What were the best investments during the Depression?

I can't seem to locate this.

During the great depression, many actually became very wealthy, what sort of businessess seemed to flourish or "bounce back" during the depression and the years that followed? For instance,wamu stock plummeted and that company was just bought by Morgan -- so, buying that stock now and waiting for the long term might be a good idea? (as an example)

On a seperate topic and question: please answer first with priority.

If one was to buy gold/silver and after some time the market balances, what do you do with these "investments"? Sell them at a potential loss or ? I guesss the idea is you can't get "rich" off of holding silver/gold, but securing the value of your currrent assets.

during the great depression the US was on a gold standard....

As good a question would be...during Weimer Germany's hyperinflation what was a good investment.


Our current situation is neither the same as the Great Depression or the Weimer inflation...but...precious metals...think about it.

this is a very good question

Congrats Lord Xar!!!

You've just accomplished the impossible, you've asked a question on this board that can not have Internet as part of the answer!!!

I never thought anyone would ever do it! Major props. :D:D:D

Xar,

First off FDR seized all private gold in the US. I'm sure they will try to repeat this once foreign investors stop buying T-Bills.

Second, even if they stave this off (which I doubt they can at this point) We will have the 60 Trillion in unfunded Social security/medicare payments soon.

Here are my thoughts:

If we have hyperinflation there will be a short period (probably a couple weeks) where gold/silver are still private, and have dramatically increased in value vs the dollar.

If this happens I may try and use some to pay off all my FRN debt. The window will
will be short and timing it will be the trick.

The other option would be to hold it long term assuming the Gov will default and people stop taking FRNs. This would involve making it "disappear". Do not trust
safety deposit boxes etc. They will be raided IMO.

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Originally Posted by Lord Xar

I can't seem to locate this.

During the great depression, many actually became very wealthy, what sort of businessess seemed to flourish or "bounce back" during the depression and the years that followed? For instance,wamu stock plummeted and that company was just bought by Morgan -- so, buying that stock now and waiting for the long term might be a good idea? (as an example)

On a seperate topic and question: please answer first with priority.

If one was to buy gold/silver and after some time the market balances, what do you do with these "investments"? Sell them at a potential loss or ? I guesss the idea is you can't get "rich" off of holding silver/gold, but securing the value of your currrent assets.

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gold probably wasn't that good of an investment back then because it was confiscated by the government (for those that owned up to owning some):

"The very next day, acting under the authority of the Emergency Banking Relief Act, President Roosevelt issued Executive Order No. 6073. In addition to authorizing the Secretary of the Treasury to decide which of the nations' banks could open, the Order prohibited owners of gold from exporting or otherwise removing it from the United States. Shortly thereafter, also under the authority of the Emergency Banking Relief Act, the President issued Executive Order No. 6102, which provided that all privately owned gold in the United States was to be confiscated by the government. As compensation, the owners would receive paper money."

http://www.blanchardonline.com/beru/...ation_1933.php

lynn

My great grandfather and grandfather made grave stones and their business was doing quite well (pretty obvious why). I've seen the old accounting books... crazy handwriting!

http://www.usagold.com/germannightmare.html

This is an excerpt from the above linked article on this topic that I have shared with family members and friends during this past week. The piece is about the German hyperinflation:

"How Investments Fared

At the start it is important to understand how hard it was to obtain real income during the inflation. Professionals, skilled workers and others used to enjoying good income found their real salaries disastrously cut. Those who depended on savings, pensions or investment income for a living faced a terrible situation.

Interest from bonds or savings deposits soon depreciated to where they had no real value. Stocks paid meager dividends or none at all; corporate managements needed the money for working capital, or used it for capital building and speculation. Owners of rental property fared no better; the government froze rents, which soon meant that tenants were occupying premises virtually rent-free. Dipping into capital led to big losses, since cash, bonds and even stocks quickly shrunk drastically in value. The urgent need for income had important effects on the true prices of various types of property and investments.

Cash: Money held in cash lost value rapidly and soon became completely worthless. Of all investment forms, this was the most disastrous.

Bank Deposits: In theory, bank deposits became as worthless as cash. However, after the stabilization the government decreed partial reimbursement, and sums in the range of 15-30% of the original deposit value were repaid. Naturally, however, the great majority of depositors withdrew their funds at some time during the inflation, after much of the value had been lost, and exchanged them for goods. Few Germans held money in deposits through the entire period.

Bonds, Mortgages: As usual in an inflation, bonds and mortgages fell in value even faster than cash. After the stabilization, some restitution was provided by law. Holders of government bonds were reimbursed to the extent of 2.5% of the original bond values. Mortgage holders also received some repayment, while a 1925 law provided for 15-25% reimbursement of corporate bondholders, though the payment was delayed for some years. Here again, few investors held bonds or mortgages throughout the entire period; most holders got rid of them for whatever pittance they would bring during the inflation.

Real Estate: Farmers and holders of urban property seemed to benefit if their property was mortgaged; the inflation soon wiped out the mortgage debt. However, they received no income, as noted above, since rents were frozen. After the stabilization, heavy new taxes and the urgent need for cash forced most holders to remortgage their property, often more heavily than originally, so that their gains were illusory. Still, those who held real estate throughout managed to save the capital thus invested. However, those who sold during the inflation (often through desperate need for cash) fared poorly. Because it brought no income, real estate sold at extremely low real price levels during inflation.

Foreign Exchange: Those who held funds in dollars, pounds or other stable currencies, or in gold, saved their capital. The government set up rigid exchange controls as the inflation proceeded. As usual under such conditions, a black market flourished. The ones who fared best were the small minority who had the foresight to exchange marks into foreign money or gold very early, before new laws made this difficult and before the mark lost too much value.

Personal Property: Capital was preserved by those who early changed it into objects of lasting value--rare coins, stamps, jewelry, works of art, antiques--or into merchandise such as clothing, fabrics, etc. Of course, most people did not understand the advantage of accumulating such property until the inflation was well along. By that time the prices of all goods had risen so much that they seemed outrageously bad bargains. In the event, however, cash proved an even worse bargain.

Common Stocks: In an inflation, common stocks are generally considered a desirable hedge to protect against or even to profit from the rise in prices. In practice, it is not so simple. In this country stock prices have been known to fall violently just when inflation was most evident (1946, 1957, 1966, 1969). Market fluctuations--the rise of exciting new speculative stocks, waves of fear or greed--all make it much too easy to buy or to sell at the wrong time or to go into the wrong stocks.

Getting down to specifics, we can say that those who bought a well-diversified list of stocks in solid, well-established companies quite early in the inflation and who held on throughout the period and also through the stabilization crisis saved much or all of their capital. However, there were many pitfalls along the wayside for the greedy, the fearful and the over-clever. Those who did best were investors with a certain unemotional, stolid character, a basic confidence that strong, well-managed companies would come through, and an immunity to excitement, anxiety and speculative temptations.

Many very sharp but brief advances and declines in the market led to widespread speculation, and well-intentioned investors often wound up as traders. Naturally most of them did as badly as amateur speculators generally do. Many decided that speculation was the only sensible approach; when the entire economy and financial structure was visibly crumbling, who could wait patiently with confidence in the long-range value of anything?"

Good question.

During the depression? Commodities.
After the depression, nearly anything, but I will be buying blue-chip tech stocks like Apple, and niche-market medical equipment manufacturers.

i think maybe after the crash, gold miners were the best investment. i remember someone saying that... but i don't remember where i heard that from. i hope someone can find this out.

but the $20 gold pieces (saint gaudens, liberties) certainly gained in purchasing power, so those obviously did well... though i think gold miners did better.

Cigarettes.

Nicotine is crazy-addictive, and your neighbors will certainly pay well for it.

Antibiotics and other medicine may also be another good investment, but you will need to be heartless if you're going to hold a mother's son's life ransom.

Make sure to stay out of the way when the stock market falls in the next few months. or maybe years depending on the amount of govt intervention trying to postpone it. Those that end up holding money at the bottom of the stock market fall wins because by that time most people don't have money to invest even if they wanted to. Of course, this is easier said then done.

Now if the govt really decides to massively print to increase the monetary base and we have massive inflation then that's another story. I hope that the moronic leaders do not go that route. It will also be the end of them, but you never know what things desperate people will do.

Xar I forgot to mention a few things.

First off good luck finding physical silver or gold. No one has any left.
Heck the US Mint just suspended sales of gold coins. I've been calling local
shops, found one with only 1 100 oz silver bar, (guy said it was impossible to
get any 1 oz rounds) Second store had only 3 100oz bars and some rounds on backorder (over 4 weeks lead time).


There is another option, trade some cash into other currency now...
Tough call though, depends on who you think is in better shape.

Buy ammunition and canned food. :D

But seriously, Harry Browne wrote a good book on this subject called "Fail-Safe Investing."

http://www.harrybrowne.com

Stocks, imagine if you bought the Dow Jones at 40 in the Spring of '33.

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Originally Posted by JRuc33

Stocks, imagine if you bought the Dow Jones at 40 in the Spring of '33.

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Winner.

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Originally Posted by Lord Xar

I can't seem to locate this.

During the great depression, many actually became very wealthy, what sort of businessess seemed to flourish or "bounce back" during the depression and the years that followed? For instance,wamu stock plummeted and that company was just bought by Morgan -- so, buying that stock now and waiting for the long term might be a good idea? (as an example)

On a seperate topic and question: please answer first with priority.

If one was to buy gold/silver and after some time the market balances, what do you do with these "investments"? Sell them at a potential loss or ? I guesss the idea is you can't get "rich" off of holding silver/gold, but securing the value of your currrent assets.

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It's mainly timing. Buy assets when they're low, but make sure you can hold on to those assets through the rough times.

From: http://www.lewrockwell.com/north/north501.html

"In August 1929, your grandfather sold one unit of the Dow and bought 18 ounces of gold. Three years later, when the Dow/gold ratio bottomed at 2:1, he sold 18 ounces and bought 9 units of the Dow.

Those 9 units reached another peak in 1966 when the ratio hit 28:1. Now your father exchanged those 9 Dow units for 252 ounces of gold.

In January 1980, the ratio got to an almost unprecedented 1:1 ratio, so he converted those 252 ounces of gold into 252 units of the Dow.

Come 1999 with the ratio at an unprecedented 43.85 to 1 level, the prudent family converted those 252 units of the Dow into 11,050 ounces of gold!

No trades were based on the price of gold or the level of the Dow . . . it’s just a simple question of how many ounces is the Dow trading for in the market.

This little fictional fable started with 1 unit of the Dow at a peak in 1929. Two tops, two bottoms, and 5 trades later it’s 11,050 ounces of gold, in 70 years."

Thank you all for you replies.

With many of these banks failing and subsequently gonna be bailed out --- curious if it would be wise to actually "buy" into them.

I think we will have a cooling off period of a few months before things get horrible, I think silver/gold availability will be an option.


But I was thinking more in terms of what business flourished etc... I believe it was the first post after mine in which the poster made the following statement:

Quote:

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during the great depression the US was on a gold standard....

As good a question would be...during Weimer Germany's hyperinflation what was a good investment.


Our current situation is neither the same as the Great Depression or the Weimer inflation...but...precious metals...think about it.

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So precious metals -- ie, silver/gold.

But if we investigate the differences beteen the Great Depression in which we had a gold standard and now (or soon be depression) which we do not have a gold standard -- what are the differences in potential for holding onto money value or making money.

Also --- how is it different from hyperinflation and Gold standard depression. I ask because I would like to see how a bad situation can be alleviated and potentailly taken advantage of. I know many have talked of silver/gold ---> but I would to see if other options can be had or not.

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Originally Posted by walt

Congrats Lord Xar!!!

You've just accomplished the impossible, you've asked a question on this board that can not have Internet as part of the answer!!!

I never thought anyone would ever do it! Major props. :D:D:D

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I have my uses ;)