Gyroscopic Investing

Folowme,

From what I've experienced, such assertions about gold going up, with this group at least, provide you the opportunity to run and hide.  I.e., who knows and good luck.

And welcome.

The "recovery" in gold is due to the recent fall in the US Dollar. Trading gold is trading the Dollar, in the short run at least.

I have gold deposits in Euros, I wish I would have them in Dollars. It's frustrating to see what has happened when the Dollar was raising the some weeks ago. The Euro price was exploding and in Dollars, not a significantly big price increase. Tricky with different currencies.

followme wrote: I have gold deposits in Euros, I wish I would have them in Dollars. It's frustrating to see what has happened when the Dollar was raising the some weeks ago. The Euro price was exploding and in Dollars, not a significantly big price increase. Tricky with different currencies.

I'm sure this is na�ve, but I don't understand "gold in euros".

Gold, the metal, is its own currency.  Subject to its own exchange rate issues. Having gold in euros seems to be no different than having US dollars in euros.

My apologies if I missed something obvious.

Are you talking about something other than gold?  A fund or something?  If so, that is just a fund. In euros or in dollars. Not gold. If your gold behaves as anything other than an international currency, it is not gold.

Mark Leavy wrote: I'm sure this is na�ve, but I don't understand "gold in euros".

The only way this makes sense to me is if the currency you do business in (Yen, Euros, Icelandic Krona) is doing well against the USD, the value of your gold seems to be going down. You are doing worse in that quadrant of the PP relative to a US resident/investor. In 2014 when the Euro was tanking against the dollar, a European PP got a positive jolt from gold being on the rise relative to the Euro. We here in the US just complained about our gold going nowhere for the year.

Incidentally, I am able to predict these currency swings because they move in lockstep with any plans I have to be paid in another currency or travel somewhere for fun. Just by booking flights to Italy for my family a couple of weeks ago, I caused a 5% move in the Euro. Cortopassi was able to do much the same thing for the gold market itself back in his heyday.

Nice week for the PP here in the US, btw. I like when Friday is strongly positive. It puts a spring in my step for the weekend.

It doesn't matter what currency you buy gold in. Once you buy gold, you own gold and not currencies. That is, assuming that one can make commission free, instantaneous, no spread conversions

USD -> EUR -> Gold -> EUR -> USD

is equal to

USD -> Gold -> USD

Since you cannot make cost free conversions, don't make stupid conversions before buying gold.

But it matters what currency you intend to ultimately sell your gold in.

Think of gold as just another currency.  Except it isn't backed by a central bank, government, economy, military, etc., which makes it a very unique currency.

Gold has been sitting doing very little while the market has gone straight up. Trees don't grow to the sky. Gold will move when most people are sure it won't. Every run up has been sold which means there is a large contingent of investors raking on a regular basis with easy timing. We all know every system is designed to fail in time, usually when everyone is on the same side of the trade. Patience will go a long way to profiting in time. When that time will come is impossible to say but I have to think it will be sooner rather than later.

OK, we're at 0% on short term interest rates. What happens if we get another recession? Does the Fed go European and give us NEGATIVE interest rates? What would those do to gold? I can imagine people saying, "SH**, I don't want to hold damn Dollars, I have to pay the bank, let me convert them to a hard asset".

Mark Leavy wrote:

followme wrote: I have gold deposits in Euros, I wish I would have them in Dollars. It's frustrating to see what has happened when the Dollar was raising the some weeks ago. The Euro price was exploding and in Dollars, not a significantly big price increase. Tricky with different currencies.

I'm sure this is na�ve, but I don't understand "gold in euros".

Gold, the metal, is its own currency.  Subject to its own exchange rate issues. Having gold in euros seems to be no different than having US dollars in euros.

My apologies if I missed something obvious.

Are you talking about something other than gold?  A fund or something?  If so, that is just a fund. In euros or in dollars. Not gold. If your gold behaves as anything other than an international currency, it is not gold.

It seems that most gold funds in Europe track the gold price in USD.

Xetra Gold ETF: "The Gold Spot index tracks the gold spot price in USD."
Deutsche Bank Physical Gold ETC: "The gold spot price is the price of gold in US Dollar according to London Bullion market fixing at any given time."

Deutsche Bank has also an Euro Hedged Physical Gold ETC.
DB Euro Hedged Physical Gold ETC: "The gold spot price is the price of gold in US Dollar according to London Bullion market fixing at any given time. The currency hedging is done on a daily basis in Euro."

IAU: +1% YTD
Xetra Gold: +12% YTD
DB Euro Hedged Physical Gold ETC: +0.5% YTD

It would seem that the DB Euro hedged ETC tracks IAU pretty closely. Xetra Gold and other funds seems to have "currency risk".

So I would a European investor buy IAU, a Euro Hedged Fund or rather an unhedged one like Xetra Gold or Euwax Gold?

ochotona wrote: OK, we're at 0% on short term interest rates. What happens if we get another recession? Does the Fed go European and give us NEGATIVE interest rates? What would those do to gold? I can imagine people saying, "SH**, I don't want to hold damn Dollars, I have to pay the bank, let me convert them to a hard asset".

There is a Forbes article about this.  http://www.forbes.com/sites/greatspecul ... -for-gold/

To illustrate this point, take a look at the current five-year Treasury yield and subtract from it the consumer price index (CPI), or the inflationary number. You get either a positive or negative real interest rate.  When that number is negative, gold has tended to be strong, and when it’s positive, gold has in the past been weak.

I just bought some more GTU, so gold should take a dive!

I love buying gold for some strange reason regardless of its performance these last couple of years.  It is very comforting to have portable wealth.  Question:  for those of you who like to hold gold coins for potential meltdown scenarios, do you also buy smaller coins?  My coins are all one ounce.

fi50@fi2023 wrote: I love buying gold for some strange reason regardless of its performance these last couple of years.  It is very comforting to have portable wealth.  Question:  for those of you who like to hold gold coins for potential meltdown scenarios, do you also buy smaller coins?  My coins are all one ounce.

For those, silver is probably a better bet. But, depending on the kind of meltdown you're envisioning, I'd imagine that useful goods would be far more effective for barter than gold coins. Non-perishable food, toilet paper, fire-starting materials, water purification tablets, ammunition, etc. Once word got out that you had a bunch of gold coins (because you were trading with them), I imagine it wouldn't be long before someone tried to rob you.

fi50@fi2023 wrote: I love buying gold for some strange reason regardless of its performance these last couple of years.  It is very comforting to have portable wealth.  Question:  for those of you who like to hold gold coins for potential meltdown scenarios, do you also buy smaller coins?  My coins are all one ounce.

No.

If we ever get to the point where you are buying toilet paper with precious metals...
Then the world is much more screwed up than any scenario that you can imagine.  Gold in any denomination will be too weird.

I don't prep for that scenario - as I don't think it is possible to fully understand the dynamics.  If forced to make a decision, I would stockpile Jack Daniels, 22LR, toilet paper and Dove soap.

That said, I do like my 1 ounce coins.  But that is a completely different scenario.

EDIT:
One time when I bought a couple of ounces, the vendor ran out of 1 ounce coins and gave me multiple 1/2 ounce Eagles ($25 face) instead.  These coins are the same size as quarters.  That's pretty useful for a thin money belt that frequently passes through TSA...

fi50@fi2023 wrote: I love buying gold for some strange reason regardless of its performance these last couple of years.  It is very comforting to have portable wealth.  Question:  for those of you who like to hold gold coins for potential meltdown scenarios, do you also buy smaller coins?  My coins are all one ounce.

Buy a bag of junk silver.

Pointedstick wrote: Once word got out that you had a bunch of gold coins (because you were trading with them), I imagine it wouldn't be long before someone tried to rob you.

But, but, but...  that simply CAN'T happen in an anarchistical utopia!  There will be a multitude of private defense companies to choose from and all absolutely-guarantee-it your safety!

MachineGhost wrote:

Pointedstick wrote: Once word got out that you had a bunch of gold coins (because you were trading with them), I imagine it wouldn't be long before someone tried to rob you.

But, but, but...  that simply CAN'T happen in an anarchistical utopia!  There will be a multitude of private defense companies to choose from and all absolutely-guarantee-it your safety!

C'mon man, don't equate anarchy with barbarism. The collapse of civilization is hardly an anarcho-capitalist utopia. More like a right-wing fantasy.

Pointedstick wrote:

fi50@fi2023 wrote: I love buying gold for some strange reason regardless of its performance these last couple of years.  It is very comforting to have portable wealth.  Question:  for those of you who like to hold gold coins for potential meltdown scenarios, do you also buy smaller coins?  My coins are all one ounce.

For those, silver is probably a better bet. But, depending on the kind of meltdown you're envisioning, I'd imagine that useful goods would be far more effective for barter than gold coins. Non-perishable food, toilet paper, fire-starting materials, water purification tablets, ammunition, etc. Once word got out that you had a bunch of gold coins (because you were trading with them), I imagine it wouldn't be long before someone tried to rob you.

Right. As far as SHTF scenarios are concerned, gold is not for use during a breakdown of society. It is for use AFTER society has been re-established.

I asked some preppers on a prepper GooglePlus community if they thought gold was of any use for SHTF, and they replied NO.

I've thought it may be OK to have some 1 oz American Eagle silver coins, though... something between a $10-$20 bill, that's a decent denomination, and a well-known issue.

So why would "junk silver" be tradeable? What's the appeal to the person on the other end of the trade?

ochotona wrote: I asked some preppers on a prepper GooglePlus community if they thought gold was of any use for SHTF, and they replied NO.

I've thought it may be OK to have some 1 oz American Eagle silver coins, though... something between a $10-$20 bill, that's a decent denomination, and a well-known issue.

So why would "junk silver" be tradeable? What's the appeal to the person on the other end of the trade?

It's the same as the appeal of 1 oz silver Eagles - relatively small amount of value in an easily recognizable form.  Rather than 100% silver like Eagles, "junk silver" (silver dimes, quarters, half dollars, and dollars, 1964 and before) are 90% silver.  See, e.g., http://www.apmex.com/product/24/90-silv ... -value-bag

The idea is if you go to the grocery store and want to buy a loaf of bread, a 1 oz Eagle is too much.  A 90% silver dime is just about right.  And then you can trade 11 90% silver dimes for a 1 oz Eagle.  And some number (probably around 100) of 1 oz silver Eagles for a 1 oz gold Eagle.  There are 1/10th oz gold Eagles as well (about the size of a dime) - which are worth approximately $100 (about 10 silver Eagles). 

The problem of course is that there aren't enough of these coins (particularly gold eagles) to replace the current paper (and digital!) money supply.

Thanks, rickb.

Simonjester wrote:

ochotona wrote: I asked some preppers on a prepper GooglePlus community if they thought gold was of any use for SHTF, and they replied NO.

I've thought it may be OK to have some 1 oz American Eagle silver coins, though... something between a $10-$20 bill, that's a decent denomination, and a well-known issue.

So why would "junk silver" be tradeable? What's the appeal to the person on the other end of the trade?

the one use for gold that a hunker in my bunker survivalist might miss, is the ability to bribe your way out of a bad place, across borders...  not necessarily a will happen event, but definitely in the realm of possibility in a cover all bases kind of way...

Not just in the realm of possibility, that is a "has happened many times" event.

rickb wrote: The problem of course is that there aren't enough of these coins (particularly gold eagles) to replace the current paper (and digital!) money supply.

Ahh, yes, "of course"!  How many tons of paper money exists?  How many tons is the right amount?

Irrelevant you say?  Depends on what numbers are printed on it?  One ton of paper bills with "1"s printed on them is not the same as one ton with "1000"s printed on them?  Hmm.

Interesting.

Verrry interesting.

How many tons of gold exist?  How many tons would be "enough" to replace the current money supply?

Get it?