There are many reasons to stack and for me, it only took one. I would invite anyone here to poke holes or propose alternatives for my reasoning. It's a good sanity check for me, so your help is much appreciated. The pillar of my reasoning is that there must be a consequence of inflating the currency supply to infinity and beyond. I believe this to be inflation. Whether its mild or hyper inflation, the fact is my currency won't buy as much tomorrow, as it does today. This issue leads me to search for a solution and I think its Gold and Silver. I am buying these metals not to get rich, but to preserve my buying power. If Gold gets to $10,000 or silver $1000 per ounce (crazy I know), that's all great but I think the economics at that time would also mean $200 milk and $100 loaves of bread. I would like to be able to buy bread and milk for my family. So in summary my reasoning is: Printing > Inflation > Robs buying power > Bad for everyone Printing > Buy Gold & Silver > Inflation > Preserved buying power > Not so bad for me (not sure about others) Thoughts?
What is the price of silver now, and this time last year? What is the price of milk now, and this time last year? I think you'll find your purchasing power has decreased.
April 2011 an oz of silver would buy about 40 litres of unleaded. April 2013 an oz of silver will buy you about 20 litres of unleaded and one Balfours pie.
Ok try this: Stack 1 oz of silver for a year Stack 10 cartons of milk for a year Then tell me which one preserved value.
One thing to keep in mind is this: Never before in history has their been 'digital currency' or so much digital debt so we can not be sure what that will do to the price. Historically when printing a lot of fiat currency and driving inflation up gold and silver would normally balance its self out. Imagine in history a government printing a trillion dollars a day, quickly the people would be flooded with paper money and the price of goods would go up but perhaps because it is digital this does not seem to be happening as quickly. From what we know by looking the past we should be able to see what is going to happen very quickly with this amount of money being generated and that is that the fiat currency will kill its self and Gold and Silver will be the victors but bringing this digital aspect into the mix seems to have slowed that process. Long term I think it will balance its self out and the price will sky rocket but I think it will happen over a longer period this time.
^^^^bonds will need to be paid back with interest How will they pay back the bonds with interest once inflation sky-rockets? The US is screwed!
I can't see how the US cannot default on Treasuries, most of them have short term maturities and in the next year or so, 5 or 6 trillion bucks is due. The only thing the US can do is borrow to pay for those due treasuries. It's madness.
Also the Australian Federal Reserve isnt printing to infinty, its the US, EU, Japan federal banks that are doing this. Therefor Gold and Silver priced in Aussie dollars isnt going to preserve wealth as much as it would in purchased with US, Euro, Yen. If these currencies inflate and the price of Gold / Silver rises against them, its got nothing to do with the Aussie Dollar which will not see this "increase"
^^^ Except, if the Aussie dollar stays strong, you might be able to pick-up some cheap silver or gold on overseas ebay.
The Australian Reserve bank isn't an entity governed by it's self like the US treasury is, is it? So the Australian reserve can't do the sneaky deals like the US treasury does.
What if, hypomathematically, ( Ronnie ) Next year Coles and Woolies start smashing each other with $1 oz's....
Proof of the pudding is in the eating. If it hasn't happened by now...it'll never happen. Here we are 5 years (that's half a decade) since the GFC that should've started the cards tumbling and nothing has changed. TPTB can keep this charade going for decades into a long slow wind down like the Japanese economy. You'll be saving and investing in PM's but missing out on the good things in life. The crunch will come eventually...but you'll be too old to enjoy the wealth and economic security a bubble in PM's will bring.
My thinking about investing in metal is more that the AUD wont retain it's "Hard As" status for ever and when it falls I'll hopefully preserve some wealth. Also it diversifies my savings...
