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The importance of cash....


DTEJD1997
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Hey all:

 

I've decided to start a new thread rather than glom onto the Outerwall (OUTR) thread.

 

I this thread, I wish to have a discussion about the importance of cash and also about silver & gold.

 

I think cash is very important, and many, many people are taking big chances relying on debit & credit cards.

 

I can give many different examples of why this is, but let me start with a few stories....

 

A). Way back when (2003?)  there a BIG power outage in the the NE & Midwest.  I had to travel that day.  In fact, the outage hit 5 minutes after I left my house.  I heard of it on the radio, and figured out I better fill up with gas.  When I got the station, long lines were starting to form.  Many people couldn't get gas, as the credit card network was down.  The station was accepting CASH ONLY.  I filled up (paid cash) and got on the freeway and made it my destination.

 

If there are power disruptions, "plastic" cash is going to have a very difficult time.

 

B). Back in 2008, a lot of business owners I knew at the time paid bills & bought inventory on their AMEX & other credit cards.  I'm talking about serious amounts...not $100 here or there.  Some of them had EXCELLENT credit...some were skating close to the edge.  Some of them went bust, as their credit lines went from $50k+ to $5k...or they were cut off completely as they had outstanding balances which suddenly became their limit.  As they paid off their balances, their limits were reduced.

 

Under normal economic conditions, this was not a problem...but in 2008, this became a major problem.

 

Of course, businessmen should not be financing their business off of access to credit limits on credit cards...

 

C). My ex-girlfriend would leave the house with literally PENNIES in her purse.  Why should she carry cash?  She had a debit & credit card.  We were driving after dinner & movie in her car, we went to a different restaurant and all of a sudden she is at 1/16 tank of gas & are in a terrible neighborhood late at night.  We pull into a gas station.  Her magnetic strip on the credit card had a scratch & didn't work.  Her debit card was not accepted for some reason at the station (wrong network?).  She needed gas RIGHT NOW!  Fortunately, I had plenty of cash...but I made sure she never left the house without a $20 bill in her purse after that...

 

D). Electronic transactions drive the price of everything up for everybody.  The merchants are going to add the processing cost back into the price of the item.

 

E). My "wise" uncle also does not like cash.  He likes to keep it in the bank to get the juicy, juicy interest!  He keeps a minimum amount in his checking account (debit card) & puts the rest into an interest bearing account.  Puts everything onto the debit card.  One day he forgets about something and miscalculates his balance.  This sets off a cascade of overdraft charges resulting in $400 of fees.

 

I ask him how much that cost him vs. the "interest" he made on cleverly managing his money.  I can't print his expletive filled tirade here...

 

F). You are relying on a counter party for credit cards & plastic.  What happens if the counter party goes under, has stress, is hacked, has problems?  Cash does not have this problem.

 

G). CRIME!!!!!  How much cash has been robbed from you in the past ten years?  How many instances of fraud have you had on plastic accounts?  I have not lost a penny from being robbed, having cash stolen.  Not the case with plastic...

 

I ALWAYS carry cash on me.  I will use plastic if it is convenient & I can get cash back...but I also use a lot of cash. 

 

I guess that is enough of a start to get the conversation going.

 

 

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My 2 cents is that the occurrences of not being able to rely on electronic means are rare. However, I always do carry some cash, a couple hundred dollars for convenience and just in case. I also have two credit cards in case my main one gets blocked for some reasons.

 

To tell you the truth, there will be a solar coronal mass ejection hitting the Earth someday like it happened in 1859. This has the potential to destroy a lot of our electronic devices. It could be major and stop all electric utilities from functioning. The problem is that we don't know the timing and how it would impact us: small inconvenience or major, a week to fix or a collapse of society?

 

So should I sell all my stocks, bonds, etc. and keep all my money in a safe at home to protect from such event that is almost certain to occur in the future? Or should I keep only a month or two worth of spending?

 

So it seems that I am not carrying enough cash to protect myself but, how much is too much is really up for debate.

 

Cardboard

 

 

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I loved this rant, completely agree!  Cash is king.

 

To pile on:

-We are putting a roof on a house we own.  The contractor quoted us a check price and a cash price.  The cash price was a few hundred dollars lower.  Why? Because he could pay the truck driver and materials on the spot and doesn't need to rely on suppler credit.  He said for the lack of hassle and cost savings he passes it straight on.  I happily paid cash.

-When I sell anything used (car, furniture) I always demand cash, I won't take anything else, not even a cashiers check.  Cash only.

 

Downside of cash:

-Banks are making it harder to withdrawal.  I went in last week and needed to put out $12k for a few different things.  I was told in the future to give them a few days notice if I ever wanted to do this again.  This is crazy to me.  I'm shopping for a used car, will of course pay cash.  If I find a car I don't want to tell a seller "hey can you wait a week so my bank can figure out how to get me $10k in $100s?" Of course not, I need to be able to pull the cash out when I need it.  I can understand a limit of something like $50k or $100k, but $10k?

-I purchased an RV six years ago for $3,500.  We were using PNC bank at the time, they wouldn't let us withdrawal the cash without advance notice, and also without another $3,500 in the account.  It was a mess, they made my wife jump through hoops for an entire afternoon trying to get that money out.  The teller told us we should have just pulled the daily max of $500 for seven days.  To my earlier point "hi seller, can you wait a week on this? I need to pull out $500/day until I get to $3500, please be patient." Of course not, that thing would have been gone.

 

I'll say this, PNC was impossible to get cash out of.  I use Dollar Bank now, a local bank, they at least let me take out over $10k at once, they had to consult the manager, but it happened.  I'd probably need the PNC CEO's stamp of approval to get $10k out in cash there.

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I usually keep 40-100 dollars in my wallet. Lots of restaurants I frequent don't even take cards. Cash only.  I have a few hundred at home so I don't have the hit the ATM constantly.  I also told my gf to keep at least $20.

 

Also holding a big stack of 100s just feel better than a plastic card.

 

 

*Another rant: People using debit cards.... Please just use credit cards and pay it off every month. Credit cards offer way more protection than debit.... And you don't get any rewards with debit.*

 

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... To tell you the truth, there will be a solar coronal mass ejection hitting the Earth someday like it happened in 1859. This has the potential to destroy a lot of our electronic devices. It could be major and stop all electric utilities from functioning. The problem is that we don't know the timing and how it would impact us: small inconvenience or major, a week to fix or a collapse of society? ...

 

Cardboard

[J/K] I do not recall any of my electronic devices falling out at some time in 1859. Maybe I'm just fading mentally, or I'm in an early stage stage of Alzheimers - ref. my signature here on board... [/J/K] Do you mean 1959, or what?

 

Here we have a rule of never leaving home without some kind of cash pocket money in the wallet, what is considered an appropriate figure [and currency] depends on what's planned to happen.

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*Another rant: People using debit cards.... Please just use credit cards and pay it off every month. Credit cards offer way more protection than debit.... And you don't get any rewards with debit.*

 

+1

 

Also, to add to the discussion, I normally carry $100-200 with me in bills, but use my credit cards for 90% of my purchases. If there's a cash discount, I'll pay cash. Also, many places in NYC require a $20-$25 minimum for credit cards, so I like to have cash for those instances as well.

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... To tell you the truth, there will be a solar coronal mass ejection hitting the Earth someday like it happened in 1859. This has the potential to destroy a lot of our electronic devices. It could be major and stop all electric utilities from functioning. The problem is that we don't know the timing and how it would impact us: small inconvenience or major, a week to fix or a collapse of society? ...

 

Cardboard

[J/K] I do not recall any of my electronic devices falling out at some time in 1859. Maybe I'm just fading mentally, or I'm in an early stage stage of Alzheimers - ref. my signature here on board... [/J/K] Do you mean 1959, or what?

 

Here we have a rule of never leaving home without some kind of cash pocket money in the wallet, what is considered an appropriate figure [and currency] depends on what's planned to happen.

 

Cardboard is entirely correct...

 

Look it up on the interweb...

 

I didn't want to bring this up (yet), as I didn't want to come across as an alarmist.

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... To tell you the truth, there will be a solar coronal mass ejection hitting the Earth someday like it happened in 1859. This has the potential to destroy a lot of our electronic devices. It could be major and stop all electric utilities from functioning. The problem is that we don't know the timing and how it would impact us: small inconvenience or major, a week to fix or a collapse of society? ...

 

Cardboard

[J/K] I do not recall any of my electronic devices falling out at some time in 1859. Maybe I'm just fading mentally, or I'm in an early stage stage of Alzheimers - ref. my signature here on board... [/J/K] Do you mean 1959, or what?

 

Here we have a rule of never leaving home without some kind of cash pocket money in the wallet, what is considered an appropriate figure [and currency] depends on what's planned to happen.

 

Cardboard is entirely correct...

 

Look it up on the interweb...

 

I didn't want to bring this up (yet), as I didn't want to come across as an alarmist.

 

OK, got it, thanks :

 

https://en.wikipedia.org/wiki/Solar_storm_of_1859

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Never use a debit card at a strip club. I had my Amex double-charged and had to send the Amex mafia after them. The only people I trust to go toe-to-toe with strip club operators are those responsible for managing large retail credit portfolios.

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What does this have to do with gold and silver?

If you are aware of the problems of plastic, and are moving towards cash...Then you will realize there are all sorts of problems with cash too.

 

One of the major problems is that over long periods of time, cash simply does not hold it's value.  Gold & silver do hold their value over long periods of time. 

 

Cash also still has a counter party risk.  While the risk is MUCH lower than with plastic, it is still there.  Gold & Silver don't have this problem.

 

Moving some amount of wealth into physical gold & silver can counter some of the problems with holding large amounts of cash.

 

I have good amounts of silver & gold.  I think people that DON'T are extremely foolish/naive. 

 

If there is enough interest in this, perhaps it can be stock for yet another thread...

 

 

 

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One problem with gold and silver is that they do not always hold their value vs cash. It depends on when/what price you bought them.

 

There is also a desire to create them with other means than traditional mining which can render them less valuable in the future: fusion, nanotech, mining asteroids. It all sounds crazy but, technology is advancing so fast than in 10 years it may be reality.

 

Finally, who is going to accept it from you and at what price? If you want to pay close to spot and avoid collectible type items, you need to buy bars. The most convenient I have seen for gold is the ounce bar from recognized refiners: easy to store, very small, very low premium to spot and large value or $1,100 U.S. per ounce.

 

However, if you want to exchange it for something, you still need to exchange it for cash first since no plumber, waitress or stripper will accept it! It is also too big of an amount for small transactions. Finally, you will also need to take it yourself to a recognized dealer and avoid being stolen. Since we are worried people here, would you rely on UPS or some other shipping means and then rely on the honesty of the dealer to say it was good gold and to send you a valid cheque?

 

Cardboard

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What does this have to do with gold and silver?

If you are aware of the problems of plastic, and are moving towards cash...Then you will realize there are all sorts of problems with cash too.

 

One of the major problems is that over long periods of time, cash simply does not hold it's value.  Gold & silver do hold their value over long periods of time. 

 

Cash also still has a counter party risk.  While the risk is MUCH lower than with plastic, it is still there.  Gold & Silver don't have this problem.

 

Moving some amount of wealth into physical gold & silver can counter some of the problems with holding large amounts of cash.

 

I have good amounts of silver & gold.  I think people that DON'T are extremely foolish/naive. 

 

If there is enough interest in this, perhaps it can be stock for yet another thread...

 

One of my fascinations lately has been with the online "stacker" community, with many people who seemingly put all of their disposable income into precious metals. It seems crazy to me but it's quite a sight to see the huge hoards of precious metals that people keep in their homes.

 

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One problem with gold and silver is that they do not always hold their value vs cash. It depends on when/what price you bought them.

 

There is also a desire to create them with other means than traditional mining which can render them less valuable in the future: fusion, nanotech, mining asteroids. It all sounds crazy but, technology is advancing so fast than in 10 years it may be reality.

 

Finally, who is going to accept it from you and at what price? If you want to pay close to spot and avoid collectible type items, you need to buy bars. The most convenient I have seen for gold is the ounce bar from recognized refiners: easy to store, very small, very low premium to spot and large value or $1,100 U.S. per ounce.

 

However, if you want to exchange it for something, you still need to exchange it for cash first since no plumber, waitress or stripper will accept it! It is also too big of an amount for small transactions. Finally, you will also need to take it yourself to a recognized dealer and avoid being stolen. Since we are worried people here, would you rely on UPS or some other shipping means and then rely on the honesty of the dealer to say it was good gold and to send you a valid cheque?

 

Cardboard

 

I regularly send & receive gold/silver through the mail and RARELY have a problem, well less than 1% of the time.

 

You are absolutely correct that gold may be ponderous for most transactions, that is why you have silver.  Silver is for most regular commerce, gold is for wealth preservation.  A silver dime is easily worth 1 gallon of gas, a loaf of bread...

 

You can also buy gold in smaller amounts than 1 oz.  1/10 oz. gold eagles are popular.  I've seen gold coins as small as 1/20 oz.

 

You always have to be careful when buying physical gold/silver so that you don't pay too high a premium.

 

A lot of transaction with gold/silver take place face to face...so you don't have to worry about mail, validity of a check, etc.  I live in a larger sized city and there are many reputable dealers that will pay you a fair price for your gold.

 

The value of gold/silver will certainly fluctuate, but it holds it's value over long periods of time better than cash...no doubt about that.  I have a "$100 gold note" from 1926.  You could trade it in for 5 $20 gold St. Gaudens coins.  The weight of these coins is close to 5 oz.  All are still legal tender today...what is worth more?  A circulated $100 gold note or 5 circulated $20 gold St. Gaudens?  Not even close...not even close by orders of magnitude...the St. Gaudens are worth at a minimum $5,500.  The gold note is worth about $120.

 

While gold & silver is certainly very important...it is important not to go overboard.  I would think 5% of one's wealth is a good amount to have. 

 

The vast, vast majority of my wealth is still in the market.  I think that is the way it should be for most people.  People having NO cash, NO gold or silver are making a mistake.  Having some is a very prudent insurance & hedge.

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What does this have to do with gold and silver?

If you are aware of the problems of plastic, and are moving towards cash...Then you will realize there are all sorts of problems with cash too.

 

One of the major problems is that over long periods of time, cash simply does not hold it's value.  Gold & silver do hold their value over long periods of time. 

 

Cash also still has a counter party risk.  While the risk is MUCH lower than with plastic, it is still there.  Gold & Silver don't have this problem.

 

Moving some amount of wealth into physical gold & silver can counter some of the problems with holding large amounts of cash.

 

I have good amounts of silver & gold.  I think people that DON'T are extremely foolish/naive. 

 

If there is enough interest in this, perhaps it can be stock for yet another thread...

 

One of my fascinations lately has been with the online "stacker" community, with many people who seemingly put all of their disposable income into precious metals. It seems crazy to me but it's quite a sight to see the huge hoards of precious metals that people keep in their homes.

 

 

Any links?

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What does this have to do with gold and silver?

If you are aware of the problems of plastic, and are moving towards cash...Then you will realize there are all sorts of problems with cash too.

 

One of the major problems is that over long periods of time, cash simply does not hold it's value.  Gold & silver do hold their value over long periods of time. 

 

Cash also still has a counter party risk.  While the risk is MUCH lower than with plastic, it is still there.  Gold & Silver don't have this problem.

 

Moving some amount of wealth into physical gold & silver can counter some of the problems with holding large amounts of cash.

 

I have good amounts of silver & gold.  I think people that DON'T are extremely foolish/naive. 

 

If there is enough interest in this, perhaps it can be stock for yet another thread...

 

One of my fascinations lately has been with the online "stacker" community, with many people who seemingly put all of their disposable income into precious metals. It seems crazy to me but it's quite a sight to see the huge hoards of precious metals that people keep in their homes.

 

 

Any links?

 

There are probably forums, but I've been watching them on YouTube. There's one link above, but here are a few other ones.

 

and
- Junius Maltby showing off his friend's gold stash. This guy also makes nearly daily videos about gold and silver, and has had a field day with the stock market's decline.

 

- Silver Nomad, this guy is just funny to me for some reason. Some combination of his voice and the stuff he says.

 

and
- Salivate Metals. This guy's voice reminds me a cartoon character, and has funny views on macroeconomics and why silver's value is constant.

 

There are a hundred more just like these guys, they're just some of my favorite characters. I don't know why I'm obsessed with them. I guess I just find them amusing.

 

 

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"People having NO cash, NO gold or silver are making a mistake.  Having some is a very prudent insurance & hedge."

 

Silver is the same problem. Easier to do small transactions but, who knows if it is not fake? I have heard so many real stories on how people got screwed with their gold and silver it is not funny. And if you want to pay a small premium on silver, you need to buy the 1,000 ounces bar that is accepted by the exchanges. That is 75 pounds!

 

I think that food, energy and ammo would be more important under the scenarios you seem to be protecting against. I would also say that living in a large city is the worst place to be under such scenarios.

 

Cardboard

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"People having NO cash, NO gold or silver are making a mistake.  Having some is a very prudent insurance & hedge."

 

Silver is the same problem. Easier to do small transactions but, who knows if it is not fake? I have heard so many real stories on how people got screwed with their gold and silver it is not funny. And if you want to pay a small premium on silver, you need to buy the 1,000 ounces bar that is accepted by the exchanges. That is 75 pounds!

 

I think that food, energy and ammo would be more important under the scenarios you seem to be protecting against. I would also say that living in a large city is the worst place to be under such scenarios.

 

Cardboard

 

Crypto is an alternative to all of them.

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"People having NO cash, NO gold or silver are making a mistake.  Having some is a very prudent insurance & hedge."

 

Silver is the same problem. Easier to do small transactions but, who knows if it is not fake? I have heard so many real stories on how people got screwed with their gold and silver it is not funny. And if you want to pay a small premium on silver, you need to buy the 1,000 ounces bar that is accepted by the exchanges. That is 75 pounds!

 

I think that food, energy and ammo would be more important under the scenarios you seem to be protecting against. I would also say that living in a large city is the worst place to be under such scenarios.

 

Cardboard

 

 

There is a VERY easy way to avoid counterfeiting problems with silver....

 

A). Know what you are doing

B). Deal with reputable people

C). MOST IMPORTANTLY, buy USA coins.  If you buy common "90% junk silver" I've NEVER heard of anyone getting fake stuff.  Not a single time.  This is the vast majority of my silver.  Who is going to counterfeit a 1962 silver quarter?

 

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