A guy at work, Chet, frequently stops by my office to take a break and talk about, among other things, the state of our economy. Are we going to have hyper inflation? Deflation? Should savings be put into stocks, bonds, precious metals?
I bought a few ounces of gold and silver in the late 1990s and that turns out to have been a fairly good investment. But as Chet points out, “You can’t eat it.”
If being able to eat it were the sole criteria for sound investing then a few tons of lentils, peas, and wheat from the farm be a good idea but my bunker can only store so many sacks before it starts getting in the way. And I’m pretty sure some of the sacks of food I sold to people worried about Y2K in 1999 (about 20,000 pounds total) are still in their closets unopened except perhaps by rodents and insects. The food stores fairly well but unless you were very careful how you stored after ten years it has noticeably degraded.
Dave Hardy points out there is an alternative to gold that is useful (I don’t recommend eating it however) and which has retained it’s value every bit as well as gold has for the last 136 years. When I bought my first gun the guy I bought it from pointed out that guns in good repair don’t loose significant value over the years. Even that SKS you bought for $65 back in the early 1990s kept pace with inflation. Ammo too has been a good investment.
So perhaps that is Chet’s answer. Instead of precious metals like gold and silver invest in steel, copper, brass and lead with a little bit of nitrocellulose thrown in.
Unfortunately, the government’s hostility toward wealth accumulation pretty much guarantees that financial planners are going to make their desperate clientele pig-pile on one risky investment after the next, in the hopes that they can pull in fiat currency fast enough to stay ahead of DC’s economy langoliers. When the stock bubble popped, the drove crowded out futures traders. When that caused a second bubble, they tried a chunk of junk mortgages. The next big thing is municipal bonds. Keep and eye out of lots of unnecessary government construction projects.
“…unnecessary government construction projects.”
You’re being redundant, Sir.
Useful working non-electrical tools of ANY kind are always a good investment.
My family’s experience with gold. My parents bought some gold Certificates through Citi Bank in 1977 at or near golds last height(not sure on what price. It took 22 before they finally sold it at a 30% loss in the 1990’s. Big problem was that Citi Bank charged them a yearly holding fee. Since they held less than 10 k this added up to a ton of money. Think of it as a negative dividend. Just a warning to anyone who might put all their money into any asset class. Of course about 3 years after they sold their gold, the price went up a staggering amount.
Waiting over two decades is hard to do. When ever things are at their height people always want in. The old Greed VS Fear problem.
I advise the Vanguard group with a balance of bonds and stocks, which should be rebalanced every year you are closer to retirement. At the end of every year you move more dough into bonds.
On guns. The laws of supply and demand seem not to work very well. I am shocked at how much people want for guns now and how much ammo now. I now longer can afford to go shooting on a regular basis bullets are just crazy expensive. I also like to support my local gun shop. So I know I am not getting the best price.
As someone who knows very little about guns I would say doesn’t supply and demand kick in at sometime. I remember when everyone started smoking cigars in the 1990’s and the price went through the roof, but it came back down.
Part of the reason I think people hold onto their guns is just fear. Not fear for their safety, but they just don’t know that they could sell that gun and the police wouldn’t immediately put out a APP on them. I own a lot of guns just because I am the one in the family who will take them when someone dies. To my family it is a release not to deal with the hassle and fear. Of course I hold on to them out of sentiment. So maybe I am part of the reason there is such an ill liquid market for used guns.
But what if 20/20 did a segment on the extra thousand your old dad’s Colt Python is worth? Wouldn’t the market be flooded. It could happen. (I know the media would never do a story about gun owners rights etc.
Sorry for writing so long. Love your blog Joe.
Miles
I stopped investing in the stock market in 2002 after I kept getting investment reports that were constantly negative. Mind you, I haven’t sold any of my stocks, I just stopped throwing my cash into the furnace,
I did turn to investing in guns and ammo and I haven’t been disappointed. My only regret is that when I started buying in ’93 is that I didn’t invest more in what has turned into a bull market.