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LuckyOne

I Have Never Seen It Put This Way .......

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http://www.housepricecrash.co.uk/forum/index.php?showtopic=154242&st=132

Rather than hijacking the OP, I thought that I would bring this over here.

I have to admit that I had never thought about gold in these terms before. If the world goes all Weimar / Zimababwe, the owners of 100 to 1,000 ounces of gold will be very rich.

The logic of holding 5% to 10% of any portfolio in physical gold is further strengthened by this argument. Someone who "only" loses 90% of their wealth when everyone else loses 100% of their wealth is still very well off.

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Can't really add anything to the logic except to say that in the given circumstance then the gold is your 'seed' money for once the worst is over. Also, I think that 10% is too conservative. I started buying at £300 an ounce and am far from pleased that my holdings have almost trebled. On the contrary, since the greater percentage is cash I am all too aware of how much value it has lost. Gold hasn't gone up from £300, the value of sterling has fallen so that it now costs over £870 in paper notes.

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Further to this, as Dr Bubb showed us a long time ago (I can't find the thread anymore) in addition to a more recent reminder, the real value of many assets (especially housing) crashes massively in real terms and relative to income in a hyperinflationary environment.

We don't know whether we are going to have hyperinflation or not (even if we think that we will). Fortunately, we do not need to risk 100% of our portfolio to retain more than 100% of our current purchasing power. If we retain 10% of our real wealth in a world where real prices have dropped by 95% (even if they are up by 1,000,000% in nominal terms) we are twice as well of than we are to-day without overexposing ourselves to being wrong.

I might not be putting this that well but hopefully I am sort of making the point.

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It depends on your point of view. I don't think you would be able to buy much for a Britannia at a local market in Zim. FWIW I'd raise my % in PMs but I have found some things which give me even better returns, so I'll stay in them unless things change.

Rising PM prices are a bad thing, as has been stated before. If things go all rioty then you'd be stuffed trying to protect 6kg of gold.

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Can't really add anything to the logic except to say that in the given circumstance then the gold is your 'seed' money for once the worst is over. Also, I think that 10% is too conservative. I started buying at £300 an ounce and am far from pleased that my holdings have almost trebled. On the contrary, since the greater percentage is cash I am all too aware of how much value it has lost. Gold hasn't gone up from £300, the value of sterling has fallen so that it now costs over £870 in paper notes.

Something very useful that I learned from this site when talking about asset allocation and portfolio rebalancing is to think about my "insurance" in terms of ounces and not in terms of fiat.

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http://www.housepricecrash.co.uk/forum/index.php?showtopic=154242&st=132

Rather than hijacking the OP, I thought that I would bring this over here.

I have to admit that I had never thought about gold in these terms before. If the world goes all Weimar / Zimababwe, the owners of 100 to 1,000 ounces of gold will be very rich.

The logic of holding 5% to 10% of any portfolio in physical gold is further strengthened by this argument. Someone who "only" loses 90% of their wealth when everyone else loses 100% of their wealth is still very well off.

The same applies to any other asset such as property or shares, particularly shares that earn foreign income. In Argentina for instance (historical hyperflation and currently over 25% in reality) single bed apartments go for $250K. Cash has devalued by 75% but property kept its value.

Why do you think share prices go ballistic with QE? becuase they are an inflation hedge and unlike Gold they return a dividend, Gold simply sustains your wealth - it doesn't make you richer.

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Something very useful that I learned from this site when talking about asset allocation and portfolio rebalancing is to think about my "insurance" in terms of ounces and not in terms of fiat.

You started working your pension out yet?

I figure that I could live on under £1k a month when I retire and am mortgage free.

That means having to put away a krugerrand now for each month of retirement living later. Pretty scary stuff on top of living and saving.

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That means having to put away a krugerrand now for each month of retirement living later. Pretty scary stuff on top of living and saving.

That's one of the key issues about PMs, particularly physical. They provide you with no income, you will be drawing down on a static capital for your pension. You will also incur security / insurance costs. Contrast that to the possible scenario if you had put that krugerrand's worth into a variety of gold miners each month.

Edit to add: Sorry, I'd rather not give away my hard-researched secrets. You are already on a good thing with gold, and you have mentioned that you don't like reading lots of reports and perhaps digging for info, which is what is required to even stand a chance of outperforming PMs.

Edited by Cash with Nowhere to Go

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You started working your pension out yet?

I figure that I could live on under £1k a month when I retire and am mortgage free.

That means having to put away a krugerrand now for each month of retirement living later. Pretty scary stuff on top of living and saving.

I am probably older than you are so I am much further down the pension road than you are.

Most of my physical gold is in a vault in Switzerland. I have a few 1/10th oz, 1/4 oz, 1/2 oz and 1 oz coins at home.

My "rule" is to spend everything else first before I touch my gold. Hopefully I will be able to exchange some of the coins for tokens which will aloow me to pay for travel if we really get to that stage.

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Hopefully I will be able to exchange some of the coins for tokens which will aloow me to pay for travel if we really get to that stage.

Hopefully they will get you over to switzerland :lol:

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That's one of the key issues about PMs, particularly physical. They provide you with no income, you will be drawing down on a static capital for your pension. You will also incur security / insurance costs. Contrast that to the possible scenario if you had put that krugerrand's worth into a variety of gold miners each month.

Edit to add: Sorry, I'd rather not give away my hard-researched secrets. You are already on a good thing with gold, and you have mentioned that you don't like reading lots of reports and perhaps digging for info, which is what is required to even stand a chance of outperforming PMs.

I do agree that miners are probably a better store of value than bullion as they provide a return and have the capacity to create PMs as PMs get more expensive / technology improves. They are certainly much better than claims on PMs like ETFs etc.

There is still a role for physical bullion though. Two years of living expenses spread out over a few uncorrelated location probably works.

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Hopefully they will get you over to switzerland :lol:

Exactly. And that Switzerland hasn't been invaded by the US Fed's Army that it creates in 2018.

There are so many events in history where I ask myself why people didn't just moved before things kicked off as they were so obvious in hindsight. I just hope that I am able to make the right decision at the right time if we are going down some of the paths that we have been down so many times before in history.

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The same applies to any other asset such as property or shares, particularly shares that earn foreign income. In Argentina for instance (historical hyperflation and currently over 25% in reality) single bed apartments go for $250K. Cash has devalued by 75% but property kept its value.

Why do you think share prices go ballistic with QE? becuase they are an inflation hedge and unlike Gold they return a dividend, Gold simply sustains your wealth - it doesn't make you richer.

This is not true. In the 70's, the closest approximation for the situation we have now, the stock markets returned a real return after infaltion, but only just (can't remember the exact figure - think it was 5% from 70 to 80). Meanwhile gold increased in real terms many fold.

The same is true today. Look at the stock and property markets priced in ounces of gold and they are both down in real terms, only gold is up in real terms.

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It depends on your point of view. I don't think you would be able to buy much for a Britannia at a local market in Zim. FWIW I'd raise my % in PMs but I have found some things which give me even better returns, so I'll stay in them unless things change.

Rising PM prices are a bad thing, as has been stated before. If things go all rioty then you'd be stuffed trying to protect 6kg of gold.

Nonsense.

If things get rioty you are more likely to have to worry about your car being burnt by a mob, unless of course you wear it like B.A. Barracus.

Gold is at no more risk than cash in your wallet, or anything else you own, provided you are prudent about who knows you own it.

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Exactly. And that Switzerland hasn't been invaded by the US Fed's Army that it creates in 2018.

There are so many events in history where I ask myself why people didn't just moved before things kicked off as they were so obvious in hindsight. I just hope that I am able to make the right decision at the right time if we are going down some of the paths that we have been down so many times before in history.

I always figured it would just be a matter of getting to the airport until the iceandic volcanoes showed how easily flights can be stopped. And that is before thinking about if an airport could be reached and what you could carry in your pockets :lol: If you plan on getting a boat to France then you best be on one before anyone else decides that it may be a good idea.

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That's one of the key issues about PMs, particularly physical. They provide you with no income, you will be drawing down on a static capital for your pension. You will also incur security / insurance costs. Contrast that to the possible scenario if you had put that krugerrand's worth into a variety of gold miners each month.

Edit to add: Sorry, I'd rather not give away my hard-researched secrets. You are already on a good thing with gold, and you have mentioned that you don't like reading lots of reports and perhaps digging for info, which is what is required to even stand a chance of outperforming PMs.

The key with gold at the moment is not income, but capital return, that's where the payday is at.

Of course, you could get a pension instead. Saw that the BBC pension fund has a £1.5Bn hole in it the other day. Hmmmm, pension or gold? Good luck BBC Pension fund holders, did someone say pennies on the pound?

Of course, there are stocks out there that may well out perform gold, even in a depression. But they require research, luck and judgement to find and you are just as likely to lose as win if looking for a high yield. In general the markets in general are mkaing negative real returns in terms of gold (real money). Gold is the safest investment for a decent low-risk return in the coming months and years IMO. Especially when considered in context of the threat to fiat and corporate and financial institutions in the current environment.

Edited by General Congreve

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I always figured it would just be a matter of getting to the airport until the iceandic volcanoes showed how easily flights can be stopped. And that is before thinking about if an airport could be reached and what you could carry in your pockets :lol: If you plan on getting a boat to France then you best be on one before anyone else decides that it may be a good idea.

Depending on the severity of the situation, you may have to "requisition" a suitable craft to make your journey - do you have the skills to do so, then pilot it safely?

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I do agree that miners are probably a better store of value than bullion as they provide a return and have the capacity to create PMs as PMs get more expensive / technology improves. They are certainly much better than claims on PMs like ETFs etc.

There is still a role for physical bullion though. Two years of living expenses spread out over a few uncorrelated location probably works.

Steer clear of ETF's and especially any unallocated gold funds. A decent stash of physical bullion comes first. Miners as a more speculative play with a smaller proportion of your capital are worth a punt. Junior miners made amazing leveraged returns for their share holders in the 70's.

That said I hold no miners at the moment. Have been waiting (in vain it would appear) for a global stock crash part 2 to get in and pick up miners cheap. Maybe I shouldn't have held off, maybe QE will keep the market going up, up, up forever?

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This is not true. In the 70's, the closest approximation for the situation we have now, the stock markets returned a real return after infaltion, but only just (can't remember the exact figure - think it was 5% from 70 to 80). Meanwhile gold increased in real terms many fold.

The same is true today. Look at the stock and property markets priced in ounces of gold and they are both down in real terms, only gold is up in real terms.

Not true.

Gold isn't even at its inflation adjusted high, In other words it has fallen in value against paper money (massively, even now) while returning no income. You are being selective with your time span and ignoring the income shares produce. Asset appreciation is not as important as income.

Property keeps returning an inflation busting income, you don't mention that.

Edited by Peter Hun

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Depending on the severity of the situation, you may have to "requisition" a suitable craft to make your journey - do you have the skills to do so, then pilot it safely?

Wouldn't get too worried about to societal breakdown. Even if Russia's darkest days in the 90's, you could still get from A to B, especially if you had money to grease the right palms.

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Not true.

Gold isn't even at its inflation adjusted high, In other words it has fallen in value against paper money (massively, even now) while returning no income.

The real value of property absolutely collapsed during the Weimar episode :

http://www.housepricecrash.co.uk/forum/index.php?showtopic=117772&st=626

We might be talking at cross purposes here. There are probably better things than gold in a high but not hyperinflationary environment. I cannot think of anything better than gold if we go all Weimar / Zimbabwe.

If you are willing to give up physical custody of your gold, you can earn a return on it through the bullion leasing market. The returns are usually T-Bill like so not worth it at the moment (or ever in my view).

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Not true.

Gold isn't even at its inflation adjusted high, In other words it has fallen in value against paper money (massively, even now) while returning no income. You are being selective with your time span and ignoring the income shares produce. Asset appreciation is not as important as income.

Property keeps returning an inflation busting income, you don't mention that.

My example was shares versus gold in the period 1970 to 1980. Since then, due to fiscal sanity taking hold with a return to high interest rates in 1980, we had a period of economic growth that meant gold wasn't the best asset to be in. Since then property and shares did well and gold fell in value, I don't dispute this.

However, in real terms, since 2000 the stock market indexes have produced negative returns, and in terms of gold UK house prices have fallen consistently since 2005.

On the other hand gold has risen since 2000, when valued in any fiat currency.

It's all about picking the right investment theme for the times (I bought property in 2002 and sold in Aug 2007 at a decent real profit, now I am in gold :ph34r: ). Those that just 'fire and forget' lose in the long run.

Edited by General Congreve

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Wouldn't get too worried about to societal breakdown. Even if Russia's darkest days in the 90's, you could still get from A to B, especially if you had money to grease the right palms.

I am not worried, doubt it'll happen. Just thought I'd inject a bit of TFH-ness. This is the gold forum, after all.

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I am not worried, doubt it'll happen. Just thought I'd inject a bit of TFH-ness. This is the gold forum, after all.

My approach is to think about all of the extreme outcomes and hedge against them as best I can without giving up too much of the returns available from the more likely outcomes.

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  • 245 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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