Something that is ‘fungible,’ is moveable, accessible, able to be held, physically stored and transferred to another place. Fungibles have physical value, such as a barrel of oil, a ton of wheat, or an ounce of gold. Fungible things are created by capital and labor investment, and as the old saying goes, everything to eat or has physical value, has to be either mined, or grown.
Stocks, (which I think are way over-priced and ripe for a fall), are created by a computer. If a corporation needs money, they simply issue stocks. Think about that for a minute. Tesla needs money, and they do and did, so they issue a new stock offering, which are bought. and Tesla has the money it needs. The holders of Tesla stock have had their stock value diluted, because there are more of them in existence. Tesla didn’t have to build a new rocket or a new electric car to issue stocks. All they had to do was to notify the SEC of it, and it was done. Did Tesla even print the stocks? No. It was just a computer entry. The days of physical paper stocks are long gone. Just a computer entry.
Ever think of a stockholder’s position if the computers went awry and records of ownership were lost? 143 million Americans have had their vital information stolen by hackers. Trillions of dollar wealth in stocks are stored in computers which have been hacked over and over again.
Buyers of Tesla stock may own a ten millionth of Tesla, or maybe less, I don’t know, but they can’t use their ten millionth of ownership to change company policy, tell it to make a different car, or economize. Their ten millionth ownership, gives them nothing but a computer entry, and if the stock goes up they can sell at a profit. If it goes down, thanks to bad corporate decisions or actions, they lose. Bonds are printed, I think, but gives no ownership of a corporation. A bond is a promise of the seller to pay back money with interest. If the city or company goes bust, bondholders lose. If the city or company thrives and is responsible, the bondholder may get his money back in many years, with a small amount of interest paid yearly. Bonds are risky I think.
There are all sorts of things to do with surplus dollars, if you’re lucky enough to have any. Buy a rental property, and hope your tenants don’t wreck the place and pay the rent. Buy antiques, rare cars, or other collectibles, which are risky, but can give personal pleasure. Antiques, rare cars and collectibles however, require knowledge in their field, and paying too much is all too common. We paid too much for some of the antiques we have in our 1887 home, but they are beautiful and give pleasure.
Then, (You knew where this was going, didn’t you?) there is gold and silver, which fulfill all the requirements of a fungible thing. They are beautiful, rare, universally accepted as to value, can be held, shipped, exchanged, and require mines to originate them. Mines, which require labor, capital, exploration, and luck. But the luck is not on your end, but on the prospector who wants to find the ore. Speaking of a prospector, go to the web site (coloradogold.com) and see the 1 oz .999 pure silver “Prospector” coin which is 28 cents over spot, a price no other can match.
Gold, silver, bonds, stocks, and properties, can go down and up, depending on the markets, and supply and demand. Washington D.C. properties, thanks to the US government’s continually enlarging, made them go up so high, that it is unbelievable. I grew up in D.C. and the 6 bedroom home I grew up in, which my parents bought for $3300 in 1936, is now worth many hundreds of thousands of dollars. Supply and demand. My home in Montrose Colorado, is worth probably $475,000, but if it were located in Telluride, 65 miles from here, it would be worth $15 million. As a real estate slogan goes, “Location, location, location.” My location is fine, and Montrose has wonderful weather, no crime, no humidity, 300 days of sunshine, but it is not a ski town, nor a town where the super rich love to be, even if it is only a few weeks a year. Damn!
Gold requires a 75th as much storage space as does silver, but throughout history, the ratio between silver and gold has been 16 to 1, meaning gold was 16 times more expensive than silver. Now it is 75 times more expensive than silver. Is silver cheap or gold expensive? I don’t think silver can be mined for its current spot price, but gold probably can. Will the ratio ever be back to 16 to 1? I cannot predict what will happen ten minutes from now, so don’t ask me. I just know that silver and gold have remained valuable and real money throughout history, when all the stocks, bonds, and paper money went bust, and that makes me feel secure. Don Stott 1-888-786-8822