Store of value?

[SidS]

On 19/12/2022 at 20:23, Mcgrimes said:

I’m glad to see that someone else has bothered to look up the recognised examples of store of value and seen currency listed, even if there are more reputable sources out there.

 Why is it hard to imagine gold being worthless, even when it has petty much no industrial use?  (Apart from the fact that is humans find it irresistible!)

 As an example, in the event of a sustained nuclear war, I’d rather be holding cans of beans than a sovereign.
 

Throw a pile of gold in the street and people will go and gather it. Thousands of years of perceived value interwoven with stories, culture and art. Very difficult to alter such ingrained perceptions.

[SidS]

On 20/12/2022 at 08:34, flyingveepixie said:

As someone said above : in the event of a nuclear war a can of beans or a pack of potassium Iodide tablets would likely have more value than a sov.

I would have thought lead would be pretty useful too.

[JohnA1]

Bitcoin hoarders have sent me videos of people mocking gold, trying to bite it, wondering how could it be worth anything since they can't eat it.

Even that Ramsey US 'billionaire' character mocks gold. Surely he knows better than that, but hey..

Maybe it is a campaign to keep the rif-raff away, so it is still cheap for the rest of us ☺️

[JohnA1]

 

Store of value? I think this graph speaks volumes.

The bottom horizontal yellow line is the price of oil in gold grams

 

I found this presentation interesting

https://www.youtube.com/watch?v=PHKPa8K4bQ8

 

Edited December 29, 2022 by JohnA1
added video link

[ArgentSmith]

8 minutes ago, JohnA1 said:

 

Store of value? I think this graph speaks volumes.

The bottom horizontal yellow line is the price of oil in gold grams

I get your point but if you zoom in it isn't as if they are pegged, quite a bit of vol

Edited December 29, 2022 by ArgentSmith

[Bratnia]

On 19/12/2022 at 20:28, Mcgrimes said:

What an unfair comparison, using two different time scales! Over the past 9 months, gold has lost 10% of its value against the dollar….

 Isn’t it easy to Cherry pick to prove a point.

 Now why don’t you look at the lost growth opportunities of having gold in a paid safety deposit box against pound Sterling stored in a interest bearing bank account over a long term duration?

Prior to 1932, gold was money, made more sense to hold money, invested into interest paying treasury bonds - as that was like the state paying you for it to securely store your gold. That ended in 1931. From 1896 for a UK investor who held 50/50 gold (UK Treasury's pre 1932) and hard US$ bills, stuffed under their mattress, rebalanced yearly ... to recent and relative to UK inflation they'd have lost 0.5% annualised purchase power. A combination of fiat and non-fiat (commodity currency/gold) currencies largely offset inflation. If instead those US$ bills were invested in US stocks, then nominal gains in those stocks, proportioned to 50% of total portfolio value generally flipped the portfolio to being a positive/real (inflation beating) portfolio.

Gold alone is not a consistent inflation pacing asset, neither is the US$ hard currency, each waxes and wanes but a combination of the both has the tendency to smooth the volatility. Better still is if the US$ are invested.

For US investors (don't know of a UK equivalent site) 50/50 stock/gold since 1972 has near-as provided the same reward as 100% stock PV with less volatility.

Broadly long term, again with volatility, gold versus UK T-Bills have in gross terms compared, in gross terms. UK T-Bills however would have involved costs and taxes each year (assuming 1 year T-Bills).

For UK investors over the last century+ a three way equal split between UK T-Bills, Gold, US$ invested in US stock historically had a high probability of returning your inflation adjusted money via instalments of ... 5 years of 20% SWR, or 10 years of 10% SWR, or 15 years of 6.66% SWR, or 20 years of 5% SWR, or 25 years of 4% SWR, or 30 years of 3.33% SWR. Three currencies, three assets diversity, considerably reduced volatility/risk and pretty consistently returned your inflation adjusted money, at least with better consistency than individual assets alone (SWR = safe withdrawal rate = initial percentage of total portfolio value drawn at the start, where that amount is uplifted by inflation as the amount drawn in subsequent years). All gold, or all cash or all stocks ... isn't a wise choice. You can cherry pick good and bad times for each. Better is to diversify, such as three currencies (£, $, global currency (gold)), three assets (stocks/bonds/commodity). Where gold can shine is that over a decade/whatever of poor stock performance, so gold tends to do OK/well, and vice versa.

[Bratnia]

On 29/12/2022 at 16:46, JohnA1 said:

Bitcoin hoarders have sent me videos of people mocking gold

<sarcasm> Stupid central banks, the likes of the US holding 60% of its reserves in the form of gold - fools that they are. Should instead swap it all for virtual coins recorded in a public 'majority rules' ledger, </sarcasm> where with some ingenuity that could all be lost/stolen from anywhere in the world. I've seen some suggesting that a 51% attack might be massively reduced via some clever triggers that throw off others into alternative activities such that one of the big 2% that collectively have over 90% of the control could lead to central banks being locked out from or losing their virtual coins. A secret/secure ledger, that uses the latest cryptography, that in perhaps 10, 20, whatever years time might be as easily cracked as advanced cryptography in DOS days, that nowadays can be cracked in seconds.

Gold is a dull element, doesn't rust, doesn't kill you, is solid rather than liquid/gas ...etc. Is perfect as a physical asset with no counter-party risk that can be geographically ring-fenced/protected. Recognised as such for millennia. BC is virtual, involves counter-parties and is based on software - and software is renowned for containing bugs.

Son: Dad, can I borrow ten dollars in bitcoin? Dad: Nine dollars? Why in God's name do you need to borrow eight dollars and sixty cents?

How do you make a small fortune from investing in bitcoin? Start off by investing a large fortune in Bitcoin.

A man walks into a bar, orders a whisky, and pays the bartender one bit coin, and says "by this time tomorrow it might be worth a million bucks". The bartender pours him a glass of water and says "by this time tomorrow it may be Scotch".

Edited January 4, 2023 by Bratnia

[JohnA1]

I agree with everything above.

However it is important to keep in mind that each vocal party tends to be biased. They all have an angle. Doesn't mean they're right or wrong necessarily, but biased.

Bitcoin holders will themselves gain if more hop onboard.

PM traders will also gain as more people hop onboard over there as well.

Therefore I take the cries regarding 'death of fiat', 'death of crypto' blah blah with a healthy pinch of salt

 

The dollar has been "dying" for quite a few years - yet it is still the strongest currency around.

I see lots of parties profit from crying 'wolf'. The wolves are out there for sure, but some gain from exaggerating year after year..

/devil's advocate

[ZRPMs]

6 minutes ago, JohnA1 said:

I agree with everything above.

However it is important to keep in mind that each vocal party tends to be biased. They all have an angle. Doesn't mean they're right or wrong necessarily, but biased.

Bitcoin holders will themselves gain if more hop onboard.

PM traders will also gain as more people hop onboard over there as well.

Therefore I take the cries regarding 'death of fiat', 'death of crypto' blah blah with a healthy pinch of salt

 

The dollar has been "dying" for quite a few years - yet it is still the strongest currency around.

I see lots of parties profit from crying 'wolf'. The wolves are out there for sure, but some gain from exaggerating year after year..

/devil's advocate

Your right in the sense that everyone has a bias. We can only make choices and decisions based upon our experiences and influences.

People that have perhaps a more traditional approach will usually see more tangible assets as the way to go, Gold, Silver, Property, Art & Collectables, etc. They see these as a store of value or more to the point a store of their wealth. 

Those that are into crypto will see various cryptos as the future, It may be Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), etc

The wanna be Buffet's and stock traders of us will see shares in companies as the place for storing their wealth. 

And so on and so on. We tend to stick to what we know and what we are comfortable with. This is only right. You wouldn't ask a brickie to replace a hip. Likewise a surgeon is probably not the best person to ask to build a house. However, everyone see's there are problems with the fiat system. Governments all operate with a negative cash flow. They spend more than they receive. The deficit never decreases. How can this be a stable system. At some point the debt repayments will be unsustainable along side the other commitments. This is when something has to give. A debt jubilee, more taxes, reduced ownership rights (I believe it was Corbyn's crew that were thinking of taking the properties off universities, the likes of Cambridge and Oxford. Would not be much of a leap to private property). Who knows what could happen, but currencies tend to have a life span/ cycle. 

We all need to try to store our hard earned savings, those that can. What's best for each individual may differ. We will also need a measure of exchange. This differs dependant upon where you live. UK the pound, USA the dollar, Europe the euro, etc. They are different. Storing cash is not a store of value or wealth as inflation erodes it's spending power. Its needed and its the currency that enables us to obtain what we need. Food, Clothing, Shelter. 

In general, as least on here, I think people recognise that there is a change to come. I don't think its a case of crying wolf. Nobody knows when, but its best to be prepared just in case. and I for one would rather be years or a generation early than a week late. What I use to store the value of my savings may differ from others, But form my experiences, Its what suits me best.

[Bratnia]

On 05/01/2023 at 10:02, JohnA1 said:

I take the cries regarding 'death of fiat', 'death of crypto' blah blah with a healthy pinch of salt

 Salt was so valuable in ancient Rome that soldiers were sometimes paid with it. The word “salary” comes from the Latin word sal, for salt. When a soldier was doing a lousy job, his paycheck might be cut, which is how we got the expression “not worth his salt.”  https://www.rd.com/list/facts-about-salt/

[JohnA1]

Yep

Without any salt your electrolytes go downhill gradually, you get sick and eventually may die.

 

[Bratnia]

On 05/01/2023 at 13:11, ZRPMs said:

We all need to try to store our hard earned savings, those that can. What's best for each individual may differ. We will also need a measure of exchange. This differs dependant upon where you live. UK the pound, USA the dollar, Europe the euro, etc. They are different. Storing cash is not a store of value or wealth as inflation erodes it's spending power.

UK investor perspective. Since 1896, calendar year granularity, someone who held thirds each gold, stocks, hard US$ currency stuffed under their mattress, with a 30 year 3.333% SWR (return of inflation adjusted money via yearly instalments), had a 96% success rate. Of the 4% that failed the margin was minimal. In the median case you ended 30 years with 75% of the inflation adjusted start date amount still available.

3.333% SWR = 3.333% of the initial start date portfolio value drawn as the first years income, where that £££ amount is increased by inflation as the amount drawn in subsequent years.

Diversifying across multiple currencies can go a long way to offset domestic inflation.

The above is based on rebalancing back to equal weightings each year, broadly however if you just drew the SWR income from the asset with the highest value at the time that tended to yield very similar outcomes.

[gji25]

On 17/12/2022 at 21:13, SiCole said:

You can store gold through a SSAS or SIPP as a pension plan if you don't already have one set up. It must be in bar form and stored in a vault though. I would discuss with a financial adviser first though tbh.

Personally i would,nt go for the idea of storing it in a uk vault as they  are empty. you can thank gordon brown for that. 

[Bratnia]

Just now, JohnA1 said:

Yep

Without any salt your electrolytes go downhill gradually, you get sick and eventually may die.

 Oh dear. Just popping out to buy and eat a bagful now

Joking aside, I had a soar throat several weeks back, gargled and accidentally swallowed a salt dilution and the subsequent retching was pretty intense. I do find that a very light salt/water solution sprayed up into blocked nostrils can work well at clearance, but make it very diluted as it can also induce a strong burning sensation.

[ZRPMs]

24 minutes ago, Bratnia said:

someone who held thirds each gold, stocks, hard US$ currency stuffed under their mattress, with a 30 year 3.333% SWR (return of inflation adjusted money via yearly instalments), had a 96% success rate. Of the 4% that failed the margin was minimal.

I understand that gold and stocks as assets would, in general increase over time allowing for your SWR of 3.333% but the hard US$ currency stuffed under the mattress. Surely If you put $30,000 there and took £900 out each year after 30 years you would have nothing left. On top of that 30 years ago $30,000 in 1992 is equivalent in purchasing power to about $62,497.31 in 2022, an increase of $32,497.31 over 30 years. The dollar had an average inflation rate of 2.48% per year between 1992 and 2022, producing a cumulative price increase of 108.32%. This means that prices in 2022 are 2.08 times as high as average prices since 1992, according to the Bureau of Labour Statistics consumer price index. The inflation rate in 1992 was 3.01%. The inflation rate in 2022 was 7.86%. The 2022 inflation rate is higher compared to the average inflation rate of 1.96% per year between 2022 and 2023.

Putting it slightly differently. Each year, the cash under the bed, would have on average lost 2.48% of its buying power. meaning that the $900 you've taken out today would have had the spending power of about $1,872 back in 1992.

This has to illustrate that cold hard cash is not a store of wealth, but rather a measure of exchange.

[JohnA1]

On 17/12/2022 at 21:13, SiCole said:

You can store gold through a SSAS or SIPP as a pension plan if you don't already have one set up. It must be in bar form and stored in a vault though. I would discuss with a financial adviser first though tbh.

I've investigated this, found the pricing a bit steep (SiPP fees, storage, insurance)

Unfortunately can't move anything 'crystallised' to such a SiPP, so turned out to be a no-go for me anyway

[flyingveepixie]

On 05/01/2023 at 13:11, ZRPMs said:

Your right in the sense that everyone has a bias. We can only make choices and decisions based upon our experiences and influences.

People that have perhaps a more traditional approach will usually see more tangible assets as the way to go, Gold, Silver, Property, Art & Collectables, etc. They see these as a store of value or more to the point a store of their wealth. 

Those that are into crypto will see various cryptos as the future, It may be Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), etc

The wanna be Buffet's and stock traders of us will see shares in companies as the place for storing their wealth. 

And so on and so on. We tend to stick to what we know and what we are comfortable with. This is only right. You wouldn't ask a brickie to replace a hip. Likewise a surgeon is probably not the best person to ask to build a house. However, everyone see's there are problems with the fiat system. Governments all operate with a negative cash flow. They spend more than they receive. The deficit never decreases. How can this be a stable system. At some point the debt repayments will be unsustainable along side the other commitments. This is when something has to give. A debt jubilee, more taxes, reduced ownership rights (I believe it was Corbyn's crew that were thinking of taking the properties off universities, the likes of Cambridge and Oxford. Would not be much of a leap to private property). Who knows what could happen, but currencies tend to have a life span/ cycle. 

We all need to try to store our hard earned savings, those that can. What's best for each individual may differ. We will also need a measure of exchange. This differs dependant upon where you live. UK the pound, USA the dollar, Europe the euro, etc. They are different. Storing cash is not a store of value or wealth as inflation erodes it's spending power. Its needed and its the currency that enables us to obtain what we need. Food, Clothing, Shelter. 

In general, as least on here, I think people recognise that there is a change to come. I don't think its a case of crying wolf. Nobody knows when, but its best to be prepared just in case. and I for one would rather be years or a generation early than a week late. What I use to store the value of my savings may differ from others, But form my experiences, Its what suits me best.

The one thing that really does my head in about crypto or digital gold, or digital anything at all really as a store of wealth which a lot of people seem to fail to see : what happens if the power goes off or the internet is closed down by a rogue government?  I remember that happened in Egypt when that arab spring thing kicked off, and fair enough there was no such thing as crypto back then, but what if it happened now..?

I remember Corbyns crew discussing the concept of a garden tax according to the amount of square metreage you owned in your property. I wouldn't write that off along with any other miserable leftie concepts they've dreamed up previously as a possibility should the commie party win the next GE.  I think they would be only marginally worse than the commie tory party we have now.

I agree with you that storing cash is also not a good way of storing wealth but in this age of ever increasing mistrust in the banking system I would say it's a good idea to keep a few months worth stashed away  just in case.

Edited January 10, 2023 by flyingveepixie

[JohnA1]

The idea is that there will always be miners running in another part of the world, so the blockchain will still be there when you get your electricity back on.

The whole blockchain concept has proven (to me) that it has anti-fragile properties - i.e. it ends up stronger after each shock.

I don't own any crypto yet, but I do have my eye on bitcoin and Monero-type structures. Once bitcoin goes back to 1-2 ounces of the shiny stuff I may be tempted to use the hardware wallet I keep unused

[ZRPMs]

6 minutes ago, flyingveepixie said:

The one thing that really does my head in about crypto or digital gold, or digital anything at all really as a store of wealth which a lot of people seem to fail to see : what happens if the power goes off or the internet is closed down by a rogue government?  I remember that happened in Egypt when that arab spring thing kicked off, and fair enough there was no such thing as crypto back then, but what if it happened now..?

 

[ZRPMs]

2 hours ago, flyingveepixie said:

storing cash is also not a good way of storing wealth but in this age of ever increasing mistrust in the banking system I would say it's a good idea to keep a few months worth stashed away  just in case.

I with you on this and would even go as far as to say if you could, perhaps a little more. Although trying to spend cash now. I'm seen as the weird one.

The bitter half required my attendance to a meal with two of her siblings and their families. Mostly because we had to drive a large distance to the restaurant/ hotel and she can't drive. Needless to say, I'd rather have had barbed wire platted in to my short and curly's. Over priced, minuscule portions of pretentious pig swill. And they all thought it was great, even more so because the place was cash less. I did my best and remained quite for most of it for the sake of the family harmony. However when I was directly asked what I thought of the food and the attempt to go cash less and what a brave thing it was. I gave my unbridled opinion. especially as we had been asked if payment could be done with one transaction. I can only assume there is a transaction cost per transaction rather than or as well as the fee on the amount. I slapped our £70 on the table and said " no chip and pin with that. put any change in to those hospitality chips if you want". 

God I'm quite ranty today. Sorry folks. Seeing as I've typed it I'll leave it. Chuckle at me or not its fine.

[Bigmarc]

5 hours ago, flyingveepixie said:

The one thing that really does my head in about crypto or digital gold, or digital anything at all really as a store of wealth which a lot of people seem to fail to see : what happens if the power goes off or the internet is closed down by a rogue government?

There are a thousand things to worry about with crypto before considering if the power goes out. Coming out the other end with some money is top of the list. Crypto is a relatively new technology and imo shouldn't be treated as a store of value, it's more of a gamble. 

I would say Google and Microsoft are more of a store of value but you don't see shareholders panicking that the lights will go out.

[flyingveepixie]

3 hours ago, ZRPMs said:

I with you on this and would even go as far as to say if you could, perhaps a little more. Although trying to spend cash now. I'm seen as the weird one.

The bitter half required my attendance to a meal with two of her siblings and their families. Mostly because we had to drive a large distance to the restaurant/ hotel and she can't drive. Needless to say, I'd rather have had barbed wire platted in to my short and curly's. Over priced, minuscule portions of pretentious pig swill. And they all thought it was great, even more so because the place was cash less. I did my best and remained quite for most of it for the sake of the family harmony. However when I was directly asked what I thought of the food and the attempt to go cash less and what a brave thing it was. I gave my unbridled opinion. especially as we had been asked if payment could be done with one transaction. I can only assume there is a transaction cost per transaction rather than or as well as the fee on the amount. I slapped our £70 on the table and said " no chip and pin with that. put any change in to those hospitality chips if you want". 

God I'm quite ranty today. Sorry folks. Seeing as I've typed it I'll leave it. Chuckle at me or not its fine.

I saw a woman in Farmfoods today. At the till she first handed over her phone to the assistant in order to claim all the little discounts offered on the app, then on getting her phone returned she presented her card to the reading machine and proceeded to pay.  I was almost rude enough to start shaking my head in disgust but managed to resist and remained the polite grey man in the background.  When my turn came I paid for my two litres of milk with a £5 note.

[JohnA1]

I enjoy handing out 50s at Tesco

They are intrigued, look at them like alien artefacts, raise them on the air and look through the lights, hand them to their colleagues and they are also in awe 😆

Edited January 10, 2023 by JohnA1

[SidS]

I can't say anything.

Whilst I've never made a mobile payment (as in using the phone as a contactless card), since the pandemic I've been paying by card everywhere.

Today I used cash for the first time in ages. I need to get back to using cash, I spend a lot, lot less!

[SidS]

5 minutes ago, JohnA1 said:

I enjoy handing out 50s at Tesco

They are intrigued, look at them like alien artefacts, raise them on the air and look through the lights, hand them to their colleagues and they are also in awe 😆

Gosh I've only ever spent £50 notes twice, both to pay fees at University back in the day. 2004 was the last time I used one. They are really hard to get hold of. I have to go into the bank, queue up at the desk and request them, if they have them in stock. About half the time, I've been unable to acquire them, not all branches have them. HSBC did though. They've shut that branch though.

So, I need to go into Halifax and try and get one of the new polymer ones for my banknote collection.

Edited January 10, 2023 by SidS