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<p>[QUOTE=&quot;Clawcoins, post: 3270923, member: 77814&quot;]A store of wealth is a gamble of &quot;future risk management&quot; for something that has a stable future value.&nbsp; Whether that is Gold, Silver, bullets, water, money, or some other commodity.&nbsp; Or even toilet paper.</p><p><br /></p><p>Gold/Silver is considered a storage of wealth as it&#039;s been some form of money for generations.</p><p><br /></p><p>Of course storing cash also is wealth preservations.&nbsp; I think I pay less for a loaf of bread today than I did 10 years ago.&nbsp; Orange juice and spaghetti sauce is cheaper than 15 years ago too from what I recall.&nbsp;&nbsp; I started making my own spaghetti sauce when a jar of Ragu broke $4.00 (now at $1.69).&nbsp; Of course some commodities have a short life and are not good at storing wealth.</p><p><br /></p><p>Cash (as long as it&#039;s stored safely) and PM have very long shelf lives; you can even bury them and hope the cash container doesn&#039;t spring a leak.</p><p><br /></p><p>Money (Cash) Economics has 3 basic Functions:</p><p>(1) storage</p><p>(2) exchange</p><p>(3) unit of account</p><p><br /></p><p>(1) storage is basically hoarding.&nbsp; Money has storage power because of it&#039;s Purchasing Power.&nbsp; (2) It is the defacto medium to buy stuff, and to receive when you sell stuff. (3) is it also what commodities are rated at, defined in units of. i.e. a loaf of bread is $1.99.</p><p><br /></p><p>Of course money is impacted during times of high inflation as it&#039;s value decreases (2) buying power.&nbsp; If you are (1) hoarding it though, it&#039;s future value will be different.&nbsp; Inflation is a &quot;now&quot; pressure on money that affects (2) and (3).</p><p><br /></p><p>Precious Metals - Gold/Silver is also a (1) storage of cash although it has to go through (2/3) exchange in valuation to obtain it.&nbsp; So it is a step away from direct inflationary pressures that Money goes through. So it has different impact pressures than pure cash.</p><p><br /></p><p>Although to Spend it, in most places you have to (2/3) exchange it back to (1) cash.</p><p><br /></p><p>That is where it becomes a long term Risk Management of the Future Value of Money.&nbsp; Because some technicalities will raise the valuation of PMs.</p><p><br /></p><p>Although as we have seen there are times of extreme volatility which may not be related to the basic fundamentals of it&#039;s valuation.&nbsp; One has to take out those extremes in using it to manage it&#039;s future value.&nbsp; Although many will sell during those extreme situations.</p><p><br /></p><p>During 2011 I didn&#039;t sell all my Gold/Silver.&nbsp; I was asked why by a friend.&nbsp; I said .. what would I invest the (1) Cash into then?&nbsp; He looked perplexed back at me - he spent the money he cashed in.&nbsp; &nbsp; My PMs are a long term risk management for the FV of Cash.&nbsp; Truthfully, it looks pretty is my #1.</p><p><br /></p><p>But is PM a long term play against inflation?</p><p>For the investor types going back in history PM were the hedge against the beginning of inflation to get them through the inflationary periods.&nbsp; in the early 1900s there were not many options for investments. </p><p><br /></p><p>So Gold became the defacto security to hold against inflation if you bought it as inflation started ramping up, and sold it at it&#039;s max before inflation decreased. That is the ultimate hedge against inflation for PMs and how to use it.</p><p><br /></p><p>Nowadays, if you really think inflation is causing a problem you can get Treasury Inflation Protected Securities.&nbsp; aka TIPS.</p><p><a href="https://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips.htm" target="_blank" class="externalLink ProxyLink" data-proxy-href="https://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips.htm" rel="nofollow">https://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips.htm</a></p><p><br /></p><p>&quot;<b><font size="5">How TIPS Are Tied to Inflation</font></b></p><p>Treasury Inflation-Protected Securities (TIPS) are marketable securities whose principal is adjusted by changes in the Consumer Price Index. With inflation (a rise in the index), the principal increases. With a deflation (a drop in the index), the principal decreases.&quot;</p><p><br /></p><p>Compared to gold history ...</p><p><img src="https://static.seekingalpha.com/uploads/2013/6/14/681349-13712163513475628-funwithwine.jpg" class="bbCodeImage wysiwygImage" alt="" unselectable="on" /></p><p><br /></p><p>So is Gold really a hedge against inflation?</p><p>TIPS is a direct correlated indicator on inflation; moreso than Gold.</p><p><br /></p><p>Gold .. then becomes more of a Supply/Demand scenario affected more minutely by other impact items such as the US Dollar Index (not CPI), more of a derivative Savings platform (remember we are hit all the time about using PMs for 401ks etc in marketing) and other impact items.</p><p><br /></p><p>PMs are no longer a passive medium for a &quot;storage of wealth&quot; or &quot;hedge against inflation&quot; like they were 100 or 80 years ago where these theories were driven and sold.[/QUOTE]</p><p><br /></p>

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