Last night my husband I looked at our 50th house since our home-buying odyssey began. I knew the moment I walked in the door that it wasn’t the right house. I couldn’t do that when I first started looking, but now I know. If you’re not quite sure you’ll know when it’s right, here are 9 signs that it is, and one that it isn’t.

You Get the Flutters
Remember when you first fell in love? Every time you saw your beloved, your stomach fluttered. It’s the same with a house. If I get the flutters when I’m in a house, I know it’s right for me. With some houses, the flutters are strong, like the second house we made an offer on. With other houses, the flutters are softer, but still noticeable, like with the house we currently have an offer on.

You Forgive Flaws
In some houses, I see flaws and refuse to consider them. However, with other houses I’ve been willing to overlook the flaws. An example is oven-size. Since we’re looking at older homes, many of them have small ovens. The second house we offered on had an oven that was a little smaller than I would like, but I was willing to overlook it. I wasn’t willing to do that with other houses.

It Doesn’t Have Your Dealbreakers
Even if I’m willing to bend on some things, my dealbreakers are still my dealbreakers. For example, even if it has updates and decent-sized oven, a too-small kitchen is still a too-small kitchen. I can’t overlook that, and houses with too-small kitchens don’t give me flutters. A house without AC is still a house without AC. I don’t even bother to look at those.

You Feel Pride in the House
Would you feel proud having people over to this home? Can you imagine yourself coming home to the house and feeling happy? Then it’s your house. We’ve looked at some houses that needed work and I could see the potential, but there were certain factors, like the location, that would always embarrass me. That meant it wasn’t the house for me.

You Can Imagine Putting Your Stamp on It
No house is perfect, not even a mansion. You’ll still need to put your own stamp on it – things like furniture, paint color, landscaping, etc. Can you see how you’d arrange your furniture? Can you see how you’d like it to look, and is that image affordable?

Recently we saw a gorgeous house that was nearly 2600 square feet (huge for LA, and massive for our price range.) Ultimately, we didn’t make an offer. We just couldn’t see how we’d live in it, despite the size.

It Meets Your External Criteria
Even if the house is perfect, it may not be right for you if it doesn’t meet your external criteria. I don’t even bother to look at a house if it doesn’t meet my school or commute standards. No matter how much I love a home, I can’t change traffic patterns or schools and those are important to me.

The House is Emblazoned in Your Memory
After looking at fifty houses, you’d think they’d all run together. The homes we like enough to make offers on stand out. I can still picture the details of those houses. I can remember how I felt in them and I obsess over them while we wait for responses on offers.

You Can Afford It
This is key. Sure, I could look at a $2 million house and see all of the above, but I can’t afford the house, so it’s not right for me.

You Want the House – I Mean Really, Really Want
Plain and simple, you walk away wanting the house. You want to make an offer right away. You can see your bidding strategy and know what you’re willing to pay. That said, make sure you don’t lose your head in a bidding war and overpay, especially in this market.

At a certain point, say when you’ve looked at 46 houses and have been in the market for six months, you might be ready to throw in the towel and just buy something, anything. Remember this sign that this isn’t the right house for you:

You Sort of Like It
Sort of liking it isn’t enough. You have to live here for a long time. You can’t just move in a year as you can with a rental. Don’t just buy a house because you’re tired of looking. My husband and I looked a house two weeks ago that we sort of liked, and could sort of see ourselves in. There were aspects we loved, but not enough to win us over. With the help of our agent, we realized we were capitulating. At this point, I can’t even remember what the house looked like or where it was.

People who aren’t married ask how you know when he or she is the “one.” It’s the same with a house. You know when you know, it’s as easy as that. Don’t settle until you find that feeling.

Although some of the travel sites have dropped their booking fees, I still always use them for research and then book my flight directly with the airline. Today, I discovered the ultimate reward for that practice.

Booking Directly Can Save Fees
Most of the major travel sites make their money off fees they charge you for making the purchase. Travel agents are no longer paid by the airlines, so bookers are coming to consumers for their money. I will still compare flights on Orbitz or Farecast, then I go to the airline’s website to book the flight. The only time this doesn’t work is when the best fair is on a split itinerary with multiple airlines. Then you really do have to book through the travel site.

Booking directly sometimes nets me a lower fare, too. In addition, some airlines give a mileage boost if you’re a rewards member and book online. Most have discontinued the practice, but they do hold occasional promotions.

Book Directly if Your Plans May Change
I had to book a flight for work. An hour after I booked it, the client changed the meeting date. I was ticked because I’d have to pay a $150 change fee. Then I discovered that United offers free cancellation for 24 hours if you book directly with them. Delta offers the same service until midnight of the next day. Not all airlines do this, but if your itinerary could change, make sure you choose an airline with this option.

Book Directly to Reduce the Hassle
Again, if your plans are likely to change, then booking with an airline reduces the hassle. The travel sites make you deal with their customer service reps who don’t have real power. You’ll spend hours on the phone arguing. If you booked with their airline, their reps are usually nice, helpful people who can actually do something for you.

Book Directly to Avoid Being Scammed
I’ll admit this is rare, but at least once a summer you hear about some traveler who was scammed by an online travel site that turned out to be a fraud. They were left with no tickets, no money, and no recourse. If you go directly to the airline’s website, you don’t have to worry about scams. Of course, you might miss out on some of the sweet deals that packagers offer, but if a deal looks too good to be true, it probably is.

I rarely book travel through a travel website unless I need to score a hotel room deal on Priceline or TravelZoo or want luxury travel from LuxuryLink. Otherwise, I go directly to the airline. It’s the best way to save.

“Bidding war?” you may say. “No one gets into bidding wars anymore.” Au contraire. If you’re trying to buy in a real estate market where prices have fallen significantly and the market is loaded with foreclosures and a few traditional sales, any well-priced home in good condition will generate multiple offers and potential bidding war. If you’re bidding in a multiple offer situation, here’s how to keep your head.

Make Sure You Really Like the Property
We just went to offer in a multiple offer situation, but we thought carefully about it first. We like the home, but we don’t totally love it. We still love another home that was foreclosed before our offer was accepted, but we can’t wait around for it to come back on the market. The home we just submitted an offer on is a good home we can see ourselves in for a long time. It’s just not our “dream home.” Unless you hit the lottery, your first home rarely is.

Check the Comps
The next step is to carefully review the comps. If you’re buying in a development, comps are easy. See what similar homes closed for in the last three months and use that as your price guide. If you live in an older region like LA where every home is different, then comps are tougher. I generally use an average of the price per square foot for properties with similar square footage, upgrades, bedrooms, and bathrooms within in mile of the house in question.

Determine What It Will Appraise For
This is key. Your agent should be able to offer some guidance here. You could offer 20% over asking if you want to, but it won’t matter if the home doesn’t appraise for that amount. Unlike the bidding wars of the mid-2000s, homes really do need to appraise now, and standards are strict.

Set Your Maximum Price
This is the second key. Once you’ve checked the comps and have some idea of the value, then you can set your maximum price. This is the price you can afford at current interest rates and that you’re comfortable paying for the home. That might be 10% over asking, it might be 5% over asking. It might be asking price. Remember that price. If the bidding goes to multiple rounds, be prepared to drop out if it goes too high. This isn’t a $40 googaw on eBay. You’re spending many thousands of dollars – this is one time you can’t afford to lose your head in a bidding war. There will be other homes.

Choose Your Bidding Strategy
If yours is the first offer and you think the home will go to multiple offers (your agent will have a feel for this), then you can probably start right around asking price. If there are already multiple offers, and some are over asking, you might want to consider making your best offer out of the gate. If the seller comes back to all offers with “submit highest and best,” you don’t have to do more paperwork. Or, if yours is already the highest, they might just accept it.

Don’t Be Talked into Overbidding
With traditional sales, it sometimes happens that the seller will respond to several offers with a minimum price to start the next round of bidding. If that number is above your max, then let it go. Don’t try to sweeten the pot because you’re feeling competitive. Again, there will be other homes. Frankly, I’m relieved we were outbid for the first property we made an offer on. We’ve seen much better homes since then.

If the requested number is below your max, and higher than your initial offer, then you could offer up to your max, or you could choose to walk.

Don’t Assume the Seller Will Renegotiate Later
Some buyers assume that bidding over the market value is okay, because the seller will be forced to come down if the house doesn’t appraise. Maybe, maybe not. Remember, you’re dealing with real people. As a species, people are stupid. We may be smart as individuals, but we often make stupid decisions. The seller could decide to wait and see if it will appraise higher later (it won’t anytime soon, but see my previous sentence.) The seller could ask you to make up the difference in cash (you’re under no obligation to do so if you included an appraisal contingency in your offer.) The upshot is this: the seller might come down, or they might not and everyone’s time has been wasted, along with the $450 you just shelled out for the appraisal.

Buying a home is exciting, and if you fall in love, you might do desperate things to make sure you get it. So, I’ll say one final time: there will be other homes. They will be in your price range. You will have an offer accepted eventually. If you wait long enough, you may even save more money so you can qualify for better terms.

Since we started this process, we visited 30 open houses to determine our needs before we hired our agent. In that time, we saw four that we could imagine ourselves making offers on. Since hiring our agent, we’ve looked at 19 more and made just three offers. Every week there are more homes on the market. So be patient. When it’s the right house, you’ll make the right offer and the home will be yours. You just need to have a little faith.

In case you haven’t heard, California is headed for disaster. No, not the Big One, an economic disaster. Because voters rejected some taxes and cuts that would have resolved our budget issues for this year, the governor is making draconian cuts to try to shore up our collapsing budget. Basically, we’re broke and the voters didn’t want to fix it. That’s just how we roll.

Play the Budget Game
You may have played the national budget hero game at Marketplace.org. If you played a few months ago, it’s now been Obama-ized for the new economic reality, so go back and play again.

Once you fix the Federal budget, give the California budget a try.  California has to trim $24 billion from the state budget in order to balance the budget. The LA Times tool lets you cut programs and add taxes, but also informs you when some of the cuts may be illegal or impossible to achieve. I managed to get it down to a $6 billion deficit.

How Does Your Personal Budget Compare?
So now that you’ve taken a whack at the California budget, which is larger than the budget for several small countries, it might bring your own budget woes into perspective. If you’re willing to increase the cigarette tax by $1.50 to close the budget gap for California, maybe it’s time to cut your own budget by $5 a pack by quitting smoking, for example. If you want to cut the Office of Emergency Services, maybe you should also increase your personal insurance deductible to at least $1,000 to cut your own insurance costs.

At first it seems hard to cut your personal budget, but once you compare cutting a few thousand from your budget to cutting several billion from a state budget, it seems more doable.

At the very least, this game makes you reconsider what you expect government to provide for you, and what you’re willing to offer in exchange. One thing is for sure: you can’t have low taxes and full government services at the same time. There are costs. Even if you cut government waste, there are still a lot of costs associated with services.

Now, if you want to have some real fun, play your own budget game by seeing how your budget categories line up to recommended averages with the CNN Money budget tool.

We’ve got baseball, basketball, and hockey all happening at the same time, which is a good diversion from personal finance worries if you like sports. If you’re like me, then, um have a lobster roll instead.

If you want to worry about personal finance, we’ve got the personal finance blog carnival round-up. Yay!

First up, the Carnival of Personal Finance #208 hosted by Money Under 30.  Despite being over 30, I got an editor’s pick with my post about how the GM bankruptcy affects you. I also recommend Beyond Paycheck to Paycheck’s advice about when to repair a car and when to buy a new one.

Next up, the Festival of Frugality hosted by Personal Finance Analyst. I earned something called a groundball with my post about reducing your property tax. I also recommend Practicing Thrifts tips for frugal home decor. Use some of that property tax savings to spruce up your home with flea market finds.

Finally, the Money Hacks Carnival #68 hosted by Financial Highway. In addition to my post on cheap hobbies, I also recommend Love Hacks’ ideas for cheap dates - in case you get bored with your hobbies.

If you’ve watched TV, listened to the radio, or driven past a billboard in the last six months, you hopefully know that analog broadcast signals were turned off today, and you now need a digital converter or digital TV to receive television signals over the air. You were probably assured that you didn’t need to do anything if you were a cable or satellite subscriber.

Oops. I learned on NPR last night that some cable subscribers will lose channels following the conversion, or may have lost them already. Here’s what you need to know.

What is the Digital Cable Conversion
At the same time that analog broadcasters are switching to digital, so are many cable companies. In most areas, this happened long ago. Cable companies are doing this so they can offer more services in the bandwidth formerly occupied by those analog signals. Unfortunately, they’re simply removing some old channels you used to receive for free, like the second PBS channel or the public access/PEG access (Public, Educational, and Governmental) channels.

Why It Matters to You
Most people won’t notice the loss of these channels. I used to have three PBS channels and was cut back to two several years ago. I may be down to one now, but I don’t mind. I don’t really need more than one.

I also don’t frequently watch public access TV, but you might if you tend to watch City Council meetings or live in an area at risk for “snow days.” When school is cancelled in my region, it’s usually due to an earthquake, and every station is covering that. However, school closures in other regions are usually announced on public access TV. If you live in a snow region, you should check now to make sure you still receive those channels.

What to Do if Channels Are Missing
First, call the cable company to make sure the channel is gone. It could just be out for an unrelated reason. If it’s gone, you may have to buy a digital cable converter to regain those channels, or rent one for an additional fee. You may also have to upgrade to a higher package to get those channels that were once free. Personally, I find the idea of asking people to pay for public access channels abhorrent, but so far the cable companies are getting away with it.

If the channels are no longer free, the cable company may offer you the equipment free for a year, but you’ll have to pay for it eventually unless your city council or state legislature takes up the issue. If that happens, I think it’s more likely to happen at the local level.

Of course, you could choose to dump cable altogether and switch to digital broadcast television. Or you could choose to stop watching TV altogether.

If you only need to know about snow days, check the school district website or track down the snow day hotline phone number. If you want to watch the City Council meeting, it may be streamed on the city’s website or broadcast on a local NPR radio station. I probably won’t pay $3-$10 a month for the privilege of getting either on my TV.

I recently read Mark Bittman’s new book and discovered his recipe for homemade microwave popcorn. I don’t usually buy microwave popcorn because it’s expensive and I’m not a fan of the taste, but I’ve recently been craving popcorn like nobody’s business. My office supplies free snacks, so I could use their bags, but I still don’t like the taste or all the chemicals.

Today I gave the homemade microwave popcorn a test run and I’m hooked. It’s easy and cheap! Certainly a lot cheaper than the $1.20 you’d pay for each bag of microwave popcorn. As a bonus, it’s also better for you and you can better control the serving size.

Homemade Microwave Popcorn Recipe
Here’s what you need to make your own microwave popcorn snack:

Brown paper lunch sack
2 tablespoons popcorn
½ teaspoon olive oil
Salt
Towel, paper towel or napkin

Pour the kernels in the bag. Add the oil and salt. Shake. Fold the top of the bag down 1 inch and crease tightly. Fold down again and crease again. Place napkin or paper towel on microwave plate. Set bag upright on paper towel. Microwave 3 minutes, or until there is a 2 second pause between pops. Open carefully.

You may need to add additional salt. Some people use a pat of butter instead of oil. Others add butter or oil later – it’s not necessary for cooking, just flavor. You could also try seasoning salt, garlic powder, parmesan flakes, butter spray, butter flakes, popcorn salt, or any other topping that floats your boat. Make kettle corn by adding a couple teaspoons of sugar to the bag before microwaving.

The towel, paper towel, or napkin is very important unless you enjoy wiping oil off the base of your microwave.

Cost of DIY Microwave Popcorn
This recipe makes about half the amount you get in a typical bag of microwave popcorn.

Paper bag: 4 cents
Popcorn kernels: 4.5 cents
Salt: 1 cent
Oil: 2 cents
Total: 11.5 cents for 2 tablespoons of unpopped corn, about 2.5 cups popped corn. That would be 23 cents for the same amount you’d get in a $1.20 bag of microwave popcorn, but without all the dangerous chemicals.

Even better, if you have a few unpopped kernels, you can eat all of the popped corn and then microwave the bag again.

When I’m home, I still prefer my air popper and real melted butter for a decadent treat, but this is a cheap and easy way to enjoy a healthy office snack. To get it to work without messing up my lunch sack, I put the salt and corn in the paper bag and folded it up a few times. I put the oil in a tiny plastic container and then used a spoon to add it to the bag when it was time to cook it. Adding the oil too far ahead would just be messy, and cause the bag to soak up most of the oil.

If you’re already bringing your lunch to work to save money, consider packing in your snacks, too. This is a great one to add to your repertoire.

I was okay with the new car tax deduction. It didn’t offer a huge incentive to buy a new car or pose a big burden on the federal budget, but it was a nice bonus for people who planned to buy a new car anyway. Now the House of Representatives has passed a new “cash for clunkers” voucher program, AKA bribe, that is really making me stabby. There’s no telling if the Senate will pass it, but the very idea makes me so stabby that I nearly have the vapors. Someone get my smelling salts.

Cash for Clunkers = Bribes for Getting New Cars
The bill purports to offer an incentive for people to replace their old gas guzzlers with new energy-efficient vehicles. The House defines a gas guzzler as anything getting less than 18MPG. I can completely agree with that – that’s really bad mileage and I can understand people wanting to get rid of them. That’s not the part that makes me stabby.

This is: a “fuel-efficient” car is anything that gets over 22 MPG! 22! And the bonus for gaining a measly 4 MPG? $3,500! If you’re really bold and improve your gas mileage by 10 MPG, you get $4,500.

But wait, there’s more. That’s for standard passenger cars, not SUVS, trucks, or minivans.

Someone hold me back, I’m about to rip my hair out.

If you own an SUV, truck, or minivan that gets less than 18 MPG, you can earn a $3,500 voucher for buying a new SUV that does 2 MPG better. Yes, that’s right, choose an SUV that improves your gas mileage by TWO miles per gallon, and you get $3,500.You get the full $4,500 by buying an SUV that gets an extra 5 MPG.

And if you’ve got a really heavy truck, you only need to improve by ONE MILE PER GALLON.

I think I’m going to cry now.

This is Not about Fuel Efficiency
If the government was really concerned about encouraging people to buy more fuel efficient cars, they have a few options:

  1. Establish the Cash for Clunkers program with minimum improvement requirements of 15 MPG. That would require people to buy cars with a minimum mileage of 33 MPG. For those of you paying attention, that’s 2.5 MPG less than the new fleet-wide minimum CAFE standards that are mandated by 2016.
  2. Increase the gas tax. Want to see people flock to fuel-efficient cars? Make them pay more for gas. It worked when gas prices shot up, it would have a more permanent effect if the base rate was always higher.
  3. Levy additional taxes on gas guzzlers. It’s simple – want to buy a Hummer? Pay a sin tax at purchase. $3,500 sounds fair.

Why This Makes Me Stabby
The House of Representatives wants our government to spend $4 billion to fund this program that will do very little to improve fuel efficiency, reduce our gas use, or reduce our impact on the environment. It’s basically designed to sell all those cars sitting in dealer lots right now so they can start making new ones. How about they just cut the price instead of asking the government for more hand-outs? Reducing the price by $4,500 would do a lot to help move those cars and taxpayers wouldn’t have to get involved.

Potential Upsides
This bill does have potential benefits. I can think of two:

It will stimulate the auto industry. This particular bill doesn’t support any specific car company, in fact it might help foreign automakers more than US automakers. Although you could argue that some fuel-efficient Toyotas and Hondas are built in the US, so they’re American cars anyway and are saving American jobs.

It will get those older, less efficient cars off the road. Once traded-in, the engine, transmission, and some other parts will be destroyed so the cars don’t return as used cars.

Those benefits are not enough to outweigh the downsides for me. I DO NOT support this bill. If you agree, it’s time to call or write your Senator. Urge them not to pass this bill. I will write my Senators just as soon as I stop screaming.

Over the course of the last two weeks, mortgage rates “skyrocketed” from 4.85% to 5.45%. Some people are acting like this is the end of the world, but really it’s not. Although it will affect people’s bottom lines, in the long run it’s probably good for the economy.

Higher Interest Rates and Your Current Mortgage
If you already have a fixed-rate mortgage, then higher interest rates have no immediate affect on you. If your rate is already around 5.5% and you were trying to refinance, there’s no point in doing that now. However, it probably doesn’t really affect you because most people were unable to complete a refinance when rates dropped – the banks were too swamped to close the loans during the lock period.

If you have a rate above 6%, then it’s still worthwhile to refinance, and it may actually be easier to close now because there are fewer people trying to do it.

If you have a variable-rate mortgage, now is still a good time to try to refi into a fixed rate. Ultimately, mortgage rates will have to move higher. I don’t think we’ll see the double-digit rates of the 1980s, but 6-7% is not unthinkable.

Higher Interest Rates and Prospective Buyers
If you’re trying to buy a home, then higher interest rates could impact your ability to buy. When my husband I were first approved for a loan, rates were around 5.5% and we had 15% down. We set our max price at $600K. When rates fell to 4.85%, we could have pushed our limit up a little, but chose not to. With rates higher again, we’re back to where we started. The difference for us is about $270 a month, but we had already budgeted that amount.

If you don’t have 20%, or are trying to do an FHA loan with 3.5% down, then higher interest rates could reduce your price range. These loans have PMI, which is already $200 a month extra (in the $600K price range). Add an extra $310 a month in mortgage costs, and you may not be able to afford that anymore.

However, if you can still afford to buy, you may see less competition for homes, and you may actually be able to close your loan in 30 days because loan processors aren’t overburdened with refi applications.

Why Did Interest Rates Rise?
Interest rates rose because they were so low that it was inevitable. Rates only dropped as low as they did because Treasury was buying up bonds. The US can’t afford to continue that forever. Non-Treasury bond buyers were demanding higher yields at the same time that a stock market rally was decreasing demand for bonds. Bond buyers were also concerned about inflation, which is another reason rates moved higher. The economy needs bond buyers in order to make a complete recovery.

In addition, the short-term Fed rate is currently 0%. It can’t stay there. Some experts expect the Fed to increase it by the end of the year, which is a hopeful sign that the economy is improving. When that rate rises, other rates will probably rise with it. It’s not a direct correlation, but it has an effect.

Some mortgage experts predict that rates will rise a little more and then come down again. Probably not as low as 4.85%, but I consider anything below 5.5% to be a great rate, and 6% to be completely reasonable.

What Should You Do?
Rather than setting a price based on the lower interest rate, figure out what you can afford to pay each month regardless of the current rate. Ask your mortgage broker to use the current interest rate to give you an estimate for the home price that correlates to the monthly payment you can afford, but also ask what you could qualify for if rates went up to 6%. Use that number as a guide to what you can afford. Then you’ll be in an even better situation if rates fall again.

Also keep in mind that higher interest rates often result in lower home prices, because people can’t afford to overbid by quite as much. You could end up getting the same home with the same payment for a lower price if this trend continues.

If you listen to news radio for any length of time, you’ll hear several commercials touting gold as the current best possible investment. As a guaranteed way to protect your money and the safest investment ever. So should you invest in gold? The simple answer is yes, but not the way these people are suggesting.

Gold’s Place in Your Portfolio
If you have a well-rounded portfolio, then gold and other precious metals have a place in them. Because they generally move against other investments, they’re considered a hedge against inflation. It should not be your entire portfolio, nor should you aim to own a big pile of gold unless you like looking at it.

Does Gold Lose Value?
Like any other investment, gold can lose value, and in fact has lost value. Because its value is based in US Dollars, the price of gold has risen and fallen over time. Its price is influenced by world events, inflation, and current market sentiment. In fact, gold lost significant value between 1980 and 2008. If you bought gold bars or coins in 1980, you probably still haven’t fully regained the value relative to inflation.

How to Invest in Gold
There are four primary ways to invest in gold: gold coins, gold exchange-traded funds, gold mutual funds, and gold futures.

Gold Coins
If you want to personally possess your gold, then you need to buy gold coins or bars. The advantage is that you own the physical gold. The disadvantage is that it’s more difficult to quickly trade.

Gold Exchange-Traded Funds
Gold ETFs buy gold and hold it for its investors. You then buy shares in the fund as you would any other fund. This is significantly easier to buy and sell, but you don’t directly possess any gold.

Gold Mutual Funds
Gold mutual funds generally invest in precious metal mining companies, rather than the metal itself. It’s a stock fund like any other stock fund, but one that focuses on a specific market segment. If you have a diverse portfolio, you can include gold and precious metals as one segment.

Gold Options and Futures
Gold is traded on the commodities market like oil and other resources. You can trade on the expected future value of gold, however this activity should be reserved for experts only. It’s very risky and you can easily lose money.

Will Gold Protect You in an Emergency?
Many people are touting gold as a way to possess a liquid asset in a major emergency or global meltdown. The idea is that gold has intrinsic value and therefore can be used to buy things if the dollar is severely devalued. Personally, I see a couple of problems with this theory.

First, most people don’t own or understand the value of gold. A store clerk isn’t going to accept your gold krugerrand in exchange for a bottle of water. Most banks won’t exchange gold for cash – it must be sold to a dealer, which doesn’t make it truly liquid. If the dollar collapses, you’ll have to learn to barter your gold for goods, but no one will agree on what it’s worth. In addition, people may doubt whether a gold coin or bar is real. We can estimate the value of gold jewelry, but we’re not used to looking at it and valuing it in monetary form.

Second, and this gets pretty theoretical, but ultimately gold has no intrinsic value. It’s a hard lump of stuff that comes out of the earth. You can’t make fire or energy with it easily. Therefore, it really only has a representative value. Europeans looked at gold and decided it was worth something. The Mayans looked at cocao beans and decided they had value. In order for an object to be useful as a medium of exchange, it must have an artificial value placed upon it. Gold, and all other precious metals, are currently valued in US dollars and the price rises and falls on the spot market in relation to other factors increasing or decreasing the demand for gold. If the economy collapses, the spot market may not continue to exist, which would eliminate the primary method of attaching value to gold.

If you’re going to hoard something in expectation of a disaster, hoard food, blankets, and other items you can actually survive on. Gold won’t keep you warm at night. However, if you just want to diversify your portfolio, then a 5% stake in a precious metals is something to seriously consider.

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