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The Importance Of Physical Assets

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Valued Member
Canada
82 Posts
 Posted 10/22/2021  6:26 pm  Show Profile   Bookmark this reply Add sbr to your friends list Get a Link to this Reply
Just watched the 1 hour show "commodities" on BNN and in Venezuela they actually are using gold as a currency. Apparently a haircut costs an eight of a gram ,lunch for two is a 1/4 of a gram . As well apparently Venezuela was also using gold reserves held in Britain to pay for food (multiple articles on the internet).
Valued Member
Canada
82 Posts
 Posted 11/11/2021  09:07 am  Show Profile   Bookmark this reply Add sbr to your friends list Get a Link to this Reply
Gold is starting to make a move again. Cyclicality is at play here as we head into December (I think). As well my sister who has never ever considered gold was at an investment seminar and they recommended that they buy some physical gold so she is looking at buying . Bought some junior miners to offset some of my tec as that sector seems to be not trading that well right now.
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United States
4251 Posts
 Posted 11/12/2021  08:37 am  Show Profile   Bookmark this reply Add fistfulladirt to your friends list Get a Link to this Reply
Gold's not moving, but the dollar sure is.
When I listen to LED ZEPPELIN...so do my neighbors...
Roll hunting since '77
Dirt fishing since '72
Valued Member
United States
87 Posts
 Posted 11/15/2021  02:08 am  Show Profile   Bookmark this reply Add glenmorenee to your friends list Get a Link to this Reply
Gold has been correcting a little over a year now since it's all time high in August 2020. This rally looks pretty good, a good punch over the 200 day moving average line which has flattened out and just ticked up.
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Canada
588 Posts
 Posted 11/19/2021  7:59 pm  Show Profile   Bookmark this reply Add vonigohcr to your friends list Get a Link to this Reply
Gold is flat or down over the last year, depending on your location (home currency).

https://www.kitco.com/gold_currency...herChatmp=no

In the US, it is essentially flat at -0.4%, Canada it is down 4%, the UK, shade over 2% down. It is up in Europe +4% and up by a lot in Japan at almost 10%. For what it is worth, if you are investing in gold, you would be better off/little gain with a stash of Benjamins under your mattress... Yes it has rallied over the last month but that is on the back of a 5-10% drop over the summer.

You can always cherry pick a time frame where gold does well or poorly. In USD, Gold is flat over the last 12 months, up 53% over the last 5 yrs but only 9% over the last 10 yrs. Not a great candidate for an investment.

The Dow Jones Industrial Average by contrast is up 21% over the last year, 80% over the last 5 yrs and 190% over the last 10 yrs. In real terms, $1,000 invested 10 yrs ago in Gold is worth $1,090 today, same $1,000 in the Dow, $1,900. In addition, most gold dealers have a higher spread (difference between spot and actual price charged/paid) vs. most discount brokers.

Gold, Silver etc are great for hobby but not retirement.

Locally, here in Southwestern BC, we have just experienced a year of pain from natural disasters. Over the summer, we had extreme heat that triggered forest fires that destroyed one small town and threatened many others as well as reduced the air quality for much of our province as well as being blamed for hundreds of heat related deaths. Now as we approach winter, we just had a significant rain event that washed out our land connections to the rest of Canada (4 highways and 2 rail links) as well as flooded one of the most productive farming communities in Canada killing uncounted livestock as well as an unprecedented (for this region) tornado that brought down trees and disrupted power. There are significant concerns in much of this province regarding grocery availability with store shelves empty... this has exacerbated the supply chain challenges that have been growing over the last year. In this context... be it snow & cold in Texas or earthquakes around the ring of fire, hurricanes in the US South East, Volcanoes in Iceland or extreme weather in BC... Personally held Gold & Silver reserves are not the safety net that 2-3 weeks of food & water provide. As I said earlier, I trust our western based economies to survive any medium term threat.
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United States
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 Posted 11/20/2021  01:26 am  Show Profile   Bookmark this reply Add mrpapageorgio to your friends list Get a Link to this Reply
It's why I don't buy standalone gold bullion. I buy gold with a numismatic aspect to it that helps with appreciation, but can always fall back on the bullion value if the numismatic value deteriorates.
Edited by mrpapageorgio
11/20/2021 01:27 am
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United States
2512 Posts
 Posted 11/22/2021  08:20 am  Show Profile   Bookmark this reply Add thq to your friends list Get a Link to this Reply
I follow that numismatic urge too mrpapageorgio. However so are an increasing number of people. I cannot find the lower grade rare coins I used to find with regularity anymore, at least not priced close to bullion. I see them in the higher grades, but those coins are priced for their numismatic value only. People have realized that these coins are an order of magnitude scarcer than Morgan dollars, and within a decade are worth more as bullion than the price originally paid.

Oh for the days when I could find cc half eagles for 50% over melt.....it wasn't over 2 years ago....
"Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
Edited by thq
11/22/2021 08:27 am
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United States
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 Posted 11/28/2021  9:29 pm  Show Profile   Bookmark this reply Add mrpapageorgio to your friends list Get a Link to this Reply
I remember people telling me not too long ago to buy pre-33 gold because the premiums are so low......not anymore. I lucked out grabbing a 1890-CC $20 gold piece when prices were lower. Now it has appreciated quite a bit. Good for the value of my current piece, but not good that I can't get more at a decent price.
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Australia
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 Posted 11/28/2021  11:17 pm  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
The house which you own and live in is your most important physical asset. No rent to pay. In the last 13 years, I have not paid nearly $500,000 in 2021 dollar terms.
Over the same period the value has nearly tripled in 2021 dollar terms.

Gold has not matched that sort of performance.
Edited by sel_69l
11/28/2021 11:27 pm
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Canada
588 Posts
 Posted 11/29/2021  5:22 pm  Show Profile   Bookmark this reply Add vonigohcr to your friends list Get a Link to this Reply

Quote:
The house which you own and live in is your most important physical asset


Numismatics in all of its forms (Circulating, NCLT, Bullion) unless it is your primary business, should only be a hobby if you don't want to court financial distress... Over any reasonably long term, both the stock market and real estate markets have out outperformed numismatics and PMs as investments.
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 Posted 11/30/2021  10:47 am  Show Profile   Bookmark this reply Add NumisEd to your friends list Get a Link to this Reply

Quote:
The house which you own and live in is your most important physical asset. No rent to pay. In the last 13 years, I have not paid nearly $500,000 in 2021 dollar terms.
Over the same period the value has nearly tripled in 2021 dollar terms.


A home is the biggest liability: endless repairs, handing boatloads of money to the housing tax man, etc.
And you don't own your home, the bank does (unless you pay off the mortgage in full).
The best way to "own" a home is to put it into an LLC and rent it back from the LLC. That way, you can at least deduct both repairs AND rent.


Quote:
Over any reasonably long term, both the stock market and real estate markets have out outperformed numismatics and PMs as investments.


That is another fallacy.
Home prices have outperformed Numismatics the last couple of decades mainly because of falling interest rates.
When interest rates are going up, home prices probably underperform equities and collectibles.
For instance, in the period 1940 - 1980 (a period of rising interest rates) home prices went up 16x, while the stock market went up 65x and gold 24x.

https://www.cnbc.com/2017/06/27/how...y-state.html
https://www.officialdata.org/us/sto...endYear=1980
Edited by NumisEd
11/30/2021 11:01 am
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 Posted 11/30/2021  12:04 pm  Show Profile   Bookmark this reply Add jbuck to your friends list Get a Link to this Reply

Quote:
And you don't own your home, the bank does (unless you pay off the mortgage in full).
Sel implied his home has been free and clear for 13 years.

Pillar of the Community
Canada
1749 Posts
 Posted 01/11/2022  6:47 pm  Show Profile   Bookmark this reply Add pocket change 50 to your friends list Get a Link to this Reply
I don't know if there's any full proof answers long term? Except possibly diversification for the average person. Owning a paid off home is great depending on the housing market. A home in Toronto about 5 years ago has become almost unattainable for the 30's crowd with inflated prices. I watched some of those reality shows and they were telling their buyers to join another friend they absolutely trust to share the costs of ownership! I remember people losing homes in the early 80's when interest rates spiked and around 2008.

Then as someone pointed out there's property taxes, insurance and ongoing repairs or updates! It's great if a person has the skill or time to do the maintenance!! In some places in Canada trying to find a quality tradesman to do repairs, is like finding a needle in a haystack! Then there's the cost of materials! This summer a 2x4 in my Alberta town was $14. So I'm not sure if there's a good answer? I think we have left out one factor, over the long term, what are going to be most desired by people? How long has the stock market been around in it's current form, to really judge performance in a number of situations?

Probably the best asset to invest in are needed skills and the ability to barter? This has been a most interesting discussion.

Now I'm off to research what happened next door in BC. I don't own a tv, so I did hear something about rains knocking out transportation systems from Vancouver. I couldn't believe people couldn't leave the province from the area!! That had to be a frightening time!! BC was really hard hit last year with major disasters. Friends in Nova Scotia had smoke from there for several days, which was also hard to believe, being the opposite end of Canada.
Edited by pocket change 50
01/11/2022 6:49 pm
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 Posted 01/12/2022  2:41 pm  Show Profile   Bookmark this reply Add vonigohcr to your friends list Get a Link to this Reply

Quote:
Now I'm off to research what happened next door in BC. I don't own a tv, so I did hear something about rains knocking out transportation systems from Vancouver. I couldn't believe people couldn't leave the province from the area!!


Heat dome in June then Forest Fires through the end of summer, one of which completely destroyed the small town of Lytton in 15-20 minutes but also threatened larger towns in the interior.
Atmospheric River in November caused massive runoff that closed all three highways connecting the Lower Mainland to the Rest of Canada. The two rail lines (CN & CP) were also damaged. You could drive to the US but with Covid border restrictions, it wasn't something done lightly. In fact, basic supplies delivered by truck were transported via the US in a great display of international cooperation regarding the delivery of essential goods. Even today, the roads are compromised with one of the routes (#5) being limited to commercial traffic and the others prone to Avalanche closures.
One other outcome from the November rain was that the Sumas Prairie (A lake drained half a century ago) refilled and is still in the process of being drained. All of the farmland in the Prairie will require significant reclamation to restore to productive use.

Over Christmas we experienced temperatures of -10C (10F) with significant wind chill factors on top. Many of the houses in my town experienced both frozen and burst pipes... there is a significant backlog for plumbing work.

Now in the 2nd week of January, we are getting another Atmospheric River with significant rainfall combined with a rising freezing level causing all low fallen snow to melt and contribute to an increased flood risk.

There are numerous people throughout BC who, even today, are still trying to put their lives and property back together... A disastrous second half to 2021... All that was missing was the plague of locusts.

Oh and did I mention Omicron...
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