Best opportunity is to invest in physical silver and gold, as the euro (and by extension the dollar) will not be able to hold their value as the printing presses run ever faster...
Seriously, all the commodities guys are. If you look at gold/silver demand guess what the major determinant is - OH YEAH - JEWELLERY! You know the stuff people buy when veblen goods are popular (i.e. a strong world economy).
Your baubles are worth nothing if the 2 largest economies go down.
Everyone dumped emerging markets, the euro and stocks to buy dollars and treasuries (flight to quality during high vol.).
Not because anything drastically changed, but because of the beauty contest dynamic in markets. You predict what others may predict to happen in the short term and act accordingly.
Go buy yourself a gun, food, and some survival training if that is your position. You can't eat gold. You can't live in silver. And you most certainly can't sell it when everything goes down.
Notice the graph and its constituents. Gold/Silver guys mock us fiat currency types (i.e. everyone) when they themselves are trading the same trust based tulips as the rest of us.
Everything you trade is based on trust, and trust is, and always will be, a bet on the future being better.
Gold/Silver is a bet for the world getting better, not worse.
You can't invest in the end of the world. You can merely prepare for it.
You certainly sound ferociously biased. In another comment, you implied you're making huge trades, so it's not very surprising.
> You can't eat gold. You can't live in silver. And you most certainly can't sell it when everything goes down.
Hyperinflation in Zimbabwe ring a bell? They sure didn't seem to mind that you can't eat gold, and just went ahead and exchanged it for food instead: https://www.youtube.com/watch?v=8HD0NWRSEjU
Your dismissal of gold as "baubles" doesn't change the fact that it does seem to work as a medium of exchange, even in a situation where a fiat currency no longer doesn't.
Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust.
> Well seeing as my tbills represent the future output of the world's largest economies
Your T-Bills are IOU's from one of the world's largest economies, and guess what? -Those are based on trust too.
> Money moves to safety during times of high vol. People think money moves to gold, when in fact it moves to the highest quality bonds and currency.
Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds.
But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange.
Government bonds in general have been thought of as a safe investment, but Greece's bonds are government bonds too. Care to buy some?
I trade large currency/bond markets, not the relatively small markets like gold. I was making a point. I can't make people do things, the market is way too big (just ask the Bank of England!). Gold huggers can. Hence why I stated:
> Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions.
Yeah you're picking and choosing your examples there. I only talked about super clusters (euro/dollar/yen/yuan/rupee), not POS countries in Africa that have 0 impact on global markets, as they aren't connected, or correlated. Care to read my other comments, they indicate when hyperinflation occurs:
> Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.
Sounds like Zimbabwe now then doesn't it?
Barter > Gold. Barter is the normal medium of exchange. It scales nicely in the developing world, where things are slow, and people are poor. Gold is a POS medium of exchange for the exact reasons gold huggers love it. There isn't enough of it to do anything with. It's nothing but shiny baubles for the uncritically thinking. Why not diamonds? They're just as rare, just as hard to handle? Why not cacoa beans? Or platinum? Or terbium? HUH!
> Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust.
Yeah that's the point. Your gold has no use in a developing country, despite what you think. People trade in dollars for a reason.
> Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds.
The US has the fastest nukes, the best standing military and one of the greatest economies.
> But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange.
Nothing is safer than the US government.
And do you know why?
Because if the US government isn't safe, well then, none of this matters. The US is a conduit for massive capital. It exports huge amounts of goods and services, and consumes far more. You want to bet on the end of the US? You can't, because that bet is the exact same as the one for the end of the world. You cannot invest for catastrophe. Merely depression!
Buy gold all you want. Your bet, if you look at it closely, is exactly the same as mine.
"Not.. sure.. if intentionally obtuse, or just messing with me.."
> Yeah you're picking and choosing your examples there.
Ah yes, the classic "cherry-picking" -accusation. Always a good distraction.
You said:
>> Your baubles are worth nothing if the 2 largest economies go down.
>> You can't eat gold.
I pointed out that gold was actually "worth" food in Zimbabwe, and that therefore it was unnecessary to try and subsist on it. Gold has been used as a medium of exchange for ages, and it's still useable in that capacity. It doesn't really matter why, as long as you can trade in it.
You claim that if one "super centre" goes down, all others will follow. That may be true, but it's just as possible that all super centres going down would not affect gold's useability as a medium of exchange. For example, all those piece of shit backwaters outside of your super centres may just happily continue trading in gold and whatever other currencies they happen to use.
It's also possible that all other super centres would not fall in a chain reaction.
> Barter is the normal medium of exchange.
No. Barter is a method of exchange. Gold is a medium of exchange.
Here's how barter works:
Let's say you have 10 apples, and you meet some other guy with 10 oranges. You feel like eating an orange might be fun for a change, so you suggest a trade with him. He figures he could use some apples too, and so, he accepts some apples in exchange for his oranges. You both walk away munching on your newly acquired fruity loot, and there is much rejoicing.
Now, if for some reason you don't feel like eating oranges at the time, but feel like making a trade, then a medium of exchange is necessary. You want to exchange your apples for something that you can later exchange for something other than oranges. So, the guy with the oranges needs to give you a few apples' worth of "money" - be it gold or dollars, or whatever medium of exchange you trust enough. You might even accept cocoa beans, if you believe you can exchange them for something you want later on.
OK, I suppose you get the idea, but let me know if there was a part you didn't understand.
> Your gold has no use in a developing country, despite what you think. People trade in dollars for a reason.
I'm sure we all understand that physical gold is just pretty fucking inconvenient as a medium of exchange when you want to deal with someone who's not standing right in front of you, because it can't be converted into ones and zeroes and zapped across the world. But that is completely irrelevant to gold's "worth" as long as you can, in fact, exchange gold for things of value.
On the other hand, you need to consider the possibility that fiat currencies may actually end up dying, if taken over by de-centralized, cryptographic currencies like Bitcoin. That would be a welcome change, in fact.
> But gold huggers work on a small market, and it is their incentive for others to buy into this farce. Take from that what you will (reminds me of pump and dump and the tulip mania).
You're thinking like someone used to the idea of manipulating markets to their benefit, much like a Wall Street trader might. Do you think that gold's exponential rise in the past few years just might have something to do with the on-going disaster that the world woke up to in 2008? http://www.usagold.com/reference/prices/2012jangoldprice.jpg .. or is it just "gold-huggers" working their evil schemes pumping up the price, in a time where the vast majority of investors are completely oblivious to gold as an investment or even a store of value?
Do you think that the prices of gold in various fiat currencies might actually reflect the their perceived trustworthiness as mediums of exchange?
> Nothing is safer than the US government.
Right, and the fact that your nation's external debt is more than 100% of your GDP, and currently increasing at 1.5 trillion dollars per year does not affect the trustworthiness of your IOUs? Just like it doesn't matter that various US states and municipalities are bankrupt?
> Because if the US government isn't safe, well then, none of this matters.
There are other countries out there you know. No one knows what will/would happen if the US went down in flames. But it might also not be the end of the world.
> The US is a conduit for massive capital. It exports huge amounts of goods and services, and consumes far more.
Its main export seems to be global economic calamity. I'm not sure if iDevices count as US or Chinese exports.
Most of the "assets" sloshing around the globe are of imaginary value. Debt sliced and diced into various financial instruments, etc. Bullshit, pretty much. Tens of trillions of dollars "worth" of bullshit. Again, no one knows what will happen in the world's economy, but I'm sure we could do with less bullshit.
> It's just that you don't know what you're doing.
Well what exactly am I doing? Besides, you know, educating you? :p
Well seeing as my tbills represent the future output of the world's largest economies, and one of the greatest consumers of veblen goods (which includes most of the demand for your commodities), you and I aren't so different. We bet the same.
But you have no idea what you're doing.
I merely wish to point out that you can't bet for the end of the world. You can merely prepare for it.
I can short the end of the world; as long as there is enough time between when I profit and when I cash that profit out into something that will provide me with long term value (house, etc).
For this argument, I define value as providing ME something, not value that can be traded.
Not really. You make a tonne of assumptions stating that gold will be better than paper. You assume rule of law, efficient markets, a government that will protect your assets, a place where you can spend your gains. etc. etc.
Reports of paper money's death have been greatly exaggerated.
Floating paper is here to stay people. If the world falls apart, all that matters is guns, food, water and shelter.
Your baubles are worthless without the society to back it up. And since we move trillions across nations everyday, I'm going to go ahead and say the world trade markets are synced up and highly correlated/dependent. If one super centre goes down, so does everyone else.
We live in one world now, people just don't know it yet.
>You assume rule of law, efficient markets, a government that will protect your assets, a place where you can spend your gains. etc. etc.
It sounds like you equate a hyperinflation scenario with a complete societal breakdown. That isn't necessarily the case.
>Reports of paper money's death have been greatly exaggerated.
Paper money as a tool will never die because it's convenient. Individual currencies, however, have and will. This is historical fact.
>Your baubles are worthless without the society to back it up.
Of course, but currencies collapse more commonly than societies. Value stored in commodities can be recovered. Currency value killed by hyperinflation can't.
Hyperinflation in a super centre will lead to societal meltdown, massive change in rule of law, and a massive reallocation in assets. I wouldn't be surprised if we had a revolution on our hands.
Those countries you speak of were when the markets weren't tied to each other and weren't highly correlated/dependent (1700-1960s). This was due to flux in global geopol structure where the countries didn't have much to do with each other.
Tell me the last time a developed nation got hyperinflation.
Stick your money in uncorrelated risky countries, and you take the yield, but you take the risk of hyperinflation.
>Hyperinflation in a super centre will lead to societal meltdown, massive change in rule of law, and a massive reallocation in assets.
What's a "super centre"?
>Those countries you speak of were when the markets weren't tied to each other and weren't highly correlated/dependent (1700-1960s). Tell me the last time a developed nation got hyperinflation.
Argentina (ended 1991) and Yogoslavia (ended 1994).
You have a country that went under massive transformation and another under the thumb of dictators. Two risky countries. Two high yields. Two cases of hyperinflation. Just like I said.
Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.
Obviously the next comparison will be with the largest and most stable economies the world has ever seen, moving the largest quantities of wealth it has ever seen. Not.
Super centres are where the majority of cash moves through, either for trade or as an intermediary. Eurozone, Japan, China, America, India. Those are the places that matter.
Some small POS country in South America and another in Eastern Europe are rounding errors. Hyperinflation is only a concern for relatively risky, isolationist countries that are still undergoing societal flux.
Once again, the reports of paper money's death have been greatly exaggerated - ESPECIALLY by those who stand to benefit from it - long gold/silver etc.
>Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.
The western world may be headed for upheaval. Globalization and technological progress are making western labor redundant and the economic center of gravity may eventually move to the East.
Transformation brings uncertainty. Paper money will always remain as a tool, but when global orders change, as they have throughout history, individual currencies may be casualties.
Thanks for the reply. Interesting, I thought (speaking roughly here) entities put money in gold during high volatility - times where its hard to find stable bonds and currency. Thinking about it, perhaps that last condition is rarely the case.
So why the "flight to gold" that is spoken of in the media?
Same reason puppies and natural disasters are in the news.
It sells papers and ads - it's link baiting in real life.
You need to look at the incentives of parties before you take their word. My incentive is obviously for people to buy dollars and treasuries, but guess what, everyone does that every day of the week (business/buying/stocks/retirement accounts). So I don't really care what gold huggers think.
But gold huggers work on a small market, and it is their incentive for others to buy into this farce. Take from that what you will (reminds me of pump and dump and the tulip mania).
Don't believe what I say, go figure stuff out for yourself. Everyone is biased.
Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions.
My point was that if you bet on commodities, you bet for increased production, and increased consumption of scarce resources.
Not the end of the world.
It's no different from buying the stock of companies that sell the goods the commodities are composed of (since they demand those commodities and in turn set their prices in the market via demand).
The bonds Greece/Spain/Portugal hold and are defaulting on were largely purchased by German and French banks. These banks turned around and hedged the default risk with US banks. When the defaults occur (or if...they could choose to inflate to the moon or call the default by another name), the German banks will go to their US Bank counter parties asking to be made whole en mass. US banks will be unable to cover this pay out (unless the fed steps in with truly massive amounts of capital) and have no real reason to do so...
What we saw in the US housing crisis is now playing out on a scale of nations.
