why

Assuming you're able to maintain your income. As I understand it, general deflation usually entails a general drop in incomes, with widespread unemployment, and reduced salaries for those who do still have work. (How can a company maintain worker salaries if the price they receive for goods decreases?)

 

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If you really live in fear of the markets crashing, money becoming worthless, then a PM stockpile is not the way to go. When it gets so bad that everything is virtually worthless, then the best thing to have is knowledge of:

1. Living off the grid with survival techniques.
2. Growing your own food.
3. Hunting for your food.

Living in fear is just wasting your short life you have been given. Collect coins for fun like I do, don't expect them to keep you alive if the worst occurs. :thumb:

 

You are assuming that there will be sufficient income to cover both. The percentage of income budgeted for food and essentials (gas, utilities, etc.) can overwhelm discretionary and debt service budgets. Your gross/nominal income may rise with inflation, but your net/effective income will shrink as cost of living rises faster than your income can compensate. I'm not saying it will, in all cases, make it harder to service fixed rate debts, but people have a hard time downgrading their lifestyles to adjust to the realities of lower effective incomes.

 

Add one thing...accumulate gold coins.
Just like all the Central Banks in the world...they are hoarding gold; especially China.
Gold coins are just another stamped form of the metal.
Want an double benefit...collect gold coins with numismatic value to even-off the edges of the volatility of the market.
If the Central Banks hold/are hoarding gold, leasing gold, everything revolves around gold reserves...doesn't that indicate that it might be a good thing to be your own Central and Reserve bank and own some GOLD?

 

Unless I can eat gold or use them to throw at potential food, I think you misunderstood the point I was trying to make. Gold won't keep you alive when the absolute worst occurs. Food and ammo will have greater purchasing power than gold in such scenarios.

 

Don't take anyone's advice without first doing your own research and due diligence. Nobody has a crystal ball, and nobody can tell you what's right for you. For myself, I like having a lot of ounces because it provides me with peace of mind that no matter what happens with the economy or world events that I will have something of value that will be able to provide me with a means to survive in the worst case scenario. Whatever happens with the economy, the government in power, or the winds of change, I will not be left holding an empty bag no matter what. Of course I have other things to this end, of which gold and silver are not first and foremost, but monetary policy has given a clear indication that inflation is the path we are on. For that reason I think it is a good time to buy in spite of the seemingly high prices, because precious metals are merely a reflection of the erosion of purchasing power of currency, and as long as that will be the case then it's a good time to buy from the longterm perspective.

 

IMO, when a situation arises where Gold can't be used to buy whatever you need, then you will probably be dead soon, or wish that you were. People romanticize doomsday by such words as "prepping" and "self-sufficiency", but true doomsday can't be prepared for. Think nuclear war, large asteroids hitting Earth, mass plague.

On the other hand history DOES support Gold being used by people to escape civil disorder, dictatorships, war zones, etc.

 

A doctor friend of mine says he loves the thought of inflation, because then his income will also go up, and his mortgage and school loans will then be easier to pay. Moral of the story? Get into a recession-proof occupation. Not that I agree with him...

 

Its true though. Inflation helps borrowers and hurts lenders. Read up about William Jennings Bryan. His "Cross of Gold" speech was against a gold standard and in favor of a duel standard. The farmers, his constituency, wanted higher inflation, (or less deflation) and were demanding more money be put into the system so it would be cheaper for them to pay back their loans.

If someone really believed that massive inflation was coming, he would load up on fixed rate debt, and would never buy a fixed rate bond.

 

In the summer of 2008, the lowest a gallon of regular gas sold for in my area was $4.60 a gallon. The self-appointed "experts" said it would never sell for less than $3 or $4 a gallon again. By the winter of 2008, a regular in my area was selling for as little as $1.74 a gallon.

So you and everyone else who says silver will never be 5-7 again are acting a bit high and mighty to keep saying that when there is a very real possibility that it will go that low again. It is just a matter of time and that time will be sometime this year.

 

If you are right sir, I will make you a side bet. I bet if the CME price of silver is $7, no one will be able to physically buy it from any coin dealer for less than $14 for at least a year. Way too many people believing PM is the end all be all, and dealers know that and would keep premiums very high. I bet you that they would bring up the CME when buying though.

 

Oh, I got that 100%. It's just that I disagree with his desire to see inflation.

 

oil prices are always higher in the summer time...

 

If you study economics you will come to understand that the likelihood of a doomsday scenario is higher than a long term sustainable economy.

 

If silver went to $7 the most I would offer such dealers would be $0.35 for a common silver dime, $1.60 for your average silver quarter and $3.20 for your typical 90% silver half. I would tell them that I will be taking my business elsewhere until they come back down to reality and realize that silver is in fact, $7 and not $14. Nobody had a problem selling physical silver back in 2005, for example, when it was largely in the $6 or $7 an ounce range and nobody should have a problem selling it when it goes that low again (which will be later this year).

Yes, you are right. You are so right that oil went from $147 a barrel in the summer down to $35 by winter back in 2008. lol

 

Its just a bet. I am going off my experience in the early 80's when there was still an expectation that silver would go above $30 long term again. You didn't have that expectation and number of market participants in 2005. Completely different scenarios, and I would liken silver going down today more like the early 80's than 2005. We will see, (maybe).

 

Really? In what way? Sure most economic systems break down eventually, but a lot of those are due to externalities and not internal pressures. Just curious what leads to that statement, (and yes I studied economics quite a bit )

 

If silver is ever $7 and ounce again, I'm backing a dump truck up to a pawn shop and buying everything they have. My plan is to hold PM's for the next 35 years. If at any time between the 20 and 35 year mark it spikes, I sell. But I'm fairly young, so I have time to work with.

 

I understand the sentiment, but let me put this into context. What if you bought a truckload of silver, (which would still be tens and tens of thousands of dollars), at $15, then it goes down to 12, then 10 then 8. Life happens in the meantime, and all of this money you have tied up, (having to pay for security), making no money, etc. Everyone here is now used to silver being priced at $25-35, but that is just our expectation. The same expectation existed in the early 80's, and silver kept falling. Many people I know bought at $20 thinking they were getting a screaming deal. Some bought more at $15, then $10, all the while it kept falling. Dealers were charging high premiums because they thought it would go back up and didn't want to sell "at a loss". The expectation of prices was the same back then as today, and those who wagered long lost. Maybe today you would win, but its not guaranteed.

 

One simply can't come up with a simplistic rule that "inflation helps borrowers" without also considering interest rates relative to said inflation, what wages are doing and the complex interaction of those three against asset prices.