True but a China lead recession for Australia will be like the dairy farmers but to a bigger sector of Australian economy -> resulting in tanking of Australian dollar. Plus I am not talking all my funds it is sub 5% majority are still in high growth shares, with a health sector bias. I am not a believer in one solution fits all, even if there was, I am not that lucky I wouldn't have invested in that.
Also even if PM stabilise at $5 to $15 USD range for the twenty years there is enough volatility to realise big gains (and loses) Though it does seem there are members who advocate being passive and just adding hail rain or shine, I expect that is not the norm. Like me for exsample, I buy coins what I like when I like, but this is hobby which is very different to my PM holdings.
That graph is not granular enough... granted it didn't double, but 1987 was an world wide crash, where everyone was devastated, the China lead recession I believe will be a localised one, ie I cant say it wont effect US and Europe I am sure it will to an extent but a mild blow over just a blip maybe, could even inflationary with the devaluing of the yuan. But conversely a localised Chinese recession will mean - big currency flight to safety -> Big increase in USD curry trade. What does that mean for Australia -> being so dependent on China for all exports be it farming or resources and even the services sectors -> Australian dollar and economy will have a recession that could potentially be worse than china. With Australia dollar tanking. So even if PM spot stayed the same which I dont think it will, at minimum I would expect a 20 to 30% rise in Gold in USD with diverging a 20 to 30% devaluation of the Australian dollar it is a nice little earner. It is all theory, oc course if it did happen, I would be busy shuffling my other assets around, and hopefully in a position with the rise in PM not to crystallise any loses that can occur short term. 1989 $401.00 -2.23% 1988 $410.15 -15.69% 1987 $486.50 24.46% 1986 $390.90 19.54%
Ipv6Ready, Thanks for the sharing and explanation, that's truly awesome to know the history back of Precious Metals May I know how much percentage is the PM consists in your buffer that you suggest now ? Jim Rickards suggest 10% as minimum and 20% of all Gold (not Silver) as the aggresive strategy to buffer yourself from the recession.
If you have any debt then pay that down first before you invest in metal. If SHFT and/or another GFC style event, then those without any debt will be the winners whether they have PM's or not. Having metal is like having cash, and you shouldn't be sitting on much cash when you could use that to pay down your debt.
And what exactly does that figure and the 10% of Richards et.al actually mean? Is it % of your spare cash, or % of your total wealth? e.g. if you own 1M in assets (house+shares+cash+metal+whatever), should you really have $500k of that wealth in metal?
Totally agree pay off "bad" debt first like credit card and personal loans. As for Internet commentators suggesting 10% or 20% in metals without knowing specific details about your circumstance are snake oil doctors. Say you accumulated $10,000 in silver and gold. But you had $10,000 credit debt paying 20% that means PM needs to double in spot if the next major recession is five years from now. Remember that a recession that only concerns Australia will not move $US spot prices, any movement will be currency related.
SilverDJ, I do have some mortgage in the form of property investment. The reason I am started to invest in PM's is because I have just read Jim Rickard's book to diversify the risk before the recession hits. I am now still trying to learn stock / options as well that is related to Gold.
Metals stocks have had a big recovery recently, so you have missed a lot of action there after they all hit rock bottom about a year ago. But there is still plenty of upside in mining stocks, and they might be the only ones to do well or hold during any major stock market crash. Much talk about these on the stock section of the forum.
Best advice I've read is "be your own central bank". If you hedge your debt with gold you're covered for the advantage of inflation upon your debt, and of deflation on your assets - in my view.
I believe their standard suggestion is ~10% of your investable money. Personally, mine is much higher than that but I have no debt at all so it isn't money I could be otherwise using for that. I agree that everything, except potentially mortgage debt, should be paid off before investing in metals heavily. I think if you buy a bit here and there as a hobby that's a bit different but getting rid of debt would be more important than buying an asset class that is volatile, even if that is to the upside at the moment.
I've considered this possibility and wondering if it might be worth being in debt. My concern comes from the banks, who are likely to jack interest rates up even though the RBA might be staying low. As evidenced by the last cut, banks actually raised some rates (on term deposits) even though the RBA went down. If anyone was seriously thinking about going this way, it would absolutely have to be fixed interest and even then, read the fine print to make sure it's not just for a couple years and/or the banks can't renege on the interest rate or call in the loan in a severe inflation scenario. I'm actually expecting the spread on bank borrowing/lending rates to widen as things get worse. Justification will be that they need to cover the growing costs of bad debts.
I believe that the bubble we are in, is complete and total. I.e Every asset is included in that bubble. All the currency that is being 'injected' into the system just makes it very hard to know when the bubble will burst. I can see a scenario where gold goes to 10,000, but I can also see a scenario where it goes back to historical levels like $200. Deflation will come first, and later inflation. There will be lots of currency available on offer to those that judge it right, and much lots by those who don't. That's my two cents worth, which i believe to be worth a lot
OK, do you guys think that we should be able to buy Gold next week before 30th September ? As per this prediction, Gold price will be bullish to the higher level: http://pro.agorafinancial.com/AWN_dollarreset_0716/EAWNS9AK
JIf trump wins I think gold will jump too, because of uncertainty. I think its a fair possibility he will win, too.
