[30thElement]

I hope everyone learned their lesson after all the panic over Italy/Greece/whoever defaulting and when senior MBS bonds took losses way back in 2009 and the code can handle defaults. I think the bigger risk would be from the portfolio rebalancing that would need to be done as what was assumed to be a 0 risk T-note is no longer 0 risk. That's of course ignoring the sudden "oh shit" heard all the way in southern Jersey when the notes don't actually pay out.

[LekkoscPiwa]

There have been tons and tons of serious investors claiming T-bills are the most risky assets class since at least 2005:

Marc Faber, Jim Rogers, Kyle Bass, Peter Schiff, list goes on and on.

Hoarding gold since 2005 and tell you one thing - just can't wait.

[maratd]

> Hoarding gold since 2005 and tell you one thing - just can't wait.

I don't want to burst your bubble, but if things go tits up, it will affect the demand of useless shiny metals and as a consequence, their value. If I were you, I would hoard toilet paper. Historically, for some reason, when the shit hits the fan, there is never enough toilet paper around to wipe up the mess.

[dllthomas]

Gold has lots of uses. Of course, most of them are dependant on industrial (and hence financial) infrastructure...

[LekkoscPiwa]

Gold Price is currently at its mining cost. The asset you can buy at its production cost is a bubble? Where are you talking your investment advise from? CNBC?

US Treasuries at the most expensive price point for the past 300 years. That's for you, if you're looking for bubbles.

[ZachPruckowski]

Gold's mining cost is directly correlated with its sale price - different precious metal or gem mines have different extraction costs. So the "mining cost" of an ounce of gold varies with which mines are open, which varies with how much the gold sells for.

[LekkoscPiwa]

mining cost = labor + energy

If: labor + energy to extract gold > gold price

we have a bubble?

;-) LOL

[maratd]

I meant "burst your bubble" as an idiom, not as an insinuation that there is a bubble in economic terms.

That said, gold's price is determined by supply and demand, just like for any other good. Certainly part of the price is supply, which is determined to some extent by mining costs, but there is also the demand side of the equation. You will find demand for precious metals greatly diminished during a recession or any kind of economic hardship. They are a luxury good. Toilet paper, on the other hand, is an inferior good whose price will not be affected by any economic hardship. In fact, it may even increase during such a crisis.

Buy toilet paper.

[douglasisshiny]

U.S. debt will still be among the safest assets (as opposed to the safest, which it still could be).

Edit: I don't think that defaulting on or debt wouldn't lead to catastrophic consequences. Nor am I an economist.