The real value of gold will be after TSHTF. Sure, gold will probably shoot up like a rocket as we approach 2000, but who cares? So will everything else worth buying, ie pack of matches = $500. When absolutely NO currency exists in the post Y2K era, gold will be worth whatever anyone is willing to barter with it.

DOWNtheROAD

-- downtheroad (don't@askwhy.com), July 08, 1999

Answers

For a more informed analysis of gold and its "future", check out the following:

http://www.newaus.com.au/econ126frank.html

Jolly

-- Jollyprez (jolly@prez.com), July 08, 1999.

In my mind gold does not go up or down. Everything else moves up or down to the value of gold.

Justthinkin

-- justthinkin com (justthinkin@y2k.com), July 08, 1999.

the future value of gold will be the same as it all ways has. the real question is what will be the future value of federal reserve notes. Today everything is judged against the relative value of the currency.

Once supply and demand problems for commedities return back to normal after the dust has settled then everything will regain its relative value. the question then will be what will be the medium of exchange?

Gold, Silver, Toilet paper, Federal Reserve notes or pure electronic commerce. All I'm concerned about now is being prepared while the dust is still flying. Once things settle back down again commerce will be restored.

not looking to get rich off of y2k

-- Guns, Grub & Gold (The End@the World.com), July 08, 1999.

Hi Guns and Grub,

Sorry my friend, but I don't see anything getting back to normal. How could things become settled after a societal breakdown? The problem we have is that we are sooo accustomed to a certain standard of living and doing things, that we can't even imagine living in the stone age. But assuredly, that's where were headed.

DOWNtheROAD

-- DOWNtheRoad (foo@bar.com), July 08, 1999.

An ounce of gold has historically been worth the price of a fine man's suit. That would make it about $600 today. I expect that gold will at least return to its historical value after Y2K hits. On the other hand, without gas and electricity an $80,000 Mercedes and Microsuck stock will be worth nothing.

-- Mr. Adequate (mr@adequate.com), July 08, 1999.

Jolly,

Good find! Shostak does a pretty good job of summarizing Ludwig Mises' regression theorem of money.

(snip)

"In plain English yesterday's price of money is required to set today's price of money. It follows then, that without yesterday's information about the price of money, today's purchasing power of money cannot be established. (With regard to other goods and services past history is not required to set present prices. As demand for these goods arises on account of the perceived benefits from consuming them. The benefit that money provides is that it can be exchanged for goods and services. Consequently, one needs to know the past purchasing power of money in order to establish today's demand for it )."

(snip to end)

In spite of federal reserve notes being fiat money, I believe that peoples' familiarity with them in everyday purchases will make them more readily accepted during an economic crunch than gold coin (not to mention bullion) at exchange rates at or better than today's prices.

Jerry

-- Jerry B (skeptic76@erols.com), July 08, 1999.

Jerry, yes prior to Y2K currency will still be accepted, and worth relativley more. BUT, products and services will also be much more expensive. My point about gold is, once the crash happens, maybe a few months or even years later, gold will have a redeemable value in terms of goods etc. I think most of us are still living under the illusion that life will continue somewhat normally after Y2K. This is a big mistake. Life will be far, far from normal. Paper currency will be worth squat.

DOWNtheROAD

-- DOWNtheROAD (foo@foo.com), July 08, 1999.

DOWNtheROAD,

Yes, there will be many differences and we can make our guesses about them. Among my guesses is that, relative to todays' exchange rates, FRNs will more useful than gold in the range of scenarios that I regard as most likely in the year 2000. Obviously, different people have different guesses.

Jerry

-- Jerry B (skeptic76@erols.com), July 08, 1999.

Just had to put my two cents worth in here:

First of all, I'm not going to take the other side of the trade when various central banks and the IMF are selling gold. If they are selling, I certainly don't want to be buying. There's an old trader's saying that says the mice shouldn't come out to play when the elephants are on the floor.

Next, Mr. Adequate said: "An ounce of gold has historically been worth the price of a fine man's suit. That would make it about $600 today."

What will the price of a fine man's suit be in a year or two if TSHTF?

Also, I've seen a lot of comments from time to time on this forum about how we should go back to a gold standard . If the US went back to the gold standard, what would the gov't value an ounce of gold at? I contend that it would be as little as possible, so they could get "more bang for their buck", so to speak. I'll go out on a limb and say they will give you $50 an ounce. Coincidentally, that is what it says on the front of a one ounce US Gold Eagle coin. It is also just slightly more that the $43 an ounce or so that it is still valued at on the government's balance sheet (see Milton Friedman's "Money Mischief").

If Y2K turns out to be a 10, the gold bugs may be right, but for anything less, I think that cash will be the way to go, at least for a while.

I also agree with what Jerry B. said about currency: It is what people are familiar with.

I'm betting the price of gold will tumble after Y2K (if it's pretty bad, but not a 9 or 10). Everyone will be melting down their jewelry and selling it for currency so they can buy a loaf of bread because the grocer prefers dollars because that's what he is familiar with and that is what his suppliers prefer.

I could be wrong, but we're going into uncharted territory here and nobody really knows for sure. If it's a 10, my cash may not be worth anything, but I've got plenty of .223 ammo and a year's worth of freeze dried food as a back up.

-- Clyde (clydeblalock@hotmail.com), July 09, 1999.

Down the Road says that before Y2K prices of services and products will go up. He is wrong!

I provide a service in the home. When the panic hits, nobody will be interested in my service. I will then be forced to lower my prices to keep buzy.

The same goes for the furinture dealer. Nobody will buy furniture during a panic. He will be forced to lower his prices to keep on selling his furniture.

However if Y2K is 10, and products are real scarce and hard to get, the prices will then go up.

I'm planning to buy all new furniture in about November!

-- freddie (freddie@thefreeloader.com), July 09, 1999.

In the event of a societal collapse, holding enough gold to matter (as coin or bullion) seems a questionable proposition to me.

1) Your mobility is severely restricted if you guard it yourself.

2) If you don't guard it yourself, you will need to hire others for security. How can you trust them?

3) If you use gold in a transaction, how will you establish its value?

4) Once you do use it, you will be known as one holding gold, and you will be at risk from that point on.

5) Rational discussion among reasonable men in an orderly environment may not be possible in the situation as it develops.

-- Tom Carey (tomcarey@mindspring.com), July 09, 1999.

If TSHTF, tell me, who will take your gold when you're starving and need food? Gold's TRUE value is ZERO, because you can't DO anything with it. If you're bartering, people want something they can USE, not some worthless rock.

But hey, don't let that stop you from stocking up on all those pretty coins.

-- (gold@worthless.idiots), July 09, 1999.

>>>>If TSHTF, tell me, who will take your gold when you're starving and need food? Gold's TRUE value is ZERO, because you can't DO anything with it. If you're bartering, people want something they can USE, not some worthless rock. But hey, don't let that stop you from stocking up on all those pretty coins. <<<<<<

Gold is THE storehouse of excess purchasing power, Einstein. You obviously don't have that problem hence your limited world view. No one with the need to convert out of fiat currencies and the grasp of the situation is stupid enough to buy gold and forget food, shelter, ammunition, etc..

But you get satisfaction from thinking that is so, I'm sure.

-- Will Huett (willhuett@usa.net), July 09, 1999.

Tom,

Gold is small and easy to hide. Your arguements about the energy needed to protect it are not exclusive to gold. They apply to food, toilet paper, batteries and so on. Where gold is irreplaceable is in preserving wealth THROUGH the collapse.

How does one get their wealth across to the other side?

The wealth so protected will NOT BE USED DURING THE COLLAPSE. It will be used afterwards to rebuild. Hence it is vital for those with the ability to make these preparations.

Regards,

Will

-- Will Huett (willhuett@usa.net), July 09, 1999.

Yes, preserving our wealth through the chaos of Y2K is the whole point of holding gold. In my opinion, its value will skyrocket. Come on folks, how couldn't it? Historically, its the marker. All currency that we use was derived from the gold standard. Seems to the me the question about gold is alot like Y2K, either you get it or not. Don't waste your time thinking about the value of 'currency' or federal reserve rates. Give me a break! What's the whole point of understanding Y2K? That society ain't gonna work no more. And along with it, its traditional means of exchange. Come on folks, time is getting short.

DOWNtheROAD

-- DOWNtheROAD (foo@foo.com), July 09, 1999.

Actually, gold has not always necessarily been the marker. Silver competed for a long time before losing out more recently.

Even up to the beginning of this recent century, silver was considered as a possible standard for currencies.

I prefer gold to silver because you don't have to work as hard or as often to polish it.

-- nothere nothere (notherethere@hotmail.com), July 09, 1999.

DOWNtheROAD,

I thing that getting it, in Y2K terms, means preceiving that Y2K computer bugs will cause various kinds of problems which together will have serious adverse effects. But getting it does not mean being able to quantify the magnitudes and durations of the adverse effects, and the available data is open to wide variations of guesses about such magnitudes and durations. Different guesses have some implications in common, but some other implications that diverge considerably.

So, too, with regard to gold. Different guesses have some implcations in common, but some other implications that diverge considerably.

If you are guessing that "society ain't gonna work no more", the implications diverge considerably from those of guesses that society will for some period of time work somewhat less well than it has in the recent past (and with considerable variation of the "somewhat less well" among the guesses).

Jerry

-- Jerry B (skeptic76@erols.com), July 09, 1999.

>>Gold is THE storehouse of excess purchasing power, Einstein. You obviously don't have that problem hence your limited world view.

No, the problem is YOUR limited world view. Just because gold IS the storehouse of excess purchasing power doesn't mean it WILL be the storehouse when TSHTF. As others have pointed out, it will have NO VALUE until society is rebuilt, because nobody will be interested in pretty rocks.

So then the question is, how will it gain its value back? At what point will people start swapping gold around? Let's use an example from history. Oh, wait, THERE ARE NONE.

You might be lucky and gold will magically come back into style after TSHTF. But if you're wrong, then all you got is a pile of worthless rocks.

-- (gold@worthless.idiots), July 09, 1999.

My only question is who is buying it???

That might be a clue!!

justthinkin

-- justhinkin com (justthinkin@y2k.com), July 09, 1999.

>>So then the question is, how will it gain its value back? At what point will people start swapping gold around? Let's use an example from history. Oh, wait, THERE ARE NONE. <<

This clown thinks there are no examples? For 6000 years, gold has been considered valuable. This is not an example? Tell you what, Einstein, if you happen to trip over some of those "worthless rocks" as you blunder through your uneducated life, just let me know; I'll gladly take them off your hands.

-- Elbow Grease (LBO Grise@aol.com), July 09, 1999.

A lot of the responses omit the word "relative," that would make some sense out of talking about gold's prospective value. Gold's price relative to life's necessary goods may fall behind, while still preserving one's capital vs. paper currency or electronic records of wealth.

Gold's nominal price in terms of much-devalued dollars may rise or fall. $500 gold wouldn't help you as much storing up (if you could) a few years' supply of gasoline in a USA of $5 gas prices. But it sure would have been better than holding paper $.

Ask yourself the larger question: If I had $1 million in a bank now, and I thought my right to withdraw my million bucks was vulnerable sometime in the near future, would I want a million in green paper bills, or about 3600 1-ounce gold coins? A mixture? Well then, favoring which "investment"?

As for gold's spendability in a crisis, people on this forum have never mentioned the profession that thrives in tricky financial times: the moneychanger. Whatever small coins, bills, matches, cigarettes pass for everyday spending, will (if legal, or at least fairly safe) be available in exchange for gold, with some measure of privacy part of the bargain.

-- Mr Gresham (ready@for.it), July 09, 1999.

I think that Mr. Gresham pretty well summarized it: Gold (and silver) will be used (in a "rebuild" stage after TSHTF, perhaps) as one of many barter items. In point of fact, everything will be negotiable.

Nobody knows what will happen with Y2K, of course. But having a "Y2K diversified portfolio" that in addition to your surivial property and preps, which consists of cash $10s, $5s, $1s, and coins), gold coins, and silver coins makes good sense. It provides for options that you otherwise would not have.

-- Jack (jsprat@eld.net), July 09, 1999.

>>So then the question is, how will it gain its value back? At what point will people start swapping gold around? Let's use an example from history. Oh, wait, THERE ARE NONE.<<

<>

No, it's NOT. I asked for an example of the last time gold lost ALL it's value and then came BACK. Can you provide one? I'm waiting...

-- (gold@worthless.idiots), July 10, 1999.

Excuse me, "worthless.idiot", do I have to point out the nonsense of your straw man? Gold has held value for 6000 years. What proof do *you* have that people will not continue to consider it valuable? Oh, that's right, THERE IS NONE.

-- Elbow Grease (LBO Grise@aol.com), July 10, 1999.

>>Excuse me, "worthless.idiot", do I have to point out the nonsense of your straw man? Gold has held value for 6000 years. What proof do *you have that people will not continue to consider it valuable? Oh, that's right, THERE IS NONE.

Do you even bother to read the posts in here, or are you just so enamored with shooting off your mouth that you don't even notice what people are saying? When Y2K hits, gold will be USELESS. NOBODY will want any. Why? Because in the collapse of civilization, people will want what they can USE. Look back at the previous posts and you'll see the same thing. Let's say you and your family are starving but you've got a nice pair of shoes. I need some shoes and figure that you might give me yours. I have with me one bag of wheat and a few gold coins. Which will you take??? Yeah, maybe you should take the gold and watch your family die of starvation. That's the ticket.

-- (gold@worthless.idiots), July 10, 1999.

:-D :-D

Mr. worthless,

Actually, I'm normally quite placid in my responses. I usually save my posts for only the most blatant of foolish statements. (Isn't that right, Mr. Decker?) In this case, I feel I am engaging in a battle of wits with an unarmed man. But I think I understand the problem now: you don't know what a straw man argument is.

Your unproven assumptions are as follows:

(1) the collapse of civilization (2) that gold will be worthless (3) that the circumstances of your hypothetical example have any chance of occurring given your flawed thought processes.

Let me reiterate once more: Throughout human history, through peace and war, through feast and famine, through boom and bust, gold has been a store of value. If you possessed gold during a period of chaos, would you give it away even if you felt it was worthless, or would you keep it?

-- Elbow Grease (LBO Grise@aol.com), July 10, 1999.

>>Your unproven assumptions are as follows:

>>(1) the collapse of civilization

So you think everything will be a-okay then, Polly?

>>(2) that gold will be worthless

And yet again, you show only that you haven't even read the other messages in this thread. Just close your eyes and pop your head back into the sand. Everything will be okay, really.

>>(3) that the circumstances of your hypothetical example have any chance of occurring given your flawed thought processes.

Well, if Y2K is just a "bump in the road" then you're probably right. So why stock up on gold at all? Just use cash.

>>Let me reiterate once more: Throughout human history, through peace and war, through feast and famine, through boom and bust, gold has been a store of value.

You can reiterate it as many times as you like. You still never answered the question of how gold will go from not being used in the "crisis" to suddenly being used in the "rebuilding." If you don't know what I'm talking about, I can only repeat my request that you actually try to read the rest of the posts in this thread. If you choose not to, that's not my problem.

>>If you possessed gold during a period of chaos, would you give it away even if you felt it was worthless, or would you keep it?

I'm not stupid enough to have any during a crisis in which it will lose its value, on the "hopes" that it will come back. I prefer a less risky investment.

But it's fun to watch you desperately cling to the hope that someone will want your gold coins when you're dying of starvation. Who knows, you could get lucky. I wouldn't want to risk my life and that of my family on it, though.

-- (gold@worthless.idiots), July 10, 1999.

Mr. worthless,

Glad you keep hanging around. Are you a masochist? You are most definitely unarmed. If you believe the other opinions on this thread support your position, you need serious help.

Let's see..

DtR starts with "The real value of gold will be after TSHTF."

justthinkin says "Everything else moves up or down to the value of gold."

GG&G says "the future value of gold will be the same as it all ways has."

Mr. Adequate says "I expect that gold will at least return to its historical value after Y2K hits."

Jerry B says "I believe that peoples' familiarity with them [FRN's] in everyday purchases will make them more readily accepted during an economic crunch than gold coin..."

DtR says "My point about gold is, once the crash happens, maybe a few months or even years later, gold will have a redeemable value in terms of goods etc."

Clyde agrees with Jerry B and adds "I'm betting the price of gold will tumble after Y2K .."

freddie doesn't mention gold, Tom Carey finds owning it risky but his statements imply that the risk is due to gold having value.

So, no one is supporting you here, Mr. worthless.

Now back to your fantasy question. "I asked for an example of the last time gold lost ALL it's value and then came BACK." It has *never* happened. It has never happened because gold has never lost ALL it's value. That is my answer in terms even you can understand. But it is the same answer I've given before.

Quid pro quo, Mr. worthless. Time for you to put up or shut up. For gold to lose ALL value, there *must* be total world-wide societal collapse. Prove that that is the *only possible* consequence of Y2K. Secondly, prove that, even if there are serious problems, they *must be* serious enough to overturn all of human history's opinion of the value of gold.

You're in way over your head, Mr. worthless.

-- Elbow Grease (LBO Grise@aol.com), July 10, 1999.

Did "gold@worthless.idiots" really call Elbow Grease a polly??? :-D :-D

-- RUOK (RUOK@yesiam.com), July 10, 1999.

"gold@worthless" is probably a guy named "Todd" who pops up on other Y2K and survival boards the moment anyone says anything positive about precious metals. He seems to believe that we are headed into an infomagic-like abyss in which there will be no organized economic activity, and in which life will be nothing more than a hand-to-mouth struggle, for years or decades. In this sceanario, of course he is right that metals ("pretty rocks") will have little or no value, since everyone will be preoccupied with simply getting enough to eat THAT VERY DAY, etc. However, if you think that such a sceanario is very unlikely (as I do), and that we might suffer perhaps severe disruptions, depression, etc., without a "devolutionary spiral", TOTAL collapse of the division of labor, TOTAL collapse of mediated exchanges (i.e. money, i.e. metals), for decades or generations, AND if you have more than very modest financial resources (say, more than $5000 or so), then metals become an attractive optional way to preserve something of what you have through the upcoming whatever-it-is-going-to-be.

I agree with the oft-made point that "one cannot eat gold", and that basic consumable survival supplies come FIRST in one's plans... food, clothing, etc., etc. But there is only so much of that stuff to buy if one does not think that the whole infomagic sceanario is going to play out. I mean, after you lay in a 2-3 year supply of food, what next? A five year supply? A seven year supply? How bad do you think things are going to get? And if you have a little money to work with (say, 15K in the 'ol IRA, etc.), what are you going to do with it? Spend it all on survival supplies?

These are serious questions. One of the problems with the "you can't eat gold" argument is that it does not address the other side of this issue, which is (perhaps) that "you can't spend dried food". By this I mean that once all your money is in survival supplies, then your only option, in the event of a milder sceanario, is to slowly use them all up -- directly and personally. Not that this is a disaster, but it could represent a BIG opportunity cost. For example, I can imagine in a depressed environment that a lot of things previously much inflated in price (equities of companies with excellent fundamentals, urban real estate, etc.) might become very cheap; you might wish for your long-term financial security that you had the cash to take advantage of them. Having all your money in bullets and beef jerky would not allow this, or would make it very inconvenient.

And as for "cash", why not simply stockpile FRNs? No reason, except for the vulnerability (mid-long term) of the U.S. dollar. Indeed, I think it is a good idea to stockpile some cash, some gold, some silver, along with the barter goods, consumables, etc. DIVERSIFY in ALL categories of hard assets.

Bottom line: putting ALL of one's resources into direct consumables seems, to me, to be as imbalanced an approach as betting your whole farm on a single start-up company, or a single anything.

PS: I have found Todd's (gold@worthless') comments quite interesting and useful for my own thinking. Indeed, I cut/pasted a lengthy exchange between Todd and a goldbug, arguing this whole issue out about as far as it can be taken -- a worthy read if you really want food for thought about these issues. The exchange is posted here:

Metals, Currency, Consumables, and the Post-Crisis Migration of Values, Parts I and II:

http://www.provide.net/~aelewis/gold/crisisv1.htm http://www.provide.net/~aelewis/gold/crisisv2.htm

-- alan (foo@bar.com), July 10, 1999.

Gawd! Even Infomagic advocates going to gold coins, and in fact doing it now before Y2K, just selling them back as you need to to handle life's little payments (mortgage, credit card, whatever). Its in one of Cory Hamasaki's "Dee Cee Weather Reports", the last one that has an article by Infomagic -- I think the title is in fact "Infomagic 3". (Sorry I don't have the exact issue....)

-- King of Spain (madrid@aol.com), July 10, 1999.

Alan,

Thanks for the linkmost instructive. If you're right about Todd/gold is worthless, someone could be on this thread until rollover trying to explain basic economics to him (and have no more success than Gerald Walker!). It would be interesting to see Gerald Walker discuss Y2K with Mr. Decker, however.

-- RUOK (RUOK@yesiam.com), July 11, 1999.