The recent collapse in the euro and the further rally in the dollar raises the question. What happens when confidence in the dollar wanes? As Martha and the Vandellas put it in their 1960s hit...
Obviously, gold and (I believe) silver become money. If only a small fraction of existing money is converted to these metals, the rise in valuations is almost beyond imagination. So many things go wrong and fracture in such a circumstance, that no one wants to contemplate it.
Most gold bugs (including me), believe that the risk of global financial collapse is still a few years away. In the meantime, we expect a deflationary episode that takes down the price of everything including gold. We could be wrong...no deflation occurs...and there is an immediate global currency crisis.
None of this could happen if we had a responsible political system supported by the Hedge Tax.
If it comes to this, gold and silver will have less real value then you may think. If paper loses it's value, total confidence in government is most likely lost as well. There won't be enough metal to support the needed trade to keep people from starving, and you can bet that anarchy would ensue. If all paper fails, I don't think anyone can really predict what will happen next.
Posted by: Kyle | June 07, 2010 at 05:03 AM
Real estate is the ultimate answer, and perhaps businesses that provide basic needs. Taxes and distribution are theproblems to be overcome. Metals are only a transition...and a mediocretransition at best.
Z
To: ezagrodzky@hotmail.com
Posted by: Wonk | June 07, 2010 at 06:04 AM
I think I'll focus on chicken farming ;) Gold and silver are hard on the digestive system.
Posted by: Kyle | June 07, 2010 at 07:36 PM
Probably a good choice. At some point there is going to be a crisis in the production of protein. Tough part is how to generate volume.The selling price will be 50% higher than commercial production. The compost would be outstanding.
Dad
To: ezagrodzky@hotmail.com
Posted by: Wonk | June 08, 2010 at 07:17 AM