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The Importance Of Physical Assets

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Pillar of the Community
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 Posted 10/02/2021  3:26 pm  Show Profile   Bookmark this reply Add ijn1944 to your friends list Get a Link to this Reply
Maybe I should rethink my stamp collection.
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 Posted 10/04/2021  5:24 pm  Show Profile   Bookmark this reply Add jbuck to your friends list Get a Link to this Reply

Quote:
...I think the worse choice Nixon made was taking us off the gold standard, it allows for unlimited money printing, and debt.
He had no choice. Maintaining the gold standard became untenable with continued growth of the US economy (or even the world economy). There is not enough gold on the planet to back our money supply (and that includes the stuff still in the ground).



Quote:
...I think it is a good idea to have tangable assets like houses, and coins and precious metals. Even if you dont agree, it cant hurt anything to have it as a hedge.

I do believe our fiat system is a fascinating design (on paper at least, pun intended). Volumes have been written for and against it, and I will not rehash those arguments here. I only preface with this because while I believe it is not the demon most make it out to be, it can fail from mismanagement and abuse.

With that being said, I am definitely in the "keep some physical assets" camp. They do not have to be (exclusively) PMs and do not even have to appreciate much (or at all). I believe it could be anything that keeps its value and utility during a crisis, which is when you will need them most (and may well wish you had them).
Pillar of the Community
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 Posted 10/04/2021  5:33 pm  Show Profile   Bookmark this reply Add hfjacinto to your friends list Get a Link to this Reply
I'm like JBuck, we have a home, cars and other items that are physical in nature with some property in Portugal in case the SHTF in the US, being a dual citizen has its benefits.

And while I generally have cash in case of unexpected purchases I have and will continue to sell surplus physical assets (like watches, coins, gear) when I need quick cash to pay for an impulse purchase.

eBay had made it really easy to sell stuff that you don't need :)
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Canada
82 Posts
 Posted 10/04/2021  11:52 pm  Show Profile   Bookmark this reply Add sbr to your friends list Get a Link to this Reply
I am afraid of deficits ,even more now because it is systemic worldwide. A country on the news today took off 3 zeros off their currency ,can it happen in North America who knows but you can't print helicopter money forever . Our house and assets are paid off. we have 4% in physical precious metals and 4% in mining stocks (gold, nickel ,lithium and base metals). But our base is solid dividend and reit stocks .As well we currently have a lot of oil and gas companies (mainly Canadian ). It seems in history gold comes out in emergencies .I look at precious metals as insurance , never want to use it but glad we have it.
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 Posted 10/05/2021  04:52 am  Show Profile   Bookmark this reply Add fistfulladirt to your friends list Get a Link to this Reply
In a low fixed-interest rate setting and possible future high rates of inflation, I'm thinking that taking on some debt is not all that bad of a thing.
Still nice to have physical assets as a backup.
When I listen to LED ZEPPELIN...so do my neighbors...
Roll hunting since '77
Dirt fishing since '72
Valued Member
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87 Posts
 Posted 10/07/2021  01:23 am  Show Profile   Bookmark this reply Add glenmorenee to your friends list Get a Link to this Reply



Quote:
"I am afraid of deficits ,even more now because it is systemic worldwide."


This is actually a good thing. It makes a collapse of any one of the majors very very unlikely. Same boat, same ocean. But if you are paddling along side like Venezuela, you may not make it.

No major country will commit hari-kari when everybody else is doing the same thing. And no major would go TOO far with the printing because their currency would suffer and they'd end up like Venezuela.

As jbuck said, Nixon had no choice. Looks like brilliance in hindsight, but here are, world's richest and most productive country, our currency is the world standard.
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Canada
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 Posted 10/07/2021  09:18 am  Show Profile   Bookmark this reply Add sbr to your friends list Get a Link to this Reply

Quote:
"no major would go too far with the money printing " .


What would be considered too much printing ,I have read a few articles claiming up to 50% of all US money was created in one year . In Canada our current leader created more debt than all our previous leaders put together ,too much not sure . The big rise over cryptos is partly due to fear of fiats .While some say low interest rates is a great time to borrow when is a great time to repay debt or is that ever to happen . *** Redacted by the Staff *** .It's very hard to talk about gold without talking about deficits and governments so I won't comment any further so I don't cross any rules here.
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 Posted 10/07/2021  10:42 am  Show Profile   Bookmark this reply Add Adam_E to your friends list Get a Link to this Reply

Quote:
While some say low interest rates is a great time to borrow when is a great time to repay debt or is that ever to happen


Are you asking from a consumer perspective or from a governmental perspective?

The answer if you are a consumer would be when inflation rises. When inflation goes up the value of your asset will appreciate more than the interest on your debt, and the principal will be worth less relative to it's purchasing power. Money now is (almost) always worth more than money later, but this is doubly true for high inflation environments. People who were able to purchase houses in the late 60's made out really well due to the 70's inflation crisis.
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 Posted 10/07/2021  12:23 pm  Show Profile   Bookmark this reply Add glenmorenee to your friends list Get a Link to this Reply
To sleep better you might check out this handy site that has all the foreign currency exchange rate charts. Really handy and easy to use. XE.COM.

Click on CHARTS. Use the 2 arrows in the center to toggle back and forth and use the view that you are most accustomed to when looking at your currency versus others. Click 10 YEARS to get an idea of a trend if any.

AUS$ and CAD$ look pretty much the same. Big bulge from the oil and natural resource boom in 2010-2014. I remember when the AUS$ was EVEN with USD! Back then our relatives from Australia were traveling and on a spending spree and were quite generous with cash gifts to our kids. I looked at the chart and sold all the AUS$. Charts look pretty stable. The rest of the world doesn't see any untoward printing, yet.

Check out what looks like an enemy list:

Iranian Rial
Russian Rupee
Turkish Lira

And poor Venezuela and Argentina. With charts like these, you don't need gold, you need guns and ammo.

Japan prints a lot but seems to have found a comfortable level.

Must be getting hard to sleep in India. That trend does not look good. Might explain their fascination with gold.

And how is the USD doing against the tight fisted Swiss? Hmmm, looks stable.
Edited by glenmorenee
10/07/2021 12:26 pm
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 Posted 10/07/2021  4:55 pm  Show Profile   Bookmark this reply Add psuman08 to your friends list Get a Link to this Reply

Quote:
First and foremost , a completely paid off house is paramount .
Then zero consumer debt .
Everything else falls into place after that .
Then invest invest invest in SOLID companies that pay
Dividends .


While I understand the value of "owning" your home, with rates the way they are or at least have been, I will gladly hold a mortgage.

The market has easily outperformed my 3.5% mortgage, so it is better to invest that money. I agree investing in solid companies. That said, no matter what your age you need to have some tech, and they are generally not paying dividends.

Of course, the best advice for anyone is that no matter what investment you make, be comfortable with it so that you can sleep at night.
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 Posted 10/07/2021  5:06 pm  Show Profile   Bookmark this reply Add jbuck to your friends list Get a Link to this Reply

Quote:
Of course, the best advice for anyone is that no matter what investment you make, be comfortable with it so that you can sleep at night.
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 Posted 10/07/2021  6:04 pm  Show Profile   Bookmark this reply Add Adam_E to your friends list Get a Link to this Reply

Quote:
While I understand the value of "owning" your home, with rates the way they are or at least have been, I will gladly hold a mortgage.

The market has easily outperformed my 3.5% mortgage, so it is better to invest that money


This, exactly. This is a big fundamental problem that most people don't understand. Having debt, in and of itself, is not necessarily a bad thing. If you can borrow money cheaply to purchase assets that will likely retain their value or go up in value, you are effectively leveraging your income to increase your net worth. If someone hold a mortgage at under 3.5%, instead of making extra payments to pay off the house faster, contributing that money to a 401K will pay for itself in under 10 years. This is why governmental debt isn't necessarily a bad thing if the debt is being used to improve the country in way that will pay dividends down the road. Additionally, holding debt means the creditors have an interest in you succeeding so you can eventually pay down the debt, this is more relevant in the world stage than the consumer world, but it still holds true.

The important caveat to this is that the debt must be held in things that will at the very least retain their value, and the interest rate can't be too high. Holding credit card debt because you purchased a new phone or a car loan are not good examples of exerting leverage.
Edited by Adam_E
10/07/2021 6:06 pm
Pillar of the Community
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 Posted 10/08/2021  11:07 am  Show Profile   Bookmark this reply Add thq to your friends list Get a Link to this Reply
When I sold my dad's estate coins, the gold contributed at least 90% of the cash proceeds. I don't know how much he paid for it, but it was worth far more than all his modern proof sets. Some coins are better hedges against inflation than others. And compared to the other junk accumulated in his basement even the modern proof sets looked like a winner....

I took this lesson to heart. For the past 50 years precious metals have been a pretty good hedge. Some of the numismatic gold and silver coins have outperformed the metals themselves (branch mints and pre 1800's, eg), but they're difficult to guess. I focus on rarity and affordability. Unfortunately so does everyone else....the days of bargain low survival coins are gone....
"Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
Edited by thq
10/08/2021 11:07 am
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 Posted 10/14/2021  11:53 am  Show Profile   Bookmark this reply Add vonigohcr to your friends list Get a Link to this Reply
A couple of things said in this forum resonate for me but #1 & #2 from @Pacificoin

Quote:
don't think of Numismatic coins as an investment.


Quote:
zero consumer debt


These are paramount...

Home purchase debt, investing debt... all good topics of debate... I agree that you should increase investments before accelerating debt payoff on real estate or other investments if... and only if your investment income exceeds the interest that would otherwise be payable if you hadn't accelerated the debt payment. e.g. an additional $100 on a 3.5% mortgage will reduce interest by $3.50 where as $100 invested at 5% will return $5.00 Seems like a reasonable decision to me... I know the actual math is more complex but this is not the place for in depth business math

The key assessment though is to realize that metals are not an investment... they are at best a hedge against currency devaluation.

Also for doomsayers, PMs will do you no good in an complete fiscal meltdown... just look at Venezuela or any failed economy from the past. Nobody is clamoring for gold there... just food, shelter, fuel to heat... survival items.

I am not a prepper; I trust our western economy to survive even though it may be painful from time to time (remember the early '80s). I invest for retirement and buy PMs & Numismatics for my hobby. My only accommodation for future doom is that while I live close to the ocean (Vancouver BC area), my house is at 100m (330 ft) elevation so tsunamis or sea level rise are less likely to affect me directly.
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 Posted 10/14/2021  6:17 pm  Show Profile   Bookmark this reply Add fistfulladirt to your friends list Get a Link to this Reply

Quote:
Also for doomsayers, PMs will do you no good in an complete fiscal meltdown... just look at Venezuela or any failed economy from the past. Nobody is clamoring for gold there... just food, shelter, fuel to heat... survival items.
I disagree. I doubt many if any common citizens in Venezuela own gold. If they had any gold at all it sure would make their lives easier.
When I listen to LED ZEPPELIN...so do my neighbors...
Roll hunting since '77
Dirt fishing since '72
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