World in Crisis??

Question

Are we as a world going to survive this current economic crisis?  Will all this turmoil lead to more declines and eventually Anarchy??  Share your opinions.

Rich Weese · Answer

Hi Jack.
    Just a followup to gold and silver. I don't know what the premium is on junk silver, and gold eagles in 1/10,1/5, 1/2 and 1 oz. I do know that my junk silver half dollar will be at least worth $.50. I don't know what my paper $100 bill will be worth.  I like having small denominations. These aren't going to be for buying properties. They'll be for trading for commodities, like SOAP, seasonings etc, if we ever get that bad.

Jack Ryan · Answer

Rich - good point, it is much more advantageous if the debt was used to purchase real assets then say a bottle of Louis XIII at the night club. :) Of course all dollar denominated debt would still be less relative to your earning power.

Jack Ryan · Answer

You guys are correct, but the problem is it just depends.

1. Right now platinum / gold coins are difficult to trade because they are hard to move and floating will over $100 over spot.  However there is some speculation that the paper gold markets may dislocate due to the lack of underlying physical supporting these markets.  India has already went through this scenario.

2. Deflation - Yup, we are going through a huge deflationary crunch right now.  Having debt in deflation is bad.  However Bernanke has repeatedly said he will do whatever it takes to fight deflation.  >IF< this includes currency debasement (which he stated is an option), this can cause hyper-inflation.  In a hyper-inflationary environment you would want to leverage up to your eyeballs in debt.

:wink:

Rich Weese · Answer

Jack, don't you need to differentiate between types of debt. Consumer and installment debt would not be helped in inflation much, while real estate debt would benefit greatly, just as it did in 70's for me. Great times!! My young wife in those days complained about milk going up a few cents a gallon. I told her to be happy!! That meant all our real estate was increasing in value and our net worth was doubling really fast. Rules of 72 my friend..

Rich Weese · Answer

couple responses to thread.
Platinum is not a tradeable commodity, like junk silver or small gold coins. 
Debt is horrible at worst, palatable at best. Depends on what kind; installment, consumer, or investment debt-makes a dif imo.
Most people not only don't have the reserves I listed, but here is the bad news. Approximately 1/3 of Americans have a NEGATIVE net worth. Take away their home equity, and it rises to 2/3 of all Americans have Neg nw. As home prices continue to drop, the 2/3 # continues to rise. Govt. can't and won't fix that, only us.

Dave P. · Answer

Jack,

I'm no economist, but I believe that deflationary concerns are valid, in which case debt would be horrible.

Jack Ryan · Answer

Debt is not a bad thing if we enter into a hyper inflationary environment.  The question is:

1. How bad is deflation
2. What is the FED gonna do about it?
3. Will the FED's actions trigger hyper-inflation

It's a very difficult subject to predict.

I have 5500rds of ammunition, a decent amount of platinum, but I will not get into gold until sub $600/oz, and especially not with a $100 over spot price for eagles...

Jon Holdman · Answer

OTOH, the two later bear markets turned around at those low points.   This time wasn't nearly as quick as in the great depression.  What's it mean?  Beat's me.

Jack Ryan · Answer

I think it's too early for gold, we're still in the deflationary process of this nightmare.  Platinum might be more reasonable play as I think it's a bit oversold, although with auto-demand dropping demand for platinum will continue to decline.  Whether or not the USD will debase faster than platinum decline remains to be seen....

Rich Weese · Answer

gold, silver, cash, food and water to start. Free and clear properties and no debt. This situation would make you feel comfortable.