When does gold's value = $0.00/oz

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

Hypothetically lets say the eternal decline in oil production started June 2005. In 15 years (2020) price of oil is $2,500/bbl and every economy around the world has basically collapsed because alternative energy was never established and only the rich could afford it. Truckers stop trucking, railroads get robbed, and the grocery store has been empty for some time. Picture the great depression but much worse due to the fact we have more people and less country skills. All manufacturing as we know it has stopped and buying supplies is too late. The hardware store closed up long ago.

Now say you have prepared well and own some land that is protected from the masses either by rifle in hand or far enough from any town that people cannot get to it since cars will be obsolete. You have food production through gardens and animals. You have been collecting tools for several years. Solar and wind power has long been established on your property and you are living fairly well.

You also have been storing gold for some time and have accumulated quite a bit. Some you bought at $500/oz then at $1,000/oz then $2,000/oz then $3,000/oz and so on because you saw the end was nearing.

People no longer know how to make tools by hand since machines have been making them for so long. People no longer know how to grow a garden since corporate farms have been filling the grocery stores for so long. Most people don't have any skills to create much of anything that is useful and/or valuable in a post oil world.

So in 2030 does the gold that you bought lose most or all of its value since you cannot buy much of anything? Instead of buying gold at $3,000/oz would it have been better to buy $3,000 of seeds, goats, solar power, land, etc...? Would a good pair of chickens be more valuable then 2 ounces of gold?

joeltrout

canis_lupus

Joel --

I'll take a shot. Here's what I think: if it gets as bad as you illustrate (and, for the record, I believe it will albeit sooner) society goes back to the mid-1800s.

I think what you need to consider is this: those that don't learn/remember to make tools and learn how to survive in small agrarian communities will be dead. So, in 2030 we'll have nothing but survivors and children of survivors.

But I believe it needs to be considered that there was a thriving economy / financial system in the middle of the 1800s. I believe after the coming crash there will be a "reset" of sorts -- local markets, the booming of river towns, etc. But there will have to be banks with tally sheets of who owes what to whom.

With deflation of that magnitude, I believe there will be hyperdeflation of the price of gold, as well. I don't believe your gold will be worth nothing but I believe it will come down to what it was before the industrial revolution.

You're awfully prescient for a 25 year old punk kid still wet behind the ears pup. Were you a Scout perchance?

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

FoxV

Holly gees, you two think we'll be back to the 1800s in the next 20 years. I've heard of doomers, but you guys take the cake. And although very few people know anything about gardening and tool making, most people are capable of learning (or at least reading the instructions on the back of their seed packets)

but to address your question of when gold = $0.00/oz simply look into the past for the last time it was worth $0.00/oz. I'm going to put my guess at 10,000BC when the first farmers/permanent communities started to appear.

But I suspect gold had value even before then because a stone-aged man walking buy seeing a nice shiny orange colored stone in the river that he's never seen before would think it pretty special and perhaps could trade it for a few mammoth flanks.
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NTBKtrader · Intermediate Crude Joined: Oct 19, 2004 Posts: 605

1. Gold will always hold value but you are correct in that it may be better to own/invest in seeds, guns, arable land etc

2. I also doubt it will get that bad...and if it does, no matter where you are, you would likely be dead soon.

just fyi in revelation etc it says the world population will be reduced by about half and that the meak shall inherit the earth, so if you take that literally then maybe it's not so doomerish...

FoolYap

I tend to agree that it will have value so long as we're not living in a cannibalistic wasteland. Cool

However, I've been wondering to myself lately whether I ought to think about converting some silver into "stuff I want", and if so, at what price should I do this? Today, virtually anything I want can be ordered and delivered to my door.

For how much longer will (say) a high-quality kerosene lamp be buyable that way?

Or materials to build a greenhouse, to extend the growing season?

Or boxes of ammo, if your thinking heads that way? Rolling Eyes

--Steve

Tyler_JC

All I can say is, unless you live on a homestead in a communal village hundreds of miles from civilization...you will not survive in a world where gold has no value.

Fortunately, I do not believe we will reach that point.

But yes, if you believe that the world is really going to fall into Mad Max Zombie Anarchy, you are better off buying capital goods rather than hoarding shiny metal.
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canis_lupus

...presuming there will be seed packets for everyone... Very Happy

I think a financial crash that sends us into a depression coupled with an increasing scarcity of fuel could indeed send us backward in time a few years, yes. It seems to me lots of people here think the same way.

Oil's tripled over the last five years. When it keeps going, where is the bottom?

UncoveringTruths · Intermediate Crude Joined: Nov 04, 2004 Posts: 902

DomusAlbion

When will gold no longer have any value?

When all the humans are gone.

Even then some crows or pack rats may still value it.
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joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

I have been debating the question: When does it not make sense to buy gold for preparation?

Gold closed around $950 today. $950 can buy a lot of good supplies that are valuable now and have a lot more potential value in the future.

Right now for 3.5 ounces of gold you can buy a great horse drawn deep till slitter which might be tough to come buy after the "crash".

The debate is which one has more value now and later. Arguments can go both ways.

joeltrout

Micki

Gold goes to $0.00 when there is no longer a monetary system in place.
That however does not mean it doesn't have a barter value.
What that barter value will be is IMPOSSIBLE to predict. Gold however has 5000 years of history as having barter and monetary value and is easily transported, stored and hidden.
In a barter society gold can be store of value that you do not wish to store in other goods because it is perishable, bulky size etc.
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Ainan · Heavy Crude Joined: Feb 18, 2008 Posts: 312

I'm not too hot on precious metals myself other than silver since its relatively cheap to acquire. Lets look at what you can get for 1oz of gold at todays market prices, gold its around $950US per OZ. Grain is around $200 per ton, this does however vary quite a bit based on type, region and so forth. Although the price of wheat really does seem to be skyrocketing so get in soon, properly stored it will last forever pretty much. So you can get almost 5 ton of wheat for 1 OZ of gold, sound good? Lets keep realistic and remove 2 tons of wheat for transport and acquisition costs. Lets further remove 1 ton for storage costs, you will need large vermin proof drums and other packaging materials to keep this stuff edible and safe.

You now have 5442000 kcals stored with almost unlimited shelf life. Thats about a 2 year supply for a family of 4 @ 2000 kcals a day and 300 kcals per 100g using US ton as 907KG. Plus you can plant this stuff and grow more of it!

Buying gold is a good way to make money in the short term, its a reasonable store of value in the long term, but you can't eat it, make sure you have everything else covered before you start hording gold. In the future an OZ of gold may only be worth a few kilo's of wheat.

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6283

Material items are worth only what people are willing to pay. At this point we have to look to psychology to give us the answer.

If you look at Maslow's hierarchy of needs you'll have a better understanding of what you should be buying provided you can accurately predict what the situation would be like.

Gold is worth what it is because the more basic needs are taken care of. To SOMEONE gold is worth money because they have shelter and food. Trust me, if you had no food gold would be all but worthless to you as you cant eat it. However with sociaty existing as it does you can quickly convert gold to food. So from a communal perspective gold is not worthless and most likely will never be. However in a total collapse the price of gold would skyrocket to those of means as a method of wealth protection while to us mere commoners gold would be nearly worthless. What good does gold do you when you have no food?

Personally I buy gold only as an eye pleaser. I have other ways to protect my wealth and for survival needs I view gold as highly impractical if not nearly worthless.

Look at it this way. Assume times are tight. You have a bit of extra foood you can trade. Would you trade that food to someone who has gold for trade, or to someone who has ammunition or tools for trade?

Gold in and of itself is not very useful. Its worth is based on perceptions, not from any intrinsic value. Much like diamonds. While useful in manufacturing a diamond isnt very practical or useful in our day to day activities, and its also made from the worlds most common substance. Carbon. And yet people will pay oh so much for one. Silly dont you think?
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