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Possible chance for group inflation hedge - gold mine
invite response
2013 Jan 28, 10:26am 2,679 views 7 comments
by Zak ➕follow (0) 💰tip ignore
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Excellent reply. Unfortunately I will need $250 to initiate the $4000 transfer. Please forward the funds via western union.
Seriously though, if you think it's a bad idea, please elaborate. I am a student of the world and if you have something intelligent to add I'm more than willing to listen.
Why are you trying to hedge for inflation? Are you worried about the sub 2% that we are currently running? Or is this massive inflation just around the corner like the media has been saying for 4 years? Where is this hyperinflation that we have been hearing about?
All I see is more automation taking away jobs, more jobs being shipped overseas, more empty store fronts, more college graduates who can't get jobs in their field of study.
Where the FUCK do you think we are going to get inflation from in these conditions?
You should worry more about a Zombie Apocalypse, a large comet/meteor striking the planet, Yellowstone supervolcano, or a massive tsunami generated from the Canary Islands..............all of these are vastly more likely to happen.
Wage deflation will lead to either demand destruction or price deflation.
Expanded money supply that sits on the Feds balance sheet and does not get into real peoples pockets leads to well nothing, fake banking assets that the banks know are fake and will not lend or borrow against.
CPI calculated incorrectly. This is in my opinion what has lead to wage deflation, and will continue to lead to wage deflation.
I believe that gold is a good investment for inflation, but so are housing and stocks.
It would seem to me that buying an old gold mine would be leaning more towards "all in" than say buying some gold, stocks, or RE. If you are are wrong with stocks you can liquidate with the click of a mouse. Not so much with RE and certainly not with a mine.
I know nothing about mining for gold, I wouldn't have the slightest idea how to value an old mine. I would bet that most of the people here, including yourself are in the same boat.
With the price for gold holding north of 1500 per ounce I would figure that anyone with a background in goldmining would probably jump on a "deal" only costing 400k. Hell we have people on this forum buying millions of dollars of property with borrowed money massively speculating that rents and prices will remain the same or go up.
curious2
2013 Jan 28, 5:28pm
Personally I would not invest in this, but I will offer hopefully constructive criticism.
If you are looking for a gold mine as a hedge against inflation, you might consider shares in a publicly traded mining company. Usually they mine more than one metal, which might help you hedge against gold too. I'm not an investment advisor, so I won't mention any particular stock and I don't know enough to have an opinion about the future price of any particular metal.
The value of a mine depends on who is going to mine it. As you wrote, operating "would be an entirely separate issue." Problems include breakdowns, injuries, and operators stealing the gold. A major mining company can have maintenance crews on staff, safety protocols, and internal controls to ensure the gold is counted properly. Mining has huge economies of scale, and a 20-acre mine seems probably too small to interest a large and reputable company.
elliemae
2013 Jan 28, 10:27pm
1) Can you send me a nugget to prove that there's gold in them thar hills?
2) will you take a check?
I've recently found a literal gold mine for sale that was shut down because of wild fire just before the run up in gold prices. Most of the mine buildings were destroyed halting operations. I happen to have personally visited the mine, which was why I was very surprised to find it was for sale. Is this something anyone on Patrick.net would be interested in participating in a group purchase as an inflation hedge? In other words, form a corporation and participate in the purchase of a gold mine?
The purchase price on the gold mine total on over 20 acres is under 400,000 list price. I believe an S corp or LLC with under 30 investors could purchase the mine with initial capitalization of 10-20k per shareholder. Operating the mine would be an entirely separate issue. It could be profitable, but in my mind, this would primarily be a speculative hedge of 10-20k against a highly inflationary period that might happen. Rather than buying and storing gold in a vault or something, you just buy it raw stored safely in the ground, waiting for extraction.
Obviously, there are numerous issues to deal with in setting up this kind of venture. This is just to find out if there would be any kind of interest.