Why would anyone invest in stocks when they can invest in precious specie?

[ElFenix]

when the apocalypse comes bullets and cigarettes will be more valuable than gold. stock up now boys!

 

[ShawnD1]

when the apocalypse comes bullets and cigarettes will be more valuable than gold. stock up now boys!

Buy a sword as well. Eventually you'll run out of bullets.

 

[ConstipatedVigilante]

Silver is used in a lot of electronics I think.

Rare earth metals more than silver. So buy into the mining companies that get those. But, most of them are Chinese. So good luck!

 

[blackangst1]

Rare earth metals more than silver. So buy into the mining companies that get those. But, most of them are Chinese. So good luck!

And in this vein, this article is an interesting read. With so much manufacturing in China, their demand for silver is rising fast.

http://www.commodityonline.com/news/Silver-investment-demand-in-China-soars-37007-3-1.html

In 2010, China imported an unprecedented 14 percent of global silver as the demand for silver has been growing in the country. Till last year, China has been historically been a net exporter of silver.

In an interview to Silver Investing News, Chris Berry, founder of Mountain House Partners, said: “I know that the Chinese are buying huge blocks of the SLV silver ETF and then selling it to try and get their hands on the physical metal.”

While the SPDR Gold Trust exchange-traded fund (GLD) has increased 23.7 percent in the past twelve months, the corresponding silver exchange-traded fund (SLV) has skyrocketed 113.3 percent in the same time period.

 

[Kntx]

It's funny that the anti-fiat currency folk talk about how much gold is worth in terms of the "worthless" currency.

 

[lothar]

Sooo...Anyone here want to disagree with Buffett?

the problem with commodities is that you're betting on what somebody else will pay for them in six months. The commodity itself isn't going to do anything for you. So there's two types of assets to buy. One is where the asset itself delivers a return to you, such as, you know, rental properties, stocks, a farm. And then there's assets that you buy where you hope somebody else pays you more later on, but the asset itself doesn't produce anything. And those are two different games. I regard the second game as speculation. Now there's nothing immoral or illegal or fattening about speculation, but it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something you expect to produce income for you over time. I bought a farm 30 years ago, not far from here. I've never had a quote on it since. What I do is I look at what it produces every year, and it produces a very satisfactory amount relative to what I paid for it.
If they closed the stock market for 10 years and we owned Coca-Cola and Wells Fargo and some other businesses, it wouldn't bother me because I'm looking at what the business produces. If I buy a McDonald's stand, I don't get a quote on it every day. I look at how my business is every day. So those are the kind of assets I like to own, something that actually is going to deliver, and hopefully deliver to meet my expectations over time. A piece of art, you know, may go from $1,000 to $50 million, but it's dependent on what the next guy wants to pay me. The art itself— the painting itself is not going to dispense cash. So I have to find somebody that's going to like it more. And with most— with an asset like gold, for example, you know, basically gold is a way of going along on fear, and it's been a pretty good way of going along on fear from time to time. But you really have to hope people become more afraid in the year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money. But the gold itself doesn't produce anything.

I will say this about gold, if you took all of the gold in the world it would roughly make a cube 67 feet on a side. So if you took all the gold in the world, we could have a cube that went down there 67 feet...

...67 feet high and that would be the whole thing. Now for that same cube of gold it would be worth at today's market prices about $7 trillion. That's probably about a third of the value of all the stocks in the United States. So you could have a choice of owning a third of all the stocks in the United States or you could have a choice of owning that little block of gold, which can't do anything but kind of shine there and make you feel like Midas or Croesus or something of the sort.
Now, for $7 trillion, there are roughly a billion of farm— acres of farmland in the United States. They're valued at about $2 1/2 trillion. It's about half the continental United States, this farmland. You could have all the farmland in the United States, you could have about seven ExxonMobiles, and you could have $1 trillion of walking around money. And if you offered me the choice of looking at some 67-foot cube of gold and looking at it all day, you know, I mean touching it and fondling it occasionally, you know, and then saying, you know, `Do something for me,' and it says, `I don't do anything. I just stand here and look pretty.' And the alternative to that was to have all the farmland of the country, everything, cotton, corn, soybeans, seven ExxonMobiles. Just think of that. Add $1 trillion of walking around money. I, you know, maybe call me crazy but I'll take the farmland and the ExxonMobiles.

-Warren E. Buffett
http://www.cnbc.com/id/41867379

 

[lothar]

Also, those of you that are rushing to buy gold, what is the intrinsic value of gold?

 

[matt0611]

It's funny that the anti-fiat currency folk talk about how much gold is worth in terms of the "worthless" currency.

Currency is more "worthless" than metals in relative terms because the currency is just paper that can be printed at will for almost no cost at all.

Things can only have value if they are scarce. Its a basic economic law. There is only so much gold and silver on the earth and only so much can be mined per year.

On the other hand, they could print 500 trillion dollars in notes tomorrow if they really wanted to.

 

[JS80]

Also, those of you that are rushing to buy gold, what is the intrinsic value of gold?

It's worth whatever the next sucker is willing to pay for it.

 

[JS80]

Currency is more "worthless" than metals in relative terms because the currency is just paper that can be printed at will for almost no cost at all.

Things can only have value if they are scarce. Its a basic economic law. There is only so much gold and silver on the earth and only so much can be mined per year.

On the other hand, they could print 500 trillion dollars in notes tomorrow if they really wanted to.

So much fail here.

 

[matt0611]

Sooo...Anyone here want to disagree with Buffett?

-Warren E. Buffett
http://www.cnbc.com/id/41867379

Gold isn't an investment in the conventional sense. Its a commodity.
It can function as money because of its rarity and unique properties (beauty, resistance to corrosion, scarcity, malleability, uniformity, divisibility) plus it has some industrial uses.

Its an alternative to cash in times of inflation and economic turmoil.
Thats how I view it.

 

[matt0611]

So much fail here.

You question the fact that the value of currency could plummet to virtually nothing?
Its happened many times throughout history.

Theoretically they could print a 500 quadrillion dollar bill.
What are you gonna do about it?
Oh you have dollars? Too bad, sucks for you.

 

[lothar]

Gold isn't an investment in the conventional sense. Its a commodity.
It can function as money because of its rarity and unique properties (beauty, resistance to corrosion, scarcity, malleability, uniformity, divisibility) plus it has some industrial uses.

Its an alternative to cash in times of inflation and economic turmoil.
Thats how I view it.

Gold is an alternative to cash?
That is the 2nd or 3rd time you've mentioned that in this thread and for some reason, no one called you out on it.

I agree with JS80...So much fail in your post.

 

[Jaepheth]

In my opinion, gold is just an investment vehicle just like stocks. In a true emergency, both are equally worthless.

If the shit ever really hits the fan, you need to be holding things of real material value. e.g. steel, chickens, bicycles, guns/ammo, water filters, farm land, etc.

A dollar's (and gold's) utility value changes all the time. A chicken is always worth a chicken.

 

[matt0611]

Gold is an alternative to cash?
That is the 2nd or 3rd time you've mentioned that in this thread and for some reason, no one called you out on it.

I agree with JS80...So much fail in your post.

All you and him have said is "fail".
Wow, thats so very persuasive.

Yes, gold and silver are an alternative to holding cash in my eyes as far as "investments" are concerned. Gold does not give you dividends, so in that way, it is.
Why is that so hard to understand?

 

[matt0611]

It's worth whatever the next sucker is willing to pay for it.

And so is a dollar.

 

[lothar]

In my opinion, gold is just an investment vehicle just like stocks. In a true emergency, both are equally worthless.

If the shit ever really hits the fan, you need to be holding things of real material value. e.g. steel, chickens, bicycles, guns/ammo, water filters, farm land, etc.

A dollar's (and gold's) utility value changes all the time. A chicken is always worth a chicken.

When you own stocks, you own a part of the business and are essentially a partial business owner.

So the stock of company that sells Brita water filters, is worth $0 to you, but yet you somehow think water filters are of "real material value"?

Why would you think steel has any "real material value", but gold, copper, oil, or cotton does not?

 

[JS80]

And so is a dollar.

Exactly. So you agree there's no difference. Both are fiat.

 

[Jaepheth]

When you own stocks, you own a part of the business and are essentially a partial business owner.

So the stock of company that sells Brita water filters, is worth $0 to you, but yet you somehow think water filters are of "real material value"?

Why would you think steel has any "real material value", but gold, copper, oil, or cotton does not?

I'm talking about a complete collapse of the economy. Steel can be forged into useful items, gold just looks pretty. A water filter can be used to keep you alive while the company that made it is no longer in existence.

 

[matt0611]

Exactly. So you agree there's no difference. Both are fiat.

Not exactly, their values are both subjective but thats it. The gold is actual physical material that has SOME utility and rarity.

The paper note itself (the physical piece of paper) is basically worthless and is relatively not scarce at all because it is just paper.
(I guess it could be burned for heat, but thats pretty much it).

Since gold and silver is a commodity it is not fiat money.
The dollar we use today is fiat money.

Their values are both subjective though so.

They can make all the currency they want, they could not do the same for gold (unless someone can figure out how to turn other material into gold or something)

 

[Brainonska511]

Not exactly, their values are both subjective but thats it. The gold is actual physical material that has SOME utility and rarity. The paper note itself (the physical piece of paper) is basically worthless and is relatively not scarce at all because it is just paper. (I guess it could be burned for heat, but thats pretty much it).

Gold is only worth something in making jewelry and some semiconductor applications. Overall, it's pretty useless by itself to an individual. It doesn't have any intrinsic value. Only the value that we instill in it by the belief that it is actually worth something.

The value in any money is the belief that you'll be able to exchange what you have for goods and services. It's because it isn't worth it to cut off the leg of a cow to pay for a few loaves of bread - the rest of the cow would rot in the field before you could finish spending it.

 

[lothar]

All you and him have said is "fail".
Wow, thats so very persuasive.

Yes, gold and silver are an alternative to holding cash in my eyes as far as "investments" are concerned. Gold does not give you dividends, so in that way, it is.
Why is that so hard to understand?

Why should I bother explaining when Warren Buffett explained it better than I could?

Maybe you should tell Warren Buffett to keep Berkshire's $32 billion of cash in gold instead.

Since you consider gold to be an alternative to cash, go and empty all your checking and savings accounts and use it to buy several gold necklaces and bracelets for your wife at Tiffanys.
They're the same thing, right?

 

[lothar]

I'm talking about a complete collapse of the economy. Steel can be forged into useful items, gold just looks pretty. A water filter can be used to keep you alive while the company that made it is no longer in existence.

What do you think steel is made of? How do you think it's made?
What makes you think steel would be useful in a complete collapse of the economy? You think the corporation that makes Brita filters would become bankrupt, but you also think the hammersmith and blacksmith that makes items and weapons from metals won't be?

Owning a water filter is useful, but owning the company that makes them is useless? Gotcha.
Owning steel is useful, but owning iron ore or the stock of a corporation that mines and makes items from the steel itself is useless? Gotcha.

 

[Jaepheth]

Your mileage may vary on owning raw materials like steel or ore; depending on what other tools you have access to.

It also depends how far down the economy goes. Owning stock is just a contract. What if the economy crashes to the point that we're forced to switch to a barter system overnight? What happens if no one agrees your contract is valid anymore?

The factory that makes the water filters may keep running, and not give any of its stockholders the time of day.

 

[matt0611]

Why should I bother explaining when Warren Buffett explained it better than I could?

Maybe you should tell Warren Buffett to keep Berkshire's $32 billion of cash in gold instead.

Since you consider gold to be an alternative to cash, go and empty all your checking and savings accounts and use it to buy several gold necklaces and bracelets for your wife at Tiffanys.
They're the same thing, right?

Alternative to cash in terms of SAVINGS or INVESTMENTS.
I never said I use it in every day life to buy stuff with.

Jesus, I feel like I'm talking to 10 year olds here.