Did the bottom just drop out of the market?

Did you not bother to read what I typed? The oil analogy was easy to follow, I thought.

I wont re-explain it but your assessment of wealth is not correct.

 

Indeed. All I see are bull traps. Anybody who regards a 1000 point dow drop as an anomaly and the one and only correction deserves what they get. Attempting to chase quick profits on the upswings is a dangerous and silly game IMO. You may win, you may lose. Better off waiting for it to bottom out and buy things at good value and hold. Correction is just getting started. The people who are unloading their art and cars know this.

 

Tell that to the people who lost it. But even if you overpaid for a ferrari at the top of the bubble and are an enthusiast,in the long run it wont matter. The speculators holding a lot of overvalued stock will be slaughtered.

 

And gold silver and diamonds as an exchange medium for the above.

 

Yup

 

All fine and good, but if you have to move you cant take your land with you.

In fact the only non registred asett that is also highly portable and globaly tradeable are diamonds.

Gold come close, but its bulky so you can physicaly posess little value.

 

Seriously.??

Someone is agreeing with another person on here that literally wrote about the "delusion" of compound interest?

Money supplies around the world have been manipulated but that goes directly into the "wealth" associated with cars and other "hard assets".

Many of these same hard assets have no productive worth either, and so in many ways are being treated in the same way as money, as a medium of exchange.

Wealth is having assets of value, that can be traded for other assets of value. Value is inherently context specific, and therefore can change over time. A bottle of water may have no value in the middle of a lake, but can be worth $100mm to a dehydrated billionaire in a desert.

Someone's wealth DOES go down when the perceived value of an asset (like the 250 GTO mentioned) goes down. This is real degradation of wealth because they can no longer convert that asset / item into other valuable assets / items at that same ratio.

Cash is also wealth in itself, because it can be immediately converted into other assets that are desired and of value.

It is easy for conspiracy theorists, people who are financially illiterate, and others, to rave about paper wealth being worthless, etc etc. It is also easy for people who have no scientific or medical knowledge to believe that walking backwards through a door can cure disease, or that you need to throw salt over your shoulder for xxxxxx... and so on.

I would much rather have my assets in cash right now than a number of assets out there. Most of my assets are (unfortunately) in overpriced real estate.

What I will say (and maybe this is indirectly in agreement to some of the posts above) is that there is a potentially false notion of "wealth" in a market where money is so cheap to borrow, because the debt levels are still relatively high, with people borrowing from the future to buy things today. As these asset values drop, the impact to someone's net worth gets squeezed very rapidly. I don't think most collector car buyers are in this position, but a great many are. It only takes 10-20% of the market to get squeezed and be forced to sell, to take down the "wealth" of many.

 

Diamonds are a false asset too, because their supply / demand features are highly artificial.

Gold is questionable and changes in sentiment have huge role to play in demand as well. I bought gold at around $270/oz at a time when others said it was foolish (tech bubble boom). I had cycled into gold as a hedge, at a time when gold was entirely out of favor.

It has been in favor for some time now, so unclear how much it already bakes-in as a hedge by those who are concerned about the viability of fiat currencies. I no longer hold gold as I don't have any good read of longer-term relative sentiment.

As for portability, gold is actually pretty good because it is so dense. It is heavy, sure, but quite compact.

As for cash, USD looks pretty safe overall since there are no viable alternatives. Fears over the USD tend to disregard the lack of real, sustainable alternatives over the next 20-30 years. Currency value is all relative, and "real" inflation of a material nature is difficult when there is so much potential real supply that can harnessed (productivity in about 1/2 of the world's population is incredibly low).

 

There are lots of rumor misnomers out there about diamonds.
Since about 1995 there have been no diamond stockpiles, the former monopolist debeers represents 30% of supply. Demand it is true comes largely from jewlery, which is global therefore somewhat stable. In collapse though, without jewlery demand diamond mining ceases so supply becomes static. As an example current rough diamond sales are at 30% of norm, while inventory in China dries up. As a result there has been at most a net 5% decline in polished prices and thhere is danger of temporary price spikes as evebn with china at 0 global demand has not dropped 70%. Its a normal self correcting market.

While you may think gold is portable, its not. How much bulk and weight does it take to move 100k worth of gold. Coudl you do it yourself. 100k is not very much $$$.

Could you store 100k gold safetly at home how about 1 million.

Diamonds have some drawbacks but also unique charateristics. They are totaly off the grid, you can posess as much wealth as you want in the palm of your hand, transfer easily, no one knows you have it and you can take it anywhere. The past 10 year average price increase has been 5% per anum, including the recession and now. Not a great "investment" then, but a fanbtasic secure store of wealth, for at least part of any well diversified wealth portfolio.

you never know,

 

Cash, Gold, Diamonds and Real estate. All are portable except for the house. But a house will always have decent value. A roof over one's head is on the hierarchy of needs (safety and physiological need). Diamonds and gold can serve as a substitute for cash.

When an economy is in a recession or depression nobody gives two sh*ts about having a flashy car. Many out there even feel self conscious displaying the wealth when so many are in bad spot. In fact many also don't care about having one even when the market is normal and Not in a classic car bubble. Anyone who thinks buying exotic cars as an investment will somehow be a better place to have your money than the stock market is behaving as foolishly as the people who have been blowing the air into this thing. Almost the entire population views automobiles as transportation, nothing more.

 

To address gold storage and movement first, yes, it is extremely small and easy to store and move gold. At current prices, $1mm is about two standard bricks, or about 47 pounds of gold. Now, 47 pounds sounds like a lot, but remember it is extremely dense (reason why lead was used in the past to fake gold). Each brick is about 7 inches by 3.5 x 2 inches, so we are talking about an extremely space efficient store of wealth.

To carry around $100k of gold... they have smaller trading bars, and that is how I held my gold years ago. $100k in these bars is actually extremely portable, if a bit heavy for their size.

In terms of diamonds, supply is still a major issue given where diamonds are located and who controls the supply. Also, the supply base is controlled to release only so many diamonds into the market (nevermind again the issues of much of supply being controlled by unscrupulous governments). The total potential supply of diamonds is enormous.

Good analogy is oil controls, except the difference is that oil is far more finite in supply and currently has a destructive use -- i.e., the supply gets diminished over time and isn't incremental and aggregated.

Look, I don't think diamonds are necessarily a poor store of wealth, but I would dispel any notion that gold isn't space efficient. It would take up much, much, much more volume to hold $1,000 bills instead of gold (and in fact, it wouldn't even be that much lighter!) Also, diamond value varies tremendously and requires more time to certify and confirm than confirming a gold bar is real and verifying its weight / value. That makes gold much more effective for actual use -- if it ever came to that

 

This is oh so true and becoming more true every year.

 

That's why you buy certified numismatic coins which are recognized worldwide. You don't need to carry bricks of gold. 2 small coins can fit in your pocket and they can be worth upwards of 7 figures.

 

Kilo bars in gold are easy stored and very portable. ~ 38k per bar at the moment.

 

Please explain to me when the dollar collapses how you go about buying $35.53 in groceries.. WITH GOLD? Do you then use silver coins? At what point do you whip out gold without worrying about personal safety to the place to spend it? You'll never carry it on your for fear of being robbed.

Gold is a psychological device that has worthless application in the real world. Silver is more practical. But for actual use at the end of the world you're not going to actually use gold except to buy livestock.. except who would exchange animals that produce sustenance for a shiny metal that does nothing?

 

Remember Charade. The deceased guy needed to hide/move lots of money. He put three collector's stamps on an envelope. Even though he was dead several investigators and his widow could not figure out where the wealth was hidden.

 

Yet as old as our civilization is, it always bought you anything you wanted......

 

And it has for 5000 years. That's a pretty good track record for me.

 

historical fact: fortunes have been moved using diamonds and other precious stones, it is the most favored way... millions in value have been secreted into seams and voids to avoid detection... while gold and silver are a good medium of exchange in small amounts, their weight and bulk makes it impossible to move fortunes without their weight being easily detected, one needs a forklift to move an amount to just buy a sought after collector level F car in an open transaction.

 

Most favored way? No.

Great store of wealth over very long periods of time? Not necessarily.

You realize that many "precious stones" have varied tremendously in real value (i.e., relative value at a given point in history). Gold and other precious metals have fared much, much, much better overall (though non-gold precious metals have also been very, very volatile).

Also, if we stick only to diamonds, diamonds can be artificially produced to the point where they are pretty much indistinguishable from "real" diamonds. Gold cannot be synthesized (though as everyone knows, many have tried). For very long term wealth security, this is a potentially huge issue.

Supply and demand for diamonds are still largely artificial too due to the nature of supply sources.

Finally, what you call a benefit (the size / portability) can be a big issue when it comes to theft and security. I've also already noted the problem about grading diamonds -- you would need to grade every single diamond and verify its grade to be able to ascertain the value. Gold is much simpler.

I am the last one advocating for payment of goods with gold -- in fact, in my post I was talking about how it is at the whim of investor sentiment to a huge degree and I personally would not invest in it. But let's be real about the merits. You said a "forklift" is needed to move enough gold to pay for an investment grade car? For a $5mm car you need ~250lbs of gold, which would reasonably fit in maybe 3 or 4 suitcases (easily). It is an absurd notion to pay that way, but it is very, very, very far from requiring a forklift.

Let's compare with paying with diamonds. It would require providing $5mm in diamonds (I assume someone would hold a variety of sizes and grades... making "change" would otherwise be tough hah). So you would need to have the diamonds appraised...

Both present drawbacks.

Again, I would advocate for both or neither as investments (gold + diamonds can add diversification benefits in a well diversified portfolio). Personally, I would strongly prefer gold between the two.
WSJ article today on diamonds: http://www.wsj.com/articles/SB10001424052748704337004575059723597630174

Haven't read it yet but obviously will.

 

See, the thing is that I don't see any dire financial outcomes. Big corrections, some bubble deflations, yes, but nothing that will do anything but temporary show a run to safe haven assets.

Gold is more universal than other forms of tradeable goods. So sometimes it comes down to "the best of the worst".

Best form of currency at the moment is still currency. Holding USD looks pretty good to me given the near-term global outlook (1-5 years)!

 

you are trying to re write history... others have tried, but as yet have not been successful :=)... the relative ease of portability in moving large quantity of wealth ( value ) in the least detectable manner is their virtue, as history has shown many times over...

introducing marketability for day to day transactions as in buying necessities for life, is like only having large denomination currency notes to pay for a loaf of bread, neither will work very well... the comment was about moving wealth / fortunes in a least burdensome / openly invisible way, not shopping at the market... long term value is not important either, as value exists at the whim of the markets / those willing to barter or exchange... value ( price/cost ) in numerical terms is perishable.... it represents the perception of what one is willing to pay at the time of transaction based on desire or need... a bottle of water in the middle of the desert has a greater value to a thirsty person than at the bank of a river, regardless of what one is will to exchange to consummate a transaction

 

You know how women get away with asking intimate questions men would never ask? Somewhere in the neighborhood of 10-20 years after the war, my mother asked an Italian countess friend how her family managed to keep its wealth for 500 years. The answer was, "Land and jewels."

The downfall of Communism allowed many families to reclaim their land, but someone must have the long view. My Czech wife's family had a large, expensive house expropriated by the Communists. Unfortunately no one had the long view. Since land had NO value under the Communists, no one kept every scrap of paper, and they could not prove ownership. (i.e. "land had no value", her uncle gave up his half interest in a decent country home that was not expropriated for a washing machine.)