Mon, Jul 11, 2011 - 12:32pm
Have a question I'd like you all to take a stab at.
Does buying stock in any of the gold or silver mining companies differ at all from buying an ETF?
Here's my thought process.
Like buying an ETF, buying mining shares essentially gives you a piece of paper that says you own part of a company that produces a precious metal. When the final run on the dollar finally begins, panicked gold and silver buying will lead to a huge increase in gold and silver prices and thus, mining stocks will rise as well. But I think the key question is, does it really matter?
First question: How desperate will the US government get when the world dumps our currency? I'd say pretty damn desperate. Raiding people's 401Ks, pensions, etc. is only phase one. In the age of digital everything, what's stopping them from raiding your Ameritrade account?
Second question: Even if the US government doesn't resort to that, you better believe that they'll hike taxes on pretty much everything. Yeah, your mining companies might have done well, but selling them will only mean you receive worthless FRNs that will be taxed like crazy. You're then left with worthless paper that nobody wants.
Is there really any reason to buy ANY paper (including PM miners)? Seems like physical is the only solution.
Thoughts? Am I missing something here?
Edited by: FalseParadigm on Nov 8, 2014 - 5:09am