Monday, January 4, 2016

Silver and Gold, Silver and Gold

Image: Universiteit van Amsterdam
When I hear about people investing in gold and silver bullion, I think of alarmism.

There are many good reasons to invest in precious metals, of course, and many intelligent, mature people have already done so. There are also a great many scams built around this market, fed by some prominent firebrands, bigots and amoral opportunists. This is managed by starting in a place of self-reliance and emergency preparation, then preying upon people's fears and whipping them up into a frenzy until rational thought goes out the window.

That is exactly what happens when you get mad. It has been demonstrated in carefully directed studies that you make worse decisions when you're angry. That is why racists and misogynists are so easily led: their thought processes have been disabled. "Fear leads to anger. Anger leads to hate. Hate leads to suffering." This we all know. But this, perhaps, is a post for another time.

In our current world of enduring peace, unmitigated freedom and abundance for all, why would anyone want to invest fictional money in actual, physical precious metals? One answer is a word I made up, chremalysis, which can be interpreted as "why we can't have nice things". Essentially: things go to shit. They go tits-up, and because people have been indoctrinated to mock emergency preparation (which used to be a way of life, before we redirected all our labor and innovation into convenience), they're usually caught flat-footed when things go wrong, as they inevitably will. They instantly become liabilities, relying on the charity of those "doomers" they once ridiculed, relying on relief from the government they condemned as a "nanny state".

Wow, I digress.

So! Gold and silver: why? I'm finding it difficult to isolate very responsible sources for this information, since the frenzy of money-lusting entrepreneurs has generated a dense fog of useless, repetitive or misleading websites of low to medium quality.

GoldSilver.com offers several reasons, mainly centering on the stability of silver against a volatile stock market and its relative worth against gold. Specifically:
  1. Silver metal is actual worth, rather than fiat paper or stock.
  2. Any Joe Shmoe can buy silver.
  3. Bullion is resistant to inflation/deflation.
  4. Silver has diverse medical and technical application, and then it gets thrown away in these applications, making the remaining silver more valuable.
  5. The less physical silver there is, the more valuable it gets.
  6. Silver comes from developing, war-torn or exploited nations. (How is this a benefit?)
  7. China and India are rapidly buying up gold and silver, driving up demand, which again puts pressure on developing, war-torn and exploited nations. (This sounds unappealing.)
  8. It's harder to manipulate silver bullion prices than silver stock.
  9. (More paranoia involving futures pricing, repeating above points.)
  10. Silver has remained fairly steady in its worth relative to gold.
Not sure if that's very convincing. It sounds more like a list of alarmist points with silver in common, rather than a persuasive argument that underscores the value of silver in response to environmental conditions.

Trendshare tips its hand as a pro-stock, stock-heavy outlet by downplaying the worth of physical bullion and promoting ETFs and the S&P 500 index fund. But I'm trying to get away from stock and investments because those are unstable and unpredictable. I'm not a betting man: when my wife and I went to Las Vegas, I was exponentially more interested in all the restaurants than any poker table or slot machine. So I'm not listening to Trendshare because they have nothing to offer me.

Similarly, one writer for Forbes has nothing favorable to say about investing in gold and silver bullion coins. Their advice: "Don't buy physical bullion; if you must (because you're an idiot), buy very little. Here's a bunch of condescending Warren Buffett quotes to support my premise that everything will always be the same forever, the market will always expand, and nothing bad will ever happen."

On the other hand, The Moneychanger offers very sober advice on how to invest in gold and silver. No post-apocalyptic sensationalism, no appealing to spurious authority, no abruptly switching to Comic Sans typeface: just clear recommendations and clear substantiation for these decisions. Unfortunately, if you read up on his autobio, he sounds like he's made a career of screening for federal loopholes under the auspices of just trying to earn a living. That doesn't mean his financial advice is necessarily bad, but I sense I might not want to live next door to him. To be fair, he'd probably feel the same about me.

A different Forbes writer than the aforementioned backs this advice up.

Still, I'm not (yet) looking for "how to," I'm searching for "why to".

While anyone can write an article for GoldSilverWorlds, a website run by six old white men (including, saints preserve me, a South African analyst), this article does state why some people invest in bullion: we've always done it; India and China gift it as a foundation for newly married couples; banks in each nation are stocking up on them to protect against the revaluation of regular money. People invest in bullion because the price is stable: $5 in gold will probably be $5 in gold several years from now, while $5 in paper loses its value over time.

To apprehend this point, here is a graphic a Reddit user made of classic video game consoles from the last several decades, underscoring what they cost back then and their sums' equivalent prices today. For instance, when the Atari 2600 came out in 1977, it cost $200, which would be $796 today. The theory is that if you bought $200 in gold bullion in 1977, it would be worth $200 today... which... doesn't sound like a very good deal. You could buy two Wii U's today with what the Atari 2600 cost nearly 40 years ago, but you couldn't buy one with $200 in gold purchased in 1977.

...That sounds horrible. I'm not understanding something important. Christ, I hate economics and finance. I mean, what if I buy $1,000 in 90% silver US half-dollars, and then the grid goes down and civilization collapses? Say I need to buy 12 gallons of gas for my Fiat. How do I convince the rural property holder with a personal reserve of gasoline to accept a fair price in hard silver for gas? How do I extract change from him? I'm not getting this at all. I'd rather say, "Here, farmer, I'll trade you a case of homebrew for two gallons of gas. Deal?"

This is all trusting that a good ol' boy wouldn't just blow my city-slicker head off and steal my beer, car and bullion, and rape my wife and probably my headless corpse, which to me is a much likelier scenario. I don't foresee a lot of generosity and community when the apocalypse erupts; I envision a lot of uneducated, well-armed bigots fighting for domination of resources, and I fully expect to be wiped out in the first round, which would be awful for culture but great for me.

The Advice

1 comment:

Armando Ali said...
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