Homestead mailing list

[Clansgian AT wmconnect.com]

Leslie, unless I'm mistook, I didn't find this addressed and I'd be 
interested in your comment on it:

>We actually don't disagree, except for just choosing different words to say 
the same thing.  People are supposed to use their brains to determine if 
there 
is any specific reason for owning gold, and for reasons to sell gold.  

Remember though that we had waxed toward talking about a gold bubble.  In the 
phenomenon of a bubble, you must sell somewhere around the zenith.  Or at 
least on the risings side of things higher than you paid for it.  If the gold 
investor's stragegy is to exploit the bubble, there's really not a lot of 
leeway 
in the timing to be successful.

[of all things the radio in the background is playing Neil Young's "After the 
Gold Rush"!

There was a band playing in my head
 and I felt like getting high.
 I was thinking about what a friend had said 
I was hoping it was a lie.]

>> In the event that your cow died unexpectedly - do you really think that I 
believe >that you would not take some of your excess production (stored in 
the 
form of 5x >the amount of food needed) and trade it for another cow if you 
could find someone to trade with?    You are just choosing to store your 
excess 
in one form versus another. 

Here is the interesting crux of the discussion.  On one hand is the notion 
(that it seems you are championing) that every wise person makes an effort to 
store some of their wealth and it is little odds in what form that is, they 
are 
all pretty much a wash.

On the other hand is the view that that form one attempts to store one's 
surplus, one's wealth, makes a very great deal of difference.  This, of 
course, is 
my view.

Your example of the cow is a good illustration.  It is true that if the cow 
died we'd spare no effort or expense to replace her.  In fact, so convinced 
am 
I that cows conditioned to hand milking will be in demand, that we have AI'd 
her with sex specific Jersey in order to be able to raise up another Jersey 
heifer.  Not only that, we keep in contact with every Jersey farm within 
hailing 
distance (there are two, actually) and every Jersey aficionado.  Very 
fortunately many of the beef cattle produceres here, cattle later auctioned 
off to be 
sent to feed lots in the midwest, have taken to keeping Jersey cows to suckle 
the newborns they can pick up cheap.

In a pinch what would replace our cow is not so much the cash stashed for 
that purpose, but rather our realtionship with a network or confederacy of 
cow 
people.  If I asked, there are half a dozen people who would bring me a 
lactating Jersey on loan or to be settled up later.  

I mention this to emphasize that all forms of stored "wealth" are most 
certainly not equal.

>Others might choose, after they have saved up the most important things (the 
>things needed for survival) to store some in paper currency, and some in 
precious >metal.

Ah, but here is where we must reference the root beginning of this gold 
thread.  What was being proposed (not by you, of course) was NOT providing 
for the 
things one needs directly for survival, but rather stashing some gold so that 
when TSHTF, they could buy a survival lifestyle with that gold.  Tools?  
Seeds?  Land?  Grub stake?  No problem!  I've got gold coins and we all know 
that 
in a pinch you can cash these in for anything you like [although I have no 
precedent upon which to base that].

Leslie, besides the ploy of exploiting a bubble, the one characteristic of 
holding wealth in gold is this:  You have to be able and willing to hold it 
indefinately.  You must view it as the gamble it is and never be in a 
position of 
having to liquidate it.  Only then does it become a savvy investment.  With 
they way things are headed in the world, that could be a time beyond our 
lifetimes.  

This roundly contra-indicates the idea of storing wealth or surplus in gold 
so that it can be called upon in an emergency or any definite time in the 
future.

>  
> >Let's say your goal is to grow food.
> >A gamble is made when there is NO possibility of increasing the odds in 
> your >favor.
> >If you set out mindlessly to grow food without any concept of watering 
> needs, >nutritional needs, crop rotation, soil temperatures, food storage, 
> etc, 
> you would >be gambling.  

A very good argument, then, for not doing that.  Again let me draw a 
contrast.  Nature is dependable and consistent.  Oh, you can't predict when 
there will 
be a drought or a frost.  But it is dependable that you can't predict it.  In 
the things that basically matter, Nature is amazingly consistent.  If you 
plant a turnip seed, you get a turnip.  If you compost the soil, the plants 
grow 
more vigorously.  I found a few years ago that if you string black thread two 
feet above the corn field, crows will in no wise go there.  If one cooperates 
with Nature, utter failure would be hard to achieve.  

Because Nature is consistent, the homesteader is in control of his 'wealth' 
and how it increases.

Now let me contrast this to the typical gold-advocate.  The saga goes 
something like this: "It's all in how savvy you are, how much you understand 
finance! 
 I lost a bundle on the dot.bomb investments.  I lost a fortune on real 
estate.  But, oh boy, these gold coins here [jingle, jingle], I really know 
what 
I'm doing with this investment!"

Right!

Investing in gold might just pay off.  But the means by which that is done is 
utterly out of the hands of the investor.

This difference is fundamental and is why I could not agree that investments 
in soil fertility and tools and skills and such is a radically different 
thing 
than investments in gold.

>  
> >Interesting story about your grandparents and how they thought the worst 
> was in 1931, and yet the worst lay ahead.  The stock market lost a lot more 
> than 40% in the Great Depression.  (381 to 41 was roughly a 90% loss)  
> http://stockcharts.com/charts/historical/djia19201940.html

The point was that it lost 40% in ONE YEAR, 1931.  It has lost 36% this year 
alone, very ominously similar to 1931.  Those hoping for a return to the 
status quo where they can continue to flip houses and trade stocks and 
generally 
sit on their backsides are forever whistling past the graveyard by saying 
that 
things will turn around this year and return to "normal" within two years.  
They said that in 1931 too and as you have pointed out, it got a LOT worse.

> 
> >HMMMMM me thinks that coin stored a lot of fiat money value passed on from 
> >>
> your grandfather's generation to the next generation(s) and increased 
> significantly >in value along the way.... of course most of that value is 
> as a 
> collectors item as >opposed to spot gold price.   Still you could take that 
> single worthless piece of >gold and buy a lot of valuable beans.... 
> 
> 

Not really.  It's a 1889 Liberty Head Double Eagle.  It is 90% gold and the 
coin weighs about 1.1 troy ounces, so it's about a troy ounce of gold.  Last 
time I looked into it, out of curiousity, about six or seven years ago, the 
coin 
as a collectors item was worth about $500 - $600 dollars.  Of course, now of 
days it has more gold in it than that, so I'd expect it's collector's value 
to 
be double or some bit higher than that.  It's moot.  It wouldn't be for sale.

But let me point out, Leslie, that during these gold threads I never once 
said that I didn't have any gold.  I just know what its proper place is in 
the 
scheme of things and I'd never put my trust in it.

James