# Storing Physical Gold - Coins etc.



## aus_trader (17 July 2018)

G'day all,

I really like everyone to get involved in this discussion, since the combined knowledge of all would be so much more powerful than one individual. So here is my dilemma...

I am thinking about getting some exposure to Gold, particularly physical gold rather than gold related investments and gold mining companies. Main reason for this is to have some exposure to an asset that may preserve wealth. The problem is storing it securely. There's also ongoing costs with secure storage !

The problem is not with purchase of an once or two along with a few coins, but rather storing it securely so that it doesn't go missing from under the mattress during a house robbery scenario 

Because I see Gold as more of a hedge against currency de-valuations due to money printing etc, it's hard to justify ongoing storage costs. Also Gold is not income producing asset as owning gold does not entitle you to dividends or interest. So in a way I sometimes get negative thoughts about the whole idea of trying to own a bit of gold, especially when Warren Buffet's view on gold comes to mind. Buffet's comments were *"Gold gets dug out of the ground in Africa, or some place,"* said Buffett in 1998. *"Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it."*

So is there a way to buy and hold some gold securely with minimal or no ongoing fees ? If not what other assets are there that can preserve wealth safely?


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## greggles (17 July 2018)

aus_trader said:


> Buffet's comments were *"Gold gets dug out of the ground in Africa, or some place,"* said Buffett in 1998. *"Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it."*
> 
> So is there a way to buy and hold some gold securely with minimal or no ongoing fees ? If not what other assets are there that can preserve wealth safely?




Buffett has a very good point that highlights the difficulty of owning physical gold. If you own it, you need to protect it. It's great for central banks, large companies and very rich people who already have security infrastructure in place, but for regular people storing and protecting physical gold is more trouble than it's worth.

I have a friend who owns 13 acres in regional Queensland and has no money in the bank. All his cash is kept in coffee tins which he has buried in various places on his property. For a thief, finding them would be like looking for the proverbial needle in a haystack. So this is my solution if you want to own physical gold. Get out of the city, buy a decent amount of land, then start digging and burying your gold. Just make sure you remember where you buried it.


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## cynic (17 July 2018)

greggles said:


> Buffett has a very good point that highlights the difficulty of owning physical gold. If you own it, you need to protect it. It's great for central banks, large companies and very rich people who already have security infrastructure in place, but for regular people storing and protecting physical gold is more trouble than it's worth.
> 
> I have a friend who owns 13 acres in regional Queensland and has no money in the bank. All his cash is kept in coffee tins which he has buried in various places on his property. For a thief, finding them would be like looking for the proverbial needle in a haystack. So this is my solution if you want to own physical gold. Get out of the city, buy a decent amount of land, then start digging and burying your gold. Just make sure you remember where you buried it.



Metal detectors are fairly efficient these days, so diamonds (in non metallic ontainers) would need to be considered as an alternative for this security method.


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## sptrawler (17 July 2018)

Here is a link to the Perth Mint Gold.

https://www.perthmint.com/storage/perth-mint-gold-asx.html

It has costs associated, but it is probably safe.

The other way to store it, is to buy a safe deposit box, in a bank.


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## TikoMike (17 July 2018)

sptrawler said:


> Here is a link to the Perth Mint Gold.
> 
> https://www.perthmint.com/storage/perth-mint-gold-asx.html
> 
> ...



My opinion is  that it's not a good idea to have it in a safety deposit box in the bank. Along with preserving wealth from a fiat money downturn, the whole idea of buying precious metals is to insure/protect from things like that.


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## sptrawler (17 July 2018)

TikoMike said:


> My opinion is  that it's not a good idea to have it in a safety deposit box in the bank. Along with preserving wealth from a fiat downturn, the whole idea of buying precious metals is to insure/protect from things like that.




What you think the bank would raid your safe deposit box?


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## cynic (18 July 2018)

sptrawler said:


> What you think the bank would raid your safe deposit box?



Possibly, as a recent commission has found, they're no longer paragons of virtue! 
Also this type of event might give rise to further cause for concern:
http://www.abc.net.au/news/2015-04-...-deposit-boxes-raided-in-easter-heist/6378092


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## Wysiwyg (18 July 2018)

Who would look in a Baked Bean can?  What evidence is there that gold preserves wealth?


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## sptrawler (18 July 2018)

cynic said:


> Possibly, as a recent commission has found, they're no longer paragons of virtue!
> Also this type of event might give rise to further cause for concern:
> http://www.abc.net.au/news/2015-04-...-deposit-boxes-raided-in-easter-heist/6378092




Oh well, it's back under the bed with the gold bars then.


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## aus_trader (18 July 2018)

greggles said:


> Buffett has a very good point that highlights the difficulty of owning physical gold. If you own it, you need to protect it. It's great for central banks, large companies and very rich people who already have security infrastructure in place, but for regular people storing and protecting physical gold is more trouble than it's worth.
> 
> I have a friend who owns 13 acres in regional Queensland and has no money in the bank. All his cash is kept in coffee tins which he has buried in various places on his property. For a thief, finding them would be like looking for the proverbial needle in a haystack. So this is my solution if you want to own physical gold. Get out of the city, buy a decent amount of land, then start digging and burying your gold. Just make sure you remember where you buried it.




Thanks greggles, you've highlighted some good points about the difficulty in this storage problem.


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## aus_trader (18 July 2018)

cynic said:


> Metal detectors are fairly efficient these days, so diamonds (in non metallic ontainers) would need to be considered as an alternative for this security method.



Yes I've even seen people waving these metal detectors around on beaches etc looking for ancient coins and artefacts. 


So not only will the robbers find it under your bed, but they'll dig it out of the backyard as well. Good point, so these days even greggles' friend's method of burying them randomly in farmland may be futile...


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## aus_trader (18 July 2018)

sptrawler said:


> Here is a link to the Perth Mint Gold.
> 
> https://www.perthmint.com/storage/perth-mint-gold-asx.html
> 
> ...



I will look into these options, not necessary to jump on the idea but if there is an *extremely* good case for holding Gold, I will consider the costs associated. I am still making up my mind about putting a small % of my savings/assets into gold so this thread is proving to be very valuable to look at it from all angles.

When I say *extremely* above, I need to be as clear and confident that printed money is losing value like there is no tomorrow heading towards Zimbabwe/Venezuela type disasters. I think we are no where near those levels just yet... in my opinion. 
Thank you for the thoughts.


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## aus_trader (18 July 2018)

TikoMike said:


> My opinion is  that it's not a good idea to have it in a safety deposit box in the bank. Along with preserving wealth from a fiat money downturn, the whole idea of buying precious metals is to insure/protect from things like that.



I think you are thinking just like me. Yes this thread was started to try and find ways to move a small % of your wealth from a possible_ *fiat money downturn*_ (borrowing your words) into safer assets outside of the banking system. So a safety deposit box in the bank would be like giving them back the very thing that they (the whole system) may be dying to get their hands on. I say that because they have moved away from the gold standard which is why they've been able to print excessively. If gold standard was still around money would be in limited supply and the amount they issue out to the world (new notes being printed) will be backed by how much gold is held in the vaults.


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## aus_trader (18 July 2018)

Wysiwyg said:


> Who would look in a Baked Bean can?  What evidence is there that gold preserves wealth?



Hey  mate, there is no guarantee gold would preserve wealth, but as I explained above but if gold standard was still around, the price of gold would have to be multiple times higher than what it is today to justify the amount of money that has been issued out (printed) by the central banks around the world. So that's why I thought to have at least a small % of my wealth (say 5 to 10%) in gold to keep it away from the de-valuing fiat money system. It's proving to be difficult due to storage issues but this thread may give people (including myself) ideas to look to preserve a little of their wealth outside the banking system, whether it's through gold or some other hard(not paper) assets...


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## Value Collector (18 July 2018)

aus_trader said:


> So that's why I thought to have at least a small % of my wealth (say 5 to 10%) in gold to keep it away from the de-valuing fiat money system ...preserve a little of their wealth outside the banking system, whether it's through gold or some other hard(not paper) assets...




You are half right.

You are correct in the assumption that you shouldn't store to much wealth as fiat currency.

But,

You are wrong in thinking that holding that wealth as gold is the best alternative.

You are far better of holding real assets that will not be depreciated in real value by inflation, but that also generate income at the same time, that way you will get the inflation hedge you want, while also getting investment returns.


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## aus_trader (19 July 2018)

Value Collector said:


> You are half right.
> 
> You are correct in the assumption that you shouldn't store to much wealth as fiat currency.
> 
> ...



Yes, on the same page here in terms of buying income producing assets. I am holding a few dividend producing stocks/funds in my Medium/Longer Term Stock Portfolio

If ongoing storage costs were not a barrier to holding gold bullion safely, I would still consider it as a small percentage of my overall investments.


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## explod (19 July 2018)

Gold has preserved wealth for 5 thousand years and when the money printing becomes exhausted it will be one of the few good assets to survive the coming crescendo in my humble opinion.


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## aus_trader (19 July 2018)

explod said:


> Gold has preserved wealth for 5 thousand years and when the money printing becomes exhausted it will be one of the few good assets to survive the coming crescendo in my humble opinion.



Absolutely, gold cannot be created(unless you can hire a star) or printed so I totally agree with your humble opinion.

Double thumbs up from me for your comments, I could only give one like.


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## galumay (19 July 2018)

Its not an investment IMO, just a speculative gamble. Gold has no intrinsic value and depends on the emotional, greater fool to create price rises, every ounce ever mined is still in existence and its a very common commodity. None the less, if you want feel the need to own lumps of dull yellow metal, you can buy decent safes very cheaply these days so its not too hard to store.


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## Value Collector (20 July 2018)

explod said:


> Gold has preserved wealth for 5 thousand years and when the money printing becomes exhausted it will be one of the few good assets to survive the coming crescendo in my humble opinion.




It feels like you have been saying that for 5 thousand years.

In reality, if your family owned an ounce of gold 5000 years ago snd held it till today, its still an ounce of gold, sure it would have maintained in value, and perhaps even gone up in purchasing power a bit, it would be worth nothing compared to what

But, if instead of owning that ounce of gold you just invested $1 in productive assets generating just 2% per year, you would literally own the world, that original $1 would have grown into 1000's of Trillions of $$$

Time is the enemy of gold, and the friend of productive assets.


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## luutzu (20 July 2018)

Value Collector said:


> It feels like you have been saying that for 5 thousand years.
> 
> In reality, if your family owned an ounce of gold 5000 years ago snd held it till today, its still an ounce of gold, sure it would have maintained in value, and perhaps even gone up in purchasing power a bit, it would be worth nothing compared to what
> 
> ...




He did say "preserve" wealth, not invest hoping to grow etc.

Gold, like anything that's rare, will hold value. Often, increase in "value" simply because someone else would be willing to pay higher for it.

Sure it doesn't generate an income so it wouldn't be worth as much as an equivalent business/productive enterprise would. But it preserves wealth.

If we follow your example... name one productive enterprise over the past 5,000 years that an ancestor could own, it compounds ever since... and still exists. 

Gold.


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## Value Collector (20 July 2018)

luutzu said:


> He did say "preserve" wealth, not invest hoping to grow etc.




A growing portfolio of assets that grows in size and diversity over time is the best way to preserve wealth.

If your assets are growing (even at only 2%), and spreading across different assets and industries, and geographies, it is much more likely to be "preserved".



> If we follow your example... name one productive enterprise over the past 5,000 years that an ancestor could own, it compounds ever since... and still exists.




farmland.


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## Value Collector (20 July 2018)

aus_trader said:


> Absolutely, gold cannot be created(unless you can hire a star) or printed so I totally agree with your humble opinion.
> .




Given that we are mining much more than actually gets used, we are essentially creating more every month, and just piling it up.


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## TikoMike (20 July 2018)

You're talking like as if we're saying put 100% into gold or silver. We're not, just a small percentage as insurance against the value of fiat currency. That's what we mean to preserve wealth. What's going to happen to our precious income producing businesses once the fiat paper currency becomes worthless due to an event like say hyperinflation? You want an example, look at how well the businesses are doing in Venezuela with the Bolivar now being worthless. You know what still holds value in Venezuela? Precious metals, guns and food.


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## luutzu (20 July 2018)

TikoMike said:


> You're talking like as if we're saying put 100% into gold or silver. We're not, just a small percentage as insurance against the value of fiat currency. That's what we mean to preserve wealth. What's going to happen to our precious income producing businesses once the fiat paper currency becomes worthless due to an event like say hyperinflation? You want an example, look at how well the businesses are doing in Venezuela with the Bolivar now being worthless. You know what still holds value in Venezuela? Precious metals, guns and food.




In certain situation, guns are the most valuable asset


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## explod (20 July 2018)

Agree, gold is not a money maker but it is the real money because it retains its value and is the best way to hoard. 

Around the year 2000 gold was about $250 to $300 an ounce.  Today US$1220.   There are people who store money, (cash) under the bed so to speak.  $250 cash 18 years back $250 today, in gold $1220 today.

Of course it is not recommended as an investment but many agree a 10% storage lot is healthy for a portfolio.  My favorite are silver coins, 1966 rounds and pre46 which are 92% pure.


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## Value Collector (21 July 2018)

TikoMike said:


> You're talking like as if we're saying put 100% into gold or silver. We're not, just a small percentage as insurance against the value of fiat currency. That's what we mean to preserve wealth. What's going to happen to our precious income producing businesses once the fiat paper currency becomes worthless due to an event like say hyperinflation? You want an example, look at how well the businesses are doing in Venezuela with the Bolivar now being worthless. You know what still holds value in Venezuela? Precious metals, guns and food.




If I wouldn’t put a large percentage in why would I want to put a small percentage in?

Let’s say the the Australian dollar becomes worthless, and we all start using bitcoin or something else, then I would just start charging my tenants/customers bitcoin.

When you own good assets/ businesses it doesn’t matter what the currency is, you just charge what ever he currency is of the day.


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## Value Collector (21 July 2018)

explod said:


> Agree, gold is not a money maker but it is the real money because it retains its value and is the best way to hoard.
> 
> Around the year 2000 gold was about $250 to $300 an ounce.  Today US$1220.   There are people who store money, (cash) under the bed so to speak.  $250 cash 18 years back $250 today, in gold $1220 today.
> 
> Of course it is not recommended as an investment but many agree a 10% storage lot is healthy for a portfolio.  My favorite are silver coins, 1966 rounds and pre46 which are 92% pure.




And if you bought gold at $1800, you are much worse off than the guy that just held cash under the bed, 

And the guy that held the cash in a term deposit beat the guy that held it under the bed

And the guy that owned diversified productive assets eg real estate or property index fund killed them all.


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## Value Hunter (21 July 2018)

ValuCollector I think you missed the point of what TikoMike was trying to say. What you are saying is technically true that if you own assets even if the currency debases/collapses the price/currency you charge will adjust but what you are missing is that a hyperinflation drags down the whole economy (and wipes out the middle class). 

Hypothetically if you bought into a chain of restaurants in Venezuela 10 years ago how do you think you would be doing today? How many people in Venezuela actually have money for non-essential purchases like restaurant dining? 

Productive assets perform are good when the economy is doing okay. If the economy is collapsing (including hyper-inflationary collapse) most productive assets will not be performing well. In a collapsing economy gold will tend to do better than productive assets.


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## luutzu (21 July 2018)

Value Hunter said:


> ValuCollector I think you missed the point of what TikoMike was trying to say. What you are saying is technically true that if you own assets even if the currency debases/collapses the price/currency you charge will adjust but what you are missing is that a hyperinflation drags down the whole economy (and wipes out the middle class).
> 
> Hypothetically if you bought into a chain of restaurants in Venezuela 10 years ago how do you think you would be doing today? How many people in Venezuela actually have money for non-essential purchases like restaurant dining?
> 
> Productive assets perform are good when the economy is doing okay. If the economy is collapsing (including hyper-inflationary collapse) most productive assets will not be performing well. In a collapsing economy gold will tend to do better than productive assets.




I think his scenario depends on him the capitalist being able to move his capital to where the liberators cannot sanction and choke off the economy. Which is true if you have capital/wealth/asset you can invest rather than earn through labour.

Maybe that's why capitalists doesn't much care for climate change. There's always New Zealand, or Mars. 

Reminds me what Phillip Fisher was saying about stock investment... it's great, don't be afraid of a war scare because... well, because if war does come (to America), all assets are going to be useless anyway. 

Maybe gold and a few ammo.


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## Value Collector (21 July 2018)

Value Hunter said:


> ValuCollector I think you missed the point of what TikoMike was trying to say. What you are saying is technically true that if you own assets even if the currency debases/collapses the price/currency you charge will adjust but what you are missing is that a hyperinflation drags down the whole economy (and wipes out the middle class).
> 
> Hypothetically if you bought into a chain of restaurants in Venezuela 10 years ago how do you think you would be doing today? How many people in Venezuela actually have money for non-essential purchases like restaurant dining?
> 
> Productive assets perform are good when the economy is doing okay. If the economy is collapsing (including hyper-inflationary collapse) most productive assets will not be performing well. In a collapsing economy gold will tend to do better than productive assets.




I think by doing that you are paying a high cost to insure a very low tail risk.

Notice I said  
A growing portfolio of assets that grows in size and diversity over time is the best way to preserve wealth ... and *spreading across different assets and industries, and geographies,* it is much more likely to be "preserved".


Even if you pick the worst case scenario of living in Venezuela, if you had some assets paying dividends in US dollars and EURO, you would be fine.


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## Value Collector (21 July 2018)

If you take a look at the families and organisations that have truly preserved vast sums of wealth for centuries, they hold a lot of diverse productive assets, in fact if the assets aren't productive they will be frittered away over time and not preserved.

Take a look at the asset bases like the Crown Estate, it's a diverse mix of Farmland, real estate holdings, forestry assets, businesses, resources etc, it has being funding the English royal family for nearly 1000 years, through many wars, depressions, currencies etc etc It's currently estimates (conservatively) to be worth 7 Billion Pounds, and it throws off a few hundred million pounds in walking around money each year.

The Royal family receive 15% of the income from the crown estate, they hand over the other 85% to the treasury.


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## luutzu (21 July 2018)

Value Collector said:


> If you take a look at the families and organisations that have truly preserved vast sums of wealth for centuries, they hold a lot of diverse productive assets, in fact if the assets aren't productive they will be frittered away over time and not preserved.
> 
> Take a look at the asset bases like the Crown Estate, it's a diverse mix of Farmland, real estate holdings, forestry assets, businesses, resources etc, it has being funding the English royal family for nearly 1000 years, through many wars, depressions, currencies etc etc It's currently estimates (conservatively) to be worth 7 Billion Pounds, and it throws off a few hundred million pounds in walking around money each year.
> 
> The Royal family receive 15% of the income from the crown estate, they hand over the other 85% to the treasury.





Trick question: If Hitler made it over the channel, would those still be preserved?


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## Value Collector (21 July 2018)

luutzu said:


> Trick question: If Hitler made it over the channel, would those still be preserved?



Trick question, if your dodgy neighbour made it over the fence, would your gold still be preserved?

you have much more risk of gold being stolen than a world war resulting in land being taken.

But as I said 

A growing portfolio of assets that grows in size and diversity over time is the best way to preserve wealth ... and *spreading across different assets and industries, and geographies,* it is much more likely to be "preserved".

No reason why the crown estate (or you) can't own assets all over the world.


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## jesser (22 July 2018)

Adjusting for inflation, the value of gold was range-bound for the last two hundred years with a couple of substantial spikes in recent decades.

If you're buying purely for "insurance" then that may be reasonable. But gold is not historically a long-term wealth-preservation asset. There are far too many times where if you had purchased gold you would have lost substantial wealth decades later, no matter how many currency downturns you had successfully rode through.

Also, if you're buying gold believing that there may be a downturn "soon-ish", you're really just trying to time-the-market broadly. And if you're smart enough to time markets, there are far better ways to make and keep wealth than buying physical gold.


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## aus_trader (22 July 2018)

Value Collector said:


> It feels like you have been saying that for 5 thousand years.
> 
> In reality, if your family owned an ounce of gold 5000 years ago snd held it till today, its still an ounce of gold, sure it would have maintained in value, and perhaps even gone up in purchasing power a bit, it would be worth nothing compared to what
> 
> ...



This is pretty much the Warren Buffet view as well, as I mentioned earlier and the fact that owning gold does not entitle the holder to any interest/dividends etc.

Although it's not the fastest way to wealth, it does hold value and preserve wealth I suppose.


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## Wysiwyg (22 July 2018)

aus_trader said:


> This is pretty much the Warren Buffet view as well, as I mentioned earlier and the fact that owning gold does not entitle the holder to any interest/dividends etc.
> 
> Although it's not the fastest way to wealth, it does hold value and preserve wealth I suppose.



Still tagged to cash, like one has to convert it back at some stage before death unless the next generation are going to hold. Then at conversion it is cost to buy v cost to sell to determine if wealth was actually preserved or not. Nice to look at and feel good about but eventually one hopes to convert back with something to show for the time as a metal.


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## aus_trader (23 July 2018)

galumay said:


> Its not an investment IMO, just a speculative gamble. Gold has no intrinsic value and depends on the emotional, greater fool to create price rises, every ounce ever mined is still in existence and its a very common commodity. None the less, if you want feel the need to own lumps of dull yellow metal, you can buy decent safes very cheaply these days so its not too hard to store.



I think most investments are speculative in nature, but that's probably another topic. Although if you can name one investment that can hold value in good times and bad please everyone know, I'll certainly be interested and be thankful. Just able to hold value is OK, doesn't have to be income producing (pay interest/dividends etc) or have capital growth.

Why is this important? Maybe I didn't mention it at the start of the thread but this topic is about making sure we (the small community of us here) are going to be less harmed financially in crisis situations such as GFC or worse. We don't know when that may happen but it's good to prepare right?

It's not about selling all financial assets and going all in with a backpack of gold bars and hiding in a bunker till the crisis is over. I'll be right here with everyone sharing information and learning from others as to how we can protect and preserve some of our wealth, rolling with the punches so to speak.

About the decent safes, sorry but I'm not interested. Let me explain. There is an unforeseen scenario most people won't consider in our lucky country of Australia that needs to be taken into account. It is this: if the robbery happens while you are at home, the burglar could put a gun to your child's head and request that you open the safe. What would you do? I can have the most advanced combo locked, fingerprint/retina scanned, unbreakable safe in the world to store my valuables at home but I won't put cash or gold in it. I'll put the things that are likely to be destroyed in a fire or flood in it like photos and memorabilia as well as any family heirlooms that is precious to me but of almost no value to a thief or burglar.


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## aus_trader (23 July 2018)

Value Collector said:


> A growing portfolio of assets that grows in size and diversity over time is the best way to preserve wealth.
> 
> If your assets are growing (even at only 2%), and spreading across different assets and industries, and geographies, it is much more likely to be "preserved".
> 
> ...



I think the farmland is also a good way to preserve wealth, up front cost would be fairly high which could be a barrier to entry. Also any ongoing land tax/maintenance costs need to be looked into. Something I have no prior experience with but will look into should the opportunity present itself.


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## aus_trader (23 July 2018)

explod said:


> Agree, gold is not a money maker but it is the real money because it retains its value and is the best way to hoard.
> 
> Around the year 2000 gold was about $250 to $300 an ounce.  Today US$1220.   There are people who store money, (cash) under the bed so to speak.  $250 cash 18 years back $250 today, in gold $1220 today.
> 
> Of course it is not recommended as an investment but many agree a 10% storage lot is healthy for a portfolio.  My favorite are silver coins, 1966 rounds and pre46 which are 92% pure.



Thanks for the info explode, are you talking about Aussie coins, when you say Silver coins?


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## aus_trader (23 July 2018)

Value Collector said:


> And if you bought gold at $1800, you are much worse off than the guy that just held cash under the bed,
> 
> And the guy that held the cash in a term deposit beat the guy that held it under the bed
> 
> And the guy that owned diversified productive assets eg real estate or property index fund killed them all.



I think gold did it's job of appreciating in value at the time of crisis and once things settled down, gold has fallen back to a more reasonable valuation. Things have settled down but not everything is fixed in my opinion and when the bandages that hold everything together start to come loose, gold may play it's part to appreciate in value and may preserve the small part of one's wealth that is held in gold.


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## aus_trader (23 July 2018)

luutzu said:


> I think his scenario depends on him the capitalist being able to move his capital to where the liberators cannot sanction and choke off the economy. Which is true if you have capital/wealth/asset you can invest rather than earn through labour.
> 
> Maybe that's why capitalists doesn't much care for climate change. There's always New Zealand, or Mars.
> 
> ...



Yeah, I think it's a bit dangerous to purely adopt Buffet ways in this day and age. Phillip Fisher, who first introduced the idea of buying quality companies and never selling, the idea which Buffet later adopted and refined has done well in the ever expanding stock valuations.

In my opinion stocks and other financial assets may deflate to a more reasonable valuation should the level of money supply due to printing slow down or cease. So I am cautious and although I hold some stocks (which are displayed in ASF), none of the stocks/funds are of 'forever hold' status.

So I believe it's good to have some diversification into other asset classes, including even a small % into precious metals such as gold and silver.


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## jesser (23 July 2018)

aus_trader said:


> Just able to hold value is OK, doesn't have to be income producing (pay interest/dividends etc) or have capital growth.




The problem is that despite what others are telling you here, gold is one of the riskiest mainstream assets based on its volatility. Gold is currently in a ~35% drawdown and it has experienced multiple drops of over 50%, with at least one _higher than 80%!_ Think about that - that's most of your "insurance" asset wiped out, requiring a 400% gain to just to get back to even. Worse still, it typically takes decades for gold to bounce back.



aus_trader said:


> ...less harmed financially in crisis situations such as GFC or worse. We don't know when that may happen but it's good to prepare right?




If you're looking to gold to protect you through events like the GFC, you're going to be disappointed. Gold spent most of 2008 in a general decline. Compare that to say the oil crisis of the '70s where gold skyrocketed.

So now you've got a two-part prediction problem. 1 - Of the many adverse events and crises that could occur, which ones do you want to prepare for? 2 - Can you predict whether the "insurance" investments and assets that you purchase will be positively or negatively affected?

Your goal is admirable, and yes, one we should all be striving for. Thanks. It's just that gold may not perform the way you and others think it does.


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## aus_trader (23 July 2018)

Value Collector said:


> Trick question, if your dodgy neighbour made it over the fence, would your gold still be preserved?
> 
> you have much more risk of gold being stolen than a world war resulting in land being taken.
> 
> ...



I think it's worth looking into, so it's good you broaden the view of thinking here. Sometimes it's easy to kind of push real estate investing out of your asset class considerations if I'm only considering the capital cities of Australia which tends to be pretty expensive.

By the way the Royal's are quite fond of their gold as well, see the Queen inspecting her family stash.


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## aus_trader (23 July 2018)

jesser said:


> View attachment 88490
> 
> 
> Adjusting for inflation, the value of gold was range-bound for the last two hundred years with a couple of substantial spikes in recent decades.
> ...



jesser this is just the graph we are after for discussion, thanks for posting. Charts tell a story and this one is no exception. If we are investing based on historical price data and *reversion to the mean*, gold would be a horrible investment at the moment and one should be selling any gold they hold onto the market in order to buy back at $500 average.

Have a look at the recent peaks though, do you see the reaction to times of financial crisis/uncertainty? Is the path paved by the financial institutions of the world a lovely yellow brick road, if so there is no case for gold, I rest my case. Or is there humps and bumps along the way, where hard assets like gold may preserve a small portion of your portfolio if some of the financial assets get a hit or there's a write-down?


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## aus_trader (23 July 2018)

jesser said:


> The problem is that despite what others are telling you here, gold is one of the riskiest mainstream assets based on its volatility. Gold is currently in a ~35% drawdown and it has experienced multiple drops of over 50%, with at least one _higher than 80%!_ Think about that - that's most of your "insurance" asset wiped out, requiring a 400% gain to just to get back to even. Worse still, it typically takes decades for gold to bounce back.
> 
> 
> 
> ...



Yes it is a difficult instrument to predict, specially given the spot price is affected by so many factors such as amount of supply from mines, amount in circulation and what's the demand, how much goes into the few uses of gold such as electronic circuitry and jewelry etc.

It is a liquid (in terms of buying and selling) asset that is attractive during times of crisis, compared to say real estate that will take a long time to advertise and sell to get a good price based on valuation.


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## explod (23 July 2018)

aus_trader said:


> Thanks for the info explode, are you talking about Aussie coins, when you say Silver coins?



Yes A/T

And as a collector no accounting or tax implications unless you are exchanging high volume.


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## luutzu (23 July 2018)

aus_trader said:


> Yeah, I think it's a bit dangerous to purely adopt Buffet ways in this day and age. Phillip Fisher, who first introduced the idea of buying quality companies and never selling, the idea which Buffet later adopted and refined has done well in the ever expanding stock valuations.
> 
> In my opinion stocks and other financial assets may deflate to a more reasonable valuation should the level of money supply due to printing slow down or cease. So I am cautious and although I hold some stocks (which are displayed in ASF), none of the stocks/funds are of 'forever hold' status.
> 
> So I believe it's good to have some diversification into other asset classes, including even a small % into precious metals such as gold and silver.




I think Buffett does buy/trade in commodities when the value is there. He made a few hundred millions, from memory a decade or so ago, in silver etc. 

I guess you'd only hold onto things forever if it provide good returns and you don't need the cash for other opportunities or emergencies.


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## Value Collector (23 July 2018)

aus_trader said:


> I think it's worth looking into, so it's good you broaden the view of thinking here. Sometimes it's easy to kind of push real estate investing out of your asset class considerations if I'm only considering the capital cities of Australia which tends to be pretty expensive.
> 
> By the way the Royal's are quite fond of their gold as well, see the Queen inspecting her family stash.
> View attachment 88491




HAHAHA, that is not the queens gold. that is the queen inspecting the reserve banks gold, which has nothing to do with the Crown estate, or any of her private estate, nice try though.


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## Value Collector (23 July 2018)

aus_trader said:


> By the way the Royal's are quite fond of their gold as well, see the Queen inspecting her family stash.
> View attachment 88491




Again, not her gold, the bank of England owns that gold.


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## aus_trader (23 July 2018)

Value Collector said:


> HAHAHA, that is not the queens gold. that is the queen inspecting the reserve banks gold, which has nothing to do with the Crown estate, or any of her private estate, nice try though.



OK I think you may be right on that. But the Brits seem to place importance and value in their gold holding. Does RBA have a similar structure? In other words is there a good amount of gold backing to the plastic money newly issued ?

With US, since they went off the gold standard they have been able to print money at will without being backed by gold. Previous Fed chairman Alan Greenspan actually says it, probably by a slip of his tongue (see the other Gentleman's reaction as Greenspan's comments come out)

https://www.youtube.com/embed/q6vi528gseA


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## Value Collector (23 July 2018)

aus_trader said:


> Does RBA have a similar structure?




Yes, they hold some gold as well as other assets.




> With US, since they went off the gold standard they have been able to print money at will without being backed by gold.




Thats a good thing, the money supply should be able to expand and contract with the economy, why would we want to restrict the supply of money to the arbitrary supply of a metal, money is there as an IOU to facilitate trade.

If anyone wants to convert their cash to a metal they can do so, there is no need for the government to do it.

There is severe draw backs to a gold backed system.



> Previous Fed chairman Alan Greenspan actually says it, probably by a slip of his tongue




Its not a slip of the tongue, its fact.


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## aus_trader (23 July 2018)

Value Collector said:


> Yes, they hold some gold as well as other assets.



That's good to know.

With ability to print money at will for facilitate trade argument doesn't go down well with my way of thinking. A nation's money supply should be reflective of that nation's sovereign wealth and there should be limitations on it's supply to preserve the value of the notes/coins issued in this case the greenback. When I say preserve the value I mean buying power, so more and more money will be needed to buy the same good or service as money supply increases. This can cause inflation and as mentioned by some of the earlier comments a possible hyper inflation scenario in the future.


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## Value Collector (23 July 2018)

aus_trader said:


> A nation's money supply should be reflective of that nation's sovereign wealth.




A nations real "wealth" is not linked to how much gold they have buried in vaults collecting dust.

A nations real "wealth" is related to the amount of productive assets its holds generating real tradable Products and services, and "Money" is just something we use to facilitate that process.

eg. There is a solid reason that Spain didn't become a world power for long even though it discovered and controlled the South American gold mines, and was the biggest producer of gold, it's focus on mining gold distracted it from building a real producing and manufacturing economy such as the Brits did in Britain and North America.


> and there should be limitations on it's supply to preserve the value of the notes/coins issued in this case the greenback.




Sure, but why should that limitation be linked to gold,



> When I say preserve the value I mean buying power, so more and more money will be needed to buy the same good or service as money supply increases. This can cause inflation and as mentioned by some of the earlier comments a possible hyper inflation scenario in the future




A little bit of inflation is good (2%), its a buffer against deflation which is a far worse evil than inflation, and steady 2% inflation rate is a good incentive to avoid stock piling cash, and instead put that capital to work in real assets that produce real "wealth" for the nation.

If you haven't done so already, I recommend reading "Adam smiths wealth of nations", he covers this topic very well, and given the book was written over 230 years ago its a good historical account of the real world troubles with the good system, and he points out the fatal flaws in the Spanish vs English/American economies (it was actually written before America separated from Britain)


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## aus_trader (23 July 2018)

Value Collector said:


> A little bit of inflation is good (2%), its a buffer against deflation which is a far worse evil than inflation, and steady 2% inflation rate is a good incentive to avoid stock piling cash, and instead put that capital to work in real assets that produce real "wealth" for the nation.



Agree. A 2 - 3% inflation is good and it even makes people feel good, not just the economic impact. That's because people can see that things go up slowly over time such as their investments which offsets the costs rising when purchasing good and services. I am not trying to predict the future in any way but hope this targeted range holds up for the foreseeable future to mitigate unforeseen consequences.

I'll have a read of Adam Smiths book. Historical books are some of the best that have been written.


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## jesser (23 July 2018)

aus_trader said:


> It is a liquid (in terms of buying and selling) asset that is attractive during times of crisis, compared to say real estate that will take a long time to advertise and sell to get a good price based on valuation.




Yep, gold is far more liquid than real estate. Keep in mind that the price spread on physical gold can be relatively high at 5-10% for online discount brokers (depending on how much you want to buy). And higher for premium sellers. Those transaction costs can wipe out years of gains, so it's not something you want to be jumping in and out of just because it's liquid. In your case, you're buying-and-holding/storing for the long-term to weather adverse events, so it doesn't sound like it would be a major concern.

But if high liquidity is a requirement, there are far better securities you could use for hedging.


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## luutzu (23 July 2018)

Value Collector said:


> A nations real "wealth" is not linked to how much gold they have buried in vaults collecting dust.
> 
> A nations real "wealth" is related to the amount of productive assets its holds generating real tradable Products and services, and "Money" is just something we use to facilitate that process.
> 
> ...




Was that Smith's thesis as to the causes of the wealth of nations? 

ey, I heard from Chomsky, and I agree with him on this, not sure what Smith thoughts on it were...

But according to Chomsky's reading of history, a nation's wealth does not come from it following the ideas of "natural competitive advantage". 

I think Chomsky was referring to Smith, or at least the neoLiberals ideas, of nations needing to deliver/produce what they're (currently) good at. I think Chomsky like Smith... but point is he said that any nation that follow Smith's idea regarding that specialisation will end up poor and disadvantaged.

Examples given were... one, the United States. Its main trades around the pre-revolutionary wars were agricultural. Farming, skinning racoon, fishing and stuff. 

So if the US were to follow that specialisation, it would be liberated by the French or Spaniards instead of the reverse. 

Same with Britain. Its textile industry were nowhere competitive against Eqypt or India's but since Britain militarily ruled over them, they were assigned certain specialisation other than those they're good at... while back home the Poms subsidise and made those innovation possible.

It's the same with US planners after WWII where they assign, literally, different region of the world their duties.

So a country that fall into the belief that if they're to do what they're good at... they end up being third world countries, and stay there. Well, unless they're a Singapore maybe. 

Anyway, interesting stuff.


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## Value Collector (24 July 2018)

luutzu said:


> Was that Smith's thesis as to the causes of the wealth of nations?
> 
> ey, I heard from Chomsky, and I agree with him on this, not sure what Smith thoughts on it were...
> 
> ...




Not sure how you could read wealth of nations and come away thinking that the USA should only specialize in farming and skinning raccoons.

He said capital should flow to where it is most productive, given the endless plains available in America at the time, and the fact you could buy land for next to nothing, farming and other primary industries were the best use of capital, which the produce could be traded with Europe for cheaper manufactured goods, but his ideas was always that as capital accumulated, it would saturate the primary industries and other secondary industries would become attractive.


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## aus_trader (24 July 2018)

jesser said:


> Yep, gold is far more liquid than real estate. Keep in mind that the price spread on physical gold can be relatively high at 5-10% for online discount brokers (depending on how much you want to buy). And higher for premium sellers. Those transaction costs can wipe out years of gains, so it's not something you want to be jumping in and out of just because it's liquid. In your case, you're buying-and-holding/storing for the long-term to weather adverse events, so it doesn't sound like it would be a major concern.
> 
> But if high liquidity is a requirement, there are far better securities you could use for hedging.




It's more of a store of wealth asset than an instrument for trading for short term gains, the way I see. So a slightly higher cost for buying and selling is acceptable.


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## aus_trader (25 July 2018)

Just want to say the last few days have been great in terms of responses to this thread. There is a lot of information to digest and a lot to think about. I'll update if I come across any important material as I study this investment option further, so keep posting if there's any developments or other wealth preservation related information.

While digesting this subject, I will keep up with the stock portfolio updates, which got a little neglected the last couple of days. Today added a dividend paying stock poised for growth to the Speculative Stock Portfolio, details on that thread...


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## Value Collector (26 July 2018)

I found this video informative when I watched it a few years ago, it explains alot about the operation of the federal reserve and debunks at lot myths, is a multiple part video.

This is part 1.


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## aus_trader (26 July 2018)

Value Collector said:


> This is part 1.



Good video, just goes to show the complex nature of balancing the shocks to the economy by the central banks. Also I now understand more of the reasoning behind dropping the gold standard. All done with good intentions according to Bernanke and I can see his point.

It'll be interesting to see if they can control the shocks the way they have with a 2-3% inflation going into the future.


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## Value Hunter (28 July 2018)

Value Collector I understand what you are saying about diversifying assets by geography and asset class but there are important differences between productive assets and gold. If you live in a basket case country that country may choose to institute capital controls or impose punitive wealth taxes, so if you have assets overseas you may not get access to them for a long time. Also the titles to shares, property etc rely on the electronic record keeping system. If all the computers/electricity, etc went down that would pose problems for it, not to mention database hacking, etc. Furthermore gold can be owned without leaving a paper trail (privacy is useful) meaning if you get into financial trouble with creditors, ex wives, the tax office, police state/dictatorship government, etc they might not even know you own the gold, while they will surely know what shares and properties you own.


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## Value Collector (28 July 2018)

Value Hunter said:


> Value Collector I understand what you are saying about diversifying assets by geography and asset class but there are important differences between productive assets and gold. If you live in a basket case country that country may choose to institute capital controls or impose punitive wealth taxes, so if you have assets overseas you may not get access to them for a long time. Also the titles to shares, property etc rely on the electronic record keeping system. If all the computers/electricity, etc went down that would pose problems for it, not to mention database hacking, etc. Furthermore gold can be owned without leaving a paper trail (privacy is useful) meaning if you get into financial trouble with creditors, ex wives, the tax office, police state/dictatorship government, etc they might not even know you own the gold, while they will surely know what shares and properties you own.




As I said its only good for insuring tail risks, but it is extremely expensive insurance for something which for most of us, is a very low risk problem.

Not to mention "basket case countries" have often seized private gold holdings, off course you can hide it under your bed, but then you have a risk of theft by outsiders or even that crazy wife just before she becomes your ex.

To be honest, I have always felt the best defence against a wife taking all you money is grow such a large asset base that it won't matter if you have to give her half.

eg. Instead of hiding $50,000 of gold from her incase she divorces you in 10 or 15  years, I would rather grow that $50,000 into $250,000 so even if I have to spilt it, I still end up with more, and if we don't divorce, we have a sizeable productive asset to enjoy.


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## Value Hunter (28 July 2018)

The other good thing about gold is liquidity of high quality physical gold (LBMA gold in the right sizes) is very consistent. 

Stock and property markets might be liquid enough in normal times but in crises periods liquidity can dry up, stock exchanges can be closed, etc. Also property usually takes months to turn into cash. Shares take days to turn into cash in normal times (longer when liquidity dries up or trading is halted). You can pretty much always turn a modest amount of gold into cash (or barter it for other goods in the case of a currency collapse) within hours. 

If you look at history the wealthy elite, central banks, etc, have long had some allocation to gold. Most central banks still own some gold, as do many billionaires. 

J.P. Morgan once said "gold is money, everything else is credit". With productive assets you are relying on the performance of other people tenants to pay the rent (properties), the company to not go bankrupt and be able to pay its interest (bonds), the company to prosper i.e. grow its earnings or pay dividends (shares), the government/central banks not to hyper-inflate the currency (fiat currencies). With commodities (especially so with gold) you are not relying on 3rd party performance, rather you are betting that the commodity will maintain its intrinsic usefulness/value (i.e. betting that people will still eat food, people will still drink alcohol, people will still value gold, etc). 

All of that being said, we are for the most part in agreement that gold is insurance against tail risks (as well as functioning as money).


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## Value Hunter (29 July 2018)

Value Collector earlier in the thread you made the point that if a family compounded $1 at 2% per annum starting 5000 years ago, today they would own the entire world. This is mathematically true.

This illustrates perfectly the point that any types of productive investment over a long enough time horizon will experience some kind of catastrophic event (e.g. companies will go bankrupt, governments will default on their bonds, land will be expropriated through warfare, or divorce, etc.). If this were not the case a small number of families would own the entire world. Over a long enough time horizon (multiple generations) the tail risks that gold are designed to protect against are likely to occur at some point. Hence their is a valid argument to be made that it is prudent to store a small percentage of your wealth in gold.


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## TikoMike (29 July 2018)

Hi Value Collector, not having a go at you at all but you said in past comments that hyperinflation or that a sharp decline in our fiat currency is very low risk. With Labor gaining ground, and with Shorten's socialist policies, with Penny Wong wanting to increase our foreign "aid" to record levels, with our debt levels being as high as they are and also at record levels, Labor's attack on big businesses (therefore likely that big business might just pack up and leave and take their jobs/employment with them them) and Labor's belief that trickle down economics don't work etc etc,  I would love to hear your thoughts on why you think it's very low risk for our country.


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## aus_trader (30 July 2018)

TikoMike said:


> Hi Value Collector, not having a go at you at all but you said in past comments that hyperinflation or that a sharp decline in our fiat currency is very low risk. With Labor gaining ground, and with Shorten's socialist policies, with Penny Wong wanting to increase our foreign "aid" to record levels, with our debt levels being as high as they are and also at record levels, Labor's attack on big businesses (therefore likely that big business might just pack up and leave and take their jobs/employment with them them) and Labor's belief that trickle down economics don't work etc etc,  I would love to hear your thoughts on why you think it's very low risk for our country.



Just to add to your comments we have to remember that Australia was somewhat shielded from the GFC since we were in the thick of the mining boom at that time and still our stock market took a massive hit (still to make an all time high since GFC). All the money taken out of the stock market and profits rolling in from mining probably got re-allocated into property as it went into fresh highs, doubling or more in some spots.
However with bulk commodity prices coming off the boil, that shielding may not be there in a similar crisis today. Hence the case for having a small portion of a portfolio in defensive and wealth preserving assets such as gold is justifiable I think.


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## Value Collector (30 July 2018)

Value Hunter said:


> Value Collector earlier in the thread you made the point that if a family compounded $1 at 2% per annum starting 5000 years ago, today they would own the entire world. This is mathematically true.




Yes, that was just a thought experiment to show that "Holding Value" is far less important Than "growing Value"


> This illustrates perfectly the point that any types of productive investment over a long enough time horizon will experience some kind of catastrophic event (e.g. companies will go bankrupt, governments will default on their bonds, land will be expropriated through warfare, or divorce, etc.).




Gold is exposed to the same risks.



> If this were not the case a small number of families would own the entire world.




No really, because in reality families spend the earnings, and don't have the goal of compounding for 5000 years.

Take a look at the English royal family, they have lived off the crown estate for 1000 years, with out shrinking the estate at all, You can't live of a pile of gold without shrinking it



> Over a long enough time horizon (multiple generations) the tail risks that gold are designed to protect against are likely to occur at some point. Hence their is a valid argument to be made that it is prudent to store a small percentage of your wealth in gold.




As I said, the best defence against those risks is an asset base that grows in size and diversity.

But we can agree to disagree, I am not much fussed to begin a longwinded debate.


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## Value Collector (30 July 2018)

TikoMike said:


> Hi Value Collector, not having a go at you at all but you said in past comments that hyperinflation or that a sharp decline in our fiat currency is very low risk. With Labor gaining ground, and with Shorten's socialist policies, with Penny Wong wanting to increase our foreign "aid" to record levels, with our debt levels being as high as they are and also at record levels, Labor's attack on big businesses (therefore likely that big business might just pack up and leave and take their jobs/employment with them them) and Labor's belief that trickle down economics don't work etc etc,  I would love to hear your thoughts on why you think it's very low risk for our country.




Absolutely nothing there makes me think gold has any chance of out performing a diversified portfolio of good productive assets.

If you look at the performance of the share market over the last 100 or so years, it has performed wonderfully,  it has absolutely smashed gold. But you could always find excuses not to invest, in the last hundred or so years we have had World Wars, Flu pandemics, depressions, recessions, Nuclear arms races, terrorist attacks, oil shortages, nuclear meltdowns, multiple conflicts, Ozone layer holes, heaps of stock market crashes, etc etc etc.

But through out all of that, simply buying and holding a diversified piece of the stock market has delivered returns far in excess of owning gold.


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## Value Collector (30 July 2018)

aus_trader said:


> Hence the case for having a small portion of a portfolio in defensive and wealth preserving assets such as gold is justifiable I think.




If you owned a portfolio of stocks before the GFC, and you were living off the dividends, you would have been ok if you just ignored the "crisis" and just kept holding and banking your dividend checks, some of your dividends would have been lowered, but you would be fine, and perform far better than gold


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## aus_trader (30 July 2018)

Value Collector said:


> If you owned a portfolio of stocks before the GFC, and you were living off the dividends, you would have been ok if you just ignored the "crisis" and just kept holding and banking your dividend checks, some of your dividends would have been lowered, but you would be fine, and perform far better than gold



Can't argue with the point you made earlier about a basket of top stocks that would outperform gold over the last 100 years.
However some individual stocks disappeared or became worthless thanks to the GFC. I have personally experienced it in my own 'portfolio of stocks' that I had pre GFC. So although the stocks that survived have recovered, the stocks that went under hit my portfolio hard. I used to be the "buy the dips" investor before GFC and kept adding to my stocks (including the ones that went under) during early stages as GFC unfolded. During the later stages I was in the exact same posture as TikoMike logo/avatar:




Since then I have become quite vary of stocks even with good valuations and yield, so not hesitant to liquidate even if there is a moderate downturn. I can always buy back if I am wrong and market turns around and heads higher.
Although I only wish to allocate a small % to gold (or other defensive asset that is almost certain to survive all crisis), that would be the only thing that I would do my pre GFC tactic on. Call it buying the dips or dollar cost averaging or catching a falling knife. So for example I may go from a 2% portfolio allocation to a 3% portfolio allocation if gold crashes and burns, which is entirely possible since the central/investment banks and other market manipulators will probably make it look worthless before any real crisis begins. So what can happen is once it becomes unbearable for any long term holder to see their gold investment losing so much value they may get rid of it due of years of frustration, ironically at the wrong time near the bottom.


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## Grandfather11 (30 July 2018)

aus_trader said:


> G'day all,
> 
> I really like everyone to get involved in this discussion, since the combined knowledge of all would be so much more powerful than one individual. So here is my dilemma...
> 
> ...



Hello
Yes the Perth Mint has the option of buying gold with no storage or transaction fees.
If you have an account with $50k or over gold or silver can be purchased within their own inventory. If you want it fabricated they will do this at a fee.
Otherwise the Perth Mint can hold you you. Buy and sell at any time. Backed by the WA government.
Hope this helps
Grandfather11


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## luutzu (30 July 2018)

Value Collector said:


> Not sure how you could read wealth of nations and come away thinking that the USA should only specialize in farming and skinning raccoons.
> 
> He said capital should flow to where it is most productive, given the endless plains available in America at the time, and the fact you could buy land for next to nothing, farming and other primary industries were the best use of capital, which the produce could be traded with Europe for cheaper manufactured goods, but his ideas was always that as capital accumulated, it would saturate the primary industries and other secondary industries would become attractive.




Well I haven't read it, was only half listening to Chomsky in a reply to neo-liberalism and the current trend in free-trade, competitive edge of nations. 

But it sound like I heard it right that Smith's ideas was that each country ought to specialise in what they have plenty of. In the case of those British colonies back in the days, it'd be agriculture and skinning racoons... leaving the industrial production to mother England.

That would be the most efficient use of capital and resources. i.e. you use what's readily available, what your workforce is capable of. That way you're more "competitive" - being the lowest producer with readily available human and material resources etc.

If that's the case, I'd agree with Chomsky that Smith missed a few critical points there. That is, a country cannot become wealthy and remain "competitive" if it simply stick to its knitting.

To grow a country need to both do what it is currently good at as well as making investment expand its frontiers. That expansion often mean finding better ways to knock out the neighbours and take their stuff... but it could also mean the technological, industrial innovation. Building that future boom our politician keeps talking about.

There's some famous, and very thick, book by some dude in the 90s or 2000 about the competitiveness of nations. It basically follow the same logic that nations should do what they're currently good at... stick with the program. 

Thing is, you can't do that if you want to advance.


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## Value Collector (31 July 2018)

aus_trader said:


> Can't argue with the point you made earlier about a basket of top stocks that would outperform gold over the last 100 years.
> However some individual stocks disappeared or became worthless thanks to the GFC. I have personally experienced it in my own 'portfolio of stocks' that I had pre GFC. .




I did say a diverse portfolio, unless you know what you are doing that would mean something like an index, If you had a holding of the all ordinary index for example that you accumulated in the years before the GFC you would have been fine holding it and just living off the dividends.


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## Value Collector (31 July 2018)

luutzu said:


> If that's the case, I'd agree with Chomsky that Smith missed a few critical points there. That is, a country cannot become wealthy and remain "competitive" if it simply stick to its knitting.
> 
> .




Except that is not what Adam Smith recommended, he simply said that the capital of a nation should be allowed to flow to those areas that generate the highest return on capital.

He never said America should only ever stick to farming, he simply said that at the particular point in history, given that the land was largely undeveloped, it made sense to put the capital into agriculture, because the land was almost free, and with little capital large plantations that dwalf farms in England could be made. 

He had full intent that as the agricultural industry became saturated with capital, the capital would begin to flow to other industries that could begin to upgrade the raw produce into higher value items for the domestic and export trade.

it makes complete sense to put all the capital you can into sugar cane plantations, before you start a rum distillery, etc etc, the rum distillery will make sense eventually, but not till after the "free" land has been planted, and there is an excess of cheap sugar.

Trying to get into higher manufacturing while your lands lay undeveloped is silly.


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## RIP1 (1 August 2018)

Gold is an investment but it has no income attached to it- so not preferred by me. The price of gold would benefit from a dropping Aust Dollar or hyper inflation / war etc. If you think that's likely then buy some and put it in a bank vault. If you are Indian then thieves are more likely to target your home with metal detectors looking for the wife's Jewelry. No safe is safe from magnetic drill press. Safes are good to keep family and children out only - they are also good as a delaying devise when combined with excellent Back to Base monitored alarm system. Note normal insurance policy not likely to cover more than $5 or $10k and may cover none of your Gold.


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## aus_trader (6 August 2018)

RIP1 said:


> Gold is an investment but it has no income attached to it- so not preferred by me. The price of gold would benefit from a dropping Aust Dollar or hyper inflation / war etc. If you think that's likely then buy some and put it in a bank vault. If you are Indian then thieves are more likely to target your home with metal detectors looking for the wife's Jewelry. No safe is safe from magnetic drill press. Safes are good to keep family and children out only - they are also good as a delaying devise when combined with excellent Back to Base monitored alarm system. Note normal insurance policy not likely to cover more than $5 or $10k and may cover none of your Gold.



You've made some good points about the security issues of holding gold whether it be in coins, bars or jewelry. Just for fun I googled 'magnetic drill press', man those things are brutal, no safe is safe !!

So my thinking is heading towards not storing any physical type of gold for wealth preservation purposes due to the risk of theft. If I buy a coin or some other collectible, it'll be for it's aesthetic value only since some commemorative coins etc are very beautiful. It'll also be from money I can afford to lose e.g. few hundred dollars worth maximum. If stolen, it won't hurt too much financially.

I'm not worried about gold not producing an income, it's going to be a small % of my total assets so it can sit there. However it has to be secure form of investing before I decide to put thousands into it.

Historically though gold has played a very important role as a symbol of status, power, a civilisation's wealth etc, see BBC article of an amazing Roman gold ring that was discovered recently:

https://www.bbc.co.uk/news/uk-england-somerset-45028623


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## Trav. (18 August 2018)

This may be of interest to some

https://smallcaps.com.au/perth-mint-launches-low-fee-gold-etf/


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## aus_trader (20 August 2018)

Trav. said:


> This may be of interest to some
> 
> https://smallcaps.com.au/perth-mint-launches-low-fee-gold-etf/
> 
> View attachment 88924



Thanks for the info Trav, I've given you a "like". I'm sure everyone reading this thread will appreciate the info, it's information that helps us all make better investment decisions.

Coincidentally I have also started putting a little money into gold via an ETF. After much thought and consideration the original idea of storing gold on my own is not going ahead. I may keep a beautiful coin or some collectible gold memorabilia for it's beauty but not for wealth preservation/investing purposes, where I will be letting go of thousands of hard earned paper/plastic $$$

Gold looks to be heading down at the moment, see chart below:



So I've only bought a small quantity of ETF units, keeping money for future purchases in case it drops much further for example if it goes below US $1000 I'll surely buy more...

For ease of managing portfolios I will not be keeping a portfolio of gold assets here on this thread. I think it's appropriate to bundle it with my *Medium/Longer Term Stock Portfolio *of stocks and ETF's. All gold/wealth preservation discussions and new ideas shall be discussed here on this thread of course for the benefit of all.


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## aus_trader (13 November 2018)

Added another gold related investment to my holdings. Details and performance tracking over time will be in Medium/Longer Term Stock Portfolio.


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## aus_trader (20 January 2019)

I was looking around for longer term (decade-long) charts to see if the current run up in gold looks like the early signs of another gold bull market. I don't really know but if uncertainty in the general markets continue gold may edge higher for longer.

Anyway while I was looking around, I came across this  hilarious image that I had to post for ASF members. I'm still laughing my azz off


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## explod (20 January 2019)

aus_trader said:


> I was looking around for longer term (decade-long) charts to see if the current run up in gold looks like the early signs of another gold bull market. I don't really know but if uncertainty in the general markets continue gold may edge higher for longer.
> 
> Anyway while I was looking around, I came across this  hilarious image that I had to post for ASF members. I'm still laughing my azz off
> 
> View attachment 91492



Well that's fine art for you.

Wonder what the collie is like?


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## Vaulted (24 January 2019)

Hi Aus_trader 
Great questions. 
I have been designing, building and operating private vaults for many years in Australia, so must disclose a vested interest in the subject from the outset. 
Up to 15kg+ of gold could be stored for $264pa, inc complimentary insurance up to $10k at private vaults. Also gold available to purchase onsite. 
I wouldn't call myself a goldbug as such, though I feel a transfer of wealth is imminent. 
Debt riddled balance sheets and countries, with manipulated currencies and markets cannot be sustained in my opinion. Gold is part of my strategy. 
Happy to give you some more details if you wish, though many details are online, here. 
https://vaults.aragroup.com.au/
Here endeth the advertisement


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## aus_trader (24 January 2019)

Vaulted said:


> Hi Aus_trader
> Great questions.
> I have been designing, building and operating private vaults for many years in Australia, so must disclose a vested interest in the subject from the outset.
> Up to 15kg+ of gold could be stored for $264pa, inc complimentary insurance up to $10k at private vaults. Also gold available to purchase onsite.
> ...



Thanks for the info Vaulted. I don't have a private collection at the moment, but it's good to know these services exists such as what you posted and those offered by Perth mint etc.


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## aus_trader (26 January 2019)

Big Up day on Gold as of Friday's trading day...


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## aus_trader (3 May 2019)

Physical storage is a big problem even for mines (see the end of the article below), so unless you have that big bank vault it's a risk to store the physical stuff because of it's value...

https://www.msn.com/en-au/news/aust...ry-exposure-jailed/ar-AAAQksv?ocid=spartanntp

… and Gold is valuable even in miniscule quantities, there's no question.


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