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It is actually very hard to get real gold (especially in a form that you can convert back to cash in the future). Just try to get delivery of a gold bullion. An

It is actually very hard to get real gold (especially in a form that you can convert back to cash in the future). Just try to get delivery of a gold bullion. And if you succeed, try selling it into the system again, without losing 30%. Paper gold is a bet no different than a stock; it is a bet that the system and your counterparty will both be solvent when you need them.

david927 6y ago
And that seems to imply that it is a valid alternative, maybe not for large hedge funds but individual investors.
- beagle3 6y ago
  (Assuming you refer to paper gold) It’s a viable investment, just as stocks are. But not a financial-system-crash proof store of value, which is what the GGP meant, I think, when he recommended getting gold.
secondcoming 6y ago
I own physical gold, not a lot. Here are some reasons I bought it: a) It's a store of wealth. I don't expect to be able to go buy groceries with it, however I do expect to be able to cash it in for fiat post-depression if I need to. b) I can move it abroad easily enough if I need to. I have immediate access to it. c) It's cool. It has also doubled in value since I bought it. I am old enough to remeber the chaos in the silver market a few years ago, where it went to $50 per ounce and then crashed in two or three days. I'm not one of those morons.
rwmj 6y ago
Not that I'm advising anyone to get them, but what would be the counterparty risk with gold ETFs? You don't believe their guarantees that they are backed up with actual gold? eg: https://etf.invesco.com/gb/private/en/product/invesco-physical-gold-etc/documents https://etf.invesco.com/gb/private/en/product/invesco-physic...
- beagle3 6y ago
  Personally, I don’t. The audits are few and far between, and I haven’t followed it closely, but there were several instances in time where the (gold ETF + physical future commitments + whatever else they counted) required more gold than was known to have been mined and not used in industry. What this means is that, at moment in time, if the music stopped, someone would be left without gold - though with the distributed nature of everything, it’s hard to say who. Fake bars are routinely discovered in storage, collateral, etc, see e.g. https://www.nasdaq.com/articles/chinas-kingold-shares-tank-on-report-of-fake-gold-bars-2020-06-30 https://www.nasdaq.com/articles/chinas-kingold-shares-tank-o... for the most recent high profile (but by no means unique) example.
- deleted 6y ago
  [deleted]
- dllthomas 6y ago
  Even if they have the actual gold, they have the actual gold. If they decide not to give it to you, there needs to be enough of a functioning court system to remedy that; and even then it may take time - just because you have a legitimate claim to that gold doesn't mean a court can easily decide that you're the only one with a legitimate claim to that gold.
  - willcipriano 6y ago
    Even with a functional court system you can lose it with the stroke of a pen[0]. Physical gold however would require more effort to take from you. [0]https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
    - dllthomas 6y ago
      That's true, and it's a risk. I am unclear on whether it should be technically considered "counterparty risk", although it plays out similarly.
devalgo 6y ago
>Just try to get delivery of a gold bullion It's fairly trivial to get lots of gold just above spot price. https://www.apmex.com/product/75/10-oz-gold-bar-brand-name https://www.apmex.com/product/75/10-oz-gold-bar-brand-name >And if you succeed, try selling it into the system again, without losing 30%. In the scenario where the markets are collapsing and you need to sell gold for cash it's possible or even likely that it could be worth more than what you bought it for and even if not the discount rate you accept for selling it back may be worth it either way. If the market dropped 50-80% and you are only taking a 30% loss on gold that's clearly worth taking.
paulie_a 6y ago
It's incredibly easy to buy gold. I just started dabbling in that area but it's dead simple.

david927 6y ago

And that seems to imply that it is a valid alternative, maybe not for large hedge funds but individual investors.

beagle3 6y ago
(Assuming you refer to paper gold) It’s a viable investment, just as stocks are. But not a financial-system-crash proof store of value, which is what the GGP meant, I think, when he recommended getting gold.

secondcoming 6y ago

I own physical gold, not a lot. Here are some reasons I bought it: a) It's a store of wealth. I don't expect to be able to go buy groceries with it, however I do expect to be able to cash it in for fiat post-depression if I need to. b) I can move it abroad easily enough if I need to. I have immediate access to it. c) It's cool. It has also doubled in value since I bought it. I am old enough to remeber the chaos in the silver market a few years ago, where it went to $50 per ounce and then crashed in two or three days. I'm not one of those morons.

rwmj 6y ago

Not that I'm advising anyone to get them, but what would be the counterparty risk with gold ETFs? You don't believe their guarantees that they are backed up with actual gold? eg: https://etf.invesco.com/gb/private/en/product/invesco-physical-gold-etc/documents https://etf.invesco.com/gb/private/en/product/invesco-physic...

beagle3 6y ago
Personally, I don’t. The audits are few and far between, and I haven’t followed it closely, but there were several instances in time where the (gold ETF + physical future commitments + whatever else they counted) required more gold than was known to have been mined and not used in industry. What this means is that, at moment in time, if the music stopped, someone would be left without gold - though with the distributed nature of everything, it’s hard to say who. Fake bars are routinely discovered in storage, collateral, etc, see e.g. https://www.nasdaq.com/articles/chinas-kingold-shares-tank-on-report-of-fake-gold-bars-2020-06-30 https://www.nasdaq.com/articles/chinas-kingold-shares-tank-o... for the most recent high profile (but by no means unique) example.
deleted 6y ago
[deleted]
dllthomas 6y ago
Even if they have the actual gold, they have the actual gold. If they decide not to give it to you, there needs to be enough of a functioning court system to remedy that; and even then it may take time - just because you have a legitimate claim to that gold doesn't mean a court can easily decide that you're the only one with a legitimate claim to that gold.
- willcipriano 6y ago
  Even with a functional court system you can lose it with the stroke of a pen[0]. Physical gold however would require more effort to take from you. [0]https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
  - dllthomas 6y ago
    That's true, and it's a risk. I am unclear on whether it should be technically considered "counterparty risk", although it plays out similarly.

devalgo 6y ago

>Just try to get delivery of a gold bullion It's fairly trivial to get lots of gold just above spot price. https://www.apmex.com/product/75/10-oz-gold-bar-brand-name https://www.apmex.com/product/75/10-oz-gold-bar-brand-name >And if you succeed, try selling it into the system again, without losing 30%. In the scenario where the markets are collapsing and you need to sell gold for cash it's possible or even likely that it could be worth more than what you bought it for and even if not the discount rate you accept for selling it back may be worth it either way. If the market dropped 50-80% and you are only taking a 30% loss on gold that's clearly worth taking.

paulie_a 6y ago

It's incredibly easy to buy gold. I just started dabbling in that area but it's dead simple.