Re: Expert warns of "dangerous bubble" in gold coin market

On Feb 21, 8:27 am, "Mr. Jaggers" <lugburzman[at]yahoo[dot]com> wrote:
oly wrote:
On Feb 20, 11:46 am, "Bill Krummel" <dqu...@xxxxxxxxxx> wrote:
"oly" <oly2...@xxxxxxx> wrote in message

news:d96dcda5-1dae-40c3-a95a-b9781234988c@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Feb 20, 6:56 am, "Mr. Jaggers" <lugburzman[at]yahoo[dot]com>
wrote:

stonej wrote:
http://www.prweb.com/releases/2009/goldcoins/prweb2124024.htm

So, let me get this straight. We have one contingent of experts who
are absolutely certain that gold will hit $2000 soon, and another
expert who sez
that today's gold at $1400 is grossly overpriced, and that buyers
at that level will soon be left holding the bag.

No wonder our economy is such a mess.

James

Differences of opinions are what make markets in the first place. If
all (100% of all persons) agreed that an item was a "buy", there
would
be no sellers. I all agreed that an item was a "sell", there would be
no buyers.

At any rate, in the case of gold, most commentators put the cart
before the horse. Gold is the "numeraire", the yardstick - it is the
value of the paper currency(ies) that is (are) fluctuating, not the
gold.

--------------------------------------------------------------------

I have many yardsticks; a loaf a bread, a dozen eggs, a new car, a
pair of shoes, eating out for the evening, the cost of a doctor's
visit, a gallon of gas, and on and on. All my yardsticks fluctuate
modestly (with exeptions in relatively small frames of time) to the
paper dollar but tend to fluctuate much more dramatically to gold,
excepting the measurement taken over the span of two lifetimes,
perhaps.

If I made a phone call to the local supermarket and asked the price
on their largest box of Cheerios, I would get an answer. The answer
would be termed in;

a. paper dollars and fractions thereof
b. Mercury dimes (would they know?)
c. fractions of an ounce of gold.(very, very small fractions) [would
they know?]

I make this post because I am having trouble grasping the importance
of an ounce of gold in a financial collapse. When an individual,
corporation, or nation takes a loan, they are not borrowing against
existing wealth but wealth that is generated from future
productivity. I am not having difficulty understanding the need to
print paper money that (1) represents that future productivity and
(2) provides a form of exchange.

But I do need to say that when I contemplate eternity (not the no
end part, just the no beginning part), infinity, and economics, my
head begins to spin.

Bill

Honestly, the ounce of gold may be more valuable in taking a portion
of your wealth through a time of troubles.  During the height of the
French Revolution, nobody would have dared use one in the little
commerce that was taking place.

Here is an article that I liked a lot:

http://www.fairfieldweekly.com/article.cfm?aid=11757

America has had two hyperinflations since 1776.  Why would any
economically sane person not at least admit the possibility of that
happening again?

Because we have not had one since the Federal Reserve took over.  I might
suggest two reasons for this:

1)  The gummint may be now capable of successfully manipulating the economy
to prevent hyperinflation.  This is what many say and everyone hopes, but on
this premise, the jury remains out.
2)  We have not seen war play out on our soil since the last hyperinflation,
nor has there been any use of nuclear devices anywhere in the world since
1945.  Let a few of those get lobbed into somebody else's Great Cities, no
matter whose, or by whom, and all bets are off.  The jury remains out on
this premise as well.

So, yes, the possibility always lurks.  But taking a portion of my wealth
through a time of troubles is one thing, while eating during that time of
troubles is another.  If our paper assets indeed become worthless (all one
word), what will replace them?  Certainly not one-ounce gold rounds.

Cobwebs continue to accumulate on my computer screen as I languish, waiting
for someone, anyone, or you, oly, to enumerate practical anticipatory steps
to take and to prepare for this problem, or to explain how holding PM in any
form will help me provision my larder during that time of troubles.  I'm
beginning to suspect that nobody has an answer, that we'll all just be
screwed, and that will be that.  Perhaps population commentators Scrooge and
Malthus were right.

James- Hide quoted text -

- Show quoted text -

Well, mon vieux, I'm still thinking about what I want to say.

Me, myself - I cannot do exactly what I would personally like to do,
because my parents are still living and I have a grade-school age
child.

Nor would there be much wisdom in announcing one's exact plans over
the internet, especially if the denoument is not far out in the
future.

I would more gladly elaborate on Friday at CICF.

But, in general, I myself look to the Weimar experience. I have
recently bought three more books about the inflation during that era.
I just wish that they had more anecdotal evidence as I prefer that
over theories expressed in advanced math.

1920s era Germans who had silver coins reportedly had little trouble
in obtaining any supplies or services of any nature.

But those people were lucky that overall society remained orderly, and
that riots were very sporadic. Today's U.S.A. is no doubt more
volatile than Weimar Germany.

1920s era Germans who owned foreign currencies (i.e., the dollar, the
pound, the Dutch guilder), and Germans who had income from foreign
sources lived exceedingly well. Author Thomas Mann was one of these
(he had some unfortunate losses on a "friend's" mortgage that he held
as a favor, but OTOH he was lucky to get dollars and pounds from
publishers outside Germany). Mann wrote essays on his experience.

In our era, all currencies are fiat, not commodity based, and
preserving one's wealth in the form of foreign currencies may be much
less effective (i.e., all foreign exchange may only prove to be a race
to the bottom...).

From my own travels in Brazil and Argentina (fifteen years back), I
was told over and over and over that businessmen who maintained their
fortunes in physical inventories related to their business speciality
did well. The greatest businesses in those countries, after grain and
meat production, were "Auto Parts" ("Pecas") and Tires. Pecas pecas
pecas!!!

Coin collectors have a modest or moderate hedge in their collections.
IMHO, a nice high quality denarius of the divine Marcus, or an aureus
or Nero will always find a market (unless, of course, the United
Nations outlaws ancient coin collecting).

My very few Brazilian contacts suggest that quantities of non-
perishable small items like light bulbs, disposable razors, standard
sized nails, and the always recommended toilet paper and tampons will
be good to build up over time. Should the "chicken littles" prove
wrong, you or somebody in your family can simply use them later.

And yes, I do see society as a big "flea market" if the economy
worsens from here, or if oil becomes scarce, or if we have inflation.
One must prepare for that, mentally. IMHO, nothing wrong with flea
markets, nothing at all. Some people see flea markets as trashy
beyond belief.

Finally, during the German inflation, there were many stories of
barter exchanges that were disproportionate, but at least one of the
parties were simply starving. Grand pianos swapped for a bushel
basket of potatoes - things like that. Perhaps large gold coins will
only purchase small food supplies. Or perhaps one should get powerful
metal snippers for dividing coins into halves, quarters and eighths.

I will write some more later... the weekly big pot of soup is being
prepared this A.M.

oly





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