jpinpb – you are giving more thought to questions about gold than most people do – kudos to you
the question you are currently posing, “who is going to pay $5000/oz for gold during financial Armageddon?” (I’m paraphrasing a little), is an excellent one
Rick Ackerman (http://www.rickackerman.com/) wonders the same thing – in an economy rife with unemployment and people struggling just to survive financially, how is anyone going to pay thousands of dollars for an ounce of gold and why would they do so even if they could?
Rick also believes that we are headed into MASSIVE deflation because there is no mechanism to get money into the consumer’s hands and therefore, no way for printing press money to have an effect in the economy – according to Rick we can hand money to the banks until the cows come home and we still won’t create inflation because banks don’t SPEND money, they lend it (ie, our current path is deflationary NOT inflationary regardless of how many trillions Ben and Tim give the banks)
Rick is quick to point out that gold is likely to hold its value better than any other asset class regardless of whether we have inflation or deflation – he points to the last year or so as proof (gold has dropped less than 20% while real estate and equities have gotten creamed)
Some analysts say that gold does well in either inflation or deflation – I question whether gold goes up during a deflation but it is easy for me to believe that gold goes up when citizens lose confidence in their government and monetary system even if this loss of confidence occurs in the middle of a massive deflation – ie, regardless of what happens in the next few years, gold is going up, the only question to me is “how much?”
I’m not worried about the “how much” question because I am confident that gold will continue to out-perform all other asset classes (except silver) for the next five to ten years
My only real concern about investing in the precious metals is what the govt will do when it is no longer able to keep the lid on gold prices – they aren’t going to give up on their fiat currency game so they are likely to take some action to prevent the citizens from bailing out of fiat currency and into the metals – I suspect we will be told that terrorists are using the metals to finance their operations and therefore, all transactions involving the precious metals will be made illegal – the value of gold on the black market will of course sky-rocket at that point
As to where you can physically sell gold: coin shop, pawn shop, internet brokers – my preference: local coin shop where I have developed a relationship with the owner
