Why Gold if Deflation is the Threat

[Marek]

Re: Why Gold if Deflation is the Threat

I don't recall that, in any of the countries listed by Metalman, the only citizenry to survived were those who used their stash of guns and ammunition to kill their less-armed neighbors.

I am fascinated by the persistent notion here and elsewhere that any socio-economic dislocation in the US will trigger gunfire for survival. There is no modern precedent in the US or other developed country for such events. Even in New Orleans during Katrina (our best yet test of 21st Century America's reaction to social crisis) there was little of that behavior and much of it at the hands of Blackwater. This would make a great topic for a sociology thesis; "Why Americans Assume They Will Have To Shoot Thine Neighbor In Crisis".

I don't want to believe that the only thing that keeps Americans from killing each other is cash flow.

[karim0028]

Re: Why Gold if Deflation is the Threat

I was thinking more of a difference between the paper price of gold and what you could actually buy physical gold for.

I honestly dont understand that "shortage" issue.... I've only seen it in the US... Around the time there were "shortages" here in the states i go over to Egypt or Dubai and i could find any gold i wanted to buy.....

[Kadriana]

Re: Why Gold if Deflation is the Threat

I honestly dont understand that "shortage" issue.... I've only seen it in the US... Around the time there were "shortages" here in the states i go over to Egypt or Dubai and i could find any gold i wanted to buy.....

We do have a bit of a history with self made shortages in this country. Look at our current amo shortage. My favorite was when there was a rice shortage and people who don't even eat rice were going out and buying 20 lb. bags.

[MarkL]

Re: Why Gold if Deflation is the Threat

Don't you also run the risk of not being able to buy gold in a deflationary market? It's kind of a given that inflation will happen eventually and if you had gold, why would you sell it for $800 when you're expecting the price to rise?

Two reasons:
1. Because you were forced to. Eating, keeping one's house, having gas in the tank, being able to get to work, being able to buy the necessities of life... can all force one to sell assets that will someday go up in value.

2. Trying to beat the market. Even if you believe that inflation "will happen eventually" if you think there's 6 more months of downside, you may try to get out, so you can get back in more cheaply... or even short.

[jk]

Re: Why Gold if Deflation is the Threat

jk, Hard assets are the only way to get your capital across the bridge of currency chaos and the changing of the guard of reserve currency stewardship. And PMs are the most convenient way to hold hard assets.

i agree, that's why i'm about 33% in pm's myself. my point was to question the thesis implicit in the question which names this thread: "why gold if deflation is the threat." as if someone could - in the absence of being foolish - be sure enough to be comfortably sitting, long- or even intermediate- term, 100% in long bonds, certain of the "deflation" to come. i was saying, implicitly, that it's a foolish question. it is unanswerable because there is no certainty. thus my recommendation: deploy assets probabilistically and stop trying to find certainty.

[MarkL]

Re: Why Gold if Deflation is the Threat

I honestly dont understand that "shortage" issue.... I've only seen it in the US... Around the time there were "shortages" here in the states i go over to Egypt or Dubai and i could find any gold i wanted to buy.....

Customs restrictions, transportation costs and carrying costs can cause regional shortages.

ETFs and others are trying to change this for investors but are having difficulty because:
--1: Emulating a physical market in the virtual investment world takes skill and includes risk that must be compensated for.
--2: Certain entities don't like the fact that ETFs are reducing their ability to predict and/or manipulate the markets.
--3: The SEC is currently complaining about exposing private individuals (who may not be savvy) to the risks of ETFs, particulalry the leveraged ones. Wells Fargo has recently shut down all trading in leveraged ETFs, and eliminated margin trading on all ETFs and PM Options.