Gold: Past, Present, and Future

Andrew Barrett4 said:So, what’s everyone’s take on using debt as an inflation hedge?

Fighting fire with gasoline, I suppose... 🙂

That was my initial thought process—grab a condo, put down 50% cash, finance the other half, and keep a solid liquidity cushion. I'm looking at a fixed interest rate around 2-2.5% for a 10-year term.
If inflation actually kicks in, my win is simply seeing the real value of that debt evaporate.

The catch, obviously, is that I’d be carrying debt. Besides, I'm not even convinced we’ll see massive inflation—if things went that far off the rails, this whole economy would basically cease to function. We might see 5%, maybe 7% or 10% if things get messy, but anything higher is hard to wrap my head around. The big banks have way too much sway over policy to let hyperinflation destroy everything.

And besides, prices in Germany have already hit historic highs. It doesn't feel like a smart play to buy into something that's clearly overpriced. Real estate is already so bloated that buying right now feels like a losing game.

Anyway, I don't buy into those doomsday scenarios about running out of groceries or electricity. If society actually collapses to that level, you aren't going to need a vegetable garden or a generator—you're going to need an AK-47 or an MP5.

The whole discussion has veered completely off course.

I wasn't necessarily talking about a mortgage, though. I was thinking more along the lines of a fixed-rate loan—say, a 15-year term. Those rates still seem pretty reasonable. It’s basically a high-stakes gamble. I mean, who knows if you'll even be around or how things will look by the end of that period?
But whatever. I'll probably just end up looking like I'm encouraging people to gamble with money they don't actually own. I guess I learned my lesson from that other thread >> forget that I said it... 🤣

hollowmoose21 said:Now I see why you get under people's skin sometimes. 😁 You clearly aren't even reading what you're replying to. I was talking about the USA.
@silver
Facts. Nobody actually knows how much shadow inventory is out there. A huge chunk of it might just be total junk that isn't worth a dime.
Or maybe the banks will pull some moves to make sure it stays worthless. 😍
http://www.time.com/time/video/playe...090492,00.html
Anyway, since we're drifting off-topic, let's kill this debate here. We can pick it up in another thread.

Now I understand why there's been some confusion—😍 I was actually responding to Felga69's post, not yours.

As for the US market, I agree entirely... which is why I didn't bring it up in the first place.

I'm honestly not sure where you got the impression I was addressing you directly.😂

Paul Peterson4 said:That was actually my first thought—buy a house, put down 50% of my own cash, take out a loan for the other half, and keep a solid reserve on hand. Imagine locking in a fixed rate around 2-2.5% for 10 years.
If inflation actually hits, I win because the real value of that debt just evaporates.

The part I'm not crazy about is being in debt, plain and simple. Besides, I’m honestly not convinced we’re heading for massive hyperinflation—if things went that south, this whole economy wouldn't even be able to function. We might see 5%, maybe 7%, maybe 10%... but it’s hard to imagine anything significantly higher than that. The big banks have way too much sway over policy to let inflation spiral completely out of control.

And look, prices in Germany have already been pushed to historic highs. Buying something that’s already massively overpriced doesn't feel like a winning play to me.

Also, I don't buy into those doomsday scenarios about running out of groceries or electricity. If everything really does go to hell like that, you aren't going to need a backyard garden and a flashlight—you're going to need an AK74 or an MP5.

🤣

Given the direction our economy is heading—honestly—you’ll probably need those carrots and that pitchfork long before you ever reach for an AK-47... and as for kilowatts? Forget about it. imho 😍

Andrew Barrett4 said:The whole discussion has veered completely off course.

I wasn't necessarily talking about a mortgage, though. I was thinking more along the lines of a fixed-rate loan—say, a 15-year term. Those rates still seem pretty reasonable. It’s basically a high-stakes gamble. I mean, who knows if you'll even be around or how things will look by the end of that period?
But whatever. I'll probably just end up looking like I'm encouraging people to gamble with money they don't actually own. I guess I learned my lesson from that other thread >> forget that I said it... 🤣

Why? Because the concept itself isn't bad... it's just that knowing how much political double-talk goes on around here, the dollar might actually become more stable than gold... that's the part that gives me pause.

Otherwise, it's a very compelling idea—but only for those who are absolutely certain that inflation is going to keep climbing.😉

Casey Price2 said:To be honest, the dollar value of zlato doesn't really matter to me since I don't live in a place where the dollar is the primary currency. Both gold and silver have had their corrections, and it looks like they're mostly finished. You ask what happens to people who bought at $1,900? It's the same situation I faced when I was buying at much higher rates. At the time of purchase, it felt like the absolute peak. Then, suddenly, it wasn't. Metals aren't assets you buy for a one or two-month flip; they are investments held over years. In about two years, those who bought at $1,900 will probably be wondering why they didn't buy even more.

As for art being a hedge, imagine if heaven forbid there’s a fire and a painting gets destroyed. Your hedge is gone. Can your zlato burn?

Or some butcher could just roll up and take it from me. 😂
They could steal my gold. Or I could just lose it, honestly, considering how small it is. 😍

hollowmoose21 said:I don't buy it. History shows plenty of times where debt just doesn't come back to haunt you.
Look at right now. In the US, you can grab a 30-year fixed mortgage at around 3.5%. Most people in here are claiming inflation is already higher than that. Fine. Maybe real estate prices are dipping or stalling for a bit, but that won't last long.

That’s how they do things in the US (as Bob would say)... but let's bring the focus back home to our Beautiful us...

A comment from SilverDoctors:
A few months back, Doc shared a post from some heavy hitters that laid out a solid overview of how certain assets behave during hyperinflation. Real estate can absolutely crater because once financing costs hit the stratosphere, the only way anyone can manage a purchase is if the sticker price is dirt cheap. One specific case I remember involved a house that originally pulled maybe $800,000 but eventually tanked down to $90,000—simply because that was the absolute max the property income could support given how insane the interest rates were.
There’s one more thing to consider here. If you’re renting rather than drowning in debt, there’s a decent chance your rent won't climb nearly as fast as the inflation rate. Residential properties can only handle so many real-term increases before they basically become a money pit. If things play out in your favor, you could actually end up renting a luxury hotel suite for a bargain, complete with all the bells and whistles like daily maid service and full access to the amenities. If your silver and gold appreciate faster than the inflation rate—which is pretty much a given during those kinds of chaotic times—you could actually set yourself up in a high-end residence without breaking the bank while everything else goes to hell.
It sounds totally backwards that a home or an investment property could take such a massive haircut, but you only have to look at US property prices back in the 1970s to see it happen—especially in hot spots like the South. We're talking about a period where nominal inflation was sitting at 10-15%. When standard mortgage rates climbed to 15%, almost nobody could stomach the monthly payments unless the property was priced way below the asking price. In my career this enormous increase in rates crushed the sales prices of commercial property by 50%. If the holding costs of real estate exceed its income in inflationary times, the price usually plunges by 50% or more. Unless there is a robust income coming from a specific piece of real estate, it is, in reality, a cost center, not an income producer. Unless a person can hold the property indefinitely because they have bottomless pockets, they'll usually dump it at a loss before it bankrupts them—and that happens even to owners who are incredibly wealthy and liquid.
Bottom line: real estate can act as a massive anchor for someone trying to navigate their way out of a hyperinflationary mess. That’s why it’s better to travel light with physical assets in your pocket and get out of Dodge while the getting is good.

-------------------
Setting aside the nonsense about living in hotels, this stuff is actually pretty interesting:
1. Back in the 70s, inflation was hitting 10-15%? I didn't realize that, but it sounds like a darker version of the current QE / ESF maneuvering we're seeing now.
2. When inflation is high and the economy is trashed, people can't afford homes—some might even be forced to sell because their taxes have become unbearable. Consequently, the prices for houses, apartments, and land can swing wildly in both directions.
3. Real estate is recorded on paper, which means you can't just walk away from the property taxes. When shit hits the fan, who knows if some new Linic will swoop in and introduce punitive real estate tax rates targeting "the wealthy" during those lean times. Coins and bars aren't recorded in any government ledger.

Everyone’s always obsessing over hyperinflation hitting triple digits—like 100% or more. But honestly? Even if inflation just sits at 6, 7, or 8%, you can watch a quarter of your life savings just vanish into thin air in just a few years

The government claims inflation is sitting at 4%. Honestly, I think they're just massaging the numbers to suit their own agenda. When you look at the actual cost of living—electricity is up 20%, gas has jumped 30%, public transit is up 50%, Duke Energy is eyeing a 37% hike, flour prices spiked 35% overnight, and don't even get me started on fuel... how can anyone talk about inflation being 6% or 7%? In reality, we’re already facing well over 10%, and things will likely worsen. I suppose it's better to prepare for what's actually happening rather than relying on official data that feels intentionally skewed. Besides, some of us remember the instability back in the days of the old South and what those inflation rates were like—the blackouts, the shortages, and all that. I wouldn't bet against a similar scenario playing out here.

dustyheron5 said:Now I understand why there's been some confusion—😍 I was actually responding to Felga69's post, not yours.

As for the US market, I agree entirely... which is why I didn't bring it up in the first place.

I'm honestly not sure where you got the impression I was addressing you directly.😂

Friend, where on earth are you seeing any rims? 🤣

Exactly.
Anyone who actually buys the inflation numbers the government feeds them clearly isn't buying groceries, driving a car, or paying an electric bill.

Casey Price2 said:The government claims inflation is sitting at 4%. Honestly, I think they're just massaging the numbers to suit their own agenda. When you look at the actual cost of living—electricity is up 20%, gas has jumped 30%, public transit is up 50%, Duke Energy is eyeing a 37% hike, flour prices spiked 35% overnight, and don't even get me started on fuel... how can anyone talk about inflation being 6% or 7%? In reality, we’re already facing well over 10%, and things will likely worsen. I suppose it's better to prepare for what's actually happening rather than relying on official data that feels intentionally skewed. Besides, some of us remember the instability back in the days of the old South and what those inflation rates were like—the blackouts, the shortages, and all that. I wouldn't bet against a similar scenario playing out here.

Inflation is different for everyone. It depends on if you smoke, if you drive a lot, or if you're stuck with a mortgage in Swiss francs and all that. My personal inflation rate is closer to 5.2%.

Paul Peterson4 said:That was my initial thought process—grab a condo, put down 50% cash, finance the other half, and keep a solid liquidity cushion. I'm looking at a fixed interest rate around 2-2.5% for a 10-year term.
If inflation actually kicks in, my win is simply seeing the real value of that debt evaporate.

The catch, obviously, is that I’d be carrying debt. Besides, I'm not even convinced we’ll see massive inflation—if things went that far off the rails, this whole economy would basically cease to function. We might see 5%, maybe 7% or 10% if things get messy, but anything higher is hard to wrap my head around. The big banks have way too much sway over policy to let hyperinflation destroy everything.

And besides, prices in Germany have already hit historic highs. It doesn't feel like a smart play to buy into something that's clearly overpriced. Real estate is already so bloated that buying right now feels like a losing game.

Anyway, I don't buy into those doomsday scenarios about running out of groceries or electricity. If society actually collapses to that level, you aren't going to need a vegetable garden or a generator—you're going to need an AK-47 or an MP5.

A 2.5% fixed rate???
Take it immediately if anyone offers you that—even if you have to move your money to another bank just to put it in a CD at 4% or higher. 😂

I'm looking into buying more, stacking cash, but this garbage keeps climbing.
Just waiting on when that dip/correction/manipulation/Ben—whatever we're calling it—finally happens so we can all fix our stacks. 😉

Casey Price2 said:Friend, where on earth are you seeing any rims? 🤣

Friedrich69 or Felga69... it’s not like there's actually a difference.😂

Stagflation in Extremis and The Explosive rise of Gold Bloomberg News

http://news.goldseek.com/GoldSeek/1347975278.php

dustyheron5 said:Now I understand why there's been some confusion—😍 I was actually responding to Felga69's post, not yours.

As for the US market, I agree entirely... which is why I didn't bring it up in the first place.

I'm honestly not sure where you got the impression I was addressing you directly.😂

B is talking to A, C is talking to B, so obviously C is also talking to A.
@yokohama. Those were just "minor bumps" compared to the chaos we've seen lately. 🙂
http://www.multpl.com/case-shiller-h...tion-adjusted/
But that's not what we're talking about here. There are separate threads for housing prices and even one for real estate vs. gold.

So, following that summary of the Boeing 747, someone asked how we’re all supposed to hedge our positions together.
Personally, I’m looking for some kind of differentiation beyond the obvious stuff, like commodities or energy.
The standard ideas just seem to be running dry.

Joe caught a golden whale once, and the whale tells him:
- Please let me go, because I don't just grant three wishes like some goldfish—I can grant an endless amount of them...
And Joe's response?
- Forget the wishes—take me straight to Tiffany's.

😁

wearyotter36 said:A 2.5% fixed rate???
Take it immediately if anyone offers you that—even if you have to move your money to another bank just to put it in a CD at 4% or higher. 😂

I'm looking into buying more, stacking cash, but this garbage keeps climbing.
Just waiting on when that dip/correction/manipulation/Ben—whatever we're calling it—finally happens so we can all fix our stacks. 😉

The correction is over. I'm not sure what everyone was waiting for all year while gold was just idling between $1,250 and $1,320 an ounce. And don't even get me started on silver—it corrected itself up to about $26 per ounce (not the spot price, but what you actually pay). I can't be 100% certain, of course, but I suspect we won't see gold back at $1,250 or silver at $26 anytime soon.

Andrew Barrett4 said:So, following that summary of the Boeing 747, someone asked how we’re all supposed to hedge our positions together.
Personally, I’m looking for some kind of differentiation beyond the obvious stuff, like commodities or energy.
The standard ideas just seem to be running dry.

Joe caught a golden whale once, and the whale tells him:
- Please let me go, because I don't just grant three wishes like some goldfish—I can grant an endless amount of them...
And Joe's response?
- Forget the wishes—take me straight to Tiffany's.

😁

Not sure if you remember, but we already chewed over using credit as an inflation hedge over in the housing thread. I dropped links to some killer articles by D. Amerman—pretty sure he covered this exact angle too.