the vast majority of wealth was in land. That's not true today. All the gold in the world is worth $10 trillion and in the long term is shrinking as a proportion of total wealth. The value of total US assets is around $200 trillion, and growing.

http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/

 

[clacy]

Quote from dcvtss:

Any conceivable world where gold coins have become currency I would rather have a stockpile of weapons and ammo.

You guys do realize that there is an in between where gold can increase in value significantly and the shit does NOT hit the fan, right?

There are varying levels of inflation, real interest rates and currency values, and you don't necessarily have to have WWIII to make gold attractive.

 

[oldtime]

Quote from clacy:

You guys do realize that there is an in between where gold can increase in value significantly and the shit does NOT hit the fan, right?

There are varying levels of inflation, real interest rates and currency values, and you don't necessarily have to have WWIII to make gold attractive.

yes, I own gold, but I plan to convert it back into dollars.

there is no point talking sense to a goldbug. They buy and never sell. They'll die with their gold. The thing they fear most it the U.S. dollar.

 

[fickletrader]

To the OP, you already knew the answer to your own question (gold) but for some reason you want a different answer. The way to buy gold is 1oz bullion coins (priced by weight not rarity). Forget about graded coins or etfs.

The reason to own gold is because you can buy into any currency in the world. Hyper-inflation is the end of the dollar, and something else will come along you may want to buy into. Gold will work in barter markets but that's not a reason to stack gold chips. Gold will always be expensive no matter what "home currency" or time your perspective is from. If it ever seems cheap, you've either found yourself in a "golden age" that won't last-so buy gold, or you won the lottery.

If you want alternative investments for a period of runaway inflation, forget sending money to your broker, if the dominoes start falling your money will be locked up for who knows how long. Who wants locked up money when prices are going up every day? beprepared.com is a good place to start sending your inflationary hedging alternative investment money.

 

[fickletrader]

OH, I should mention other good alternatives to 1 oz gold bullion coins: 1 oz platinum bullion coins, 1 oz silver bullion coins.

 

[oldtime]

Quote from fickletrader:

OH, I should mention other good alternatives to 1 oz gold bullion coins: 1 oz platinum bullion coins, 1 oz silver bullion coins.

I don't need to hold my gold or see it or hide it. I use GLD. But like the man said, there's no point talking sense to a goldbug.

What's the spread on that bullion? Oh, that's right, it doesn't matter, because you will never sell.

 

[peilthetraveler]

Quote from oldtime:

I don't need to hold my gold or see it or hide it. I use GLD. But like the man said, there's no point talking sense to a goldbug.

What's the spread on that bullion? Oh, that's right, it doesn't matter, because you will never sell.

GLD is a bad investment. Yes, currently it goes with the price of gold, but in a SHTF scenario when everyone wants their gold and nobody is taking dollars, do you think they will be able to cover you? You will likely get 1% of the gold you paid for if they have to be liquidated.

Try to remember that the average life of a fiat currency that is backed by nothing is 40 years. History proves this. Currently we are in year 42.

I'm not opposed to selling my gold and putting it in another investment, but it better be something that will give me a great return and it wont be in something conventional that every joe schmo and his mother have easy access to buy. Maybe something like shares in a pre-ipo stock or something like that.

 

[oldtime]

Quote from peilthetraveler:

GLD is a bad investment. Yes, currently it goes with the price of gold, but in a SHTF scenario when everyone wants their gold and nobody is taking dollars, do you think they will be able to cover you? You will likely get 1% of the gold you paid for if they have to be liquidated.

Try to remember that the average life of a fiat currency that is backed by nothing is 40 years. History proves this. Currently we are in year 42.

I'm not opposed to selling my gold and putting it in another investment, but it better be something that will give me a great return and it wont be in something conventional that every joe schmo and his mother have easy access to buy. Maybe something like shares in a pre-ipo stock or something like that.

damnit pelet, you are about as dense as it gets. Do you think I am worrired about SHTF? I had money in bonds and started selling at 126 (obviously too early) and started moving it into S&P, but it's been a long time without a decent pullback, and so that leaves me in cash, and GLD is a decent hedge against cash. I don't plan on being here until SHTF. When it comes time for me to sell, I don't have to dig it up and go to the dealer and pay that ridiculous spread that you will never know about because you are never going to sell. Best you'll ever do is get somebody to trade you a house for gold. Talk about brainwashed.

 

[peilthetraveler]

Quote from billyjoerob:

But that's the nature of productive assets. They grow. Gold never grows. An ounce of gold is always an ounce of gold. Even if the ounce of gold appreciates, it doesn't create more gold. Productive assets do. In the past, the vast majority of wealth was in land. That's not true today. All the gold in the world is worth $10 trillion and in the long term is shrinking as a proportion of total wealth. The value of total US assets is around $200 trillion, and growing.

http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/

Gold is a means of exchange and a way to measure wealth...you dont need $1 of gold to exist for every $1 of assets out there.

For instance...lets say I'm a miner and you're a farmer. I go out and mine $1 oz of gold worth $1600. You farm and grow $1,600 worth of crops. Thats $3200 in assets. Do we need 2 oz of gold now because we have $3200 in assets? No, I trade my gold for your crops and look at that...we still have $3200 in assets combined even though I spent my gold!

 

[fickletrader]

TLT/GLD