I know people out there who have invested a lot in gold under the belief that in the event of like complete societal collapse or hyperinflation, they could use it for purchasing.
I have the hunch it’s a scam, but I haven’t learned enough monetary theory, business, or economics to understand why.
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When the world collapses, nobody’s going to care about gold.
Stock up on bottlecaps instead.
As a person who has an abnormal number of bottlecaps for hobby reasons, thank you for making me feel rich! Also, why would anyone else want these?
I think they’re referencing the game Fallout where bottlecaps are used as currency
It’s almost certainly a joke but bottlecaps in a post civilization society would make a pretty decent currency, more so than gold.
They’re light, easy to carry, hard to reproduce and therefore scarce. They’re also useless for anything else. So if you happened to have a lot of caps laying around they might find their way to becoming a currency.
Gold is heavy, requires a lot of work to make it useful as a standard, and has other practical uses. Caps are actually better.
Yeah but making them isn’t complicated just medieval smelting is needed which is basically the iron ages
It’s the crimping and the precision shape that’s hard to replicate, you need a press.
And that would be doable, realistically. Though there’s a bit of plastic on the bottom that would be quite difficult to replicate.
The point is they’re only useful as a currency. And really only to a society that can’t really make much. If society advances again to the point where a used bottlecap can be replicated, other systems will already have been established to make it less attractive.
We homebrewers will be the thousandaires of the end times!
Well, for one thing, the supply of googly eyes will run out and you will have to adapt.
You’re forgetting the crows that like shiny things
If you don’t hold it, you don’t own it.
Investing in gold someone else holds is silly. Having a few ounces stashed away is just illiquid asset that should be a hedge against inflation.
You can have liquid, premium-free gold by buying an ETF/ETC. Whether you hold it or not is irrelevant in case of hyperinflation. Stashing it away may be useful only if you like to touch it I guess
Executive Order 6102
If it can be taken from you with the stroke of a pen, then it isn’t yours. Gold financial products are useful speculative assets but not for calamity insurance.
ETFs may be useless in case of a calamity (in that case I’d stash bullets and canned food, not gold) but they’re useful for hyperinflation scenarios because the financial system keeps working. See Turkey and Argentina
I think what they’re saying is that in a hyperinflation scenario, it is an option for the government to seize the physical gold backing the financial products people hold in order to continue paying to run the government now that fiat is worthless and they are having trouble with that.
Gold you have buried in your basement, they will have to work a little harder to get.
I understand but inflation is actually good for the debt of governments since there’s a surplus of money (they pay on the nominal value) so it’s unlikely they’d have to scrap personal gold in order to function.
Anyway that’s just my two cents and I may be totally wrong. I’m not an economist
I looked up some stuff about Argentina’s financial crisis since you mentioned it before, and it looks like they actually did something a bit like what I’m talking about, directly appropriating the valuable assets they could in an effort to keep being able to function:
In addition to the corralito, the Ministry of Economy dictated the pesificación; all bank accounts denominated in dollars would be converted to pesos at an official rate. Deposits would be converted at 1.40 ARS per dollar and debt was converted on 1 to 1 basis.[69]
There’s some indication that this also applied to financial products:
As noted above, a number of U.S. investors have filed ICSID arbitration claims against the government of Argentina. Most of these investors consider the January 2002 pesification of dollar-denominated contracts, and/or the ex post facto prohibition on contracts linked to foreign inflation indices, to be an effective expropriation of their investments
I can’t specifically confirm this included gold held on paper, but I think it probably would have.
As for the plausibility of this sort of thing happening in the US, in addition to the actions of Roosevelt mentioned by @diablexical@sh.itjust.works, the main trigger for Nixon abandoning the gold convertibility of US dollars was France attempting to physically withdraw the gold they had stored in US banks, which they didn’t want to allow.
Thank you for your clarification, very informative
Well, you can.
If you invest in gold that is not physically in your posession, then yes.
If society breaks down, who is going to honor that piece of paper that claims you own gold in some banks vault? You don’t even know where that gold actually is…
I am not sure how useful owning the actual precious metals would be in a societal collapse. It’s going to lose value quickly. It would take probably 5-10 years before some rich rober baron decides to make a market for it where it gets a decent trade value again. An Oz of gold is going to mean a lot less to me than box of bullets or some chickens, unless I can find someone to give me a ton of that stuff in trade before my family starves I am going to take the chickens.
Much more useful in a hyper inflation scenario.
In a societal collapse, it will be rather worthless, yes. But in an economic collapse, it probably retains more value than paper money or stock options. Property, of course, is premium. If you can uphold claims to it…
Also a in a societal collapse markets will reestablish themselves relatively quickly so if you have a trade good like gold, copper, or silver you could probably use it as a solid liquid asset. Mind you I’d say a 1-2 year minimum for markets to reestablish themselves so you have to survive that first. Also you will be at the mercy of the merchants and tradesmen regardless.
If there is complete societal collapse, then gold is going to be worth nothing, because you cant eat it. Bullets on the other hand you can use to take peoples food, or hunt for your own. So invest in bullets!
Now if you just expect financial collapse but not total societal then sure gold, silver, bonds are probably fine if you want “safe” stable ways to hold your investments.
In most cases, its just fear-mongering and gold has no more actual value than paper currency since they both derive their value from sentiment or perceived value. So if you show up at my house and offer me a small gold bar, you value at $10,000, and I value it at a potato, then your $10,000 is actually only worth a potato.
Short answer: Yes.
Long answer: Yes. Tune all of that nonsense out… But don’t fret if you own a tiny bit, either.
I kind of like Warren Buffet’s ramblings on it:
Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.
You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all – not some – all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take?
Gold has utility. Every circuit board uses gold.
Same with germanium.
And boron.
…I was gonna say I wouldn’t want a giant cube of boron. But actually, I kinda do?
only a complete bidiot or bignoramus wouldn’t
If you find out where you can get a quality boron cube, would you see if they have any beryllium spheres?
I feel like you could still do very well in life if you controlled literally all the gold in the world, but also he is Warren Buffet and my current wallet is one that I found on the ground, so I am willing to defer to the experts here.
(NB, the wallet was empty, I’m no savage)
I’m acquiring a little gold. Not a lot, but enough.
What’s enough? When my family was escaping persecution, they managed to travel under the cover of night and stayed in people’s barns and homes during the day. They planned and managed these arrangements via transactions using gold coins, links or pieces of jewelry, or other relatively universal valuables. They also got away a couple of times using the same goods to bribe authorities.
A small number of generations of my family dealt with being told that their money or credit was devalued due to their religion, profession, or relationship to public figures. In those instances, the family members who fled survived, and most of the ones who didn’t flee died.
I don’t know that I have much faith in my ability to flee anything, so I’m not investing that much time or money into acquiring gold things. Found some old watches from my grandparents/great-grandparents that claim to have gold in them. Have a couple of my own little things and jewelry I’ve given my wife. All just things when the time to survive arrives. Which it might not ever.
I hope this somewhat answered your question.
If it’s not too personal, I’m curious where your family escaped from?
Different parts of the family tree, but pre-Soviet Ukraine and Poland.
The Ukrainian family was erased over a period spanning from pre-WWI to pre-WWII. Around the time of the Bolshevik Revolution, a large portion was killed for having too close of ties with the Romanov family, and for taking advantage of the commoners. They incorrectly assumed that their social status would keep them safe. By the time that bolshevism fell out of style, anyone who remained was killed off for their radical support for empowering the commoners. Over just a couple of decades, a relatively vast family name was completely wiped out from a vast number of cities and villages. The only thing they all seemed to have in common with each other and those miles alongside them was their religion.
The Polish family either snuck out of Poland around the time that Nazism was becoming more popular, or died. One family member survived after their parents left them with some Catholic friends, and another two family members shockingly survived the concentration camps. My memories of one of them was how hard they’d cry when they’d see any portion of their numeric tattoo.
Now the living parts of the Ukrainian family live throughout the Americas, and believe that fascist leaders have redeeming qualities. Meanwhile, the Polish family is mostly in Israel and is mostly super-cool with Palestinian genocide. Imagine struggling so hard to survive, just for your offspring to perpetuate or promote the same shit that you escaped from.
You should really schedule a discussion praising Hitler and his buddies at your next family gathering…
My family gets upset when I reference Hitler and his buddies as the creative source material for our current sequel/reboot. The fact that our president had previously bragged about studying books by and about Hitler isn’t a problem, instead, it’s a problem that I bring it up.
It is an ok hedge on inflation, but it is pushed a lot by scam adjacent businesses to push up consumption.
It’s… Not really a scam so much as a thing for weird cranks who think the apocalypse is coming. If you have gold then you have gold. And gold will likely hold its value for a long time because it’s a rare resource. Unless we find some alchemy that turns common materials into it, it will likely stay that way. So if you buy gold at market value then you can always sell it later at market value, and that market value is almost guaranteed to be higher than when you bought it.
The people who are really into it though are the weird cranks. And I’d imagine certain stocks or even bonds are arguably better returns in the same time span.
Not to be contrarian, but please don’t say gold is almost guaranteed to go up… There have been times in the 1900’s where people lost in gold massively and didn’t recover for decades.
It HAS been a good investment in the last while, but it may have been just luck.
Plus, at the price it’s at now… I kind of fear buying it.
I looked into it as well but in the end went with a Gov Bond ETF instead.
Edit: typos, I have feet for hands
please don’t say gold is almost guaranteed to go up…
I mean, in so far as inflation is almost guaranteed to occur in a productive economy, gold is almost guaranteed to go up over the long term.
A better question might be “Is an investment in gold going to outperform another asset class?”
I looked into it as well but in the end went with a Gov Bond ETF instead.
That’s been the gambit with gold for a while. Point to a short term up-cycle in price and insist that’s a long term ROI you can count on.
But when you look at the actual price history
there are long periods when the price is either flat or negative. Risk of holding gold relative to, say, the S&P or even basic Treasuries can get pretty high, unless you’re very confident we’re in one of those rare '04-'11 sustained price rises.
Even as a hedge against short term downturns, it kinda sucks. If you look at the big historical recessions - '81, '90, '01, '08, '20 - the price of gold had typically already jumped ('01 being a notable exception) and subsequent years were fairly flat. Spikes in gold prices aren’t a bad prediction of future recessions, but they rarely make for good shelter on the eve of the crash.
You using XAU for gold or something else? Also have a favorite gov bond etf? I am not the best at evaluating those
I used IAU for the few instances I banked gold as a hedge. But I’ve never held longer than a year and it’s never outperformed by overall portfolio returns.
It’s just not a good long term investment.
Lately the s&p etfs have been beating gold. So like, it’s not a terrible investment, just there are better ones out there
Would you trust this guy’s advice?
I’d chop off my own dick if whatever thing is told me to do it
The thing about the value of gold in a society is that it is only valued within the society. If society collapses, there will be no group or entity that could value it. You’d need to wait until people start rebuilding. But then you’d need to be in a position to shape how currency is decided on and minted. Unless you’ve kept your load of gold secret, it’ll be hard to convince people to adopt gold as a currency without starting on more even ground.
Ever since we found gold we have valued it. I don’t understand the position of, “Oh, no one will value it!” We love the shit and it’s a store of value. How much value is dependent.
Because it was found by people in society. It was given value within an established society. I’m not saying no one will value it. I’m saying that until there is an established society, it won’t hold value. Then if you do end up in a society, you need to sway them to adopt gold as a currency while keeping your gold stores secret.
I disagree. look at the failed states right now. USD and precious metals are the most valued means of trade.
To clarify, when people colloquially refer to “the collapse of society” they don’t mean that all forms of society would cease to exist, but refer to the failure of the nation state, or possibly the international order, and the long supply chains that go with it. Etc.
So society at various scales would still exist, in overlapping ways and jurisdictions. Basic units like neighbourhoods and firefighters and towns and regions would be organizing based on the old rules and adapting. People organize well in the absence of warlords, so that and extinction events are the threats to trade.
The value of trade goods might be indeterminate if a comet wipes nearly all of us out. Otherwise, many people love to dicker and argue about the value of things, so I’m pretty confident about rare raw materials like gold having both utility value and a reasonably inflated exchange value in a prolonged regional or international crisis.
Gold is not going to save you. I’d we get to the point that gold becomes currency again, that will be the least of your worries. Those are just prepper fantasies.
If you are considering investing in gold as an asset, sure that’s legit.
The only things that will have value when society collapses are food, water, shelter, off-grid power, ammunition, and weapons.
Don’t forget “skills you can use to make yourself valuable to a small community”, especially the skills to grow and prepare food, locate and purify water, construct and maintain shelter, maintain and upscale off-grid power, and use ammunition and weapons.
It will be whatever the remnants of society deem valuable and convenient to use for condensed wealth. Probably bottle caps.
Unrelated, anyone else looking forward to fallout season 2?
Yeah but so is having any currency
In the event of a collapse like you describe, I’m going to need something I can eat or wear, something tangible I can trade. If you can get enough people together that agree gold is a valuable bearer instrument then you’ve got a government. That’s not really a collapse.
Look at the zoomed out 5 year chart for its price and you tell me.
$1,839 -> $4,217
Yes, but:
https://www.macrotrends.net/4534/cpi-purchasing-power-of-the-dollar
Gold is just another asset, it belongs in any long term portfolio at least to a small degree, and if you take the possibility of market instability seriously, you might consider keeping some actual metal on hand. Though silver is somewhat more practical for that.
