With all due respect Scott, I thought he laid that out pretty well. At first blush I thought it was meant seriously as a put-down of Junkster's expressed incredulity. Than ... oh boy.
Yeh - I've heard the general idea before too and tend to agree. Wouldn't want to be walking down the street with a pocket full of gold or anything else of great value during periods of civil unrest.
Well, if I'm going to go into detail:
1. I don't care what people invest in. If you want to buy Beanie Babies, that's great. If someone wants to invest in metals or baseball cards (as for the latter, good lord I wish I'd sold mine
years ago before the bottom fell out. I literally called a dealer who I knew used to sell them, along other things - coins, stamps, jewelry, etc) and asked last year if they still did and they laughed.
For those who have the mindset of buying metals as an "insurance policy" against any number of scenarios, I'd hope that they have some level of diversification to their holdings, as in my view - the mentality that leads to owning gold in that regard does not mean just holding gold.
If things go "Mad Max" (and the trailer for the remake of that looks nuts), then you hold your gold with the hope that you have some "monetary" asset that can be traded for the new currency on the other side if it ever gets there. If we go "Mad Max" for whatever reason, hopefully you have other such preparations (seeds, essentials, some skills including gardening, etc.) You hope that you are able to hold onto your gold until the "other side" of it. Your stocks aren't going to do you any good, the gold is at least tangible if you can go through the period and hopefully you've created enough friends (even, gasp, Republicans! It's amazing how much energy is spent in this country on anger over someone else's political views, left or right wing) that you may be able to trade the gold within your network.
However, in Weimar Germany (see the book "When Money Dies"), things didn't go "Mad Max", but they were awful. Still, restaurants were open (although the actual total for the cost of your meal may have changed by the time you were done with it) and someone with some gold coins may suddenly be able to pay off their mortgage with one. From "When Money Dies", "...I, too, have exchanged by husband's gold watch for four sacks of potatoes, which will at all events carry us through the Winter." If you were the farmer with a ton of potatoes to sell and a field to grow more, you were likely in better shape than the person with no field and some gold, but that person was in better shape than the person with a bunch of Papiermarks whose value was depreciating so rapidly that some used them as wallpaper.
"A liter of milk, which had cost 7 marks in April 1922 and 16 in August, by mid-September cost 26 marks. In only nine months, Mr Seed's chauffeur's weekly bill for an identical food basket had risen from 370 marks to 2,615. ...An increase in wages granted at the end of one week would not meet the rise in prices the following Tuesday."
then:
"In the meantime, September's 26 mark liter of milk became October's 50-mark litre." (202 by December.)
It goes on (again, it's been a while since I've read it and an understandably dark and depressing read but an interesting look at history.)
Again, I swing towards the idea of productive assets, but I don't have anything against those who go for metals - although I do think that if they are entirely in metals that's a mistake as there are any number of things that could fall under someone looking for "insurance policy" assets (seeds - even, gasp, GMO ones! lol)
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As for the idea that other things do well and that land (ag land) is a good idea: "Her Hans-Georg von der Osten recollects that in February 1922, with a loan from a friendly banker, he bought an estate neighboring his own property in
Pomerania for 4 million marks. He then paid the debt in the autumn with the sale of less than half the crop of one of his potato fields. In June of the
same year, when prices were shooting up ahead of the mark, he bought 100 tons of maize from a dealer for 8 million marks. A week later, he sold it back to the dealer for
double the amount. Only the country people were surviving in Germany in any comfort: anyone who lived off the land had the readiest access to real values."
Everything is also not either "black or white", there are periods in history where things were awful but things still functioned and metals were not a bad thing to have. However, I think those who have the mentality of gold as an insurance policy would be mistaken to just go for that alone.
Additionally, I guess it goes back to my philosophy when it comes to investing in the present day. While there are admittedly a couple of exceptions, I sleep well at night from the standpoint of the majority of what I'm invested in are things are hard assets and/or that serve a need, including energy, ag, health care, railroads (I own CP, CNI, UNP, BNSF (BRk-B) and KSU, so that covers Canada, most of America and Mexico, as KSU goes into Mexico and UNP owns a 26% stake in Ferromex) and the like. I mean, even Visa and Mastercard - who take a % of every transaction and prices go up over time. There's "bad" where society is still functioning, and if that happens, I do believe that these things will fare better. If things don't get bad, these are still necessities in many cases.
