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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Generally speaking, precious metal commodities are a hedge investment; they aren’t a primary investment themselves, but they’re a hedge against a loss in value of other investments, like stocks or bonds. If you are investing in gold as a hedge against inflation wiping out stock market gains, then yeah, it’s pretty solid. You probably don’t want to hold on to it forever though; if you’d bought gold just prior to Carter taking office and the stagflation of the late 70s, you be pretty much break-even with things like index funds.
As far as total societal collapse, you would need to have the physical bullion, not just have precious metals in your investment portfolio. And even then, gold might not have a ton of value in a subsistence society. People might trade for it, but if I had food to trade, I don’t think I’d be trading for gold, since I can’t eat gold. The people that will clean up in a subsistence environment? The Amish.
I bought some gold a few years ago, the price has gone up quite a lot since. I invested in small little pieces recovered from a lake somewhere. I figured it’s easier to barter with a tiny piece than a huge coin or bar of gold. It’s only a small part of my portfolio. I decided to invest in a mix of stuff, as you never really know the future. A little bit of cryptos, gold, silver, bullets, canned foods, solar panels, batteries, rain catchment and containers, etc. I also worked on my survival skills, tool skills, crafting skills, etc. it’s a huge way to barter with people when you have skills they need. The biggest thing I invested in is raw land in the middle of nowhere. The land has an RV and working on systems to gather water, power, etc. 99% of the stuff will be solar powered, but we do have a diesel heater, it doesn’t use much fuel as we only use it when it’s really cold.
I think gold is just one of the many things needed to survive if things collapsed. If it’s even needed. It’s just one of those things that makes me feel better as an insurance / just in case. But I feel the other things I have done will make a bigger difference if it ever comes down to it.
It isn’t a scam. It is an asset like buying land in the middle of nowhere. It will in general match inflation but underperform most other investments. In the very long term I would expect that with global population stabilizing and declining, the value of gold will also stabilize and decline.
Invest in land: they aren’t making any more of it.
Hawaii’s Big Island be like:
24-hour lava flow asmrBut in a societal collapse owning land doesn’t matter, because land ownership is much more dependent on contracts, which don’t mean jack shit without a society and a government, and if you have to flee because of a war or a natural disaster, you can’t just stuff your forest/house/farmland/whatever in a suitcase and sell it later.
Almost always yes, it is a scam. Theoretically, it’s a hedge against inflation, but in practice, it’s just grifters selling it to paranoid right wingers
Glenn Beck added $1000 to the price of gold in the last decade.
Complete societal collapse, hard to say what, beyond the basics, would be useful as a medium of barter.
But, in a society facing major issues, e.g., hyper inflation, or say, a US government default, yeah, gold is a pretty decent hedge bet.
The traditional safe haven has been government debt but that’s been seen as an increasingly risky bet where you could lose a lot of money to inflation or worse, government default/intervention.
So, while not ideal, gold at least seems a better bet than most other “safe” places to put one’s money.
Yeah, it really depends on the nature of the societal collapse.
I can imagine situations in which being able to press a gold necklace into the right palm might get you out of a tricky situation.
On the other hand it’s hard to imagine a situation where a horde of gold bullion in your safe at home would be very helpful.
I remember reading an article interviewing a man who lived through the early aughts Argentine Great Depression and he said the best horde of value was cheap diamond rings. You could trade one for a handgun, a couple of bags of groceries, even a motorcycle. He said they were even better than krugerrands. Something about how people trusted someone whose trading a family ring more then some profiteer.
Yeah but so is having any currency
The only things that will have value when society collapses are food, water, shelter, off-grid power, 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?
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.
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.
Compare gold to the other elements on the periodic table as a medium to store value and you’ll see why it is used for this task.
It is non toxic, it can be easily held and transported, it is non reactive (it won’t rust or combust), it is relatively rare, it is dense (a lot of gold fills a small space) and, well like others have said, it’s shiny. It can be easily moulded and forgotten about for millennia and still be the same way it was last used (look at Viking hordes as an example) few other things can do this, maybe diamonds? But they can not be recombined again like gold
Idk man… Humans like shiney baubles. Remember: Gold was a valuable commodity before we even had legit uses for it beyond decoration.
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.
It can be used for barter, gold had enough of a reputation that you can get anyone to trade you for it if they have an excess of something.
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.
You can’t eat gold, and you can only trade gold for food if that person can trade the gold for something else. I’m not going to say there’s no chance of gold being valuable in a societal collapse scenario, but I’d rather wager with resources than a pretty, shiny metal. I don’t see how that’s a position that can’t be understood. Gold works as an intermediary exchange, but direct barter can always be counted on.
Gold is good as notation for big things, like an excavator and a dozen barrels of diesel. You can’t trade that shit for cucumbers and canned tuna.
You can use gold as an excellent long lasting conductor for electric equipment. You can make it very thin. It would make a comeback in basic dentistry, as you can actually eat it: it’s non-poisonous. Doesn’t tarnish. A smith can do a lot with gold.
Gold is a resource. That said, I don’t have any right now. Just some silver coins, and some packaged goods like knives and flour mills (business leftovers). Given the market insecurities now and gold’s all time high price, wish I did.
Yeah, I know. I have what many would consider an absurd amount of rice and beans and salt so it makes sense to store something that won’t go bad. Gold never spoils. Never.
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.
There was a video essay by Folding Ideas (From “the line goes up” fame) about a weird documentary narrated/hosted by Idris Elba, and If I am remembering it right it was basically a propaganda/ad film targeting people like peepers and that are skeptical of the government and such. So I believe there is at least a push to make gold more marketable and in fashion, like De beers did for diamonds.
I don’t know if I am allowed to link to outside content (because the rule of no reposting outside content) but in any case it should be easy to find for anyone interested.
Linking to outside content is good. How else could people cite their sources?
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
Well, you can.
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
Buy Silver instead.
curious, why?
Silver has other values in addition to being a currency. Used medical equipments & in electronics.
Copper hoarding is good too.
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
Lately the s&p etfs have been beating gold. So like, it’s not a terrible investment, just there are better ones out there
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.
When was the last complete societal collapse?
Gold is a good hedge against inflation. When was the last hyperinflation in your country?
This is just me, and I’m no expert. But I kind of think that, if you’re legitimately worried about your country’s currency collapsing, you might want to consider leaving your country. Any sort of collapse that leads to hyperinflation or the large-scale elimination of financial infrastructure is probably going to be difficult if not impossible for the average person to survive, gold or no.
That said, precious metals are a niche enough market that I can’t imagine it not being rife with predatory sellers; companies that aren’t offering scams per se—you’ll probably pay them and receive what you pay for—but companies which are counting on people not knowing anything about the market and accepting a terrible price or poor quality goods.
Again, not an expert. But my end-of-the-world investment would be in shelf-stable food, easily-stored seeds (for planting), medicine, hand tools, high-quality camping gear, books, that sort of thing. If there is a collapse, those sorts of things will be immediately useful and also tradeable.
Anyone who buys gold online should have a tester, and there are reputable bullion companies like JM who don’t charge a lot of markup. If you’re on ebay trying to buy gold bullion there’s a chance it’s probably fake / silver wrapped with gold and stamped. There’s videos on the internet of folks cutting those bars in half and seeing what’s inside.
A way to increase your chances of buying real product is to buy coins that are in bad enough shape where there’s no numismatic value left. Whereas every country that mints coins has strict laws against counterfeiting them and you can go to prison for doing it, making “novelty” gold bars and rounds is perfectly legal and there’s almost no risk if you get caught scamming people with them (most often just a platform ban).
At the moment unless you have some really rare stuff the numismatic value is generally less than the gold itself, I know for sure at least with standard “Napoleon” coins that is the case.
Every country is worried about their currency collapsing because all economies are deeply connected. It just takes one major trading partner to collapse for a domino effect to ripple through the world.
Definitely a fair point. But for the most part, being in the country that collapses is going to be worse than being in a different country.
