There is a very good article in the current issue of "Backwoods Home" magazine (self-reliance) that deals with hyperinflation, also I am currently reading "The Dollar Meltdown" by Charles Goyette, that addresses the illegal inflation of our fiat currency, and the unsustainability of our current course. That being said, if a person bought gold, they may have to leave it behind if they had to flee on foot, and if they held certificates, the paper could become worthless in a societal meltdown. And, where to keep it? If you held it in a safe-deposit box, it may not be accessible, and in a total Mad Max scenario it would still be $, but might (could) be looted. Also, owning gold was made illegal by presidential decree once before, so the precedence exists. The adverts on TV were a good teachable moment for my son, however. After a commercial, he said that we should get some gold. Trouble is, what are you trusting in? Also what about logstics. How would an honest exchange rate be set, and by whom? Also how to prove the gold is 18k or higher, instead of 14k? See what I mean? Plus walking toward Barter Town (to save on precious gas after !$%*! makes a person vulnerable to crime. Again, how far do you take the whole preparedness thing? I think a person would go mad trying to plan for every single contingency(sp?). Eventually Noah had to stop working on the ark once it started raining! While I am at it, I truly feel sorry for the camo-clad lone-wolf sitting in their bunker with their cans of powdered eggs. To thrive in adversity one needs their family and friends, to be interwoven into a larger community, self reliant as individuals but willing to help out and watch out for their neighbors, like the neighborhood watches. I am thinking that a person would be well served with gold only with the idea of buy-and-never-sell, with the idea that it would be for future generations, who would not sell it unless they were in a very tight spot, indeed. The whole buy gold thing reminds me of the Y2K non-event, after which generators and equipment were available for pennies on the dollar, with little or no use. If I were going to do anything like this I would buy "junk" silver coins, with the plan to use them as currency in case hyperinflation made grocery shopping and fuel buying problematic. So, could gold be another bubble, like tulips, tech stocks, real estate, social security? I don't know, to me the whole of civilization seems like one big bubble! How's THAT for pessimism? Many in my tiny village have planted gardens in our back yard, lots of fun, good excercise, sunshine, good non-pesticide, non-GM, non-e. coli. veggies and friuts. That means much more to me than mere gold.

Scott, I would really appreciate knowing at least the outline of your current investment allocation. Me, I have mostly 401K mutual funds, weighted to stocks in the rest of the world (meaning not U.S.) and a little in the way of precious-mineral (gold,etc.) stocks. I have no idea if any of this is right. My sister, who has made plenty of money investing (which does NOT necessarily mean she knows, she may just have been lucky), says, if you pull out of the market when it plunges, how the hell do you know when to get back in? You don't, and therefore you miss the recovery, which so far, has always come. The only thing I do know is that money managers and mutual funds that charge more than the bare minimum (in other words, everyone but Vanguard) are a total waste of money.

I'm not sure about other government offices but the Army gets all of it's office supplies from an American company called Skillcraft.

I'm a south African. We have lots and LOTS of shiny rocks: gold, diamonds, platinum... you name it we've got it. Based on our current political leadership, I'm not surprised you're worried that the world's largest gold producer is going down the tubes. Buy gold. Once it's nationalized, those mines will be as productive as our other nationalized monopolies like Eskom and Telkom.

More sanely priced commodities might be preferable. A warehouse full of malted barley might well do. Or, if one assumes the markets will still function, a futures contract. Of course the bets will likely just convert to how lucky you are at predicting the weather in barley-growing countries. ; )

"Like Phloxicon, I can easily imagine a situation in which the US debt is brought under control.

1. To whom do we owe the most money?
2. How many bombs should we send.
3. Cross off books.
4. Go to 1. "

Before you get too eager about that plan, you might want to go look at the answer to #1, and then insert 1.5 Buy a bomb shelter. The majority (for now) of that debt is owed to Americans. I know I've got a non-trivial amount of t-bills in my portfolio.

Ammo has doubled in price over the last few years. Gun prices have also risen substantially.

I actually sold one American Eagle - it helped pay for Christmas. 3 left; keeping.

I'm a jeweller in Holland and buy quite a lot of second-hand gold from customers.
Would I have stocked this gold, say, 3 years ago, I would have made a great profit.
Would I have done the same 20 years ago (up until 3 years ago) it would have been just about the worst perfoming comodity on the market.

As a rule I resell the gold as quickly as possible. Guessing the future gold-price is best let to monkeys with dartboards.

I can't help but feel that the smart investors bought gold a couple of years ago and are now beginning to sell it - using the money to buy those nice cheap stocks, of course. One is supposed to be ahead of the wave, after all.

George Soros recently warned that "the ultimate asset bubble is gold."

soulcatcher:

Good points, and there was wit. However:

"Last Time I checked where anything in my office was made it said made in China. It's a good bet any tangible items in a government office were mostly manufactured in China."

Webgrunt replies: I'm not sure what your point is, here. Are you implying that the government doesn't spend much on US made goods and services because most office items are not made in the USA? Don't forget that nearly all the weapons and weapons systems and other military equipment and supplies is/are made almost exclusively by Americans within the US--that's many billions right there. The US government is also by far the largest employer in the US. when you factor in medicare (spent on mostly US goods and services) and public assistance programs (people on public assistance typically spend a high percentage of their income on food and rent, which mostly stays within the US) etc.

My point is that when you compare what percentage of every government dollar spend vs. every consumer dollar spent goes into the US economy, government spending is a lot better for the US economy than consumer spending, since so much of what US consumers buy comes from other countries. And when the government cuts back, they will eventually have to lay people off, raising unemployment. That's why I believe that cutting government spending will result in a decease in tax revenue possibly even greater than the reduction in spending.

"Its much worse than you've imagined, because the government is trying to reduce costs and offshoring reduces costs."

Webgrunt replies: Are you saying that the US government is outsourcing to reduce costs? I find that extremely unlikely. It's the opposite of pork-barreling, which would be political suicide for anyone in government voting in favor of it.

"Oh and moving contractors to government positions actually reduces the tax base and lowers government services."

Webgrunt replies: What are you talking about here?

Ravenblack: There are no holes in my argument, but let me try to explain to you what you are not understanding --

1. Rule #1 of investing is that you never know with certainty what is going to happen in the markets and in the world in general. Never. Even if you're lucky enough to have better information than anyone else, you're still going to miss things... sometimes very big and world-changing things. Some of the smartest investors in the world lost a ton of money in 2008-2009. They are a lot smarter than you and they are a lot smarter than me. That's why when someone says they have moved "all their money" to a certain financial instrument, it is highly suspect. If you're a smart investor, you'd never, ever do that. "Risky investors" often make more money than smart investors... but it doesn't make them smart. It just makes them fortunate. I suggest reading The Black Swan by Nassim Taleb if you're actually interested in the subject. Not sure why you bring up Google and Microsoft other than strawman arguments to prove something that doesn't even need to be proven.

2. I don't hold gold as currency for a doomsday existence. Probably only 1 out of every 100 people do. The rest of us hold it, like I said, as a hedge. If you're going to *actually* worry about armageddon, you'd be better off spending your money on an armored underground shelter somewhere, filled with canned goods and whatnot. It's funny that you say "real, solid gold isn't easily taxed". Might as well just say "it's easier to illegally evade taxes if you hold solid gold", which is true. If you're not into paying taxes, I agree... hold the real stuff. I pay my taxes though. And if you abide by the law, you will be taxed at a collectible rate, which is much higher than you would if you held in a retirement account.

3. With regard to commodities, again, I -- like most people -- are not investing for armageddon. I'm hedging for massive changes in world economies. The two are entirely different. And yes, not that it matters in the least bit, but I'm a CEO.

It's interesting to see so many posts advising investment in metals other than gold, on the basis that "hey, it's not just a shiny rock; it's an investment in something useful too!"

Um... gold is useful.

It's the best conductor there is, and it's used in manufacturing computer chips, hence will continue to be in demand in future - particularly considering that those chips are steadily making their way into landfills, despite the best efforts of the pinko commie environmentalist lobby.

Of course the economy could collapse and we could enter a New Dark Age Of Barbarism(TM), but a balanced portfolio isn't going to save you from that. If you want to plan for a NDAO'B(TM), devote 0.1% of your income to buying nonperishable food, weaponry, and making your home into a defensible location. There's still plenty left to buy gold... and stocks and shares too.

Gold has had value for thousands of years, and will continue to do so even in a post apoplectic world (even if not at the first).

Hyper inflation seems to be the way the government will handle the debt problem. However, there is one legitimate and effective way to eliminate or greatly reduce the federal debt.

That is to sell off as many government assets as possible: almost all federal land, most (non-weapon) military assets, most government buildings, etc. Of course this would basically have to coincide with a much smaller, less invasive government going forward – but that is not a bad thing.

Jason Butler

I own no gold but own stock in a couple companies that make it (mine it) as hedge against a falling dollar. Once a money making idea hits TV it is the start of the dumb money entering the game, it happened with TV shows flipping houses and is happening again with the "invest in gold" commercials that show up on the cable news programs.

I wouldn't take any financial advice from anyone who is putting a large percentage of their wealth directly into gold/silver, I also wouldn't consider them the smartest people I know after that point...

I'm very interested in you and your friends investing in shiny rocks.

That will leave a larger chunk of the stock market for me. Making a long-term bet against all the capitalists in the world isn't a very smart bet. Diversification is a better strategy.

"Investing" in shiny rocks? No.
But I do collect them... without any expectation that they will have any future utility or value (this coin came from... we panned this nugget from... historical/sentimental value, etc.).

Gold is so glaringly obviously bubbled right now, it's amazing that more people aren't poking around to see who's playing the role of the Hunt brothers this time.