Saturday Sitrepon August 13, 2011 at 23:06
London burned, the DOW crashed, gold spiked. Oh wait, London burned, the DOW rallied, gold fell. Or was is Londoners’ rallied against the rioting few, the DOW had a brief period of volatility and precious metals fluctuated in response to uncertainties.
It all depends on your news source, but the take-away is simple – don’t buy precious metals during civil or financial uncertainty.
If riots, or politicians, or the stock market, or the price of gas, or, or, or, has got you feeling the need to stock-up and put something away “just in case” try buying beans, or soap, or socks. They store well and rarely go down in cost. Note I said cost – not value – there is a very big difference.
The value of a new pair of good quality socks is a constant. The value of a hot bowl of food is a constant. The cost of such staples is directly impacted by inflation. Prices tend to always go up, and yes there are many examples of a staple dropping in price for the short run and even times when a price dropped across the board long term, but as a rule prices go up.
If you had bought a 50 pound bag of pinto beans last year they were $22.50 locally. Today the same bag is $33.75. No, you won’t get rich, but you will cut your food budget long term and allow you to absorb gasoline fluctuations better.
Repeating for those who skim without reading: Don’t buy precious metals when there is civil unrest or financial panic – buy practical items you will need later.
(besides, you should have already put 10% of your investment portfolio into precious metals when they were still relatively cheap… …see what happens when you wait too long?