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.
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!
If $40,000 used to represent $40,000 in gold, and now it would take $40,000 of all the dollars we are swimming in now to buy a piece of gold that only takes $1400 of them to buy, what does that tell you about the purchasing power of that gold vs. that dollar?
I have some pure silver quarters. In 1964, when we stopped making quarters out of silver, one of those quarters could have bought a gallon of gas. Guess what, today one of those silver quarters **STILL** can buy a gallon of gas.
How someone can hold onto $usd vs. actual money (gold) seems crazy to me (outside of obvious liquidity needs as I understand the challenge of going to the store and buying a gallon of milk with a gold shaving.)
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.
You do realize that in a good part of the world cowry shells was used as money, not gold or silver? China used Bronze coins and later invented paper money. They didn't start using silver until the Ming Dynasty when thanks to mining in America, silver became so plentiful that the Mexican Peso became the means of exchange in China.
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!
If $40,000 used to represent $40,000 in gold, and now it would take $40,000 of all the dollars we are swimming in now to buy a piece of gold that only takes $1400 of them to buy, what does that tell you about the purchasing power of that gold vs. that dollar?
I never said $40K used to represent $40K in gold, I said if you tried to base a world economy on gold it would have to cost $40K an ounce. That is because it there isn't enough gold to support a world economy.
I have some pure silver quarters. In 1964, when we stopped making quarters out of silver, one of those quarters could have bought a gallon of gas. Guess what, today one of those silver quarters **STILL** can buy a gallon of gas.
Not if you tried to use that quarter at the gas station instead of taking it to a coin store. But think about it for a minute, if your silver quarter buys the same thing now as it did then, then you've made nothing off of it.
this is laughable. I bought into the hype and bought some gold, can’t sell it for anywhere near the spot price. Pathetic
I seriously think the people behind the hype purchased billions in gold then hired PR firms to drive up demand so they can sell it. I own a PR firm and you would be surprised at what companies try to hire you to put in the media.
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.
Totally agree with this. There are very few reasons one should hold on to a boatload of cash.
@Brandon Lewis absolutely. I don’t think buying a few etf or even a few oz bar or coin is a horrible idea, but to put any type of material amount of your asset in there is dumb. That’s what doomsday preppers do.
@Account Closed well hold on here- my statement clearly implies that a real estate decision must be the right one.
You're also bunching real estate losses from two different categories into a single statement. Natural disasters are almost always insured against. Yes, if it is a mass tragedy you're going to be waiting on a payout as insurers become impacted... but you're going to get your market value or replacement cost.
The decline of economies is obviously a distinctively different type of event, where the investor has some responsibility in understanding economic trends pertaining to their market of choice.
Just as there are many events in the annals of history where gold outperformed real estate, there are many more where real estate has outperformed gold, and on average the national real estate investment market has outperformed gold historically.
Also, one thing a lot of people don't pay attention to: when gold appreciates, it's strongly tied to a devaluation of paper currency. So the dollar value of your bullion or commodity goes up, but the value of the dollar at this time is often proportionally lower. I guess it still beats inflation though, by a bit.
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 a friend who has been assuring me that hyperinflation and skyrocketing gold is right around the corner since I met him when our kids were in preschool. He has reams of statistics and books and articles and experts he has heard.
The kids are now heading into their junior years in high school. He still thinks it's any day now.
To me what is important is the physical:
Gold/Metals
Land/Real Estate
Guns
Access Food/Provisions
In the next economic crisis, all that paper wealth in stocks and bonds will be seized to "bailout" the country. The government, at any time, can call those brokerages and freeze accounts - trading accounts, retirement accounts, etc. Whats the point of having a stock go up 400% over this low interest rate decade and then not be able to sell?
Paper wealth or electronic wealth we be worthless when governments start stealing it. Its the easiest thing to steal.
Stick to physical.
I recommend The Death Of Money by Jim Rickards.
Joe
@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.
What the fed expects, plans and say are all different. They are currently saying how great the economy is while saying they're going to start cutting rates. They stopped selling what little of their balance sheet they planned on because the market was selling off. To me the fed is like a crappy magician. They're trying to distract you with what they say or do with one hand while doing something different in the other but they're doing it right in front of you, most people just don't watch the other hand. They are just an extension of the government these days and are only interested in keeping stocks high with no regard for anything else, which just causes bubbles
To me what is important is the physical:
Gold/Metals
Land/Real Estate
Guns
Access Food/Provisions
In the next economic crisis, all that paper wealth in stocks and bonds will be seized to "bailout" the country. The government, at any time, can call those brokerages and freeze accounts - trading accounts, retirement accounts, etc. Whats the point of having a stock go up 400% over this low interest rate decade and then not be able to sell?
Paper wealth or electronic wealth we be worthless when governments start stealing it. Its the easiest thing to steal.
Stick to physical.
I recommend The Death Of Money by Jim Rickards.
Joe
At the rate we're going this will follow the play book of every other country that has gone down this path. The snowball gets bigger, the government takes all of the retirement accounts to bail out entitlement because people who planned for retirement are greedy and need to help the poor that didn't plan and these steps continue until total collapse under socialism/communism. It would have been much further by now if the government could pass gun laws that have been passed in every other country this happened in. We're being saved by the 2nd amendment (for now) and half the country doesn't even get that.
It does look like Trump bullied the Fed into it. On the other hand he wants to appoint someone who wants to go back to the gold standard to the Fed. I wonder if he even understands the contradiction between asking the feds to lower the interest rate and going back to the gold standard?
People who complaint about dollar losing value doesn't seem to understand their paychecks have also gotten bigger.
I think my wife's Birkins might actually had better returns than my silver/gold