Does it make sense to buy gold as a COVID hedge?

csgohan4

Well you can always buy gold at your local Costco, although be warned Ed may have bought them all and turned them into 

coachman12

Lovely photo of the Kruger ( and correct as a full 1 ounce version), but as it was minted in 1974, it would have been illegal to buy then due to apartheid sanctions, and quite right too. I often think Paul Kruger should be replaced by Nelson Mandela as the South African after whom this lovely coin should be named now. 
As for the Costco picture it does not do justice to the beauty of a my Swiss bar in my Zurich bank and, of course, none of the bars shown are the 400 ounce "masterpiece" which would keep me very comfortably off for life if I lost all my large share portfolio, bonds and savings, etc, etc.
There seems to be continual hatemail ( and this forum is really getting a bad name due to the number of nasty posts) just because some members have things that some others want but don't have. I'm sorry about that but I'd rather that certain posters could just live amicably with it all and enjoy hearing of others' different financial situations and views; and share their own financial position and their ways and means of holding their savings in a friendly and pleasant way. I know that gold is too expensive for many people but most serious investors seem to have a certain amount of the shiny stuff in their vault alongside their share portfolio and other investments. Or even the coppery-looking KrugerRands, which I choose to spell any way I wish to.  I don't see any need for anyone to be nasty if they have no gold or do not wish to own any bullion-----they can merely say "gold is not my cup of tea" and politely discuss why they feel that way and what they invest in instead. I thought we were all here to share their own financial experiences and discuss others' experiences in an amicable way. I post when there is a subject I have experience of and I normally keep quiet when it comes to things I know nothing about such as benefits, mortgages, and so much more.
But I'll keep making any point I wish to make when a thread is about a subject I have first-hand knowledge of----in this particular context : gold. 
Hoping ( probably in vain) for a better and more tolerant Savings and Investments Forum. 

csgohan4

coachman12 said:

Lovely photo of the Kruger ( and correct as a full 1 ounce version), but as it was minted in 1974, it would have been illegal to buy then due to apartheid sanctions, and quite right too. I often think Paul Kruger should be replaced by Nelson Mandela as the South African after whom this lovely coin should be named now. 
As for the Costco picture it does not do justice to the beauty of a my Swiss bar in my Zurich bank and, of course, none of the bars shown are the 400 ounce "masterpiece" which would keep me very comfortably off for life if I lost all my large share portfolio, bonds and savings, etc, etc.
There seems to be continual hatemail ( and this forum is really getting a bad name due to the number of nasty posts) just because some members have things that some others want but don't have. I'm sorry about that but I'd rather that certain posters could just live amicably with it all and enjoy hearing of others' different financial situations and views; and share their own financial position and their ways and means of holding their savings in a friendly and pleasant way. I know that gold is too expensive for many people but most serious investors seem to have a certain amount of the shiny stuff in their vault alongside their share portfolio and other investments. Or even the coppery-looking KrugerRands, which I choose to spell any way I wish to.  I don't see any need for anyone to be nasty if they have no gold or do not wish to own any bullion-----they can merely say "gold is not my cup of tea" and politely discuss why they feel that way and what they invest in instead. I thought we were all here to share their own financial experiences and discuss others' experiences in an amicable way. I post when there is a subject I have experience of and I normally keep quiet when it comes to things I know nothing about such as benefits, mortgages, and so much more.
But I'll keep making any point I wish to make when a thread is about a subject I have first-hand knowledge of----in this particular context : gold. 
Hoping ( probably in vain) for a better and more tolerant Savings and Investments Forum. 

In all honesty, I don't invest in gold as it doesn't fit in my investment goals/ strategy. Also too risky and volatile for my liking, having to depend on a recession to see a profit for example. 

Some people are happy to hold onto gold, good for them, not for me

one man's meat is another man's poison

grumiofoundation

coachman12 said:

Lovely photo of the Kruger ( and correct as a full 1 ounce version), but as it was minted in 1974, it would have been illegal to buy then due to apartheid sanctions, and quite right too. I often think Paul Kruger should be replaced by Nelson Mandela as the South African after whom this lovely coin should be named now. 
As for the Costco picture it does not do justice to the beauty of a my Swiss bar in my Zurich bank and, of course, none of the bars shown are the 400 ounce "masterpiece" which would keep me very comfortably off for life if I lost all my large share portfolio, bonds and savings, etc, etc.
There seems to be continual hatemail ( and this forum is really getting a bad name due to the number of nasty posts) just because some members have things that some others want but don't have. I'm sorry about that but I'd rather that certain posters could just live amicably with it all and enjoy hearing of others' different financial situations and views; and share their own financial position and their ways and means of holding their savings in a friendly and pleasant way. I know that gold is too expensive for many people but most serious investors seem to have a certain amount of the shiny stuff in their vault alongside their share portfolio and other investments. Or even the coppery-looking KrugerRands, which I choose to spell any way I wish to.  I don't see any need for anyone to be nasty if they have no gold or do not wish to own any bullion-----they can merely say "gold is not my cup of tea" and politely discuss why they feel that way and what they invest in instead. I thought we were all here to share their own financial experiences and discuss others' experiences in an amicable way. I post when there is a subject I have experience of and I normally keep quiet when it comes to things I know nothing about such as benefits, mortgages, and so much more.
But I'll keep making any point I wish to make when a thread is about a subject I have first-hand knowledge of----in this particular context : gold. 
Hoping ( probably in vain) for a better and more tolerant Savings and Investments Forum. 

This may not be intentional (or may but I’ll give you the benefit of the doubt to try and be more tolerant) but the way you talk about your financial position can come across as far from ‘pleasant’ on many occasions. 

Prism

coachman12 said:

There seems to be continual hatemail ( and this forum is really getting a bad name due to the number of nasty posts) just because some members have things that some others want but don't have. I'm sorry about that but I'd rather that certain posters could just live amicably with it all and enjoy hearing of others' different financial situations and views; and share their own financial position and their ways and means of holding their savings in a friendly and pleasant way. I know that gold is too expensive for many people but most serious investors seem to have a certain amount of the shiny stuff in their vault alongside their share portfolio and other investments. 

I don't think gold is too expensive for most people - I'm sure I could rustle up a bit of cash to buy a few of those shiny coins and maybe the odd bar. I'd feel a lot safer with my savings and equities - gold is a bit volatile for me.

EdGasketTheSecond

DiggerUK said:

Fiat  currencies are always trusted to a level that makes them acceptable, always have been. 

But only since 1971 and not all fiat currencies (see article below), except for some fiat in China that was said to be 'worth' so much gold but not exchangeable for it:

"Fiat money started to predominate during the 20th century. Since President Nixon's decision to decouple the US dollar from gold in 1971, a system of national fiat currencies has been used globally."

https://en.wikipedia.org/wiki/Fiat_money

The average life of a fiat currency is 27 years. As the following article shows, fiat currencies are NOT always trusted, and NEVER have been for very long:

https://news.bitcoin.com/a-short-history-of-major-fiat-currency-collapses-and-what-triggered-them/

Compare the above to the thousands of years that gold and silver has performed the function of money thoughout history; why do you think mankind has suddenly discovered the Holy Grail of unlimited currency with no consequences that can always be trusted?

DiggerUK

Fiat currencies are trusted as long as they are trusted, then they are replaced, renewed or given a makeover. Fiat isn't about to die, it might go from a physical to an electronic form, but it is not disappearing any time soon. The world will not rock and roll on a gold standard, it's just impossible anymore.

This magical la-la land of a perfect monetary prefect called gold you keep bringing up, is a nonsense. Metal coins were debased and reduced to make money out of thin air as well you know. Old wine new bottles.

Your reference to the medieval Chinese fiat is wrong, that paper was convertible to gold and silver, it's how it became accepted. Advantage to the state was its ability to keep precious metals in the country, not see them leach out. Which is what the British government did in the Napoleonic and First World War; gold has always had a strategic military role, equal to guns and battleships.

The Breton Woods agreement returned nobody to a gold standard, it reverse engineered the whole process. The US$ only could be converted to gold on demand, that's all. 

There was no limitation on how many dollars could be produced, whereas on a gold standard the amount of dollars is regulated. Since that ending of convertibility to gold, US$ fiat is still going strong.

Keep in mind that at the time of the 1933 US gold confiscation the Federal Reserve had to maintain a gold backing of only 40%, but it had to be maintained. With the exception of pre 1971 US$, no fiat has been gold backed for a century now, and it's still working.
Bit creaky in some places I'll grant, but still standing..._

bowlhead99

EdGasketTheSecond said:

The average life of a fiat currency is 27 years. As the following article shows, fiat currencies are NOT always trusted, and NEVER have been for very long

Well, here is a comprehensive debunking of the meme that the average life of a fiat currency is 27 years, which I have posted before:

http://jpkoning.blogspot.com/2019/09/the-life-and-death-of-internet-monetary.html

Koning notes that from the data sampled, the maths only works to get to 27 years if you are looking at 599 dead currencies and exclude the 176 currencies that are still existing perfectly happily. The 599 currencies that are no longer in circulation didn’t all just spontaneously combust, as the meme implies. Rather, they were actually deliberately replaced or ended for economic, political or social reasons. So the idea of counting up these currencies’ “lifespans” just doesn’t really make much sense.

The list contains all of the pre-euro currencies (Dutch guilder, French franc, Italian lira, etc). These currencies had good reasons for disappearing: they were swapped for a new monetary unit. Existing currency holders weren't robbed. They were fairly compensated for this switch.

Another example of monetary reorganization occurred in East Africa. From 1919 to the 1960s, Britain's former east African colonies relied on the East African shilling, produced by the East African Currency Board. When these countries gained their independence, the currency board was dismantled. In its place Kenya began issuing its own shillings at par with the old ones, as did Tanzania and Uganda. In each case, existing owners of East African shillings could convert their holdings into new currency. No wealth was being destroyed during any of these switches.

But people who throw around the phrase the average life expectancy for a fiat currency is 27 years as a criticism of the very institution of currency are using the data in a way that implicitly assumes that the East African experience -and others like it- were negative. They weren't.

Koning points out some other factual errors too, so his blog post is worth a read if you are going to bandy around your statistics as if they are meaningful.

EdGasketTheSecond said:
Compare the above to the thousands of years that gold and silver has performed the function of money thoughout history; why do you think mankind has suddenly discovered the Holy Grail of unlimited currency with no consequences that can always be trusted?

You could perhaps consider what beliefs were held for thousands of years until people figured out better answers.  

For example, maybe the world is flat, or the sun goes round the earth, or the world and the people on it were created in a few days by a bloke living in the sky who will punish you with an eternity in hell if you don't conform to what the commandments tell you to do. 

Or maybe we should live in caves because we haven't figured out how to construct buildings from bricks, and we can get along just fine for two thousand centuries without inventing microchips, so why should I want a 'computer'.... what is wrong with good old papyrus, or carving stone slabs?

Yeah, we should definitely keep digging up gold and using that as the basis for our economy, because nothing better can be found; the fact that it was once what we did, means it must be the best solution.

Seriously. Wat.

eskbanker

EdGasketTheSecond said:

The average life of a fiat currency is 27 years.

Are you hoping that people will accept that assertion as fact?  The article you parrot it from is derided whenever anyone cites it as if it was true....

http://jpkoning.blogspot.com/2019/09/the-life-and-death-of-internet-monetary.html

EdGasketTheSecond

DiggerUK said:

Your reference to the medieval Chinese fiat is wrong, that paper was convertible to gold and silver, it's how it became accepted.

You are the one who is wrong again:

"The Song Dynasty in China was the first to issue paper money, jiaozi, about the 10th century AD. Although the notes were valued at a certain exchange rate for gold, silver, or silk, conversion was never allowed in practice."

https://en.wikipedia.org/wiki/Fiat_money.

Yeah bowlhead99 lets just keep printing free money and have a party; all good until one day it isn't.