Everywhere you turn, you are being bombarded by people telling you to buy gold rather than investing in riskier commodities such as stocks. Are you convinced?
Besides Diamond Dave (who apparently puts all his money in diamonds), I'm sure most people have a diverse portfolio and may have bought some gold. That's fine - I'm really aiming this more at those who propose to invest in gold almost exclusively.
With the price of gold at an all-time high, I'm not sure this is a great time. Am I missing the boat here?
By the time "everyone" is saying to get into one investment or another, you have most assuredly missed the opportunity. Time to bet on the other side of that trade. As Warren Buffet says: Be afriad when others are greedy and be greedy when others are afraid.
Thank god Relapse quoted word for word from the USA Today that was stuffed under my door. We need people like that when we forget how to read. As far as buying gold - buy it when you can afford it. Buy it as an in hand commodity. Don't buy gold futures. Buy it an ounce at a time that you can take home and stash. Don't buy it now. Gold prices will come down. It will happen late next spring. $795 - $850 p/oz.
I don't know about the next 6 months, but I think precious metals, and silver in particular, have a 5-10 year bull run left.
Financial and commodity markets tend to run in a 33 year cycle with about 1/2 favorable to stocks and bonds, the other 1/2 to commodities. We've been on the commodity side since 2001.
During the Volcker recession of the early 1980's, it took 21.5% interest rates to wring the inflation and profligacy out of the economic mindset. That generation did not have near the debt levels that we have now individually or governmentally. I don't think we have the pain tolerance or political will to take the medicine needed for the cure.
Savers are being used and abused with near 0% savings interest rates.
Our dependence on foreign money to fund our lifestyle will not go on forever. The Red Chinese do not love us and Middle Eastern oil money would delight in the fall of the US $.
The price precious metals were selling for was roughly the same amount in 2006 that it was in 1981. This does not even factor in inflation.
After the last big recession in the late 70's, these prices spiked for two or three years before receding again. What we are now seeing is this same pattern being repeated. If the price of gold has not topped out yet, it is sure to happen in the very near future. I would be very careful of buying gold now - you are purchasing it at an all-time high.
The term "33-year cycle" does not apply to gold - its historic value follows no such pattern.
Savers are only being abused if they are putting their money into bank accounts. Almost everyone I know has recognized this and merely adjusted by placing their savings elsewhere.
OK. One last time. YTD 401k earnings as of 11/7/09 : Small caps + 32%. International funds + 35%. Long term + 13%. Personal stock investments: -5% to +70%. Again, be smart. What recession?
Gold has always been THE monetary metal. Governments settled trade accounts in gold, so they could only go on small spending sprees. That is partly why the 100 Years War took so long. They'd fight till they ran out of money and would need to raise money through taxes or by borrowing.
There would be short durations where governments would debase their currency and reduce the gold or silver content of their coins or use a base metal. Discipline was out and foolishness would reign briefly. The ridges on coins were put there as a defense mechanism so one would know if someone had shaved off part of the gold or silver coin.
There was a net of 0% inflation from 1814 to 1914 and WWI with the gold standard. The federal income tax and Federal Reserve started around 1913. FDR took us off the gold standard in 1933 and made it illegal to own gold bullion (for almost 40 years), LBJ removed silver from US coinage in 1965, and in 1971 Nixon ended the Bretton Woods agreement, having the US$ convertible to gold for foreign gov'ts at $35 per ounce.
The US trade deficit has been running from $1500-2500 per man, woman and child annually. The federal budget deficit this year is about $4500 per citizen. Money must be printed, lenders must be found. China would not have to sell their dollar holdings to cause a crisis, they could simply stop buying our debt. If the press is to be believed, we are not very popular internationally.
If you trust the government implicitly, ignore whatever you hear from gold bugs. Otherwise 5-15% of your net worth or liquid net worth in precious metals makes sense as a hedge against financial chaos and inflation.
All of the gold man has mined would fit in a 20 meter cube weighing less than 100,000 tons. I marvel that God arranged things so man can transact business in an organized fashion with the discipline coming from the rarity of one metal.
If you insist on buying gold, I would most heartily recommend that you buy kona gold. I agree with Diamond Dave that the government will probably try to talk you out of it, but it offers a tremendous return.
So, if I'm reading this right, Diamond Dave says that if your net worth is $200 grand, you should have about $30,000 in gold boullion laying around your house, or maybe in a lock box?
5-15% of 200k would be $10,000 to 30,000 in bullion, coins, precious metals stocks or mutual funds. I would suggest if you prefer bullion or coins, buy whatever has the lowest premium to the quoted market value. If the 200k includes the equity in your house, you may want to adjust your net worth to the amount that is liquid and investable and take 5-15% of that figure.
If you're 60 years old, go ahead and invest that $20,000 in gold - it's safe. If you're young like me, I say invest in something that has a larger opportunity of making you money.
I don't think there is anything wrong with possessing gold as part of your portfolio, but the key here is part of your portfolio. Over the years, I have purchased Kruggerands when I could afford it, and have acquired 35 of them. I would not purchase them now, but will again when this gold spike calms down.
My personal opinion is that these high gold prices are being fueled by Diamond Dave mercilessly hounding everyone he knows to buy the stuff. I was at Casey's the other day, and there was Dave Redfern trying to buy some crap with a bar of gold. They called security to the front, of course, confiscated the bar of gold, threw him in the paddywagon and hauled him off to god knows where. All the time he was yelling about some Diamond Dave. Beware of Diamond Dave.
That would be 0 gold bullion holdings. The Texans phrase for this is "big hat, no cattle."
My apologies to David Redfern and his family. He put the cashier in an untenable position. Changing a kilo of gold worth close to $40,000 for a six-pack could be considered a security risk. Chipping a little off might be a better method. Hopefully he will be located and has not been shipped to the gulag. I have not been used to people paying attention to my opinions before, and did not factor in the power of the world wide web and JIN's reach. So sorry.
"...did not factor in the power of the world wide web and JIN's reach."
I'd guess the reach of JIN is similar to the reach of the forearms of a T-Rex, if that. Does anyone think JIN has audience numbers that reach double digits?
Always nice to hear near references to Kevin Willis, center for Atlanta Hawks and various NBA teams in the 1990's. His exceedingly short appendages earned him the nickname of Raptor or TRex.
Gold sounds like a fine idea, but what store is going to accept any gold? If you go to Europe they accept the Euro, but Americans traveling in Europe almost expect them to accept the dollar. I tried to give a Euro to the Ben Franklin store and the young help looked at me in disbelief and wouldn't accept it. They wouldn't accept any gold either.
I recently got an offer to subscribe to a BLACK CARD. What is a BLACK CARD? It is a card made of carbon. Isn't that great? Only 1% of Americans are offered this card and they selected me. Oh, by the way American Express which offers the card charges $450. annual fee for the privilege. I think I will decline that offer.
Now everyone is swiping their credit cards through the machines to buy anything from a 50¢ soda to an office chair. While I use a credit card from time to time, especially on line or phone sales I still love to have cash on hand to buy my lunch/supper, buy groceries or gas. Who wants to pay for those things 30-45 days later? What if the network for credit cards goes down and you don't have any currency? You are broke ~ Keep a little cash on hand and you cannot go wrong. You worried to carry cash? When was the last time somebody held you up and stole your money? It hasn't happened to me.
Just want you to realize that they have already devalued your dollar when they started to print more. What no inflation? I beg to differ. The government is keeping the interest rate at around "O" so that you don't get any interest on your money. It certainly helps the banks, but not the investors who should be getting paid 5% interest on their money.
Ah, go out and buy a new High Definition TV, DirecTV or an antenna or all three. Get it while your dollar still has a little bit of purchasing power. Bah, Humbug to Gold.
25 comments:
Besides Diamond Dave (who apparently puts all his money in diamonds), I'm sure most people have a diverse portfolio and may have bought some gold. That's fine - I'm really aiming this more at those who propose to invest in gold almost exclusively.
With the price of gold at an all-time high, I'm not sure this is a great time. Am I missing the boat here?
By the time "everyone" is saying to get into one investment or another, you have most assuredly missed the opportunity. Time to bet on the other side of that trade. As Warren Buffet says: Be afriad when others are greedy and be greedy when others are afraid.
So, is everybody scared or greedy right now? I need to know before 830 AM tomorrow.
I am considering buying the sun. I have heard it's energy can be converted to electricity by the use of photovoltaic panels.
I plan to hold the owners of all these panels hostage. If they don't pay, I turn the sun off. Simple as that.
Thank god Relapse quoted word for word from the USA Today that was stuffed under my door. We need people like that when we forget how to read. As far as buying gold - buy it when you can afford it. Buy it as an in hand commodity. Don't buy gold futures. Buy it an ounce at a time that you can take home and stash. Don't buy it now. Gold prices will come down. It will happen late next spring. $795 - $850 p/oz.
I don't know about the next 6 months, but I think precious metals, and silver in particular, have a 5-10 year bull run left.
Financial and commodity markets tend to run in a 33 year cycle with about 1/2 favorable to stocks and bonds, the other 1/2 to commodities. We've been on the commodity side since 2001.
During the Volcker recession of the early 1980's, it took 21.5% interest rates to wring the inflation and profligacy out of the economic mindset. That generation did not have near the debt levels that we have now individually or governmentally. I don't think we have the pain tolerance or political will to take the medicine needed for the cure.
Savers are being used and abused with near 0% savings interest rates.
Our dependence on foreign money to fund our lifestyle will not go on forever. The Red Chinese do not love us and Middle Eastern oil money would delight in the fall of the US $.
This is the first time I have heard the term "Red Chinese" since Nixon was in office.
The price precious metals were selling for was roughly the same amount in 2006 that it was in 1981. This does not even factor in inflation.
After the last big recession in the late 70's, these prices spiked for two or three years before receding again. What we are now seeing is this same pattern being repeated. If the price of gold has not topped out yet, it is sure to happen in the very near future. I would be very careful of buying gold now - you are purchasing it at an all-time high.
The term "33-year cycle" does not apply to gold - its historic value follows no such pattern.
Savers are only being abused if they are putting their money into bank accounts. Almost everyone I know has recognized this and merely adjusted by placing their savings elsewhere.
OK. One last time. YTD 401k earnings as of 11/7/09 : Small caps + 32%. International funds + 35%. Long term + 13%. Personal stock investments: -5% to +70%. Again, be smart. What recession?
Gold has always been THE monetary metal. Governments settled trade accounts in gold, so they could only go on small spending sprees. That is partly why the 100 Years War took so long. They'd fight till they ran out of money and would need to raise money through taxes or by borrowing.
There would be short durations where governments would debase their currency and reduce the gold or silver content of their coins or use a base metal. Discipline was out and foolishness would reign briefly. The ridges on coins were put there as a defense mechanism so one would know if someone had shaved off part of the gold or silver coin.
There was a net of 0% inflation from 1814 to 1914 and WWI with the gold standard. The federal income tax and Federal Reserve started around 1913. FDR took us off the gold standard in 1933 and made it illegal to own gold bullion (for almost 40 years), LBJ removed silver from US coinage in 1965, and in 1971 Nixon ended the Bretton Woods agreement, having the US$ convertible to gold for foreign gov'ts at $35 per ounce.
The US trade deficit has been running from $1500-2500 per man, woman and child annually. The federal budget deficit this year is about $4500 per citizen. Money must be printed, lenders must be found. China would not have to sell their dollar holdings to cause a crisis, they could simply stop buying our debt. If the press is to be believed, we are not very popular internationally.
If you trust the government implicitly, ignore whatever you hear from gold bugs. Otherwise 5-15% of your net worth or liquid net worth in precious metals makes sense as a hedge against financial chaos and inflation.
All of the gold man has mined would fit in a 20 meter cube weighing less than 100,000 tons. I marvel that God arranged things so man can transact business in an organized fashion with the discipline coming from the rarity of one metal.
If you insist on buying gold, I would most heartily recommend that you buy kona gold. I agree with Diamond Dave that the government will probably try to talk you out of it, but it offers a tremendous return.
So, if I'm reading this right, Diamond Dave says that if your net worth is $200 grand, you should have about $30,000 in gold boullion laying around your house, or maybe in a lock box?
5-15% of 200k would be $10,000 to 30,000 in bullion, coins, precious metals stocks or mutual funds. I would suggest if you prefer bullion or coins, buy whatever has the lowest premium to the quoted market value. If the 200k includes the equity in your house, you may want to adjust your net worth to the amount that is liquid and investable and take 5-15% of that figure.
If you're 60 years old, go ahead and invest that $20,000 in gold - it's safe. If you're young like me, I say invest in something that has a larger opportunity of making you money.
I don't think there is anything wrong with possessing gold as part of your portfolio, but the key here is part of your portfolio. Over the years, I have purchased Kruggerands when I could afford it, and have acquired 35 of them. I would not purchase them now, but will again when this gold spike calms down.
My personal opinion is that these high gold prices are being fueled by Diamond Dave mercilessly hounding everyone he knows to buy the stuff. I was at Casey's the other day, and there was Dave Redfern trying to buy some crap with a bar of gold. They called security to the front, of course, confiscated the bar of gold, threw him in the paddywagon and hauled him off to god knows where. All the time he was yelling about some Diamond Dave. Beware of Diamond Dave.
How much gold bullion do you have on hand, Diamond Dave?
Beware. Beware!
That would be 0 gold bullion holdings. The Texans phrase for this is "big hat, no cattle."
My apologies to David Redfern and his family. He put the cashier in an untenable position. Changing a kilo of gold worth close to $40,000 for a six-pack could be considered a security risk. Chipping a little off might be a better method. Hopefully he will be located and has not been shipped to the gulag. I have not been used to people paying attention to my opinions before, and did not factor in the power of the world wide web and JIN's reach. So sorry.
"...did not factor in the power of the world wide web and JIN's reach."
I'd guess the reach of JIN is similar to the reach of the forearms of a T-Rex, if that. Does anyone think JIN has audience numbers that reach double digits?
Rick - Any way you could provide hit numbers?
Marty
Always nice to hear near references to Kevin Willis, center for Atlanta Hawks and various NBA teams in the 1990's. His exceedingly short appendages earned him the nickname of Raptor or TRex.
Gold sounds like a fine idea, but what store is going to accept any gold? If you go to Europe they accept the Euro, but Americans traveling in Europe almost expect them to accept the dollar. I tried to give a Euro to the Ben Franklin store and the young help looked at me in disbelief and wouldn't accept it. They wouldn't accept any gold either.
I recently got an offer to subscribe to a BLACK CARD. What is a BLACK CARD? It is a card made of carbon. Isn't that great? Only 1% of Americans are offered this card and they selected me. Oh, by the way American Express which offers the card charges $450. annual fee for the privilege. I think I will decline that offer.
Now everyone is swiping their credit cards through the machines to buy anything from a 50¢ soda to an office chair. While I use a credit card from time to time, especially on line or phone sales I still love to have cash on hand to buy my lunch/supper, buy groceries or gas. Who wants to pay for those things 30-45 days later? What if the network for credit cards goes down and you don't have any currency? You are broke ~ Keep a little cash on hand and you cannot go wrong. You worried to carry cash? When was the last time somebody held you up and stole your money? It hasn't happened to me.
Just want you to realize that they have already devalued your dollar when they started to print more. What no inflation? I beg to differ. The government is keeping the interest rate at around "O" so that you don't get any interest on your money. It certainly helps the banks, but not the investors who should be getting paid 5% interest on their money.
Ah, go out and buy a new High Definition TV, DirecTV or an antenna or all three. Get it while your dollar still has a little bit of purchasing power. Bah, Humbug to Gold.
Braxton Hicks
Braxton - Tell me where you can buy a 50 cent soda.
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