An educated response

W

Walbertross

New Member
Hey guys,
I want to write an educated rebuttal to the statement below. Everyone's ideas are greatly appreciated. I have a few ideas like inflation adjusted stocks, scarcity, industrial and monetary value, test of time. Cheers!

Gold and silver are bad investments because they don't earn.It is purely gambling. If you think the currency will collapse then invest in mining companies never buy the metal because all it does is sit there. Over a long enough period it will always have the same relative value. The stupid thing about the people that harp on about gold and silver do so because they see paper currency as a house of cards that it has no real value and may collapse at any moment. The reality is gold and silver are very similar, while they do have an industrial value most of their value exists on the exact same level as paper money.it has value because people say it has value. If people really want to keep there money safe buy metals that sell at prices based solely on there industrial value like aluminum., but like I said at the start, invest in the mine instead you will earn much more.
 
it is what it is everyone has different personalities and hence the amount of risk they can or cant deal with so really its all personal choice, and when i make a bad one can i go back to the place i made that choice and ask for my money back ?
made plenty of bad ones and every now and then i get lucky :)
 
I agree with a lot of what you say, but I think it depends why you stack PMs. If its for a get rich quick scheme then one could be dissapointed. I think there is a lot of hype which is making a lot of people buy PMs with little notion of a plan. This is evident from the many posts I read here. eBay is both a friend and enemy to buying PMs. It gives an easy place to sell and buy, but it has over-inflated the prices. No wonder some people think PMs are easy with 40% above spot prices.
To my mind history is a good predictor of the future. Silver and Gold have a long tradition of security if you are stacking for the right reasons. Take the hype, scaremongering and get rich quick attitude out of the picture and PMs as part of a diverse portfolio is a wise move. Bet your shirt on it and you will most likely lose it.
 
I would look at the angle. That physical metal in the safe will not change. Yet investing in the miner, they may close the doors or go broke through whatever.

What happens when the miner runs out ? When do you sell. Generally I would say more research and time would need to be invested into a Share holding as opposed to just buying some metal. You take that time and add it as well to the cost base.

What if the miner gets sued, or someone is killed. Unless you knock them out with your 1kg PM Gold Bars you should be OK in this scenario.

Maybe - Have a look at two or three miners, work out what the share price is now, what it was 1 year / 2 year. plus what dividends.

Compare against storage of a PM bar or PM Unallocated. Forget about payments along the way. Add up the numbers who came out ahead. Look at commission on sales etc... every cost.
 
See Bill Gross of PIMCO, the biggest paper asset bug of all time until QE let loose money printing as the goverment's tool for fiscal and economic management.

Bill Gross says only gold and real assets will thrive in fiscal 'ring of fire'
October 2, 2012, 10:58 AM

Gold GG GCZ2 -1.32% elicits black and white responses, the Pimco analysts said. Some investors "have a deep, almost religious conviction that gold is a useless, barbaric relic with no yield," while others "love it" and see it as "the only asset that can offer protection from the coming financial catastrophe" always just around the corner, they said.

"Our views are more nuanced Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies," the analysts said. "We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio."

See: http://blogs.marketwatch.com/thetel...al-assets-will-thrive-in-fiscal-ring-of-fire/
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Also you must realise that it is only in this current generation the gold and silver has been de-monetized. Pretending that it is gold that is the pretender trying to assume the properties of irredeemable fiat currency is completely backwards. It is irredeemable fiat currencies that the governments and central banks work tirelessly at convincing you are suitable replacements for gold and silver. Just have a look in your pocket for the colour of the coins you carry. It is only since 1971 that international trade stopped using currencies redeemable for Gold. We are part of an experiment that has run amok and will end in disaster like Zimbabwe did recently. Like PIMPCO says, paper assets will burn, burn, burn, in a ring of fire. Wait, that was Johnny Cash (h/t southerncross).
 
Walbertross said:
Hey guys,
I want to write an educated rebuttal to the statement below. Everyone's ideas are greatly appreciated. I have a few ideas like inflation adjusted stocks, scarcity, industrial and monetary value, test of time. Cheers!

Gold and silver are bad investments because they don't earn.It is purely gambling. If you think the currency will collapse then invest in mining companies never buy the metal because all it does is sit there. Over a long enough period it will always have the same relative value. The stupid thing about the people that harp on about gold and silver do so because they see paper currency as a house of cards that it has no real value and may collapse at any moment. The reality is gold and silver are very similar, while they do have an industrial value most of their value exists on the exact same level as paper money.it has value because people say it has value. If people really want to keep there money safe buy metals that sell at prices based solely on there industrial value like aluminum., but like I said at the start, invest in the mine instead you will earn much more.
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That critic is a truth and a lie pair.
That's how liars typically operate: try to sell them together with a truth.

See that first bold line? That's the truth.
That was exactly the reason for me to buy silver. I didn't do it for profit in terms of purchasing power (which is the wrong reason), but to avoid losses in terms of purchasing power (that's what a bank account and cash is, due to fiatmoney creation and interest rates manipulation).

See that second bold line? That's the lie.
Silver does not exist on the exact level as paper money, because it's production cost is way higher than cotton+ink and electronic money, where simple addition of a zero already means a tenfold. That means that silvers perceived value on a given moment, cannot be watered like paper currencies, and that is exactly what the 'holy grail' is of any product used as medium of exchange / storage of value, unit of account, in short: money.

Industrial usage is also irrelevant to silvers price trend.
http://www.silverinstitute.org/site/supply-demand/
It wasn't industrial usage tripling that caused the price 3-folding since 2008 and 6-folding since 2001. The industrial demand rose a mere 25% since 2002.
Coins and medals monetary demand, however, 2,74-folded (that's + 174%) since 2002.
Implied Net Investment (ETF's), however, rose from nonexisting to 164 Moz. 2008-2011 alone was a total 500 Moz demand, being a halve entire worlds annual supply.
So it's very clear that monetary demand droves the price, and industrial was just some rumble on the sideline.

Now, why would the usage of silver in monetary roles collapse? What is better out there? Papermoney is a designed-for loss. And a proved loss over the decades. Just compare price trends of existing products we need, with intrest rate on a bank account. It's kept lower by the govts institutions in favor of themselves and the parasiting clubs behind them. Without that, they would fail to parasite. Why would this in the future be different? Will governments cut themselves and their parasiting clubs back to levels of decades ago? Byebye all that regulation / taxes / etc? Lol, since 2008 I saw the exact opposite. They added new agencies galore, they added personell galore, to further interfere with markets.

With silver, you control your worth yourself (by not buying in bogus - caused by shorter term buy&dumpsters - demand based price uptrends). It's your power, your independency, your freedom.
With fiatpapermoney (not redeemable in anything on any moment), you are doomed to passively undergo the theft. You can do nothing except watching powerless.
 
Walbertross said:
Gold and silver are bad investments because they don't earn. It is purely gambling. If you think the currency will collapse then invest in mining companies never buy the metal because all it does is sit there. Over a long enough period it will always have the same relative value. The stupid thing about the people that harp on about gold and silver do so because they see paper currency as a house of cards that it has no real value and may collapse at any moment. The reality is gold and silver are very similar, while they do have an industrial value most of their value exists on the exact same level as paper money.it has value because people say it has value. If people really want to keep there money safe buy metals that sell at prices based solely on there industrial value like aluminum., but like I said at the start, invest in the mine instead you will earn much more.
Click to expand...

This is the crux of the matter as far as I'm concerned. I personally don't use them as investments, but rather as my savings, my store of wealth into the future. Sure I could have currency sitting in a bank account, but I'm really bad at that, I spend it. Gold and Silver however... I look at my stack, I hold a bar, and I. WANT. MORE! It has changed the way that I view my purchases: do I really want that <item> that I will probably either break or discard, or do I want another ounce..? Because of this and this alone I have managed to save more in the last 6 months than in the previous 2 years. I know that this may not be the case for everyone, some people are more disciplined than I, but it works for me and that's what counts.

Also, investing is in a sense, gambling. You are taking a chance on the belief that you either know more about the market (long term investing) or can react faster to any changes (short term investing), than the big players... personally I don't see this as viable for the individual, especially in the case of short term investing. There are whole data centres designed for this, with direct fibre into the stock exchange (for the fractions of a second it will save them), terribly large amounts of processing power, and algorithms written by people who are really good at math! :p
 
Gambling has a crucial difference with speculation: with gambling, there was no risk prior to the act of gambling, with speculation, there was. On the moment someone buys silver, he reacts on the risk of inflation. On the moment someone pulls the lever of a casino slot machine, he just created the risk. He can decide to not pull the lever, and just go away. Speculation is reacting and thus requires insight, gambling is just a random choice, and requires nothing.
 
Pirocco said:
Gambling has a crucial difference with speculation: with gambling, there was no risk prior to the act of gambling, with speculation, there was. On the moment someone buys silver, he reacts on the risk of inflation. On the moment someone pulls the lever of a casino slot machine, he just created the risk. He can decide to not pull the lever, and just go away. Speculation is reacting and thus requires insight, gambling is just a random choice, and requires nothing.
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I suppose that is one view, but IMO it is drawing a very long bow and enters the realms of self-justification. :/
You are assuming silver is only purchased as a risk-free inflation hedge in the absence of other alternatives.
 
Great responses above. Love reading this forum.

There is no gamble keeping your money in fiat... It is a conscious decision to lose value through inflation.

Holding physical is a risk as with any other investment. At best you make capital growth in excess of inflation, at worst you lose more value than holding fiat. However there is a floor to how low the price can go. Stocks on the other hand have no floor price and can (and have) go to 0.

the argument was put forward that physical does not provide an income. This is true. However, many stocks and realestate investments are purely purchased for the purpose of achieving capital growth in line with or greater than inflation also. Some stocks for example pay dividends less than 2%, which is less than the governments inflation target. So even your dividend payment will lose purchasing power each year.... And if it is leveraged, as many stock investors are highly, it will cost you even more still through paying interest for the privilege!
 
The main reason people or Governments do not recommend Gold or Silver as an Investment, is that while it is sitting in a safe not attracting interest and you are not paying any tax is a bad thing, We can't have the masses holding something of value protecting some of their wealth without having to pay tax on that investment until they sell it or retire and pay no tax, we don't want people to give their children a head start in life by passing our gold or silver on to them so they can buy a house without going in to debt for the rest of their lives, that would just be silly!!!!!!

Just my thoughts any way,

Regards

Dags
 
KMGeneral said:
Walbertross said:
Gold and silver are bad investments because they don't earn. It is purely gambling. If you think the currency will collapse then invest in mining companies never buy the metal because all it does is sit there. Over a long enough period it will always have the same relative value. The stupid thing about the people that harp on about gold and silver do so because they see paper currency as a house of cards that it has no real value and may collapse at any moment. The reality is gold and silver are very similar, while they do have an industrial value most of their value exists on the exact same level as paper money.it has value because people say it has value. If people really want to keep there money safe buy metals that sell at prices based solely on there industrial value like aluminum., but like I said at the start, invest in the mine instead you will earn much more.
Click to expand...

This is the crux of the matter as far as I'm concerned. I personally don't use them as investments, but rather as my savings, my store of wealth into the future. Sure I could have currency sitting in a bank account, but I'm really bad at that, I spend it. Gold and Silver however... I look at my stack, I hold a bar, and I. WANT. MORE! It has changed the way that I view my purchases: do I really want that <item> that I will probably either break or discard, or do I want another ounce..? Because of this and this alone I have managed to save more in the last 6 months than in the previous 2 years. I know that this may not be the case for everyone, some people are more disciplined than I, but it works for me and that's what counts.

Also, investing is in a sense, gambling. You are taking a chance on the belief that you either know more about the market (long term investing) or can react faster to any changes (short term investing), than the big players... personally I don't see this as viable for the individual, especially in the case of short term investing. There are whole data centres designed for this, with direct fibre into the stock exchange (for the fractions of a second it will save them), terribly large amounts of processing power, and algorithms written by people who are really good at math! :p
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I'm definitely with you on this. I've never been a good saver at all, but I really enjoy purchasing and making that stack just a little bigger regularly. It works for me too. :)
 
U just say "Gold & silver are bad investments..", crazy talk! They act well as a hedge against inflation, use them to store or increase your buying power. They may not pay dividends, be eaten or lived in but they cost little to store, have not maintence plus are non-perishable. While the supply of fiat increases it self dilutes its own value but when pm is consumed it inflates the price of existing stock & limited consumables will win vs anything as long as it remains useful & until it is totally consumed the value will increase. I think pm's are a great investment.
 
wrcmad said:
Pirocco said:
wrcmad said:
You are assuming silver is only purchased as a risk-free inflation hedge in the absence of other alternatives.
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Did I?
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Pirocco said:
On the moment someone buys silver, he reacts on the risk of inflation.
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^^ IMO, yes. :)
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Where do you read that silver would be a 'risk-free inflation hedge'?
Where do you read that silver is the only inflation hedge?
You have a broad 'reading opinion' over there. :)
I think you are throwing here two risks together as they were one.
1) the risk of price risings (risk of inflation)
2) the risk of paying too much for silver
Those are two different risks that exist aside eachother.
You can buy silver as a hedge against the risk of inflation, and be succesful in doing so (by not paying too much)
You can buy silver as a hedge against the risk of inflation, and fail in doing so (by paying too much)
There are two speculations involved here, not one.
1) the speculation on inflation.
2) the speculation on the silver price.
I hope this helps you. :)
 
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