I read somewhere yesterday and also somewhere here on SS today about the possibility of the RBA wanting to devalue the Aussie dollar.
It got me to thinking that in effect all we are doing by stacking is buying U.S dollars , but then I also wonder that if that is the case then buying bullion is a no fail way of doing it at the moment.
Here's my reasoning.
Aussie dollar is high = Silver/Gold purchase is comparatively low in both price and U.S dollars. $1000 Au in gold or silver = $1000 + X in $U.S.
Aussie dollar drops back to $0.75 compared to U.S currency means that the previous bullion purchase is worth 25% more in $AU.
So am I right in thinking that if the global economy crashes and the U.S dollar is no longer seen as a safe haven for investment the price of bullion will still be a better bet than buying the actual currency of either the AU or US dollar ?
I am looking at this from the point of view that even if in a deflation scenario where all physical assets are devalued on account of currency issues that even then gold or silver will still be seen as a safer hedge compared to fiat if not more so, or on the flip side in the case of inflation bullion will keep pace with fiat value.
Where is the catch ?
The only downside I can see on the face of it is that prices plummet along with everything else in a crisis but they will never fall below the cost of production unlike shares or be arbitrarily devalued like a currency. That and the case for you wont lose unless you need to sell.
Am I missing something here? Just locally if I invested in the safe bet of real estate where I live five years ago I would be $100 K down on the median price at least as opposed to the gains in precious metals.
Another point I like to look at is the case for liquidation, I couldn't very well sell just a part of my house if I bought one to fund something else or take a holiday without redrawing on my loan and/or paying the extra interest. Or sell part of my business without sacrificing a proportionate part of the income and both circumstances would be reliant upon the market at the time along with many other influences.
Again, am I missing something ?
I know a lot is to do with personal circumstances, renting as opposed to buying and interest rates etc, Short term or long term investments on the share market or risk etc but overall if given the gift of hindsight, for maximum security as the first priority and medium to long term gain and investment as a second priority where would you have placed your hard earned dollars ? Liquidity being an important third but probably inapplicable to people who have purchased a property as a home rather than an investment.
I am really curious as to others opinions on this aspect of buying PM's. Are we just buying pseudo U.S dollars given the current standing of a global reserve currency or is there a benefit that is to be realised longer term?
Is there a potential large loss to be made compared to a safer investment?
It got me to thinking that in effect all we are doing by stacking is buying U.S dollars , but then I also wonder that if that is the case then buying bullion is a no fail way of doing it at the moment.
Here's my reasoning.
Aussie dollar is high = Silver/Gold purchase is comparatively low in both price and U.S dollars. $1000 Au in gold or silver = $1000 + X in $U.S.
Aussie dollar drops back to $0.75 compared to U.S currency means that the previous bullion purchase is worth 25% more in $AU.
So am I right in thinking that if the global economy crashes and the U.S dollar is no longer seen as a safe haven for investment the price of bullion will still be a better bet than buying the actual currency of either the AU or US dollar ?
I am looking at this from the point of view that even if in a deflation scenario where all physical assets are devalued on account of currency issues that even then gold or silver will still be seen as a safer hedge compared to fiat if not more so, or on the flip side in the case of inflation bullion will keep pace with fiat value.
Where is the catch ?
The only downside I can see on the face of it is that prices plummet along with everything else in a crisis but they will never fall below the cost of production unlike shares or be arbitrarily devalued like a currency. That and the case for you wont lose unless you need to sell.
Am I missing something here? Just locally if I invested in the safe bet of real estate where I live five years ago I would be $100 K down on the median price at least as opposed to the gains in precious metals.
Another point I like to look at is the case for liquidation, I couldn't very well sell just a part of my house if I bought one to fund something else or take a holiday without redrawing on my loan and/or paying the extra interest. Or sell part of my business without sacrificing a proportionate part of the income and both circumstances would be reliant upon the market at the time along with many other influences.
Again, am I missing something ?
I know a lot is to do with personal circumstances, renting as opposed to buying and interest rates etc, Short term or long term investments on the share market or risk etc but overall if given the gift of hindsight, for maximum security as the first priority and medium to long term gain and investment as a second priority where would you have placed your hard earned dollars ? Liquidity being an important third but probably inapplicable to people who have purchased a property as a home rather than an investment.
I am really curious as to others opinions on this aspect of buying PM's. Are we just buying pseudo U.S dollars given the current standing of a global reserve currency or is there a benefit that is to be realised longer term?
Is there a potential large loss to be made compared to a safer investment?
