Bye Bye Dollar, Buy Buy Gold?
Rental Property Investor · Houston, TX · Member since 2019 · 30 posts · 6 votes
Lots of noise in the market, making me nervous.
Noise 1 ) bye bye dollar, buy buy gold.
* Gold has hit 5-year high.
* Will dollar continue to weaken? I see quite a few propellants fueling it: oil dollar position is being challenged, a few countries ( Russia, China, Iran ) have started to settling trade in local currency. This is a challenge to the US dollar dominated world currency system since 1972. The US Central bank has managed to print money and exported crises to the world and saved home country economy. Will it be able to survice this round? for how long?
Should I buy gold or should I keep buying rental? What will be the rental/housing market look like if the US dollar loses its world currency position?
I have small gold bars that I would love to get rid of, find me a place that will take it without skimming 15% off the spot price.
@Jay Hinrichs interesting, Michael Burry - the guy portrayed in the movie " the big short" ?
"The second-heaviest holding in the Michael Burry portfolio through the first quarter of 2019 is an interesting one: a small-cap real estate investment trust worth around $500 million."
@Helen De la rosa I think it is totally fair to leverage your primary residence for other investment as long as you don't overleverage it. At the same time, some of the "gurus" recommend people to invest in investment properties before getting a primary residence. I found that logic to be deeply flawed in most cases and it should be taken with a grain of salt.
Remember the last few years we have had unprecedented growth. It's easy to make money for people if they are just semi responsible with their money (well except the gold buyer). I am not remotely close to be a good investor, but I have two more zeros to my net worth than I did than 2009. Education is definitely important, this site definitely does help. Still, I think everyone has to put everything through their personal filter to make sure the logic works for them. WHat works for someone in California doesn't necessarily hold true for someone in Ohio.
I should also add that as a CPA, you probably know more about tax planning than most people do. I wish I had known earlier, but a simple course in tax planning I saved myself $10K in taxes. The return was better than any C class properties I could make.
Posts like these make me question the sanity of people on this forum..
@Helen De la rosa hasn't the dollar continue to weaken the last 40 years? It probably will continue to lose purchasing power until it goes to 0.
If you think the dollar is going to 0 than why invest in the US at all? And the dollar hasn’t weakened continually for 40 years. And a weaker dollar isn’t a bad thing. The dollar has been getting stronger not weaker.
The Dollar has lost 95% of its purchasing power since the Federal Reserve was created in 1913. If you hold real assets (oil, gold, real estate) you shouldn't care if the dollar goes to 0, or even if its replaced by another currency altogether. People who own the real assets will simply be paid in the new currency.
Your Comment: "The Dollar has lost 95% of its purchasing power since the Federal Reserve was created in 1913." While true, that doesn't tell the whole story. Without inflating the dollar, along with going to war, we wouldn't have air conditioning, refrigerators, food surplus, obesity, TV, the Internet, computers, cell phones, airplanes, aluminum foil, lasers, mass transportation, radar, GPS, cheap clothing, an abundance of fuel, "forever stamps", office chairs, lots and lots and lots of housing sub divisions and everything in them. These are all built on an expanding money supply, money to lend & money to borrow, money to invest and the belief that a stable dollar (slowly deflating based on a prescribed inflation rate) so that future returns can be guessed at and calculated. Why take a risk and build a factory if there isn't a reward? The robber barons of the late 1890's and early 1900's had all the money. It was impossible to compete with them. The Federal Reserve was and still is a horrible idea, for reasons not yet mentioned, but there were benefits and that needs to be recognized for an accurate understanding of why it is still here. (at least in the short term.) Hint: Buy Gold soon. ;-)
If you want to see a society where currency never wavers, look at the Amish. Same currency for 300 years. Mostly barter really.
@Allan Szlafrok one chargeback on my gold bar and I am f$&@:6ed
Gold is a defense against the dollar dropping in value. The dollar has not dropped in value.
Never buy bars. Buy gold coins.
The idea with gold is to hang on to it for a lifetime or until needed in an emergency. If you think you will need to convert it to cash in the next couple of years, it isn't the right place to park your money.
Curious why you say don't buy bars, buy coins? I have mostly coins but I have a few 1oz pamp bars (well, 25 to be exact. I wanted to fill out my little pamp bar holder I got on ebay. Sorry for the flex :)
@Cody L. I will reach out when I am back from my vacation, I would offload my gold and silver if I can get near spot price in cash for it. I am in Bay area. They just take up space in my safe since insurance won't cover it!
If there is hyperinflation, I guess that could mean my house would be paid off pretty quickly too :)
Gold hasn't even kept up with inflation. Crap I actually lost money on it, forget about the commission and the mark up and all that.
| 1100 | 2013 | 2% inflation per year |
| 1122 | 2014 | |
| 1155.66 | 2015 | |
| 1190.33 | 2016 | |
| 1226.04 | 2017 | |
| 1262.821 | 2018 | |
| 1300.706 | 2019 |
At the next zombie apocalypse. I would love to see what kind of value the sharks offer you for your 1 oz of gold. I am guessing it might be a better deal to buy a bunker, store a few years worth of water and RTE meals in there than to keep buying gold for that day to come.
It's not either or brother. I have gobs of water, ammo, food, and gold in case it's ever needed. And if it's not, I can still eat it, drink it, or convert it back to fiat (in the case of gold). I'm "up" on my gold in terms of what I paid vs. what it's worth but that wasn't even the point of buying it. Just trying to diversify a bit. It'll sit in my safe and likely never be used. Just like I have some paper $USD currency that sits in my safe that'll likely never be used.
In my mind it doesn't really "cost" anything to buy gold as you're buying money. The only "cost" is the mark up you might have to pay to get it from a retail dealer but in the grand scheme of things that's not much.
@Allan Szlafrok one chargeback on my gold bar and I am f$&@:6ed
Gold is a defense against the dollar dropping in value. The dollar has not dropped in value.
Never buy bars. Buy gold coins.
The idea with gold is to hang on to it for a lifetime or until needed in an emergency. If you think you will need to convert it to cash in the next couple of years, it isn't the right place to park your money.
Curious why you say don't buy bars, buy coins? I have mostly coins but I have a few 1oz pamp bars (well, 25 to be exact. I wanted to fill out my little pamp bar holder I got on ebay. Sorry for the flex :)
I prefer regular gold coins because they are more recognizable by people who are unsophisticated if ever I should need to buy their assets/services by using gold in a worst case scenario. I stay away from "collectible" coins since there is a premium markup in cost that doesn't add value. If ever you need your gold to buy an asset when currency is no longer favored, the guy on the other side of the trade wants to know the purity and weight and couldn't care what year it was minted. Gold bars, I think, are more of a mental block for some people since it really isn't like anything they normally encounter. It's a personal thing.
@Allan Szlafrok one chargeback on my gold bar and I am f$&@:6ed
Gold is a defense against the dollar dropping in value. The dollar has not dropped in value.
Never buy bars. Buy gold coins.
The idea with gold is to hang on to it for a lifetime or until needed in an emergency. If you think you will need to convert it to cash in the next couple of years, it isn't the right place to park your money.
Curious why you say don't buy bars, buy coins? I have mostly coins but I have a few 1oz pamp bars (well, 25 to be exact. I wanted to fill out my little pamp bar holder I got on ebay. Sorry for the flex :)
I prefer regular gold coins because they are more recognizable by people who are unsophisticated if ever I should need to buy their assets/services by using gold in a worst case scenario. I stay away from "collectible" coins since there is a premium markup in cost that doesn't add value. If ever you need your gold to buy an asset when currency is no longer favored, the guy on the other side of the trade wants to know the purity and weight and couldn't care what year it was minted. Gold bars, I think, are more of a mental block for some people since it really isn't like anything they normally encounter. It's a personal thing.
Fair enough. And I totally agree with you re spending more for "special" coins. I always buy US gold eagles or the Pamp bars. I like the pamp bars as even though they're 'bars', they're sealed in a tamper proof case and have an individual serial/QR code. So who knows, those might have some legitimacy as they're harder to spoof.
Anyway, if that ever becomes an issues we all have bigger problems right? :)
@Helen De la rosa Silver silver silver silver silver! Gold has already started to increase (although still has more room to grow), and silver hasn't yet caught up to it. The silver:gold price ratio is at historic lows, suggesting that silver prices are due to catch up with them and continue to trace a normal ratio as gold prices increase. Silver also has superior industrial use, notably in some emerging industries such as microchip manufacturing and alternative energy devices.
Honestly I don't think precious metals can hold up to real estate, long term. Now if your options are- buy metals or buy a rental home in Houston- go buy the gold. Investing in an inflated major market now is a one way ticket to equity loss + break even/negative cash flow. If you can find a strong, cash flowing property... you're essentially a commodities investor just like a metals investor is. Just a commodities investor who's reaping the added benefits of real property ownership (debt paydown, depreciation, leverage, higher yield)
If you want to know what to expect with gold, just study Martin Armstrong's analysis on his blog and site. I've been following his computer model's predictions for everything from real estate to precious metals to stock markets for over a decade. He's pretty much spot on.
Your comment: "I don't think precious metals can hold up to real estate, long term"
I can think of a lot of examples where having gold fared better than having real estate long term.
If you converted your real estate to gold before these events you would have been far better off than owning real estate if you were in the disaster zone. Galveston Tx hurricane, 1900, San Francisco Earthquake 1906, Great Chicago fire 1871, Seattle fire 1889, Peshito fire 1871, Alabama tornado outbreak 2011, New Orleans Hurricane Katrina 2005, Mississippi flood of 1927, Joplin tornado 2011, New Hampshire hurricane of 1938, New York twin towers 2001, Oregon Heppner flash flood of 1903, Johnstown flood 1889, Vermont flood 1927, and I could list the worst 15 earthquakes in California to boot. There's Three mile island, "down winders" from Hanford Nuclear processing pant, the cities of Detroit, Cleveland, Gary, Memphis, St Louis and on and on. These are just a sampling of how life can change quickly and you can not take real estate with you. Indeed, real estate loses value quickly when it isn't habitable. There is a season that real estate is great to own and then there are seasons when it isn't.
@Elliott Elkhoury
That's my conclusion after reading 5 books plus lots of blogs this past long weekend. It's assuring to hear about your insights. Cheers
@Helen De la rosa Silver silver silver silver silver! Gold has already started to increase (although still has more room to grow), and silver hasn't yet caught up to it. The silver:gold price ratio is at historic lows, suggesting that silver prices are due to catch up with them and continue to trace a normal ratio as gold prices increase. Silver also has superior industrial use, notably in some emerging industries such as microchip manufacturing and alternative energy devices.
Honestly I don't think precious metals can hold up to real estate, long term. Now if your options are- buy metals or buy a rental home in Houston- go buy the gold. Investing in an inflated major market now is a one way ticket to equity loss + break even/negative cash flow. If you can find a strong, cash flowing property... you're essentially a commodities investor just like a metals investor is. Just a commodities investor who's reaping the added benefits of real property ownership (debt paydown, depreciation, leverage, higher yield)
Your comment: "I don't think precious metals can hold up to real estate, long term"
I can think of a lot of examples where having gold fared better than having real estate long term.
If you converted your real estate to gold before these events you would have been far better off than owning real estate if you were in the disaster zone. Galveston Tx hurricane, 1900, San Francisco Earthquake 1906, Great Chicago fire 1871, Seattle fire 1889, Peshito fire 1871, Alabama tornado outbreak 2011, New Orleans Hurricane Katrina 2005, Mississippi flood of 1927, Joplin tornado 2011, New Hampshire hurricane of 1938, New York twin towers 2001, Oregon Heppner flash flood of 1903, Johnstown flood 1889, Vermont flood 1927, and I could list the worst 15 earthquakes in California to boot. There's Three mile island, "down winders" from Hanford Nuclear processing pant, the cities of Detroit, Cleveland, Gary, Memphis, St Louis and on and on. These are just a sampling of how life can change quickly and you can not take real estate with you. Indeed, real estate loses value quickly when it isn't habitable. There is a season that real estate is great to own and then there are seasons when it isn't.
Uh, yeah. If your real estate is utterly destroyed your gold will have fared better. Maybe. When I was a kid my father had a large piece of gold ore with pure veins in it. One day our house burned down. We never did find the gold ore.
Lots of noise in the market, making me nervous.
Noise 1 ) bye bye dollar, buy buy gold.
* Gold has hit 5-year high.
* Will dollar continue to weaken? I see quite a few propellants fueling it: oil dollar position is being challenged, a few countries ( Russia, China, Iran ) have started to settling trade in local currency. This is a challenge to the US dollar dominated world currency system since 1972. The US Central bank has managed to print money and exported crises to the world and saved home country economy. Will it be able to survice this round? for how long?
Should I buy gold or should I keep buying rental? What will be the rental/housing market look like if the US dollar loses its world currency position?
They last thing you want to do is buy gold when it is at a high. I invested in gold once, when it was $300-400 an once. I sold it during the Great Recession and it probably saved my hide. But gold is commodity and like anything else you want to buy low and sell high. The dollar is not that weak and as long as the Fed doesn't give in to Trump's ridiculous demands to cut interest rates when the economy is strong we should be fine. Whether you should continue to buy real estate depends on what your returns are like and what kinds of deals you can get. I don't expect the housing market would be effected if the dollar weakens. The only effect I've seen that have is that overseas vacations become more costly.
Gold is not money, it is a commodity. Commodities are always risky but they also can give good returns, but it is ridiculous to consider gold money. If we were to go back to the gold standard gold would have to cost $40,000 an once to support a world economy. Forget about that wedding ring!
@Helen De la rosa hasn't the dollar continue to weaken the last 40 years? It probably will continue to lose purchasing power until it goes to 0.
We thought about buying precious metals over real estate, however every time my wife reminds me that it's easier to go buy food with money we collect in rent than it is with a gold coin in America.
True. I sold my gold out of necessity during the Great Recession. It was amazing how many places wanted to buy it for so much less than the market value. I did finally find a store which gave me a fair price, but it was the only one in town.
There was a news article yesterday talking about how NASA is sending a probe to an asteroid they previously found that has enough gold in it that if it were on earth, gold would start being used in soft drink cans instead of Aluminum.
There is gold on the moon for that matter, but it would cost too much to bring it here.
@Helen De la rosa I bought silver during the Obama years because I thought the U.S. was headed for the ditch. It was $35 per once. We survived Obama, thank God. Now the economy is booming under Trump, thank God. Silver is $15 per once. How is my investment doing? Not too good. Metal is not an investment. It doesn't produce cash flow, only appreciation. It only goes up based on fear of the unknown. This is not a good investment strategy. Luckily, I only bought about $5000 in silver and it's worth half that now. This is speculation, not investing. Buy real assets, like real estate. It is a hedge against inflation, like precious metal, but it also produces cash flow every month in the form of rent. Metal is just metal. If you think the economy will crash, buy chickens, guns, and ammo.
Like gold, I bought silver when it was low, about $4 an once and sold it during the Great Recession. At $15 an once I think it is still a good investment because the ratio of gold to silver is usually 50 to 1.
@Helen De la rosa the fed is going to print money at a rate that will make QE1,2 and 3 look like they were just getting some snacks for a party. This will be a 7 course tasting menu with wine pairing. Add to that they're going to have to go to negative interest rates and all of that still won't keep us from the pain that is coming and I wouldn't keep a penny in dollars if it isn't required. On the bright side stocks won't take as much of a hit as they should because the dollar will lose so much value
They don't seem to want to at this point, but Trump is sure pushing them to do this.
Supposedly the silver to gold ratio is at 26 year high, hope it will rebound from here... Anyway, I picked up $23k in SIVR EFT in early morning to diversify my stock holdings...https://www.bullionvault.com/gold-news/gold-silver-ratio-061220191
Why not buy a nice set of silverware on Ebay? Then at least you can do something with it.
I don't think anyone would advise holding on to a boatload of cash. We are investors for a reason. We keep enough cash around to cover emergencies or to save up for the next investment.
Real Estate will never go to $0. Gold is a tough one and I believe it will be around for a while but, you can't sleep under it, wear it, eat it, or use it to buy things. It solves no issue nor does it add conveineince, and while it's rare and feels awesome in your hands, what can you really do with it? Except hold it and trade it for Fiat at some point, for a fee.
Another issue is that the price of gold is suppressed by the government. I think today, the value would be much higher if it were a true free market. Simply because of everyone's trust and belief. You can find info on gold futures and price suppression and why.
If we are ever at a point that we are trading with gold with each other, I think we will have much bigger issues than the value of our RE portfolio
Fiat currency is almost nearly backed by oil and the military. But as you mentioned, Russia and China are already dealing outside the US dollar. Other than that, the US can print as much as it wants and it has about the same utility as gold. Aside from golds use in electronics and the like.
Look into Bitcoin, do your research, understand it, purchase wisely, and protect it.
Buy real estate but have reserves and buy your properties with some tolerance underwritten in. What if rents and or occupancy drop? Buy with that in mind and protect yourself
Also, our brains have a built in greater fear of losing something, It's always the threat or news of possible loss that takes us down the rabbit hole.
Gold is not money, it is a commodity. Commodities are always risky but they also can give good returns, but it is ridiculous to consider gold money. If we were to go back to the gold standard gold would have to cost $40,000 an once to support a world economy. Forget about that wedding ring!
How is gold not money? Let me get this straight:
1) People use gold and silver as money
2) People use paper receipts for gold to make barter easier
3) Government makes coins out of gold and silver and their value is simply that value of the metal (i.e, a quarter is simply $.25 worth of silver). Paper money is just a government promise to be paid in that much gold or silver
4) Government decides "We are not going to make coins out of gold/silver anymore, and your paper isn't redeemable for gold/silver anymore
5) People switch their thinking to gold not being money, but the paper that used to represent it (and is now functionally worthless) is what's REALLY "money"
That just seems SO crazy to me. And I don't even consider myself a 'gold bug'. It's like somehow in step 5 people just got duped. Or enough time passed. Or some combination.