Bank safe box storage diversification and other tips

Discussion of the Gold portion of the Permanent Portfolio

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Re: Bank safe box storage diversification and other tips

Post by Ad Orientem » Wed Jul 31, 2013 1:17 pm

Mdraf wrote:
Pointedstick wrote:
Libertarian666 wrote: That is one possibility. The other obvious possibility is that one government or some set of governments decides they are tired of the US getting away with murder via the "exorbitant privilege" and that they will stop it by creating a new currency regime based on gold, to supplant the dollar.

That's the one I expect.
Do you expect that the rest of the world--or a lot of it--will flock to that new country due to their stronger gold-backed currency and proceed to hand them the de facto crown of reserve currency issuer?
That's exactly what happened to the British Pound when it handed the crown to the USA:

Wikipedia:
"The gold standard was suspended at the outbreak of the war in 1914, with Bank of England and Treasury notes becoming legal tender. Prior to World War I, the United Kingdom had one of the world's strongest economies, holding 40% of the world's overseas investments. However, by the end of the war the country owed £850 million (£35.1 billion as of 2013),  mostly to the United States, with interest costing the country some 40% of all government spending. In an attempt to resume stability, a variation on the gold standard was reintroduced in 1925, under which the currency was fixed to gold at its pre-war peg, although people were only able to exchange their currency for gold bullion, rather than for coins. This was abandoned on 21 September 1931, during the Great Depression, and sterling suffered an initial devaluation of some 25%."
You are reiterating one the many points from my earlier post. The gold standard is a joke because no one will adhere to it in a crisis. The first casualty of World War I was the old gold standard. The US also abandoned it when we entered the war.
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Re: Bank safe box storage diversification and other tips

Post by MediumTex » Wed Jul 31, 2013 1:21 pm

Mdraf wrote:
Pointedstick wrote:
Libertarian666 wrote: That is one possibility. The other obvious possibility is that one government or some set of governments decides they are tired of the US getting away with murder via the "exorbitant privilege" and that they will stop it by creating a new currency regime based on gold, to supplant the dollar.

That's the one I expect.
Do you expect that the rest of the world--or a lot of it--will flock to that new country due to their stronger gold-backed currency and proceed to hand them the de facto crown of reserve currency issuer?
That's exactly what happened to the British Pound when it handed the crown to the USA:

Wikipedia:
"The gold standard was suspended at the outbreak of the war in 1914, with Bank of England and Treasury notes becoming legal tender. Prior to World War I, the United Kingdom had one of the world's strongest economies, holding 40% of the world's overseas investments. However, by the end of the war the country owed £850 million (£35.1 billion as of 2013),  mostly to the United States, with interest costing the country some 40% of all government spending. In an attempt to resume stability, a variation on the gold standard was reintroduced in 1925, under which the currency was fixed to gold at its pre-war peg, although people were only able to exchange their currency for gold bullion, rather than for coins. This was abandoned on 21 September 1931, during the Great Depression, and sterling suffered an initial devaluation of some 25%."
So who do you think that the U.S. will be handing the reigns to?

China?  They would NEVER want a burden like that.  Imagine how hard it would be for them to artificially depress the value of the new world reserve currency?

Maybe Russia?  Nah.

The EU?  Please.  An economic union that isn't aligned with a political union simply isn't a durable arrangement, which has been demonstrated frequently in recent years.

Japan?  The nation with far more debt than the U.S.?  No.

Maybe go back to the British Pound?  Just kidding.

The British handed the reigns to the U.S. because the U.S. was starting to eclipse Britain in virtually every way, but especially when it came to the strength of the U.S. military and the productivity of the U.S. economy.  Well guess what?  Those advantages are still in place 100 years later.  The U.S. still has the most productive economy in the world and it still has the most powerful military in the world.

There will come a day when it is time to decommission the U.S. dollar as world reserve currency, but today is not that day, and tomorrow won't be either.

Why not just enjoy living in such a nice economic and political arrangement?  Why complain so much about what might happen in the distant future (especially when you have no control over it whatsoever)?
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Re: Bank safe box storage diversification and other tips

Post by Pointedstick » Wed Jul 31, 2013 1:25 pm

I agree with Ad Orientem. Shackles so fragile that a government can simply remove them when it becomes inconvenient are no real restraint at all.

I would love to hear a good counter-argument to this. From my perspective, the gold standard seems like something that inherently tends toward being discarded everywhere it's been tried due to its inconvenience to the maintainer.
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Re: Bank safe box storage diversification and other tips

Post by Mdraf » Wed Jul 31, 2013 1:33 pm

I agree that it is easily abandoned.  As I said elsewhere everyone loves credit, the more the merrier and damn the consequences.  As for who will/can replace the US?  No country in sight right now.  That's why the dollar retains its value.
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Re: Bank safe box storage diversification and other tips

Post by MediumTex » Wed Jul 31, 2013 1:37 pm

Mdraf wrote: I agree that it is easily abandoned.  As I said elsewhere everyone loves credit, the more the merrier and damn the consequences.  As for who will/can replace the US?  No country in sight right now.  That's why the dollar retains its value.
You think the dollar wouldn't retain its value if there were another country to take over reserve currency status?

If that were the case, how would you explain the fact that the British pound is still a stable and viable world currency 100 years after losing its reserve status?

When Hall of Fame players retire, they don't feed them to the dogs.  Such players usually remain respected figures for the rest of their lives.  I wouldn't expect any reserve currency issuer to be treated differently, even after its playing days are over.
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Re: Bank safe box storage diversification and other tips

Post by Mdraf » Wed Jul 31, 2013 1:52 pm

MediumTex wrote:
Mdraf wrote: I agree that it is easily abandoned.  As I said elsewhere everyone loves credit, the more the merrier and damn the consequences.  As for who will/can replace the US?  No country in sight right now.  That's why the dollar retains its value.
You think the dollar wouldn't retain its value if there were another country to take over reserve currency status?

If that were the case, how would you explain the fact that the British pound is still a stable and viable world currency 100 years after losing its reserve status?

When Hall of Fame players retire, they don't feed them to the dogs.  Such players usually remain respected figures for the rest of their lives.  I wouldn't expect any reserve currency issuer to be treated differently, even after its playing days are over.
It only definitely lost its reserve status post WW2.  It's still a stable currency now but will only buy $1.50 instead of $5.00 then
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Re: Bank safe box storage diversification and other tips

Post by MediumTex » Wed Jul 31, 2013 2:21 pm

Mdraf wrote:
MediumTex wrote:
Mdraf wrote: I agree that it is easily abandoned.  As I said elsewhere everyone loves credit, the more the merrier and damn the consequences.  As for who will/can replace the US?  No country in sight right now.  That's why the dollar retains its value.
You think the dollar wouldn't retain its value if there were another country to take over reserve currency status?

If that were the case, how would you explain the fact that the British pound is still a stable and viable world currency 100 years after losing its reserve status?

When Hall of Fame players retire, they don't feed them to the dogs.  Such players usually remain respected figures for the rest of their lives.  I wouldn't expect any reserve currency issuer to be treated differently, even after its playing days are over.
It only definitely lost its reserve status post WW2.  It's still a stable currency now but will only buy $1.50 instead of $5.00 then
Steady and systematic currency devaluation is the goal of all central banks all over the world.

The U.S. is unremarkable when it comes to long term grinding currency devaluation, and such devaluation tells us nothing about the long term viability of the U.S. dollar in relation to other world currencies.

This chronic single digit devaluation is part of the reason that we hold 25% in gold.

Just to make sure I understand the point you are making, do you believe that the U.S. dollar is at a greater risk of seeing a decline in value than almost any other world currency in the world?  If so, I assume that the last five years have been happy times for you as the dollar has strengthened, rather than weakened, in relation to other world currencies.  Perhaps the pleasant surprises will continue.  I wouldn't rule it out.  In response to the worsening condition of the Japanese government's finances over the last 20 years, the value of the yen has remained stable or strengthened.
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Re: Bank safe box storage diversification and other tips

Post by Mdraf » Wed Jul 31, 2013 4:11 pm

MediumTex wrote: Just to make sure I understand the point you are making, do you believe that the U.S. dollar is at a greater risk of seeing a decline in value than almost any other world currency in the world?
Not at all. In fact the exact opposite. Sorry if I didn't make  myself clear.
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Re: Bank safe box storage diversification and other tips

Post by MediumTex » Wed Jul 31, 2013 4:23 pm

Mdraf wrote:
MediumTex wrote: Just to make sure I understand the point you are making, do you believe that the U.S. dollar is at a greater risk of seeing a decline in value than almost any other world currency in the world?
Not at all. In fact the exact opposite. Sorry if I didn't make  myself clear.
Oh okay, so we are back to the U.S. dollar basically being the best looking horse at the glue factory?

That's sort of how I see it.
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Re: Bank safe box storage diversification and other tips

Post by Mdraf » Wed Jul 31, 2013 4:45 pm

MediumTex wrote:
Mdraf wrote:
MediumTex wrote: Just to make sure I understand the point you are making, do you believe that the U.S. dollar is at a greater risk of seeing a decline in value than almost any other world currency in the world?
Not at all. In fact the exact opposite. Sorry if I didn't make  myself clear.
Oh okay, so we are back to the U.S. dollar basically being the best looking horse at the glue factory?

That's sort of how I see it.
Me too  since everybody is in fiat.  But what Libertarian666  was saying is that IF another country backstopped by gold then it would become a strong currency and possibly the world reserve currency. And I agree with him.  However a strong currency is a liability since it impacts negatively on balance of trade so nobody wants one in this age of globalization. The only economy which could -or rather used to - do well without the need to export is/or was the USA
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Re: Bank safe box storage diversification and other tips

Post by Pointedstick » Wed Jul 31, 2013 4:58 pm

Mdraf wrote: Me too  since everybody is in fiat.  But what Libertarian666  was saying is that IF another country backstopped by gold then it would become a strong currency and possibly the world reserve currency. And I agree with him.  However a strong currency is a liability since it impacts negatively on balance of trade so nobody wants one in this age of globalization. The only economy which could -or rather used to - do well without the need to export is/or was the USA
There's another problem: being a reserve currency issuer means that when other people need money, they borrow it from you. If your currency is backed by gold, then that requires mining more gold during a period of heightened demand for your money, or devaluing your currency by making each dollar worth less gold, which kind of defeats the point of having a gold-backed currency that's supposed to be hard to devalue.

The basic thing is that for a variety of reasons, nobody wants a strong currency. Austrian economics buffs do, but very few other people have such a desire. That's just not the world we live in.
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Re: Bank safe box storage diversification and other tips

Post by Mdraf » Wed Jul 31, 2013 5:16 pm

Pointedstick wrote:
Mdraf wrote: Me too  since everybody is in fiat.  But what Libertarian666  was saying is that IF another country backstopped by gold then it would become a strong currency and possibly the world reserve currency. And I agree with him.  However a strong currency is a liability since it impacts negatively on balance of trade so nobody wants one in this age of globalization. The only economy which could -or rather used to - do well without the need to export is/or was the USA
There's another problem: being a reserve currency issuer means that when other people need money, they borrow it from you. If your currency is backed by gold, then that requires mining more gold during a period of heightened demand for your money, or devaluing your currency by making each dollar worth less gold, which kind of defeats the point of having a gold-backed currency that's supposed to be hard to devalue.

The basic thing is that for a variety of reasons, nobody wants a strong currency. Austrian economics buffs do, but very few other people have such a desire. That's just not the world we live in.
HOWEVER..... :-X
Nobody wants a currency that's too weak either because that lowers the population's living standards
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Re: Bank safe box storage diversification and other tips

Post by Ad Orientem » Wed Jul 31, 2013 5:52 pm

Mdraf wrote:
Pointedstick wrote:
Mdraf wrote: Me too  since everybody is in fiat.  But what Libertarian666  was saying is that IF another country backstopped by gold then it would become a strong currency and possibly the world reserve currency. And I agree with him.  However a strong currency is a liability since it impacts negatively on balance of trade so nobody wants one in this age of globalization. The only economy which could -or rather used to - do well without the need to export is/or was the USA
There's another problem: being a reserve currency issuer means that when other people need money, they borrow it from you. If your currency is backed by gold, then that requires mining more gold during a period of heightened demand for your money, or devaluing your currency by making each dollar worth less gold, which kind of defeats the point of having a gold-backed currency that's supposed to be hard to devalue.

The basic thing is that for a variety of reasons, nobody wants a strong currency. Austrian economics buffs do, but very few other people have such a desire. That's just not the world we live in.
HOWEVER..... :-X
Nobody wants a currency that's too weak either because that lowers the population's living standards
I'm not sure I'd agree with that. It depends on how one defines currency weakness. If it is relative to other currencies it would normally have little effect on your standard of living unless you are fond of vacationing in Europe or buying a lot of imported goods. But if you are referring to higher domestic inflation, that can have a very prejudicial effect on standard of living.
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Re: Bank safe box storage diversification and other tips

Post by Pointedstick » Wed Jul 31, 2013 6:14 pm

If by "currency weakness" you mean "domestic inflation", then that can only cause the people's standard of living to fall if their wages and savings don't keep pace with it. For example if inflation is 5%, but wage growth and interest rates are 5.5%, there's really no problem except for the hoary old prospectors who put cash under their mattress. ;)
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Re: Bank safe box storage diversification and other tips

Post by Ad Orientem » Wed Jul 31, 2013 6:19 pm

Unfortunately in periods of high inflation the working and middle classes tend to suffer. Wages usually lag rising inflation by at least a bit and of course savings take a big hit. The only people who really do well in inflationary periods are debtors and those speculative investors who wagered on inflation.
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Re: Bank safe box storage diversification and other tips

Post by Mdraf » Wed Jul 31, 2013 8:34 pm

Countries with weak currencies have no choice but set up currency controls to protect the standard of living.  It hardly ever works in the long run. It creates a huge underground economy and black markets for foreign currency. 
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Re: Bank safe box storage diversification and other tips

Post by vnatale » Fri Mar 06, 2020 5:55 pm

Libertarian666 wrote:
Tue Jul 30, 2013 9:39 pm
Pointedstick wrote:
Libertarian666 wrote:
MediumTex wrote: If you were talking about basically ANY country in the world other than the U.S. I might be able to comprehend your argument, but the U.S. dollar is in so much better condition from a structural perspective than any other currency in the world that I can't fathom why the dollar would be the currency to collapse.
Obviously we live in different worlds, since in the world I live in, the dollar is the currency of the most overextended, bankrupt entity the world has ever seen.

What color is the Sun in your world?
Would it be fair to say that mental model you're working from is that the dollar is worthless trash that everyone in the world is on the verge of ditching as soon as they realize that it's a bunch of unbacked confetti conjured out of thin air by the most violent, least trustworthy band of organized criminals in human history?
Everyone in the world? No. I don't expect everyone in the world to do anything at the same time.

What I expect is that the marginal demand for the dollar will take a nosedive at some point after an event that is unknowable in advance but will be heralded as "the reason" for its demise, just as the 1929 crash is considered by the unknowledgeable as "the reason" for the 1930's depression.
I challenge any comedian to come up with a more comedic line than the one I've highlighted above!


And, Libertarian666, have we since come close to the dollar taking a "nosedive". Could this virus be the "unknowable in advance"?

Vinny
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Re: Bank safe box storage diversification and other tips

Post by vnatale » Fri Mar 06, 2020 5:58 pm

MediumTex wrote:
Wed Jul 31, 2013 1:05 am
Libertarian666 wrote:
MediumTex wrote: If you were talking about basically ANY country in the world other than the U.S. I might be able to comprehend your argument, but the U.S. dollar is in so much better condition from a structural perspective than any other currency in the world that I can't fathom why the dollar would be the currency to collapse.
Obviously we live in different worlds, since in the world I live in, the dollar is the currency of the most overextended, bankrupt entity the world has ever seen.

What color is the Sun in your world?
The U.S. has:

- Largest economy in the world

- Largest bond market in the world

- Largest stock market in the world

- Largest manufacturing infrastructure in the world when you exclude plastic crap production

- Largest and most powerful military in the history of the world

- Enormous natural resource deposits

- Incredibly productive economy

- Very productive and dedicated workforce (When was the last time you took a vacation?  How long was it?)

- Admirable levels of political stability compared to most of the world

- Strong protection of property rights

- Mostly corruption free government (Let's be honest about this one.  However screwed up our government is, if you offered 99% of cops a $100 bill not to write you a ticket they wouldn't take it, and if you offered 99% of politicians $100,000 to vote a certain way on a piece of legislation, they wouldn't take it.)

- No danger of military conquest from another nation

Which nations in history with even a few of the characteristics above have experienced currency collapses?

A currency collapse is mostly a result of capital flight or war.  I can't think of any currency collapse scenarios that wouldn't involve one or both of these factors.

POWERFUL statement by Tex regarding the strengths of the United States!

(And, sorry, in the light of recent discussions I could not resist highlighting and bolding what I did...)


VInny
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Re: Bank safe box storage diversification and other tips

Post by Ad Orientem » Fri Mar 06, 2020 6:36 pm

With 10YT yields below .8% I'd say the dollar remains in high demand. But I will also add that I'm not buying any bonds farther out then 2 years right now.
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Re: Bank safe box storage diversification and other tips

Post by vnatale » Fri Mar 06, 2020 7:01 pm

Ad Orientem wrote:
Fri Mar 06, 2020 6:36 pm
With 10YT yields below .8% I'd say the dollar remains in high demand. But I will also add that I'm not buying any bonds farther out then 2 years right now.
And, 30 year treasuries are yielding what? I know that Craig stated at least once that if yields came down to 1% he have to pause to re-evaluate.

Vinny
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Re: Bank safe box storage diversification and other tips

Post by Ad Orientem » Fri Mar 06, 2020 8:35 pm

vnatale wrote:
Fri Mar 06, 2020 7:01 pm
Ad Orientem wrote:
Fri Mar 06, 2020 6:36 pm
With 10YT yields below .8% I'd say the dollar remains in high demand. But I will also add that I'm not buying any bonds farther out then 2 years right now.
And, 30 year treasuries are yielding what? I know that Craig stated at least once that if yields came down to 1% he have to pause to re-evaluate.

Vinny

Currently 1.29%.
https://www.bloomberg.com/markets/rates ... t-bonds/us
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Re: Bank safe box storage diversification and other tips

Post by Mark Leavy » Tue Apr 14, 2020 6:56 pm

I spent the weekend driving through large parts of the Navajo Nation (currently under quarantine and curfew 8pm to 5am).

What a huge, and stunningly beautiful area. Immensely impoverished and so sparsely populated as to be almost virgin land. A sovereign nation the size of a good sized state embedded inside the USA. I see zero chance of widespread development (or much of anything) happening inside this land mass within my lifetime.

If someone wanted to dig a hole somewhere, I don't think you could do better than to generate a random GPS co-ordinate inside these bounds and a minimum of X miles from any of the few roads or trails.

Safety not guaranteed.
navajonation.png
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Re: Bank safe box storage diversification and other tips

Post by vnatale » Sun Apr 19, 2020 8:08 pm

MediumTex wrote:
Tue Jul 30, 2013 10:11 am
Another thing I don't understand about the gold confiscation scenarios is why the government would want anyone's gold. 

We're not on a gold standard, so it wouldn't improve the backing for the currency.

We will never go back onto a gold standard because politicians and central bankers hate it.

And the U.S. government is already the largest holder of gold in the world.  What would be the point of obtaining more through confiscation?
Related to other gold discussions currently going on here?

Vinny
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Re: Bank safe box storage diversification and other tips

Post by ochotona » Sun Apr 19, 2020 9:36 pm

I don't want more than one box. I hear horror stories about seniors squirreling assets away in multiple SDBs then dementia sets in and no one knows about the boxes any longer. Government wanted your gold in 1933, not 2023.
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