I will admit that my politics are not the most liberal of politics, and it's not unusual to catch me leaning towards the Republic side of things on occasion. But I have recently been witness to something so... right-wing wacky... that I'm speechless.
Someone I know just received a check from their mother in the amount of $1000. The instructions that attended it were pretty clear: buy silver. Buy silver so that when the hyperinflation hits before Obama's out of office they will have a secret stash.
It was accompanied by Glenn Beck's book Arguing With Idiots.
I learned a long time ago that when the value of the dollar is low, the price of gold/silver goes up - and right now is exactly the wrong time to be buying gold and silver. Apparently this fearful and overly concerned parent hasn't heard that Beck has been fearmongering precious metal sales because he is a spokesman for Goldline International (companies like that are just making it hand over fist), and has been reprimanded for promoting Goldine on TV.
It's weird because until witnessing this, I've had a hard time believing that people actually buy into anything on Fox. It's so outrageous. But they actually do exist...
I don't think the metals craze can be blamed entirely on Fox there. There's tons of advertisements trying to claim that gold and silver are great investments.
I'm personally more worried about deflation than inflation. It's my understanding that even with the extra funds we've created, it still has not replaced the void of dollars that vanished when so many huge banks and corporations went bankrupt. Kind of hard to have inflation when we have less money circulating now than we did earlier.
That, and too many countries and ginormous investors have bought up bunches of precious metals that when they decide to dump their holdings, the value will plummet, crushing the little investors who cannot react as quickly.
For what it is worth, my octogenarian relatives eat Fox News shit up with a spoon. A group of them meet up for lunches every Thursday, and sometimes I get the chance to visit as well. Often times they bemoan politics, and I had the pleasure of hearing this summer how they were all going to be put to death for being too old by Obama's death panels.
It's true. People who watch Fox News are actually less informed and educated about anything happening in the world than people who simply do not watch any news at all.
Gold and silver's prices are always going to be going up regardless of what is happening to the U.S. economy because industry (particularly electronics) is placing a larger demand on the stuff than it did in the past. Assuming that we don't come up with some supermetal in the near-future, which is totally possible.
As long as you separate the 'crash and burn of the U.S. economy' woowoo from the fact that they are increasingly useful metals you can make money off of trading them. But they're just like any other commodity you can trade for; you might as well be speculating with oil.
Most of the crap about gold comes from intentional obfuscation about the fact that not too long ago the U.S. economy used to be based on fractional gold reserves. I mean, the economy of the mightiest nation in the world was once based on gold or so it goes so if you indulge in this nationalist idolatry you'll have a piece of the awesomeness for yourself.
As you have astutely noticed, there is a reason why gold--which is a legitimate commodity, don't get me wrong--gets marketed to a right-wing audience. Partly because most of the major gold fetishists like survivalists, libertarians, and garden-variety gold bugs really like the stuff but also partly because they're taking advantage of the audiences' ignorance in economics. I mean if you believe Reagan saved the economy it's more likely that you'll believe that gold has some mystical economic powers, too.
Josh Kablack wrote:Your freedom to make rulings up on the fly is in direct conflict with my freedom to interact with an internally consistent narrative. Your freedom to run/play a game without needing to understand a complex rule system is in direct conflict with my freedom to play a character whose abilities and flaws function as I intended within that ruleset. Your freedom to add and change rules in the middle of the game is in direct conflict with my ability to understand that rules system before I decided whether or not to join your game.
In short, your entire post is dismissive of not merely my intelligence, but my agency. And I don't mean agency as a player within one of your games, I mean my agency as a person. You do not want me to be informed when I make the fundamental decisions of deciding whether to join your game or buying your rules system.
clikml wrote:I don't think the metals craze can be blamed entirely on Fox there. There's tons of advertisements trying to claim that gold and silver are great investments.
It makes more sense to advertise on Fox News: the audience is properly conditioned and knows dick about economics. Survivalists, too. My great grand-dad fought in the Red Army during the revolution. When sane soldiers took gold, he opted for imperial and Kerensky bills.
Sort of related:
It surprises me how much money gullible people have. I used to work at an "external" call center pretending to be a bank employee. One of the products the bank offered was investing in virtual gold. Once, a guy called and inquired about the product (gold, both physical coins and virtual gold, was quite popular, but that guy was special). I explained the basics: you open an account nominated in kilograms of gold, you don't get to see the metal, you can trade it at the current Central Bank's rates without paying VAT.
"So," he said, "if I buy a kilo of gold for, say, $100 and the price of gold rises to $120, I can sell it for $120".
"Sort of like that, yeah."
"And then I can buy more gold for $100 and sell it for $120 and make profit. Sounds interesting."
OMG he found an infinite loop! Someone give that guy a Nobel.
Anyway, after I explained that no, he hadn't actually haxxored economics, he asked whether the bank offered interest rates for gold accounts. I told him that we did and the minimum deposit amount to qualify for interest was $100000. Turned out he had $500000. In cash.*
*Maybe he sold an apartment. People seriously demand cash payment, even though it eats 1% of the purchase price. As another customer told me after I pointed out the 1% fee, "Who'd be so stupid as to agree to a wire transfer?"
It's entirely possible for gold and silver to lose a lot of value. There's still a lot of the stuff in the ground. When metal prices are high, as they are now, nations and companies are opening up more mines of the stuff. Even on more marginal sites. From Mongolia to South Africa there are mines operating now that are only extracting gold at $700 an once - which is only worth doing because you can turn around and sell it for more than that. As soon as the dollar gets stronger or the speculators stop bidding up gold prices, those extra mines will close - and then they will all have to panic-sell their remaining gold reserves.
This basic cycle actually happened with gold and silver both a couple of times in the twentieth century. Especially silver, because the volumes are so much larger. In 1979, silver had been bid up to $54 dollars an ounce by speculators. This up from $5 an once in 1978, and by late March it was down to $11 an once.
Gold isn't currently as over valued, so it wont slump quite so dramatically. Neither is Silver. But with silver trading at nearly $17 an ounce today hen it was trading at four dollars and fifty cents in 2002, I would not put investment money there in the same way that I wouldn't put my penis into a vagina that was leaking yellow opaque fluid.
FrankTrollman wrote:Gold isn't currently as over valued, so it wont slump quite so dramatically. Neither is Silver. But with silver trading at nearly $17 an ounce today hen it was trading at four dollars and fifty cents in 2002, I would not put investment money there in the same way that I wouldn't put my penis into a vagina that was leaking yellow opaque fluid.
-Username17
So, the lesson is, only invest while wearing a condom...
In all seriousness, I have a coworker who was considering buying gold a year ago or so, and I'm glad he changed his mind.
Maj wrote:Someone I know just received a check from their mother in the amount of $1000. The instructions that attended it were pretty clear: buy silver. Buy silver so that when the hyperinflation hits before Obama's out of office they will have a secret stash.
Although I cannot fathom the link with Obama, let's just assume hyperinflation does hit. That means that cash money (and checks and credit cards etc.) is devalued massively and you need wheelbarrows of the stuff to buy goods.
So if you believe there is a serious chance of such a scenario, the logical thing to do would be to stockpile the goods you would be buying anyway at current prices. If you're right, you save a bundle (literally) and have the option of selling after hyperinflation and if you're wrong, you can just make fewer purchases over the next couple years and use up the goods you already purchased. Due to market fluctuations you may take a loss on the value of your goods here, but as it would presumably be multiple goods, diversification would make it much safer than a single precious metal.
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However, if you go one step further and assume not just hyperinflation, but total economic and political collapse - then not only does your cash become worthless - but it's highly likely that so do your precious metals - There's just no demand for the consumer electronics that require gold electrodes beyond thunderdome. And if you are investing for that sort of scenario: I advise a portfolio of ammunition, water purifcation gear, fuel, medicine and food.
"But transportation issues are social-justice issues. The toll of bad transit policies and worse infrastructure—trains and buses that don’t run well and badly serve low-income neighborhoods, vehicular traffic that pollutes the environment and endangers the lives of cyclists and pedestrians—is borne disproportionately by black and brown communities."
I think the gold thing is partly standard investment bandwagoning. If you brought gold in 2002 you've done quite well for yourself. So naturally with the sharemarket tanking people are looking around for other areas and gold has done well.
In part, I have no doubt crazy is front and centre as well.
Disclaimer: I brought gold a couple of years back and have sold it all on strength and made some money.
Last edited by cthulhu on Thu Dec 24, 2009 1:36 am, edited 1 time in total.
First and foremost, the "Buy Gold" (not Silver) is not really per se the result of Fox, but the result of Fox's sponsors. (Does Fox Sponsors influence what goes on on Fox News? That's an interesting question.)
Given that, the notion to buy silver, is a one off adjustment under the idea that everyone is going crazy over gold so silver is safe.
I just glanced at silver prices 2000-present. Damn if I don't see a general stock pattern; the cost of silver reached a peek in early 2008, dropped like a rock in the fall and still hasn't recovered from the all time high.
THIS IS COMPLETELY THE OPPOSITE FOR GOLD; Gold looks like it overshot the curve in late 2007, corrected in late 2008 and looks like it overshot the curve again in 2009.
Those metals have boom and bust cycles alot like housing.
I'm in contract to buy a house for $162K that was sold earlier this year at 144K (when the type of funding I'm getting wouldn't have been available) but this house sold for $350K in 2007.
Gold has been rising steadily for a decade - today its about 4x its trading price per ounce as it was in 2001. There's inflation in that number since its valued in US dollars, but it's still significant.
In general, investing in precious metals is wise if you expect a world calamity or a decreasing absolute value of your home currency. We've had plenty of both in the US since 2001. The only downward spikes in metals were from the financial crisis and I imagine most of that was from selling during historical highs in order to take advantage of blasted stock prices.
I adore the comments on this thread. I have borrowed Josh and Tzor's for passing along.
There was more to the $1000 check story that I wasn't aware of: If the recipient doesn't believe that it's a good idea, they are to send the check back so the parent can purchase the silver and hold it for the disbeliever for when the economy crashes.
If time is not a factor, just progress in purchasing silver, I suggested looking at garage sales and second hand stores for old silverware and jewelry. One sterling fork weighs about an ounce troy - if you can find one for less than $15, you're making money (unlikely as it seems, my mom just found and bought my sister an old silverware set for around $300, and I've found a silver spoon at Goodwill for $1).
You might want to go with something along the lines of:
Dear Lady,
If, by any chance hyperinflation does strike you, your first and foremost worry in such times will be the same as 99% of all other people in your country, and that is food and water.
Price of stocks will plummet, since naturally, the economy won't be doing the best, and the bonds will likewise be traded for pocket change.
As for the price of precious metals, well, they do have a nasty problem of not beeing eadible. So you will have to sell it first in order to get the money to buy some food. And because 99% of the people will not be buying silver, art, or anything else not eadible, you will have to sell it for a fraction of a value.
I'll give you a few practical advices to living through the inflation. Please try to follow them:
1. If it really starts, quickly identify the foreign money which will informally be used. In case the US central bank starts printing large amounts of money, its worth compared to other currencies will plummet and prices expressed in it will raise astronomically. However, if you quickly find where foreign money could be bought as soon as you receive your monthly paycheck, it will have little to no effect on you.
2. Do not worry about bills, taxes etc. Delay paying as much as you can, since every day will probably mean that the bill you have to pay is worth less. Do not be too worried about the interest rates, hyperinflation will probably eat them. Pay just before getting your telephone, electricity and water cut, if the companies which provide it bother to cut it (since you won't be alone not paying your bills in time, trust me)
3. Buy large amounts of food, and try to pay them later, anyway you can. Even if you can pay by cheque, because, by the time its cashed in and money is withdrawn from your account, it will be worth less anyway.
4. Speaking of account, don't bother with banks. Go with the old German saying which translates to something like "when the times are hard, money is best kept dry (outside of everything, in your home)".
5. If by any chance you have something to invest, well, hyperinflation is the great time to do it! It is not unusual at such hard times for lovely oil paintings worth thousands of dollars to be sold for mere 100! And in case you can use hyperinflation to buy some real estate for next to nothing, you're doing great! Sure, it won't help you right now, but later, later you'll be thankful. Why? Just a moment; I'll explain soon.
6. Reverse of 5 is also true. Do not sell your investments. No matter how difficult your situation seems, no matter if you think you won't see tomorrow, try not to sell your valuable things until the last moment you are absolutely sure your family's life in the next minutes depend on it. Because...
7. Even though every month seems like it lasts forever in a hyperinflation, it will pass. It will pass sooner than people think. And when its over, and people see the world has not ended, it will be a time to stand up, walk out and seriously see the world with different eyes. When you take the newspaper and read them while drinking your morning coffey without thinking what will you eat that day, you will again realize that there are wonderful things in this world that make it worth living - and then you will be thankful for everything you managed to protect during those harsh times. in the end, night only makes dawn shine brighter.
Regards,
Person with some practical experience in the field.
If that many coins passed through my hands, I'd be all over it, Crissa. Whenever I get my hands on large piles of change (laundry quarters, especially), I always dump them out and listen for the old coins. I've found a few, too.
Gold goes up in cost when people are hoarding gold. This happens when people have a lot of wealth but they are afraid of losing it to taxes/inflation/martian attack/whatever soon.
During actual economic crises, anything which cannot be used to survive from day to day or fight zombies is basically worthless. When the shit hit the fan in Iraq, people were willing to pay a bar of gold for a ticket out of the country. Many of them were turned down.
Therefore, if you are afraid that there's going to be a lot of wealth destruction soon, chances are a lot of others will be too, and gold will be going up in cost. So what you should do is sell your gold and buy non-perishable food and supplies like toilet paper and bleach.
