I've been thinking about this lately, and, at the risk of sounding like a doomsday kook, this seems to make sense to me (perhaps in a milder sense) no matter where one lives. My plan is, if I ever get over $X in my account, where X is some reasonable buffer to pay bills, etc., that I'll just buy gold with the overage[1]. Back in the day you'd at least get reasonable interest by keeping money in a bank, but nowadays it's really only the convenience of direct deposit and online bill pay that draws me. Even then, all these charges and penalties and sales pitches every time I enter a bank are really turning me off.
[1] I acknowledge some logistical challenges with my plan if I become a millionaire.
>"Back in the day you'd at least get reasonable interest by keeping money in a bank, but nowadays it's really only the convenience of direct deposit and online bill pay that draws me."
Back in what day? You mean, like, 5 years ago? We're still amidst one of the worst recessions ever and rates are at all time lows. No, you don't get riskless real returns right now. But you can also borrow at exceptionally low rates. That will change in the future.
Hording physical gold outside of diversification is a bad idea. You have storage costs, pay a premium over spot when you buy it and eat a spread when you sell it. And, as another commenter said, look at its real returns; not spectacular.
Want to know what was a good buy? The stock market, 4 years ago. When everyone was screaming about the world imploding and it was at irrationally low levels. But that's just the thing: you have to be willing to zig when others are zagging.
This does depend on where you live. In some places, mortgages are offered with "offset accounts", where your positive balance in the account offsets your outstanding debt on the mortgage, and in doing so reduces the interest accruing on the loan. This means that your excess funds effectively earn the mortgage rate of interest (and since interest avoided isn't "income", this isn't taxed as deposit interest would be either), so it's an attractive option if you have a mortgage.
This only works if you physically have the gold. Having a note stating how much gold you own, which is housed someplace beyond your reach isn't security. You are still relying on the market/bank.
And even if you did have the gold, this presents a slew of other problems; security and storage are two that come to mind.
But if everybody keeps thinking like that, in a few years time in the place of "Greece, Italy, Spain, or Ireland" you will read "Germany, France and UK".
It's just a worldwide poker game, the banks are winning and the small guys are being forced out of the table.
Where else would you put your money? Keeping large sums of cash in your home is stupid and dangerous, commodities are volatile (bitcoin behaves like a commodity in this regard), real estate has high associated costs, stocks can go down as well as up.
dougk16|13 years ago
[1] I acknowledge some logistical challenges with my plan if I become a millionaire.
khuey|13 years ago
tatsuke95|13 years ago
Back in what day? You mean, like, 5 years ago? We're still amidst one of the worst recessions ever and rates are at all time lows. No, you don't get riskless real returns right now. But you can also borrow at exceptionally low rates. That will change in the future.
Hording physical gold outside of diversification is a bad idea. You have storage costs, pay a premium over spot when you buy it and eat a spread when you sell it. And, as another commenter said, look at its real returns; not spectacular.
Want to know what was a good buy? The stock market, 4 years ago. When everyone was screaming about the world imploding and it was at irrationally low levels. But that's just the thing: you have to be willing to zig when others are zagging.
caf|13 years ago
crag|13 years ago
This only works if you physically have the gold. Having a note stating how much gold you own, which is housed someplace beyond your reach isn't security. You are still relying on the market/bank.
And even if you did have the gold, this presents a slew of other problems; security and storage are two that come to mind.
gasull|13 years ago
omgyeah|13 years ago
It's just a worldwide poker game, the banks are winning and the small guys are being forced out of the table.
pinaceae|13 years ago
BCG Study, September 2011: Back to Mesopotamia? The Looming Threat of Debt Restructuring http://www.scribd.com/doc/130778664/BCG-Back-to-Mesopotamia
The concepts and numbers are already there, Cyprus is a small test bed for this.
Evbn|13 years ago
rwallace|13 years ago