I agree with Nordic, and I don't even think you have to be thinking about collapse for PMs to make sense.
Marie's posted an impressive list of things, but why is that inconsistent with what Nordic is saying? Having an exchange currency makes it easier to trade when, say, you find a person who has what you need, but you don't have what they need. Could coffee work? Yeah, but it can spill. Beans can break. Sugar can get wet. Bugs can get in it. To paraphrase Danny Devito: Everybody wants gold. That's why they call it gold. [I'm half-kidding, but only half].
Obviously no one can say what will be post-collapse. But post-collapse is a LONG way off. Tainter is very clear on the fact that collapse is a process, not an event. I'd estimate we're already in the middle part of the early stages of collapse, and it could take another generation or three before its in full-full swing.
In the meantime, if you recognize we're in the midst of a structural economic change, and not a cyclical downturn, then the 70-year history of the return on gold as compared to the return on stocks is not so relevant. I would think the last 10 or so years is far more likely to be predictive of things to come in the next few years. Look at just the last 10 year's of barracuda's Gold-DJIA chart upthread. Which line do you want to be in?
Five years ago, if your daughter was entering high school and you only had enough saved to send her to college for her freshman year, had you put that money into gold or silver you'd now have enough to get her into her senior year. If you thought about buying a house in the country four years ago and could afford to put 25% down, if you instead used the money to purchase gold or silver factor you could now buy almost 100% of that house when you factor in the drop in housing market. That's the direction of things. Name one person of repute who thinks housing is coming back anytime soon? It's not.
Could PMs crash? In the short run, they can certainly fall sharply [for instance, COMEX plays games, hiking margins on gold and silver when there's a big rally, because it reliably produce short-term downturns as people with speculative long position have to sell in order to cover the margins. Silver fell 25% in a week a few months ago]. But contrary to what barracuda said upthread, the Fed and Treasury are not able to manipulate the equity markets as easily as they have in past years. They're pretty much out of long-range bullets. Low interests rates haven't done a fucking thing for the larger economy; Fed-backed asset purchases [quantitative easing] of more than $1 trillion have reflated equity prices a good deal, but small investors don't trust it and it's also done basically nada for the real economy. And quantitative easing debases the dollar. Another round might be announced as soon as Friday.
Quantitative Easing
The term quantitative easing (QE) describes a form of monetary policy used by central banks to increase the supply of money in an economy when the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.
A central bank does this by first crediting its own account with money it has created ex nihilo ("out of nothing").[1] It then purchases financial assets, including government bonds and corporate bonds, from banks and other financial institutions in a process referred to as open market operations.
The purchases, by way of account deposits, give banks the excess reserves required for them to create new money by the process of deposit multiplication from increased lending in the fractional reserve banking system.The increase in the money supply thus stimulates the economy. Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to pocket the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.[1]
Read more:
http://www.businessinsider.com/what-is- ... z1W0NTL8Dp
A QE3 might run up the stock market again for awhile, but at the cost of the dollar's strength. I'd say the bolded section has it about right, minus the hyperinflation part thus far. And few believe a QE3 is going to do anything except continue the giveaway to the banks.
So then: what possible spin on the economic fundamentals can be put that would give investors confidence that the equity markets are a good bet long-term? A decision was made a generation ago in Washington to make it much easier for capital to seek cheap labor the world around. Absent something unforeseen, the US labor force was sure to be fucked by it, and fucked we are. So who in the US is going to buy products, when real unemployment is 15+%? What realistic prospects are there for large-scale re-employment at decent wages in this political climate? None anytime soon. When are interest rates going to going up, inducing people to save money in bank accounts and CDs? No time soon.
Flight to PMs likely continues then.
