[quote=Diego Mamani]
Stages or not, it’s the end point that I find unrealistic. From reading your text above, then you’re saying that you don’t expect the US govt and the dollar to collapse? I ask, because that (total collapse) is what most gold bugs believe.[/quote]
Actually, I completely expect the USD to collapse. I expect ALL paper to go *poof*. I was just curious as to why some people expect the Euro to collapse before the dollar, that’s all. And just so you know, there are a wide range of gold bugs out there. Some anticipate a complete collapse and chaos, others – like my mother-in law – simply expect a repeat of the 70s. What all gold bugs share is a belief that the future of the USD is grim.
[quote=Diego Mamani]But apparently you don’t expect total collapse of law and order, but rather a slow deterioration in our standard of living as the dollar, euro, etc. lose value against gold? If that’s the case, then land is a far better option than thinly traded gold that is already quite expensive.[/quote]
That’s actually not what I’m saying. Just because I don’t expect a total collapse to happen overnight does not by any means suggest that I don’t expect a total collapse to ever happen. I expect the deterioration to begin gradually and then slowly accelerate. I agree with you that vacant land should hold up nicely in this eventuality, as I suspect many people will be anxious to avoid and escape the chaos that a collapse would bring to urban areas. That said, land has one major drawback that gold does not: it is not portable, and it is illiquid. If I want to buy or sell land, it takes time and a buyer with sufficient credit and funds. There’s also the pesky little matter of taxes, escrow fees and the miscellaneous other government tentacles that will no doubt increase over time as our economy worsens. Gold, on the other hand, represents a simple (and tax free) way to exchange goods and services. Stop by your local gold dealer and offer to sell a few pieces of bullion, and you’ll see what I mean. And in the event the government ever cracks down on dealers there will almost certainly be a black market. Ask yourself this: if most banks go under, how may people will have the means to purchase the land you hold? Very few. Real property only holds value to the extent that others can afford to buy it. If credit isn’t available, then property simply isn’t going to change hands. How many 100% cash buyers do you know?
[quote=Diego Mamani]If we’ll enter a period where currencies lose value rapidly (high inflation), then not only gold, but also land, and stock prices will go up very steeply in nominal terms. The key is simply to not hold cash.[/quote]
I’m with you on the land. You lost me on the stocks. What are the fundamentals that would sustain high stock prices in the event of a dollar collapse and 30% unemployment? I think you are assuming that inflation will hit all goods and services equally. That’s not necessarily the case. If we experience hyperinflation, I think you’ll find that food, gas and other commodities and necessities skyrocket, while the prices of homes, iPods, stocks and cars plummet. How on earth will companies remain profitable enough to warrant skyrocketing stock prices if the dollar collapses and people are laid of en masse?
