So What Would You Do if Gold/Silver Truly Skyrocketed?
Posted: Thu Aug 13, 2020 8:15 amIt is of course nice to see the way that gold and silver have acted recently. But I want to take things a step (actually perhaps several steps) further.
What if, say, gold hit $10,000/oz. and silver hit, say, $250/oz. That would be a gold/silver ratio of 40, a lot more reasonable than what we've had recently. The knee jerk reaction by many would be to say, "That's incredible. I'm selling now." Ok, then what? Are you gonna put a boatload of fiat currency into a bank account that pays nothing. If you merely sit on the cash, it will likely be making close to or less than zero. If inflation really got to a hyperactive level, you could regret selling. And, of course there was the bail-in situation in Cyprus in 2012-13. That was a mess. Even though it was a foreign country, don't think for a minute that our officials weren't taking copious notes about how things happened in case a similar situation arose here.
On the other hand, if you just sit on the metals and they become super valuable, you need to be concerned about proper storage with a high level of safety and that is not so likely at a bank. Also, what about the cost of insurance for the metals hoard? It would definitely NOT be covered by a garden variety homeowner's insurance policy.
I will say that if I had a physical asset that I was looking to buy (home, land, car, or recreational vehicle), I'd definitely consider attempting a barter transaction with a portion of the precious metals.
Also, it isn't necessarily how high the metals go, but how they act on the way up. In other words, I'd feel much differently about silver at $100 if it took a year of steady movement with several 20-30% pullbacks along the way than I would if it was there next month. This is truly one that I personally struggle with. To me this would be a lot easier if I was either in my 20's or 30's and likely still had a very long time to live or if I was near death. (Without getting too personal, I think my wife would be ok without me. She is a pretty tough person and a survivor who has dealt with adversity in the past.) Anytime in between being very young and on my death bed and it becomes a lot more difficult for me to deal with. What does everyone else think about this?
P.S. No, I am not terminally ill in any shape form or fashion.
What if, say, gold hit $10,000/oz. and silver hit, say, $250/oz. That would be a gold/silver ratio of 40, a lot more reasonable than what we've had recently. The knee jerk reaction by many would be to say, "That's incredible. I'm selling now." Ok, then what? Are you gonna put a boatload of fiat currency into a bank account that pays nothing. If you merely sit on the cash, it will likely be making close to or less than zero. If inflation really got to a hyperactive level, you could regret selling. And, of course there was the bail-in situation in Cyprus in 2012-13. That was a mess. Even though it was a foreign country, don't think for a minute that our officials weren't taking copious notes about how things happened in case a similar situation arose here.
On the other hand, if you just sit on the metals and they become super valuable, you need to be concerned about proper storage with a high level of safety and that is not so likely at a bank. Also, what about the cost of insurance for the metals hoard? It would definitely NOT be covered by a garden variety homeowner's insurance policy.
I will say that if I had a physical asset that I was looking to buy (home, land, car, or recreational vehicle), I'd definitely consider attempting a barter transaction with a portion of the precious metals.
Also, it isn't necessarily how high the metals go, but how they act on the way up. In other words, I'd feel much differently about silver at $100 if it took a year of steady movement with several 20-30% pullbacks along the way than I would if it was there next month. This is truly one that I personally struggle with. To me this would be a lot easier if I was either in my 20's or 30's and likely still had a very long time to live or if I was near death. (Without getting too personal, I think my wife would be ok without me. She is a pretty tough person and a survivor who has dealt with adversity in the past.) Anytime in between being very young and on my death bed and it becomes a lot more difficult for me to deal with. What does everyone else think about this?
P.S. No, I am not terminally ill in any shape form or fashion.
