Are Precious Metals a Thing of the Past?

Discussion in 'Bullion Investing' started by Endeavor, Mar 13, 2020.

  1. Endeavor

    Endeavor Well-Known Member

    Are Precious Metals a Thing of the Past?

    (in regards to investing)

    Equity markets up, precious metals go down. Equity markets down, precious metals go down. Crisis or no crisis, precious metals are dull and inconsequential. Begs to ask... Do modern day investors consider metals irrelevant or obsolete?

    When you think about it, what purpose does precious metal serve? You can't eat it. Yea the idea used to be that you could trade it for food or whatever other necessities, but only cause the person you would trade with also considered it valuable. But what if people stopped considering it valuable? It's not like you would build houses with it when there are more abundant metals that are stronger. Precious metal isn't used in developing life saving medicine. Other than jewelry, I don't see any function precious metal serves that would make it, well, precious.
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  3. Suarez

    Suarez Well-Known Member

    It serves the purpose of being the only thing that's intrinsically valuable the world over. Gold (and the others) are rare and desirable. When people stop trusting in government paper, which includes bonds, the only thing that's left to put your money in that's guaranteed to remain valuable are the precious metals.

    Well, that and cigarettes and ammo!

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  4. baseball21

    baseball21 Well-Known Member

    They've never actually been a good investment. Gold and Silver spike once in a blue moon (actually much less than that) yet some still insist it's a smart way to "invest" or that "its real money". People have lost TONs of money buying into that since the last run up about a decade ago
    Last edited: Mar 13, 2020
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  5. furryfrog02

    furryfrog02 Well-Known Member

    Don't forget TP!
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  6. Michael K

    Michael K Well-Known Member

    But what makes it intrinsically valuable, since it really isn't good for much. You can make jewelry out of it, but in a crisis you can't eat it or wear it.
    It's just because a value has been assigned to it, that is accepted by a majority.
    This brainwashing that this worthless chunk of metal holds it's value will show itself to be just folly over the super-long term.
    A lot of labor goes into finding it, and transforming it. But that is only because it is something that is presumed to have value. Supply and demand is a factor in the value. But you are just buying and selling it with paper money.
    Paper money is just as worthless. It is used as a medium of exchange between people who accept that there is a tangible value attached to it. But in reality it's intangible.
    Last edited: Mar 13, 2020
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  7. Suarez

    Suarez Well-Known Member

    Except it's not worthless. It's heavily used in electronics and many high-tech applications where there aren't good substitutes. But an even bigger reason why it has intrinsic value is because people want it and are willing to go to great lengths to get it. That's pretty much the very definition of value.
  8. desertgem

    desertgem MODERATOR Senior Errer Collecktor Moderator

    About 350 tons of gold are used for such per year worldwide, with about 15-20 % recycled gold. About 8000 tons of silver is used and very little recycled so industrial use should make silver more valuable.

    And yes you are correct about intrinsic value, but maybe that is usually through indoctrination by society that makes it so valuable, rather than a self realization. All of us grew up with Uncle Scrooge McDuck or similar folklore so we do. As electronic "cash" increases among the younger generation, it might change.IMO, Jim
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  9. furryfrog02

    furryfrog02 Well-Known Member

    Tell that to the Bitcoin bois today...
  10. Endeavor

    Endeavor Well-Known Member

    It seems to me like this is "conventional wisdom" passed down by fathers and grandfathers without ever really being questioned. Now it seems like people are waking up and thinking in pragmatical terms.

    The question people are asking themselves is "What can I do with precious metal while in my possession?". You can't eat it. You can't use it build something that is better using cheaper and stronger metals. You can't get high off it. So what good is it to someone when everyone realizes it serves no functional purpose to improve ones life (and therefore won't give you something for it)?
  11. Islander80-83

    Islander80-83 Well-Known Member

    Not if rare earth metals are considered precious.
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  12. FarmerBill

    FarmerBill Member

    It lets me sleep a little better at night. I put gold and silver in the category of things Id rather have and not need than need and not have. Its not an investment its insurance. And like dear old dad said "It don't eat no oats".
  13. Endeavor

    Endeavor Well-Known Member

    It might have some superior conductivity qualities, but there are other metals that aren't much worse and at far abundant quantities and cheaper cost. This also doesn't explain past value when electronics didn't exist or were primitive.

    Yea people have historically gone to great lengths to get it but for what purpose? For jewelry? Perhaps it's a status symbol thing and it's value derives from attracting mates to get in bed with you? LOL. Okay that could actually be a reason, but one that people seem to be getting away from as society becomes more pragmatic.

    Is the loss of interest in superficial things (such as precious metal) a sign the average person is becoming more concerned with surviving and less concerned with luxury?
  14. Endeavor

    Endeavor Well-Known Member

    Well said Jim. I think a large reason older people associate precious metal with wealth and sound investing is cause money itself was made from it. I don't need to explain to members on a coin forum how that came to an end with FDR's order in 1930s and 1964 in the case of silver.

    I do think we may be headed towards a day where precious metal isn't considered anything special. It will just be another commodity, if that.
  15. Suarez

    Suarez Well-Known Member

    Well, that's not a terrible argument. If you're not willing to accept its uses as I've already mentioned then, yeah, you can't do a whole lot with gold. In this sense wouldn't it be the same with every other metal though? Why are you singling out gold specifically?

    Gold is ultimately an instrument for trading and for storing value (and looking good when worn). You could say that a case of Ramen noodles is infinitely more useful than a gold brick in some Mad Max-style apocalypctic scenario. However, you'd be making the assumption that ordinary people wouldn't be willing to trade you that gold brick for a whole lot more than Ramen. Can you realistically expect that to be the case?

  16. Endeavor

    Endeavor Well-Known Member

    Like I said before, conventional wisdom passed down by dads and granddads. Sounds great until one day everyone wakes up and realizes it's just a shiny metal. Good luck selling it then.
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  17. Endeavor

    Endeavor Well-Known Member

    Well I didn't really specify gold, but it is a short list of precious metals and gold is the most popular one of all so yea you could say gold is at the center of my question.

    I can't expect that to be the case so long as the charade that gold is valuable is widely accepted by many.
  18. Suarez

    Suarez Well-Known Member

    Where oh where do you get that "people are getting more pragmatic"? Here's a fact: each year more and more gold is mined and demand keeps pace. Why is this? If it's really some passing fad demand should be dropping.

    The part you're missing is recognizing the effect of human nature. People want what others want. If we were all as logical and as coldly rational as Spock then, yes, we'd have a completely different world but that's not the case. If you walked by a gold coin I seriously doubt you would pick it up excitedly. Or are you saying you wouldn't? If you did pick it up then why? The answer is because you can sell it. It has a value that you can easily cash in on.

  19. Endeavor

    Endeavor Well-Known Member

    I'm not stating as fact that the world is getting more pragmatic but postulating that it could explain how price of precious metal on spot markets don't react like they used to during times of crisis. I don't know if the rate of mining is increasing or not but it seems like the demand isn't reacting like it normally would based on spot prices posted.

    Since the supply is rising due to ongoing mining shouldn't that concern folks that hoard precious metal in the hopes of cashing out at a profit one day? Imagine waking up one day and the whole world realizes it's just a shiny metal.

    Well yea, that's my point. There isn't a tangible reason for precious metal having high value. It's basically all like a marketing gimmick.
  20. Randy Abercrombie

    Randy Abercrombie Supporter! Supporter

    Well, that and the fact that empires have been built on silver and gold for many millennia. I would agree that it is a horrid investment vehicle. But like a pretty girl, I sure do love to sit and stare....... But in all seriousness, don’t discount the many thousands of years of history attached with the intrinsic value of PM’s.
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  21. Suarez

    Suarez Well-Known Member

    Dude, seriously, think about what you're saying. Do you really think that some day people are going to "wake up" and toss their jewelry in the garbage because they just suddenly realized it's worthless? Maybe throw out that diamond-encrusted Rolex since their phone is more accurate anyway?

    You're missing two big aspects. First that human nature drives the markets to a large degree (the stock market wouldn't exist otherwise) and, secondly, the basic economy principle that value is relative. It is derived both from available supply AND demand. Demand is driven by wants as much as by needs. This has been the case since the dawn of humankind. Perhaps even predates it.

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