Silver is on the rise!

Silver made a comeback after being down as low as $15.61:

Silver is up 0.05 to $15.84/oz as of 11:23 PM US EST.

 

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Newbie question: why tenth ounce?

 

refering to when gold is at $3,000...

The longest chart I could make on Kitco is from 1975 to present. Gold increased 5 fold. If the future is the same, gold will reach $3,000 in about 20 years. However, I believe we're headed into a new Jimmy Carter era, one on steroids. Jimmy tripled gold in less than 4 years, I predict Hussein will do the same.

Gold will be at $3,000 before 2012.

 

August , 1974 - it was illegal for US Citizens to own gold prior. This certainly had an effect on the 5 fold rise in price.

 

They are the cheapest in absolute terms, but percentage-wise you pay a much higher premium, so they aren't really all that great a deal.

 

Hi Hawksquat,

One of the reasons for buying tenth ounce gold Eagles is if you are a survivalist. These often-misunderstood people fear that there is a real possibility of war, pandemic, or government incompetence resulting in a near-complete collapse of the US dollar.

Now this not the same as the World returning to the Stone Age or anything like it. When the mark famously collapsed in Germany in the 1920s, markets still sold food, mechanics still mended cars, builders still contructed houses ... but only those who had hard currency (usually gold at that time) could pay them.

Since then, despite institutions such as the World Bank and the International Monetary Fund, there have three hyperinflations that have been worse than Germany: Hungary in 1946, Yugoslavia in 1994 and, tragically, Zimbabwe in 2008. In those situations, people could use US dollars. If the US dollar were to collapse, what hard currency is there?

Gold and silver, the survivalists answer. But one-ounce gold coins are inconvenient for this purpose. You don't want to sell an ounce of gold for hyperinflating dollars just to buy your week's groceries. The remaining dollars will be worth much less in a week's time. Hence the interest in tenth-ounce and quarter-ounce gold Eagles.

Is all this likely? Of course not. Is it possible? Unfortunately yes; none of the four cases I've mentioned would have thought likely 30 years before. Is it worth buying gold to hedge against it? Well, that's up to you.

Survivalists are the most pessimistic of the four levels of gold bug I described in

http://www.cointalk.com/forum/t50049-3/#post556617

Me? I'm only a second-level gold bug (a rainy day saver) so I bought a Zimbabwean 100,000,000,000,000 dollar note for my collection: I do not expect the US to provide me with the same opportunity!

Later

John

 

Thank you John!

 

And thanks for the link......very informative, and a little scary.

 

whis i would have bought a ton then

 

Of course if those times come, you can cut your 1 ounce gold coin in half. It won't change its value as a currency.

 

We are over-due for a bout of serious inflation IMHO. In the event of a currency collapse Silver may be more useful for paying daily living expenses than gold. Instead of 1/10 oz gold why not just buy silver? I also believe silver is under valued relative to gold and has more appreciation potential.

 

That would make sense because I would think that in a SHTF scenario, a merchant may not have enough "change" to give you if you give a merchant a gold coin to pay for basic necessities in a SHTF scenario.

 

One thing many of those with a survivalist bent don't quite grasp is that in an economic collapse, people are not going to politely line up to buy bread and milk with silver dimes. Instead, a hoard of 1,000 people are going to smash their way through the glass and steal everthing in sight. People known to have gold and silver will be beaten or killed. The police will shoot as many as they can, stores will never reopen, and all commerce will stop. That's what happens when money ceases to be accepted. I like PMs because I think I can make some money from them, not because I believe they will have any value in a crisis.

 

Maybe. Silver's value relative to gold isn't clear and governments, these days, only hold gold as a monetary asset for their currencies. If one is planning to store hard assets for a SHTF scenario, then gold IMO is the choice. I suppose a little silver wouldn't hurt, but only, as you say, for making some change. People who have gold, won't have any problem getting their hands on silver if they need it.

 

Thanks Cloud. I feel really good after reading this post. Nice picture you've painted.

Damned if you do..damned if you don't..

By the way, in the scenario you've described, there wouldn't (probably?) be any discernment. Whether survivalist, or no.

 

I don't think there is even a small chance that the economic landscape envisioned by the survivalists will come to pass. So in my opinion, it is better to focus on doing the things that have worked under most conditions in the past. It is certainly more pleasant to think positive. Nobody can really prepare for Armageddon anyway, because it is difficult to see in advance what will work and what won't.

 

Whenever there has been a currency collapse in the past, the result is painful, but it didn't result in Mad Max Beyond Thunderdome. The only thing that I can think of barring some sort of huge natural disaster that could cause such a scenario would be an out and out nuclear war with the Russians or possibly China. This doesn't really seem likely either. So I agree with Cloud that preparing for such things is pretty fruitless. The people putting in bomb shelters 50 years ago certainly found that out.

 

Russia sold most of it's nuclear arsenal for the price of some BMW's is the rumor and if anyone thinks China is gonna attack us, that'd just be stupid on their part. We're their biggest customer and they own most of our deficit. Killing us would be a mistake on their part, so it's just never going to happen.

 

I would not completely discount the possibility of a zombie apocalypse. World-wide SHTF scenario.

 

You can use your bullion to throw at them then.