written by reader Physical gold vs. futures, options & shares

By Anonymous Questions, August 26, 2014

You have by far the best newsletter in town…
Will sign up for Premium Membership now…
Have this question re teasers: If case of a correction (or meltdown), pundits say that you must own physical gold as security… What about futures options or just shares? Will the exchanges function? How about an article about gold teasers!

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SdnJohn
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SdnJohn
August 29, 2014 5:02 pm

In case of a meltdown, it is best to have physical gold in your possession! Exchanges/banks/etc may not only close, but the government may take some of your assets if they can find them. Just look at what happened in Greece! The Greek government confisicated a percentage of every bank account over one night.

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jomcintyre
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jomcintyre
August 31, 2014 1:27 pm

Also have cash. Specie. US Govt printed paper. Federal Reserve notes. Plus, change – quarters, dimes, nickels, pennies. Some merchants will retain a fondness born of familiarity, for cash. With no experience in actual physical gold – Rqnds, Canadian gold pieces, Mexican gold dollars, Austrian… etc. Or how about a bar? How will the merchant know the “value” of this. All precious metals are denominated in currency.

Back in around 1977, when people were again “allowed” to own gold, my husband rushed to the coin store in town to buy as much as he could at $70/oz! The price on the gold market soared to $600 in the next few years! Two interesting things happened.

First, there was no gold to be had, at any price. Market had frozen. No gold holders wanted to sell their metal. The coin store dealer called my dear husband and asked if DH would be interested in selling some of his coins at something like $600/oz. DH looked at me, “We could pay off the mortgage if I sold him some. What do you think?” After carefully thinking through his question for about, oh, one second, I said, “Absolutely, do it!” So, poor as we were at the time and in our 30s, we owned a lovely four bedroom home on large corner lot free and clear! That gold bought peace of mind, though we still had to pay upkeep and property taxes.

Second thing. DH said the coin dealer wanted to buy a television. Dealer had a gold piece “worth” $600, so he went across the street in our small town to the local TV dealer and offered the tv dealer his little yellow piece of metal in exchange for a $600 TV. “No deal!” TV guy refused to make the deal. “If that thing is worth $600, go sell it and bring me the cash!”

For me, the best investment is to know your neighbors. Secondarily, make and collect all the disaster preparations you think you will need, learn gardening.. you know, all the ancient virtues of self-sufficiency knowing there will be no help from outside.

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