Should I cash in my old 401k and buy gold?

[HeathieAK]

@Prime

A quick note on mining stocks. Remember, the reasons we expect for gold to increase in value, such as inflation or hyperinflation, are also reasons that cost mining companies more money to extract gold. What I’m saying is if we have hyper inflation, you can bet that the energy required to mine gold, the wages paid to labor, etc.. are also increasing. It may not be as profitable as some believe. Not saying it is bad by any means, but just because gold shoots up doesn’t necessarily mean the mining companies will be as successful.

For mines more than half of the cost is usually fixed in infastructure. Hyperinflation reduces these costs to nothing and revenue goes up with hyperinflation. So if revenue goes up and more than half your costs go to zero you come out way ahead.

For example, if a mine buys a 300 million dollar mill that will last 30 years and they cost it out at 10 million dollars a year so every year they’re expensing 10 million dollars for it. If hyperinflation occurs the 10 million fixed cost ends up being basically zero.