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Banks, gangsters and the strange resurgence of cash

economist.com

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Re: Banks, gangsters and the strange resurgence of cash

#61

Post by christophilus »

ptero wrote: post #53
Spooky23 wrote: post #41

Earlier quoted context omitted.

Those are the folks schnookered by companies that sell gold. Aka suckers. The “real” gold and silver people use it to avoid taxation. The high spreads and illiquidity are less than what you owe the tax guy or your ex-wife.

I don't see either high spreads or illiquidity. At least in the US the spread from reputable dealers is under 1% for bullion; slightly more for coins. It is certainly a feasible (and, in current low interest rate scenario, inexpensive) hedge against catastrophic economic problems.

Where do you find spreads that low? They’re like 10-20% where I am.

Re: Banks, gangsters and the strange resurgence of cash

#62

Post by esrauch »

dylan604 wrote: post #54
rsj_hn wrote: post #52

Earlier quoted context omitted.

I think the idea is that gold is a universally desired good that can be exchange for money or anything of value in any situation or place. So if you decide to flee the country, five pounds of gold is $150K and can easily be carried in a small backpack. Let's say you keep it in 1 troy oz pieces, so you have 80 of them worth about $1800 each. You can go to any nation on earth, and whatever currency they have, they will…

I understand the rational thinking of gold exchanges. You missed the detail about this being confusion on preppers. If the world has gone to shit (nuclear war, zombies, etc), then gold just isn't that useful. If it was silver, you could at least melt it down and kill the vampires with it. You're attempting to use logic in a place where there is none.

I don't really understand your point; the fact that preppers have gold and gold didn't help against zombies seems easily explainable by preppers not actually preparing for zombies, but instead far more realistic events including short term social unrest.

Re: Banks, gangsters and the strange resurgence of cash

#63

Post by lazide »

vl wrote: post #59
Spooky23 wrote: post #41

Earlier quoted context omitted.

Those are the folks schnookered by companies that sell gold. Aka suckers. The “real” gold and silver people use it to avoid taxation. The high spreads and illiquidity are less than what you owe the tax guy or your ex-wife.

How exactly is it going to work out if all purchaser of gold are tracked? You can’t buy any amount of gold without id.

It’s trivial to buy gold in the US without id, in cash. More than a million or two might require something, but less than that very doable.

Re: Banks, gangsters and the strange resurgence of cash

#64

Post by mandelbrotwurst »

dylan604 wrote: post #54
rsj_hn wrote: post #52

Earlier quoted context omitted.

I think the idea is that gold is a universally desired good that can be exchange for money or anything of value in any situation or place. So if you decide to flee the country, five pounds of gold is $150K and can easily be carried in a small backpack. Let's say you keep it in 1 troy oz pieces, so you have 80 of them worth about $1800 each. You can go to any nation on earth, and whatever currency they have, they will…

I understand the rational thinking of gold exchanges. You missed the detail about this being confusion on preppers. If the world has gone to shit (nuclear war, zombies, etc), then gold just isn't that useful. If it was silver, you could at least melt it down and kill the vampires with it. You're attempting to use logic in a place where there is none.

Hyperinflation and concerning political instability worth relocating over can happen without quite reaching the level of a zombie apocalypse.

Re: Banks, gangsters and the strange resurgence of cash

#65

Post by lazide »

ptero wrote: post #53
Spooky23 wrote: post #41

Earlier quoted context omitted.

Those are the folks schnookered by companies that sell gold. Aka suckers. The “real” gold and silver people use it to avoid taxation. The high spreads and illiquidity are less than what you owe the tax guy or your ex-wife.

I don't see either high spreads or illiquidity. At least in the US the spread from reputable dealers is under 1% for bullion; slightly more for coins. It is certainly a feasible (and, in current low interest rate scenario, inexpensive) hedge against catastrophic economic problems.

The only stuff with that kind of spread are 100oz silver bars or 1oz gold coins, all of which are well outside of feasible for $20/wk folks (unless they are willing and able to save for 2 yrs per coin anyway)

Re: Banks, gangsters and the strange resurgence of cash

#66

Post by vl »

lazide wrote: post #63
vl wrote: post #59

Earlier quoted context omitted.

How exactly is it going to work out if all purchaser of gold are tracked? You can’t buy any amount of gold without id.

It’s trivial to buy gold in the US without id, in cash. More than a million or two might require something, but less than that very doable.

How exactly would you go about that? And how are you going to make sure you are buying gold and not gold-plated lead?

Re: Banks, gangsters and the strange resurgence of cash

#67

Post by dghlsakjg »

Spooky23 wrote: post #43
tobyjsullivan wrote: post #18

Earlier quoted context omitted.

Pseudo-relevant anecdote: I wanted to buy a used car a few months ago off someone on Facebook. We were meeting up same day so the easiest method seemed to be cash. I went to the bank to withdraw $7000 and was informed, much to my surprise, that it is impossible to withdraw more than $3000 without 48 hours notice. Suffice it to say, I've been seriously considering the tradeoffs of hoarding cash under my mattress.

Depends on the bank. Most branches are really sales offices. Usually there’s a few that actually stock cash.

That’s wild. When I was a teller (15 years ago maybe) we would routinely keep around 7-10k in our drawers, and another 40k as ready money in the day safe.

Granted, we were a drive up branch that dealt with commercial/retail so a lot of customers would routinely be dealing with 5k worth of cash. Other branches had similar amounts of cash though.

Strange world

Re: Banks, gangsters and the strange resurgence of cash

#68

Post by tristor »

inopinatus wrote: post #60
rsj_hn wrote: post #6

There is a lot of rumor and speculation about very benign things. 1. Precautionary savings. In a low interest rate environment, there is not the same penalty for holding cash as getting interest in a savings account. A lot of people find it prudent to have a buffer of cash, say enough to cover 1 month of expenses. So cash withdrawn from an ATM but put into a piggybank or under the mattress will appear here as "missin…

> There is a lot of rumor and speculation about very benign things. There is certainly misrepresentation and rumour-mongering in these comments, but not in the article, and there's nothing benign about international money laundering, or more precisely, nothing benign about the people it enables. > $50 Billion in cash is basically nothing. It's like 2% of currency in circulation. This is very far from the numbers quot…

One thing that's also benign but not mentioned by the grandparent is that any economy which has considerable foreign travelers passing through will likely end up losing some cash. I have two pint glasses sitting on my desk, one for coins, the other for bills, they are literally packed full of money from my various travels. Last time I checked, I had almost 300 euros in there and I haven't been in the Eurozone in quite some time (pandemic notwithstanding). I'm not sure if others are like me, but usually I just get cash from an ATM and pay the conversion fee but I refuse to convert back because the money changers at the train stations and airports rip you even harder than the ATM does. It just rubs me the wrong way to take it both coming and going on the conversion. So I keep the bills, and at worst case they're souvenirs.

Re: Banks, gangsters and the strange resurgence of cash

#69

Post by ptero »

christophilus wrote: post #61
ptero wrote: post #53

Earlier quoted context omitted.

I don't see either high spreads or illiquidity. At least in the US the spread from reputable dealers is under 1% for bullion; slightly more for coins. It is certainly a feasible (and, in current low interest rate scenario, inexpensive) hedge against catastrophic economic problems.

Where do you find spreads that low? They’re like 10-20% where I am.

Using reputable dealers that deliver orders placed online. Strange as it sounds, it is, IMO, one of the better and safer (definitely low commission) ways to get gold. BD Bullion, APMEX are good ones. I did not check very recently, but when I did the difference with spot price were under 1% (slightly higher for APMEX, slightly lower for BD). A friend in Australia mentioned the same ballpark, 1-1.5% spread (combined, not each way). 10-20% is a highway robbery!!

An important caveat: this only applies to reasonably large orders, 1 oz or larger. You cannot buy $100 of gold with 1% spread.

Re: Banks, gangsters and the strange resurgence of cash

#70

Post by lioeters »

rsj_hn wrote: post #52
dylan604 wrote: post #35

Earlier quoted context omitted.

i've never understood how this would work in these doomsday scenarios. are people going to walk around with scales to weigh the gold for every transaction as well as test the purity of the gold? are they going to mint their own coins? I just don't see how it's supposed to work

I think the idea is that gold is a universally desired good that can be exchange for money or anything of value in any situation or place. So if you decide to flee the country, five pounds of gold is $150K and can easily be carried in a small backpack. Let's say you keep it in 1 troy oz pieces, so you have 80 of them worth about $1800 each. You can go to any nation on earth, and whatever currency they have, they will…

Great example with Silesia. Funny thing about "worthless zlotys" is that "zloty" is the name of a currency, as well as literally meaning "gold". In this historical case, the latter would have certainly been a more stable store of value.
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