Question about Guns and Gold as a hedge

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JoeShmoe

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In light of the economic crisis, and massive government spending, some financial advisors are recommending gold ownership as a hedge against the potential for a plummeting value of the dollar.

Could investing in firearms be used in the same way as gold to preserve the value of one's savings? Do firearms hold their value in the same way as gold, if well cared for? A quality gunsafe could be used to store both guns and gold, and I'm wondering if a healthy mixture of both would make sense.
 
Guns retain value both as tools and a barterable piece.

Whether or not I'd consider it part of my portfolio, I don't really think that I would, given that my guns are worth more as tools then they are as an investment.
 
Most "gold" is actually ownership certification for bars held in an accredited vault somewhere, and next to worthless IMO if push comes to shove. Unless you have the element in your hands, I'd rather have guns and ammo, especially since I am not buying those at the top of the market like I would be with gold sovereigns.

However, gold has a larger utility factor, which is why it is an actual hedge/alternate currency and guns are not.

Gold is also relatively finite, because unless politics intervene, they're always making more guns and ammo.

Finally, gold is gold. It may come in different levels of purity, but many people can assess and buy it from you. Guns, and more narrowly, ammunition, have a smaller set of potential buyers.
 
The problem with such schemes is they hold thier value during the times when inflation devalues currency. When administrations are printing lots of new money (and creating many more computer entries which are never printed) and devaluing existing currency.
Gold in the hand stays about the same value, which appears to increase constantly because it takes more of the decreasing money to purchase the same amount. With other people having the same idea the demand for gold can actualy even increase its real value more than just the change in exchange for currency.

Then comes the time when things stabilize. So you have tons of gold, thousands of other people are also trying to offload thier gold. As more and more people unload large sources of gold onto the then more stable economy the value of gold decreases as the supply increases.
Where do you sell your gold? Do you know places that will actualy buy your gold for the going rate?
Sure lots of people will buy your gold from you, but not for the going rate, they want a large profit margin.
Sure many more such places exist now when demand is high, but when thousands of people are offloading gold there is not commercials and internet and radio adds offering to buy jewelry and gold.
You need to know how to offload your gold without losing a sizeable chunk of your investment.

The same situation can happen with firearms. With a bad economy, and the fears of crime and gun legislation the demand has skyrocketed. People cannot purchase enough firearms. The cost of something like a new AR has gone up significantly since Obama's election.
Now imagine the time comes when millions of people with more firearms than they know what to do with begin to sell them.
When the fear of impending crisis ends (hopefully right?) and the selling begins.

The market is flooded with sellers, the spiked increases in value seen in just a few months time are completely undone, and the prices begin to fall even further. There is so many on the market that the purchaser has a large selection of competing sellers.
The actual dollar ammounts will not tell the whole story. Since currency always devalues over time, just "making your money back" actual means you lost money. Even making a slight profit means you actualy lost money. You need to make at least as much money as what amounts to similar buying power when you invested to just break even.
If most other goods worth $750 today are priced at $1,000 when you sell then you need to make a 25% profit just to break even when you sell your guns.

Additionaly if legislation does pass it can increase or decrease prices. If part of the legislation says people cannot privately transfer or purchase certain types of guns past X date, then the value of those arms plummets. If private transfers are allowed then the value increases.
This can cause gun owners to become thier own worst enemy sometimes. If your collection will suddenly double in value are you less likely to defend 2nd Amendment rights as permanent reductions in freedom are occuring? Would you opposed legislation that made your guns worth far less, like say opening the NFA up or throwing it out all together if you own many such arms?

If the line in the sand moves, antis target new freedoms and new gun types. People who own certain things or use certain things in defense go from being mainstream to gun wackos as new firearm owners no longer are major owners of those items. So you become an "extremist" gun nut, the kind so extreme they even have "assault weapons" or some newer buzz word of restricted arms like during the previous AWB! :neener:
So you can have conflicting personal, idealogical and financial interests.



So for both logical and political reasons I would not encourage stocking up on firearms as a monetary investment. It can work in some situations, but people who do so can have a conflict of interest in fighting for gun rights.
Stocking up for personal ownership, or family ownership to preserve a right is fine.
 
I've owned gold coin through the years, mostly as a reserve fund of last resort. I have made money from time to time on it.

There is a liquidity issue most people are unaware of- if you buy from or sell to a broker. You'll get hit with a fee coming and going. Not all brokers do this. I have seen fees range from 3 to 15%. If you can buy without fees or taxes from an individual or coin collector, it's the way to go.

Gold was $650 ish in 2006, and has hit $1000 twice since then. Expect it to hit $1200 plus within 8 to 12 months IMO.

Guns on the other hand, can almost always be bought for less than they are worth, and held 5 to 10 years can be sold for a decent profit. Thay aren't as volutile an investment either. They made good trading stock also.

Platinum is where the money's at though. It is rare enough and used in enough products that it will continue to rise. I remember platinum at around $400 an ounce, it's about $1200.00 ish now, and has topped $2200.00 in the last few years.
 
If you take physical possession of the gold then it is an excellent hedge. If all you get is certificates... well, from what I hear the first thing Franklin Damn Roosevelt did was to confiscate all private gold that is now stored in federal vaults.

I've always been told the only true reflection of value was land, gold and cattle. At one time a dollar bill could be traded for silver 'on demand' thus they were called 'demand notes.' Now the dollar bill is only backed by the 'confidence of the American people.' Thus they are technically a confidence game.
 
barter with gun and the dude just may want some ammo to go with it............
that rather complicates the concept of trusting a stranger

gold and silver in coin or bullion form is good to have. in coin form you can barter for small quantities of an item. whereas bullion may buy you a truck or....whatever. it is heavy so one cannot travel with a lot of it. lead travels better. and when offered properly, most people will not only insist that you keep it; they will even offer you what you wanted for free.
--------------------------

i doubt that you can win and argument with a idiot; he will drag you down to his level and beat you with experience
 
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There are well published prices, both bid and asked, for gold. You can walk into any number of places and sell gold, and not get screwed senseless. The same may not be said of firearms. Also, the Authorities take a Dim View of trading in firearms without a license.
 
Don't invest with firearms

Check out the auction web for fine firearm prices. Many don't get any bid due to lack of money.
Now if you have something valuable, with intrinsic value like gold or silver you might score some good deals on stuff that is selling low.
I have had to unload fine double rifles and shotguns, and when you need the money you end up having to sell at low wholesale if your lucky.
Check out Goldmoney.com if your interested in putting some dollars into gold or silver.
A forum on holding Gold and Silver is Kitco.com.
 
Gold value has kept track with inflation. That's it. Gold does not increase in value in actual purchasing power over the years.

Gun values have also typically kept-up with inflation, they do not actually increase in value over time.

In this trainwreck of a global economy, the US Dollar is actually doing very strongly against other currencies- this is because other countries believe in the stability of the USA, and in our banking system (I know this may sound strange). The USA will be the first country to climb out of this recession and we will help lift every other country up. This is why the US dollar is more stable than the Yen, Euro, Pound, RMB, etc.

Putting all your money into guns and gold is outright silly. It doesn't make sense if you have a lot of money, and if you don't, then there are better ways to spend your money.
 
I've always been told the only true reflection of value was land, gold and cattle. At one time a dollar bill could be traded for silver 'on demand' thus they were called 'demand notes.' Now the dollar bill is only backed by the 'confidence of the American people.' Thus they are technically a confidence game.

An economy based on something which is finite is much more stable. It means the government loses the power to alter the economy for good or bad simply by changing some computer entries.
That stability is bad for those who benefit by wielding tremendous power, power which is still great but reduced by the limitations of that stability.

Gold in a bank is little different than a dollar bill. It represents something that can or cannot be there. In fact money itself traces its roots back to that very concept, and issuing a certain amount of redeemable bills more than actual gold being held.
Over time the legal amount they could give out more than the actual amount of gold increased, and increased and increased.
Eventualy they only had to have a small amount of actual gold compared to the certificates that could be redeemed for gold.
In the end they completely elimintated the gold and silver standard, giving absolute power to manipulate value.

So bottom line, gold you don't actualy have but only have a certificate for is not very reliable. If there is a "run on the bank" you may not get it. If there is a run on enough banks the government just declares it completely void and even illegal, as cited.
 
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Guns are probably not a good hedge, but I have been telling my wife for years that they are, hope she doesn't figure it out. :D
 
From what I see, raw land seems to be the hedge.

Raw land, useful for the dirt, timber, development; seems to be the consistent value holder.

If, the land is right- right size, right price, right taxes, right growth path, etc.

It is almost always worth what you paid for it, most times more, and there is always someone looking.
 
i agree, real estate, harleys, & fine firearms are always a solid investment.
 
I have an uncle who crunches economic numbers with an eye more towards the farming angle.

he says that traditionally three items have held similar value due to their relative equal utility, scarsity, and general value.

1 acre of prime Iowa farmland = 90 barrels of oil = 7 oz of gold.

I might not have that exactly right, but anyways, it is used as a tool to see which price is out of whack.

It also highlights the fact that quality farmable land is something like gold that is of limited supply. Like gold, farm land is going to ride up with inflation, but when you sell it, it won't have increaesed in value much at all beyond inflation.

Of couse, you will be getting rent from it, something you don't get from gold.

However, these last 2 years due to very high crop prices land was probably going for a little higher than it should have. (in theory, land is worth X. However, for a farmer, land that is adjacent to his own is a bit more valueable to him from a strictly production of crops standpoint. In a lean year or average year, this means nothing. In years were farmers made good profits, this means the farmer has the cash to spend X+1 or X+5 for THIS particular parcel, even though he'd view land a few miles over as just value X. Hence land prices were a bit high)

With the economy in turmoil on a world wide scale, what will happen to corn prices is really up in the air. Last year it got very high due to drought in Austrailia's wheat belt, also due to weak dollar meaning foreign money could buy more per 'yen' or 'pound' than normal, but mainly it was NOT due to ethanol usage but to HEDGE FUND SPECULATIONS.

I expect the 'real value' of land to hold true, but I expect the 'cash value' of land to go up as the dollar's value goes lower.

hence, I think now would be a very good time to invest in land.

besides, it is always good to own something that produces a real, necessary product, rather than a service or a totally unnecessary product.

People will always want corn, wheat, soybeans etc. People will not always want massages, assistant to the assitant movie executive, or designer handbags.

(or they will want them, but they will decide to not spend on them)
 
Gold actually kinda sucks as a hedge. Sellers make a big deal about it hitting $1K/oz without mentioning that it would need to be close to twice that to reach its peak value in inflation-adjusted currency. Inflation must get REALLY bad before gold makes a good hedge.

It is also subject to all the ownership laws of guns. It has been illegal for US citizens to own gold before - it can be again.

Firearms typically lose value when inflation is factored in. I know some people who have guns they purchased in the '50s and '60s... they are so excited their $17 gun is now worth hundreds.... but hundreds aren't worth jack. The average family spends hundreds every week on groceries. Selling that classic S&W won't keep you above the poverty line for two weeks, and if you are really desperate the dealers who do buy will bend you over backwards if they can. I've seen dealers offer $100 for custom 1911s that cost 20 times that, because they thought the seller was ignorant or desperate...what will they offer when they KNOW the seller needs the trade?

The value of good guns (collector, fancy grades, etc) is tied to the economy...if nobody has $80,000 to spend on a shotgun you aren't going to get that sort of money back on a really high value gun. The value of cheap guns is so low you'd need to sell 100s each year to survive.

Not knocking either to have, but they are kinda like a stash of MREs.... they may see you through a few weeks but you'd better have a long term plan.
 
No dryhumor that is not the recent case.

Logicly it makes sense there is a finite supply of land and an ever growing population. But a lot of trade in the stock market began to be based on "land" or mortgages, even things that appeared completely unrelated. They started trading it as an absolute that would not lose value and was a solid foundation, rebundling it multiple times to back various things.

So when all that bundled land value (represented by mortgages) had a slight problem it devalued all other land, and many other segments of the market built upon it.
Home values dropped.
With other people selling homes and land cheaper it devalues the value of thier neighbors' land.
Thier neighbors', including you must in turn then sell thier land cheaper if they wish to sell.
The cycle continues until those who have debt they cannot afford cease, then things stabilize. It is supply and demand that that point even though it is brought on by other forces initialy.
So even people not involved have thier land go down in value until then because you are part of the same market.

Now naturaly if left alone that would eventualy stabilize, but those who viewed land as thier prime asset would of course have lost a lot of thier wealth.
That would be compensated overall by others ability to purchase new similar land much cheaper in the the same market. (Though bad for the individuals who then owe much more than the value of thier homes, and bad for the people that backed those mortgages, like China, and resulting in political changes.)
The government stepping in to rescue people is what really sends things on a downward spiral. Rather than let the land devalue and stabilize they attempt to keep the value similar, creating an artificial value by rescuing home and land owners. Not just for thier sake but for the sake of all the other things that built on that value as a foundation.
To do that of course requires creating new money, but more money with the same amount of goods means the buying power of that money goes down.

The result is inflation and it then adjusts so that the artificaly kept value of homes is represented in the actual buying power of the dollar.
So instead of home values dropping as they should, the buying power of currency does.
If your home should have lost 50% its value but artificaly loses only 25%, the currency representing the economy must make up the other 25%. So you still lose 50% of the value of assets, you just don't see it.
In addition everyone else not involved is also forced to lose money because the government tries to rescue people.

Things are a little more complicated, especialy when you combine global trade, but in general land prices are down and going down.
They should be going down faster, but instead currency value is by trying to artificaly keep them high by helping home owners.
 
IMHO, gold as a hedge may be OK in relatively normal times, but it is not really going to be worth much in a real SHTF situation, because it is unspendable.

Suppose I have Krugerrands, or even gold U.S. coins. I take my double eagle to the Safeway and buy a steak priced at $13. I give the cashier my coin and she gives me seven (7) paper dollars in change, exactly what she owes me since the coin, as currency, is worth exactly $20 paper dollars.

Will a collector, or another gold hoarder give me more? Probably, but he too will give me paper money, which might or might not be worth anything. Basically, you can't eat gold and you really can't use it to barter with since no one else can use it either. It has a high cost but no value. Guns could be another story. You can hunt with them, you can barter with them, and in the very worst case, you can use them to take what you need from people who don't have guns.

We all should pray that things never come to that point in this nation, which has so far been fortunate.

Jim
 
That is the problem with gold coins Keenan. It is also against the law to create currency yourself.
It is punished under the same set of laws as counterfeit money.

So if you have a gold coin that is legal currency and the price of gold increases well above the face value of that coin you choosing to change the value of that coin as it relates to the value of other legal currency is illegal.
Additionaly are you aware it is a crime to destroy money?
Of course rarely enforced because not many people are destroying money.

However it is a crime to deface money, melting down legal currency is a felony if you are not authorized to do so.

So why on earth would you want your gold in the form of legal currency? Do you like being forced to commit a felony to resale it at current values?


Whoever fraudulently alters, defaces, mutilates, impairs,
diminishes, falsifies, scales, or lightens any of the coins coined
at the mints of the United States, or any foreign coins which are
by law made current or are in actual use or circulation as money
within the United States;
Shall be fined under this title or imprisoned not more than
five years, or both
It can alternatively be prosecuted under another section that makes it a misdemeanor.

Damaging money that is legal tender is a crime.
Attempting to pass damaged legal tender is another seperate crime.
Attempting to create legal tender is of course another crime.

So if you want gold, legal government coins that are in fact legal currency is probably not the way to go. That would make melting them, cutting them down or otherwise altering the gold to be useful in small amounts or to create something else from the gold is technicaly illegal.

To wrap your mind around how it is illegal to destroy money you must consider that money does not just simply belong to the government. Money is a contract representing debt owed by the government to others, often backed by bonds and other debt.
Currently money in our fractional banking system is a contract of debt. A bill is a note of debt.
It is not a gold note like in the past, it is a note of debt.
If you go around destroying legal contracts of debt that are not legaly yours to terminate by defacing currency that is in circulation you are commiting a fraudulent felony.
It does not matter if the metal that contract is printed on is worth more than the contract itself and you wish to redeem the value.
 
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Buy a couple rolls of Silver Eagle dollars. 20 1-oz coins per roll.

A lot easier handing-off 1-oz pure silver coins if you need a tank of gas or some grub, or a brick of .22lrs during an emergency... Beats trying to get change back for gold coins.

If you need to trade precious metals for goods, who cares what the Gubmint says at that point?
 
From what I see, raw land seems to be the hedge.

Raw land, useful for the dirt, timber, development; seems to be the consistent value holder.

If, the land is right- right size, right price, right taxes, right growth path, etc.

It is almost always worth what you paid for it, most times more, and there is always someone
How do you profit after paying TAXES on said land for 10 years ???That can eat up all profit potential
 
Some of my guns were purchased, some I recieved as an inheritance. In any event I consider them as a hobby first, usefull tool second (hunting &/or self defense) and lastly as
a tangible investment that will hold value and in some instances appreciate in value with certain guns.
 
I am no expert on finances at all. And i dont know much about investing. As far as guns go, well other than special runs, that are made strictly for investors, well, guns were made to shoot. As for gold, it is a funny commodity. When money is worth nothing, gold is worth a lot of money, which is worth nothing. When money is worth something, gold is worth much less.
 
Don't invest with firearms

Really???? Do you know anybody that has some post 86 samples? I know 2 dealers that bought full auto's for under 100 bucks a piece in the early 90's and they turn down offers of 3-10,000 on almost a weekly basis. (Depending on model)

Collector grade guns ARE a good investment. But going out and buying Glocks's, 10/22 or AR's is not a good investment unless another AWB is coming, then you can do like all the dealers who sat on their stuff for 2 years and jack the prices up.

I would take my chances with guns and ammo, you can always barter (if it ever comes to that) What are you going to barter for your 1 ounce of gold, if its worth $10,000 and all you want is a loaf of bread, somebody is going to come up short.
 
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