Yellen is going to print like crazy, she has no other option. The USA eventually defaults or hyper-inflates, meanwhile the world keeps making moves to get off the dollar. That much is obvious. If that is not obvious to you, then it is a hypothetical question; what if it were obvious to you?
Where to invest? These ain’t normal markets. Been thinking it thru and now considering getting some 1kg bars, just to keep things diversified. But I’ve always practiced “invest in what you know”, and I don’t know f*%^ about metals. Thus newbie questions follow…
It seems like gold has historically been a good way to preserve wealth. But short-term, in this weird environment, are markets being manipulated? CH wants to buy up tons. I imagine the US has an interest in the price one way or the other. Do fiat currencies hate gold? Any thoughts on the macro forces at play here?
Also when you “buy gold”, are you guys buying paper gold, or real gold? As I understand it there are Swiss accounts which are “unallocated”, meaning they don’t set your gold aside, and “allocated” meaning your gold is (in theory) in a separate box (additional fees). But come on, we know bankers. What is stopping them from selling more gold than is in their vaults, since they assume everyone won’t withdraw at once?
It seems like if you are buying gold so that your money can’t vanish into thin air on the internet, you actually need to be holding in your physical possession, gold! That of course raises questions on transportation, local laws on possession, etc.
The only thing that is obvious to me is that we are living in a deflationary world. More and more people will be out of work in the developed world, whether that is measured in each country’s employment stats or not. Doesn’t matter how much the Fed is printing. The only place that money is going to is in securities.
I prefer to buy coins. 1oz American eagles are probably the easiest to get and what I prefer. There are many reputable websites that deal in metals and the fees are reasonable (They add a fixed amount to spot rate).
Storage is easy. A home safe or bank deposit box… but know that these coins aren’t typically covered under your home owners policy.
Ask the local brown folks in your firm’s back office, they are all about holding gold. One guy I used to work with would constantly brag how he bought gold at $300. I think he was so proud of it that it’ll go on his tombstone.
The most efficient thing to do is to buy gold guns and ammo. That way you own gold if you need it, but you also have guns and ammo if you need to protect said gold, and it’s all in one package!
If you need liquor to get through the nuclear winter, buy Goldschlager. It’s also a good idea to get gold/bejeweled teeth, since they are relatively unregulated, have limited tax issues, are difficult to steal and look baller.
My fund invests in real bars of gold. The bars are ten ounces each and we run the transactions through an investment bank, which stores the gold bars in various areas of the city. Periodically (once a quarter or so), someone here actually goes out to the vaults to verify that the serial numbers reported to us from the bank actually match up with the numbers on the bars themselves. And when we actually want to sell some gold, they get transferred to the counter-party by way of an armored truck.
Pretty cool, huh? Trading physical gold can be much more involved than clicking buttons on a computer and staring at tickers on a screen.
Why do you go to the trouble to do this instead of say, just buying gold futures? It seems like all this armored truck business would cost money over time. Is there a reason that you prefer these gold bars over electronically traded gold?
Ammo has appreciated well (I remember back in 07 or so, you could buy 50 rounds of .45 for like $9.99. Now it’s $19.99).
Guns and accessories (like magazines) have seen a small increase, but nothing out of the ordinary. When a shooting happens, they will rocket up for a bit and come back down for fear of law changes.
The biggest problem is they take up a lot of space and are very heavy. To invest like, $50k in ammo would be like an entire closet full.
say, .223… around 1000 rounds, around $400, is like 28 lbs. We’re talking 3500 lbs of ammo to get up to $50k.
We use gold futures as well. It just depends on our views about counter-party risk. Yes, there are storage costs to the physical gold, but on the other hand we own the actual bars.
Yes, but in this case, they are actually moving big heavy gold bars to and from multiple secure locations with each transaction. They furthermore have an employee who goes and inspects every single serial number for their gold holdings. Over time, this is definitely more costly than just trading the derivatives, and leaving the physical gold management to the exchange or some other specialized entity. Storage costs are not the same for each person. It’s cheap for some farm in the midwest to store lean hogs. However, it would be extremely inconvenient for me to arrange for someone to pick up a pig whenever I trade lean hogs. All this CFA derivatives stuff just describes some factors that could influence prices. In reality, there are many more things to consider.
Most likely, numi’s fund has some special reason why they are taking the trouble to do this themselves. Perhaps they have a legal reason, or maybe they think the Joker will rob the London Gold Exchange. However, they are definitely not doing this to reduce costs.
Who is “they”? Most of the time the gold isn’t actually moved. Moving tons of gold isn’t an easy operation, nor are there many places secure enough to store large quantities of gold. The bullion banks hold on to most of the gold being used to trade futures.
Edit: I just read numi’s post above. That’s a pretty unusual situation.
Edit v2.0: Taking delivery of your gold when your futures expire is rare, and the bullion banks will do everything to try to stop you from doing it. Why? Simple. There’s much more paper gold out there than physical. If everyone took delivery of their gold at expiration, well, it would get ugly in a hurry.
The first time I taught a Level II CFA class on derivatives, after explaining what pork bellies were (dead pigs; many in the class didn’t know that), I went on to explain that if you didn’t settle your long position in pork belly futures before expiration, you’d come home from work and have to explain to your spouse why you had 100 dead pigs hanging from the ceiling in your living room.
I’m well aware that there are other factors than the few included in the curriculum. (Though I’d think that the short futures position would include the cost of inspection, etc. if that’s their normal business practice; it’s a cost they don’t want to eat.)