Post by: Phantom Warrior on March 05, 2006, 06:15:48 AM
Here's the first one. I'm out of school and in the Army, so I finally have disposable income. I'm already socking away money in a small portfolio of mutual funds and throwing 10% into TSP. My next goal is to diversify into gold.
How do I go about doing that? I've heard of buying rare coins or gold coins. Can I buy gold in some raw form? Bars/ingots/etc. Do I need to physically store the gold somewhere? Because I'm not a huge fan of that idea, living in the barracks with a roommate and being highly mobile. Can I just buy gold certificate or have an online account, like stocks?
Do any of you invest in gold? How do you do it? What strategies and companies do you recommend?
As you can tell, I have lots of questions and no answers. Anything you can contribute would be appreciated.
Post by: The Rabbi on March 05, 2006, 06:52:31 AM
Second, you can invest in gold in a number of ways, including buying coins or ingots which you then have to store. You could also buy shares in gold mining companies. You could also buy a closed end fund that invests in shares of gold mining companies. Or you could invest in the new ETF (exchange traded fund, symbol GLD) that invests in gold. They all have advantages and disadvantages.
But the biggest disadvantage I see is that gold has already had a huge increase over the last 2 years. It is imvh poor investor behavior to chase yesterday's winners. I would class investments in oil and real estate in that category as well.
Post by: 280plus on March 05, 2006, 08:39:40 AM
Post by: longeyes on March 05, 2006, 08:41:33 AM
If there's no orderly market (SHTF), small gold coins or inexpensive jewelry. I think in that scenario ammo makes more sense.
Post by: 280plus on March 05, 2006, 08:47:17 AM
Post by: Bogie on March 05, 2006, 10:08:51 AM
My advice would be to stick with mutual funds, etc... Maybe put a small amount into metals, but keep in mind that hindsight is 20/20, and it doesn't predict the future. Yeah, gold has gone up a lot recently, but it was in a heck of a slump for about 20+ years...
Post by: TarpleyG on March 05, 2006, 03:12:05 PM
Greg
Post by: Art Eatman on March 06, 2006, 05:28:01 AM
Gold? I dunno how much farther it can go up. Largely, it's a fear-factor thing about the decline of the dollar, and uncertainty in the world about such things as oil prices and warfare in the Persian Gulf area.
Doesn't mean I'm not a goldbug, but I'm cautious about it.
Art
Post by: Telperion on March 06, 2006, 06:18:11 AM
But, if you end up wanting to buy actual metal, I think coins are marginally better than bars since they are easy to recognize and authenticate.
Post by: Guest on March 06, 2006, 06:47:15 AM
Quote from: TarpleyG
Isn't gold at an all-time high right now? Buy low--sell high you know.
Greg
I'll be the contrarian here, Greg. Gold once sold for about $850 an oz. in 1980. So, adjusted for inflation of the US dollar, it would have to sell for US $2,100. or so to be at an "all-time high".Greg
Also, there was a time that one could buy the DOW Jones Industrials for about one oz of gold. (DOW 800; gold $800) Now, it takes almost 20 oz of gold to buy the DOW (11,000/$565.). I'll go out on a limb and predict that we may see gold and the DOW selling for the same US dollar price again.
What price, you ask? I don't know, but I've heard $3,000. as an educated guess.
The central banks and bullion banks have surreptitiously manipulated the price of gold (downwards) for many years by selling and leasing government gold (and futures/derivatives) into the world markets. They are running out of gold and will soon lose control of the price - if they haven't already.
Members have two choices: get in the game now or hear me say, "I told you so." later.
Post by: The Rabbi on March 06, 2006, 07:50:20 AM
Quote from: mercedesrules
Members have two choices: get in the game now or hear me say, "I told you so." later.
The third choice is to sit back and yell "sucker" later on. That's my vote.For gold to go as high as $3,000 or even $850 you would have to assume that inflation will reach the same levels it was in the late 1970s, about 12-14%. I don't see that happening. I see the Fed, that instrument of the Devil, raising rates aggresively to forestall that and see a recession coming about the end of the year.
My call is for short term rates to be 5-6%, the Dow to be at least 100 points lower by December and gold to go back to $350-400.
Post by: XLMiguel on March 07, 2006, 05:35:07 PM
Post by: brimic on March 07, 2006, 06:38:03 PM
Quote
How do I invest in gold?
You don't. You speculate in gold. Gold is a commodity, it doesn't produce a product or service. Its value is based solely upon market forces.
Speculating is a time honored tradition that causes men to lose their shirts.
Post by: Art Eatman on March 08, 2006, 07:52:37 AM
What's happening right now is an uncertainty thing. Oil. Wars. Terrorism. And, the possibility of further declines in the buying power of the US dollar.
For the moment--"moment" being maybe a year or three--the boom in commodities in general due to the economic growth of China and India is carrying over to gold and silver.
A group of wise investment would be in companies selling into the China market, whether construction materials or food.
Art
Post by: The Rabbi on March 08, 2006, 10:41:43 AM
Quote from: Art Eatman
That $800/oz price that gold SELLERS like to yak about was due to the Hunt brothers' efforts to control the silver market. It was purely a hype-thing, with gold actually following the silver trend. No geo-politics or national/world economy involved. Ignore that event when you wonder about the present times.
What's happening right now is an uncertainty thing. Oil. Wars. Terrorism. And, the possibility of further declines in the buying power of the US dollar.
For the moment--"moment" being maybe a year or three--the boom in commodities in general due to the economic growth of China and India is carrying over to gold and silver.
A group of wise investment would be in companies selling into the China market, whether construction materials or food.
Art
I sort of agree, sort of disagree. When gold went to $800 there were definitely events triggering it. Like oil prices skyrocketing and inflation at double digit rates. Yeah, at the end it was just a mania and the Hunts definitely played into it, but it was not entirely a psychology.What's happening right now is an uncertainty thing. Oil. Wars. Terrorism. And, the possibility of further declines in the buying power of the US dollar.
For the moment--"moment" being maybe a year or three--the boom in commodities in general due to the economic growth of China and India is carrying over to gold and silver.
A group of wise investment would be in companies selling into the China market, whether construction materials or food.
Art
One thing not mentioned is that the Arabs are big buyers of gold and have been turning some of their petro dollars into it. When economies cool off and oil prices fall they will sell some of that gold. Look out.
Post by: Justin on March 08, 2006, 02:19:35 PM
Quote
One thing not mentioned is that the Arabs are big buyers of gold and have been turning some of their petro dollars into it. When economies cool off and oil prices fall they will sell some of that gold. Look out.
And then they use it to plate Kalashnikov rifles with.Money =/= Taste, that's for sure.
Post by: The Rabbi on March 08, 2006, 02:43:31 PM
Quote from: Justin
Quote
One thing not mentioned is that the Arabs are big buyers of gold and have been turning some of their petro dollars into it. When economies cool off and oil prices fall they will sell some of that gold. Look out.
And then they use it to plate Kalashnikov rifles with.Money =/= Taste, that's for sure.
Post by: Art Eatman on March 08, 2006, 06:22:20 PM
Rabbi, if gold had "only" gone to $400 or so back in 1980, I'd go along with the notion of economics being the major factor. I still think the main factor was the Hunts.
Lessee. Trying to time-frame some stuff. In November, 1978, gasoline at my usual Texaco was 58.9 ¢. In November, 1979, it was $1.18. IIRC, the big runup was in the spring/summer of 1979, and gas prices "ooched" up during the fall. They stabilized during the winter at around $1.20 to $1.25.
Post by: Justin on March 08, 2006, 09:22:17 PM
Quote
You've been watching Lord of War too often....
Never seen it. Nicholas Cage annoys me.Back on topic, if gold prices are currently climbing, then there would seem to be more risk in buying gold.
I wouldn't be interested in gold as an investment, so much as a physical asset that stores wealth. But if gold prices are climbing, and likely to fluctuate, it would seem there would be better and more stable investments. Any idea as to what those would be?
Post by: Nathaniel Firethorn on March 09, 2006, 05:36:00 AM
Nathaniel Firethorn Associates
14 Kapok Street, Suite #18736599240804137
Avaricious Cayman
CAYMAN ISLANDS
You'll see about as much return on your investment that way as if you'd bought gold...
- NF
Post by: The Rabbi on March 09, 2006, 06:24:15 AM
Quote from: Art Eatman
I see where Valero petroleum is now buying a bunch of stop'''n'rob gas stations. That's really getting vertically integrated. They've never been worse than "hold" in the "Strategic Investment" recommendations.
Rabbi, if gold had "only" gone to $400 or so back in 1980, I'd go along with the notion of economics being the major factor. I still think the main factor was the Hunts.
Art, I wouldnt want to put a number on how much of the gold price was mania and how much was just a response to events. I will point out that every other hard asset during that time experienced similar price swings, including art, industrial metals, and even Elvis decanters. Not all of that can be from the Hunts.
Rabbi, if gold had "only" gone to $400 or so back in 1980, I'd go along with the notion of economics being the major factor. I still think the main factor was the Hunts.
Post by: Art Eatman on March 09, 2006, 06:35:48 AM
Stuff like that.
http://www.bloomberg.com/apps/news?pid=10000102&sid=aB30yaL0GkGU&refer=uk
Good investments? Companies that make diapers for old folks. Nursing home corporations...
Art
Post by: engineer151515 on March 09, 2006, 09:32:55 AM
Post by: Art Eatman on March 09, 2006, 03:51:38 PM
So far, over the last couple of years, no losses.
You gotta do your own forecasting...
Art
Post by: Nathaniel Firethorn on March 09, 2006, 04:47:38 PM
- NF
Post by: publius on March 10, 2006, 03:28:01 AM
Post by: Art Eatman on March 10, 2006, 09:30:33 AM
That Hunt brothers runup was a funny deal. Nobody could figure out why the amount of rise. No reason for silver to be climbing so high, so fast. Or gold. I was suspicious as all get-out. I'd buy a collection, or from somebody who was behind the market, and then sell it off for a decent gain.
There was a gunshow in Austin on the weekend with gold's closing around $800 on Friday. Lots of gun dealers were behind the curve. I bought all the silver and gold bullion I could get hold of, just like a couple of other "sharp-shooters". But, I'd get somebody to watch my table, while I ran up the street to a buddy's coin store and sold.
By 6PM on Saturday, I owned no gold bullion whatsoever. On Sunday, folks who'd heard I was a buyer would come to my table and I'd just smile and say no, no more buying.
Then came Black Monday. Gold and silver went way into the toilet.
I smiled a lot.
, Art
Post by: Guest on March 10, 2006, 11:16:23 AM
Quote from: Nathaniel Firethorn
Art, I bought gold just before Iraq II. I'm glad I lost only a littlemoney.
- NF
I don't understand this post. Do you mean spring '03?
- NF
Post by: Nathaniel Firethorn on March 11, 2006, 01:59:21 AM
I'm not as erudite on investing as some of the others here, but basically I'd think that gold is worthwhile only if you think it's going to be more in demand than other currency or types of investment. Gold doesn't generate value; it just sits there. In a sane market that isn't being manipulated, other stuff would almost certainly go up faster. In a panicked or crooked market, you (as an outsider) can't really predict a thing.
- NF
Post by: Guest on March 11, 2006, 02:58:54 AM
Quote from: Nathaniel Firethorn
Yep, thereabouts.
I'm not as erudite on investing as some of the others here, but basically I'd think that gold is worthwhile only if you think it's going to be more in demand than other currency or types of investment. Gold doesn't generate value; it just sits there. In a sane market that isn't being manipulated, other stuff would almost certainly go up faster. In a panicked or crooked market, you (as an outsider) can't really predict a thing.
- NF
The reason I asked, NF, is that it was selling for about $350/oz then and is about $540 now. I agree that it just sits there. I guess you bought some and then sold it soon thereafter.
I'm not as erudite on investing as some of the others here, but basically I'd think that gold is worthwhile only if you think it's going to be more in demand than other currency or types of investment. Gold doesn't generate value; it just sits there. In a sane market that isn't being manipulated, other stuff would almost certainly go up faster. In a panicked or crooked market, you (as an outsider) can't really predict a thing.
- NF
Post by: Art Eatman on March 11, 2006, 05:27:56 AM
Asians have rather suddenly developed a taste for cocoa, and the price is rising accordingly.
, Art
Post by: Guest on March 11, 2006, 02:54:18 PM
Don't give up on your question. It's worth your while to work on getting the answers you are looking for.
Gold actually is money, in spite of all the Keynsian efforts to redefine it as a mere commodity. Right now the concept of money in most of the world is that of a simple medium of exchange. Not long ago we had a discussion here as to the definition of money, and my own preferred definition includes defining money as a STORE OF VALUE as well as a means of exchange. That is unfortunately not a job assigned to what passes as money as far as many people today are concerned, even people who ought to know better. Never fear, they will eventually learn the lessons of The Gods Of The Copybook Headings- people always do, over time. The cyclical nature of those lessons is one of the things that can be counted on in human history. We're coming due for another return, as far as I can see it. Note of course that my academic background is history and not economics, so of course you can feel free to ignore anything I have to say on that dismal topic. Just go to your favorite search engine, type in "central bank gold holdings 2006" and read for a while.
My first suggestion is that you look at owning physical gold _not as an investment_ but as insurance. You buy insurance on your house, your car, your life, your health, all sorts of things. Owning gold is simply insurance on your money. Hey, it works for the Federal Reserve after all- they own more gold than anyone in the whole country, right? Unfortunately the US dollar is no longer _backed_ by gold, as it was until 1933 for US citizens, and until the Nixon administration for other central banks.
If you want to buy monetary insurance gold, then you want the most metal for the money in conveniently available form. Most of the time that will be in bullion coins. Lots of countries mint them, I suggest you stick to the Eagles minted by the US Treasury ( http://www.usmint.gov/mint_programs/american_eagles/index.cfm?Action=american_eagle_gold ). Any number of dealers handle them, shop around for the best prices and best service. If you want my own dealer reco's, email me. Of course you will have to store the coins safely, a trusted friend or relative might do that for you, or a safety deposit box at your bank might work. The only real risk with physical wealth in a highly concentrated form is that someone might be tempted to relieve you of it, so you will have to store it safely.
If you want to invest in numismatic gold coins, then you are investing in COINS, not gold, and you need to learn the coin market- knowing the metals market won't help.
For actual investing you have several choices. Note first of all that you have to do your homework with ANY investment and this one is certainly no different. You can most easily invest in "paper gold" via ETFs (exchange traded funds), just through opening an account with any of the online brokerages. Get familiar with some of the internet sites that focus on gold so you can keep up with the market and learn some of the technical analysis indicators. One of my favorite sites is http://www.financialsense.com/metals/main.htm , note the weekly webcasts also at http://www.netcastdaily.com/fsnewshour.htm . Also see http://www.the-moneychanger.com/entry.phtml , Franklin Sanders offers daily commentary with useful technical analysis of the metals markets. Current news from the gold markets is easily found at http://www.321gold.com/ . Access is by subscription but is on the honor system, look at it and see if you want to subscribe.
You can also invest in gold stocks or even mutual funds if you want to go that route. These are more indirect plays than the ETFs and require a LOT more work to keep up with. IMO beginners have no business investing directly in gold stocks, even the pros blow it big time sometimes (there was this company called Bre-X... you can look it up). But it can be lucrative if done right, and tragic if done otherwise. I'd suggest using a full service broker to buy stocks in individual companies if you have enough of an initial investment to make it feasible, again I will share broker reco's via email. The mutuals you can do yourself, again through an online brokerage. Sites like http://www.eaglewing.com/ will help you track funds.
Everbank does indeed have a CD based on gold. It is a $1500 minimum (IIRC, call them to check) five year CD and its value is based on the spot price of gold, if that approach interests you then you might want to try it. See their site at http://www.everbank.com/main.asp?affid=eb , I notice they are broadening their offerings to people interested in the metals markets. I do business with Everbank, I have had various foreign currency CDs with them for some years, and I like them.
And in brief that about covers the field- physical bullion, numismatic coins, ETFs, mutual funds, CDs and mining stocks. Happy (AND profitable) investing,
lpl/nc
Post by: The Rabbi on March 11, 2006, 03:34:39 PM
Quote from: Lee Lapin
PW,
Gold actually is money, in spite of all the Keynsian efforts to redefine it as a mere commodity. Right now the concept of money in most of the world is that of a simple medium of exchange. Not long ago we had a discussion here as to the definition of money, and my own preferred definition includes defining money as a STORE OF VALUE as well as a means of exchange.
I dont understand this. No one gets paid in gold. You cannot take gold to your local WalMart and exchange it for groceries. Pace Rich Young, even in South africa that is the case. Gold is a commodity, like silver, Palladium, or pork bellies. It has value simply because people value it. Guns are a store of value as well, but they are not money.Gold actually is money, in spite of all the Keynsian efforts to redefine it as a mere commodity. Right now the concept of money in most of the world is that of a simple medium of exchange. Not long ago we had a discussion here as to the definition of money, and my own preferred definition includes defining money as a STORE OF VALUE as well as a means of exchange.
My interest in gold (and I have bought some recently) is more for historical reasons. My wife's grandparents lived in Hamburg, where they had a business. When the Nazis came they took the business and all the assets they had. they were forced to flee with some minimal amount of money and when they got to America they were poverty-stricken. If they had some store of gold they could have hidden and brought with them it would have made an enormous difference in their lives.
Post by: Art Eatman on March 11, 2006, 07:30:14 PM
Bullion gold, whether fractional (the US 1/10th Eagle, e.g.) or as a one-ounce bar or a Krugerrand, can be bartered for something of value. "Dead" paper cannot.
And, even in today's US, using a gold coin as money is merely a two-step process: Sell the coin to a buyer; take the greenbacks and go to WalMart.
Art
Post by: The Rabbi on March 12, 2006, 06:16:37 AM
Quote from: Art Eatman
Bullion gold, whether fractional (the US 1/10th Eagle, e.g.) or as a one-ounce bar or a Krugerrand, can be bartered for something of value. "Dead" paper cannot.
And, even in today's US, using a gold coin as money is merely a two-step process: Sell the coin to a buyer; take the greenbacks and go to WalMart.
Art
Try buying your next car with a pocket of Krugerrands. You can only barter with someone who values that item. And that isnt a lot of people nowadays.And, even in today's US, using a gold coin as money is merely a two-step process: Sell the coin to a buyer; take the greenbacks and go to WalMart.
Art
On the second issue, you prove my point that gold is another commodity and not money. On your 2-step scenario, gold is no different from kitty litter or guns or diamonds or watches. It assuredly is not money.
Post by: Art Eatman on March 13, 2006, 04:04:43 AM
Any coin store in any town will buy and sell gold. There are coin clubs all over the country, with some of the members being gold bugs. There are heaps, gobs and bunches of "vest-pocket dealers" like I've been who'll buy and sell.
Buying/selling gold is no different from buying/selling any company's stock: You gotta know something about the market.
Art
Post by: 280plus on March 13, 2006, 04:08:56 AM
Post by: Guest on March 13, 2006, 05:32:37 AM
Ooooookay.
Several years ago I was reading a collectors' guide to Confederate paper money, and ran across an interesting note. The companies which printed Confederate currency insisted on being paid in gold, according to the author. Seems they had a good idea as to the amount of inflation they were promulgating by running their presses, and wanted no part of it.
So, gold is just one more commodity, and money is digits that are created on a keyboard with no more effort than it takes me to type this post. That my friends is demonstrative of the value of belief. And in fact it is simply that belief which allows the current monetary regime to continue apace. Once it is just as widely believed that "the Emperor has no clothes" then it might come to pass that some new belief structure will arise and the dollar will be just one more footnote to history, joining the many others which were debased beyond survival by leaders who thought style would be an adequate substitute for substance.
It is not my intent to be argumentative, I hope to be merely informative. It may be that some will perceive what I am doing as attacking them personally. Not so, I am attacking a system of belief that, no matter how firmly it has held sway in the past, has always in the end proved a crashing and expensive disappointment to its adherents. I'd hate to see anyone here included among that number the next time around, but it is certainly your right to allow yourself to be deluded by whatever authority figure you choose to embrace. You want to listen to Keynsians, that's fine by me. You want to dismiss the Austrian school and its views, that's fine by me. As the old saying goes, you pays your money and you takes your chances. Choices are seldom without cost in one way or another, after all.
http://www.mises.org/studyguide.aspx?action=subject&Id=11
lpl/nc
=======================
http://www.kipling.org.uk/poems_copybook.htm
The Gods of the Copybook Headings
--------------------------------------------------------------------------------
AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.
We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.
We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.
With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.
When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."
On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."
Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;
And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will bum,
The Gods of the Copybook Headings with terror and slaughter return.
Post by: matis on March 13, 2006, 06:25:00 AM
Great poem, I've copied it to my collection.
Thanks, Lee Lapin.
P.S. I have only temporary faith in fiat money; permanent faith in the barbaric metal.
matis
Post by: Guest on March 13, 2006, 06:35:09 AM
Quote from: Lee Lapin
I have to say that I find the amount of faith in the current monetary regime demonstrated by many of those here quite touching. ...etc..
Ignore this fine post at your peril, members.
Post by: Art Eatman on March 13, 2006, 11:42:20 AM
I'll leave the conclusions to others, but those folks' views are a bit difficult to merely ignore.
, 'Rat
Post by: crt360 on March 13, 2006, 01:34:38 PM
Post by: The Rabbi on March 13, 2006, 04:41:22 PM
Quote from: Lee Lapin
I have to say that I find the amount of faith in the current monetary regime demonstrated by many of those here quite touching. Unfortunately it is doomed to disappointment, as has always been the case with every fiat currency in history so far. But of course this is the USA, and so the dollar is special, right? We get special dispensation, we are allowed to violate all the rules with impunity, because we are the chosen country.
"In G-d We Trust. All others pay cash"I get a kick out of the "one day this will come to pass" posts. We see this in the "someday Congress will send agents to collect your guns." We see it in "someday the UN will rule over us." We see it all over. Granted, it hasn't happened. There is no indication it is happening now. There is no proof it will happen in the future. But by gosh trust me it's gonna happen. Sure.
How do you refute someone claiming that something is bound to happen, when he has no proof whatsoever? You can't. That's what makes it so dumb. It is like arguing with a paranoid--there is always a reason or hidden motive.
One time salt was money (thus the term salary). If you had suggested that one say salt would be just another commodity you would have been laughed. You would have been told it was touching to have faith in a useless metal. No civilization ever survived without salt so it was central to life and therefore would always be currency.
And salt does still have value. But don't go trying to buy your next car with it.
Post by: Art Eatman on March 14, 2006, 03:35:23 AM
Yup. But, after all, if you had lived in the South in 1865, you'd figure that the SHTF had really happened. Folks who lived through 1929-1940 tend to be on the thrifty side, because they lived through a Real Event. And then came WW II, which coupled with WW I showed a lot of Europeans just how bad life could get--particularly if you were Jewish. Or Filipino or Chinese or lived in Singapore,etc.
I guess the South Vietnamese are the most recent example of the absolute utility of gold as a survival money...
"Unlikely" or "Improbable" isn't the same as "Impossible" to anybody who looks at history. You don't even have to go back very far in time. The problem arises when people devote undue time and emotion worrying about something that's "probably" is not going to happen in their lifetime. Awareness, yes. Worrying, no. "We're all graveyard bound, and worrying just puts the whip to the horse."
, Art
Post by: The Rabbi on March 14, 2006, 04:48:46 AM
I don't think I know 5 Jews who will tell you "it can't happen here." While I do not think it is impossible (nothing is I guess) I think it is in the realm of fiction. Like paper dollars becoming worthless in my lifetime.
Post by: Guest on March 14, 2006, 05:56:07 AM
Post by: The Rabbi on March 14, 2006, 07:45:40 AM
Quote from: mercedesrules
Someone tell rabbi that his dumb salt story disproves his own point.
You could do that yourself. But then you would have to defend your statement, which I don't think you could do without appearing like a witless moron.
Post by: Guest on March 14, 2006, 09:41:02 AM
Quote
One time salt was money (thus the term salary).
Now, paper fiat certificates are money. Rabbi advocates this current type.Quote
If you (Lee Lapin) had suggested (to rabbi, conservative holder and advocate of the widely-accepted salt money) that one day salt would be just another commodity you would have been laughed (at by rabbi).
You (Lee) would have been told (by rabbi) it was touching to have faith in a useless metal. "No civilization ever survived without salt", said rabbi, so it was central to life and therefore would always be currency.
And salt does still have value. But don't go trying to buy your next car with it.
But rabbi was wrong about salt remaining the most-used money. Precious metals became money for a long time until replaced by police/military force with fiat currency.
You (Lee) would have been told (by rabbi) it was touching to have faith in a useless metal. "No civilization ever survived without salt", said rabbi, so it was central to life and therefore would always be currency.
And salt does still have value. But don't go trying to buy your next car with it.
Post by: The Rabbi on March 14, 2006, 11:28:45 AM
Post by: Guest on March 14, 2006, 04:48:56 PM
As I said earlier, it was not my intent to be argumentative. Nor will I resort to namecalling. But this discussion is an important one IMO, and it is worth continuing so long as it appears beneficial. If it deteriorates further into ad hominem insults however I will not participate.
You said: "How do you refute someone claiming that something is bound to happen, when he has no proof whatsoever? You can't. That's what makes it so dumb. It is like arguing with a paranoid--there is always a reason or hidden motive."
Yet you persist in making the same type of argument you accuse me of attempting to foist off on unsuspecting dupes here. OK, let's turn that around. YOU prove that the dollar will not collapse in your lifetime (or mine for that matter, with all my worries mine might after all be shorter than yours). Even easier- _prove_ that you will in fact be able to buy your next car with dollars. Can't do it? Yet you demand proof of the unproveable from me. Sorry, no can do either.
There is an interesting word that has been used by several well informed writers to describe various aspects of the current financial situation. That word is "unsustainable." If something is unsustainable, that means it can't be maintained forever. It doesn't put a timeline or an expiration date on anything, it just says it cannot continue indefinitely. That to me means it is a question of 'when not if.' You of course are free to interpret it any way you wish. Sources?
Alan Greenspan ( http://www.federalreserve.gov/boarddocs/testimony/2005/20050302/ )
Manchester Guardian ( http://www.federalreserve.gov/boarddocs/testimony/2005/20050302/ )
Brookings Institution ( http://www.brookings.edu/views/articles/20041201orszaggale.htm )
-for starters.
"People tend to project their own experiences onto future expectations. They also tend to be wrong about it 95% of the time, misjudging situations. I see this in investing over and over."
Unfortunately you again seem to be exempting yourself from your own rules. Am I to take it that you don't project your own experiences onto your future expectations, and you are never wrong more than 5% of the time? 8^)
I'm only 52, and I haven't yet lived through a currency collapse, major depression, hyperinflation or other large scale financial unpleasantness of that nature (unless you count the Carter era stagflation)- so it's not possible that I am projecting my own experiences onto future expectations. I have of course studied such events as the major dislocators they have been throughout human history when they HAVE happened, but I haven't experienced them myself first hand. In truth I had just as soon not do so. That does not mean I will be able to live out my life without difficulties imposed by external financial events, of course. That isn't up to me.
What IS up to me is to work toward not having to be overly concerned with what happens to the financial macro, and that is what I am doing. And by the way, I am not working for myself. It's for my mom. She was born in 1927, and she has told me more than once, "I was born in one depression, and I don't want to die broke because of another one." Since you seem concerned about reasons and motives, there's mine. My dad died in 1998, and I have been helping her manage her money since then. You will please forgive me if I do not engage you to take over that job, given your persistence of believing in form over substance.
You say salt used to be money, but that changed and it isn't money any more. You say that gold used to be money, but that changed and it isn't money any more. Yet you insist that the digital dollar IS money, and that it will remain so. You persist in dismissing the historical fact that until 1933 the dollar WAS gold for any American who wanted to redeem paper dollars for the barbarous metal, and that until Nixon closed the gold window in 1971 the dollar was redeemable in gold for the central banks of other nations. The dollar's acceptability all over the planet has coasted for a long long time on the reputation it established when it was commodity money (that is, redeemable in precious metals) and not mere fiat. Yet it would seem that you think that reputation alone is capable of supporting the dollar through continued inflation, trade imbalances and debt of unprecedented proportions.
Sorry, Teacher, your logic escapes me.
lpl/nc
Post by: The Rabbi on March 15, 2006, 05:59:08 AM
I also cannot prove that George Bush will not be found in bed with Hilary Clinton. But anyone claiming that he was needs to provide proof in order to be taken seriously.
My comment about people projecting their own experiences was aimed more at Art's comment about people in Europe or Vietnam.
I don't know what your motivation is about money/currency and honestly it doesn't matter to me. But if you are thinking of investing your mother's money in gold at this point I would strongly suggest getting some good advice.
The dollar is the standard of currency now and for the foreseeable future. It rests on the status of the US as the sole superpower. That might change. History suggests it will change. But I am not going to make investment decisions based on something I see no evidence for right now.
Post by: Guest on March 15, 2006, 10:40:24 AM
Thanks for your temperate and concerned response.
I started thinking about investing some of my mom's money in gold- and writing checks for it- as soon as I started helping her manage things, in 1998 as I said earlier. At that time I considered gold bullion at a spot price of $300/oz or below a screaming buy, and bought as much as her finances (and her nerves) could handle, along with bags of 'junk' US silver coins. I also bought her some lower graded MS61- MS63 PCGS/NGC numismatic gold coins as well (I really like Saint Gaudens double eagles, but Liberties are more collectible).
That has proven to be a worthwhile move across the board so far, I have not taken profits on any of her physical holdings and do not plan to do so for a good while yet. The physical holdings serve more of a role as insurance in her overall portfolio rather than as investments in the traditional sense of the word. There was a time not too long ago when reputable financial advisors suggested their clients have a certain percentage- usually 5- 10%- invested in physical gold and silver to play the role of fail- safe. That approach is nowadays almost completely passe' but IMHO is still a wise decision. In fact I prefer a higher percentage than that myself, which is likely no surprise.
Most of her money has been kept in Treasuries or various CDs. I have used several different currencies via Everbank's foreigh currency CDs ascurrency trends have changed through the years. We had a good run with the Euro for a bit, then switched to New Zealand dollars for a good while to take advantage of their proximity to the burgeoning Chinese market. The NZ$ CDs offered interest rates of 5%APR or better plus currency appreciation over time of about 60%, and as a plus they are FDIC insured. As New Zealand's currency problems became apparent recently I shifted those CDs to Australian dollar CDs or to Commodity CDs.
Having taken care of her physical metals, I opened an account for her with Rick Rule's Global Resource Investments, a full service brokerage firm specializing in natural resources. This account was intended to handle the speculative portion of her portfolio, and the mining stocks definitely qualify as speculative. That was in 2002, and spot prices on gold were still holding below the $300 line. Prices on a lot of junior mining companies were below a dollar per share, there was little or no widespread interest in gold or gold mining. In other words, prices were low. As in "Buy low." My broker is a university trained mining engineer with feet-on-the-rocks experience, and I asked for and took his best advice (still do, too). We bought into several companies, bringing her GRI portfolio to a total of ten stocks of various sorts. Among those we bought MDVAF in January 2003 and KGILF in February 2003.
The "rules" say that on specs like these, you hope it doubles, then sell half, recoup your initial investment and reinvest that elsewhere to broaden your portfolio, meanwhile holding half the original stock as a paid-for freebie. But I waited. I waited until the end of February of this year in fact, and then sold all the Virginia Gold and Kirkland Lake Gold shares. Virginia went from $.823 to $11.175 in that time, and Kirkland went from $1.48 to $5.435. Other holdings went up 2X or 3X- in fact most of them did- but they are still there waiting. I had held the entire portfolio through one roller coaster decline and recovery in the mining shares, and did not want to do it again. We dropped those two from the portfolio, and used the profits to add four new items and increased holdings in one stock that had been bought into earlier in a small way. With a little luck- and that is always a consideration when digging in the dirt is concerned- we'll have found another Virginia in the making. If not, having 3000 shares of a $.75 stock zero out on you is far less painful than, say, what happened to the people who bought into Enron or the dotcoms at near market highs assuming there was nowhere to go but up. But having 3000 shares of a dollar stock go to $10 or $15 is nice.
The original investment in that account has a bit more than trebled since 2002. Granted not all of that is gold stocks, some of it is energy and other resource companies. But it's still enough to keep the accountant clucking and figuring- and to make my mom wonder if the broker is doing something dishonest. She can't believe anyone can make that much money and not be doing something illegal.
So, what does the future hold? I'm betting on continued and broadening military conflict, increasing trade deficits, increasing debt of all kinds, a declining (spotty at first) real estate market, continued inflation (especially with no more M-3 reports) and 'Helicopter Ben' Bernanke at the helm of the Fed, rising energy costs, growing antagonism against the US, and a continued rise to new highs in precious metals prices as well as the prices of pretty much any other 'real stuff' like energy and food you care to name. Could I be wrong? Sure. Might it cost me money to be wrong? Certainly. Does it scare me? Not as much as having everything in dollar denominated investments would, not at all.
Why do I think this way? Well, I never studied economics for one thing, I got to choose which economists I wanted to read (and none of them were named Keynes). As I said, I studied history, and spent most of my working career as a reference librarian and most of that at various Army libraries. So I got to know a lot of people on the bleeding edge, and since about half of that time was in the special operations community I got to know a lot of people doing the not-officially-reported stuff. Yeah, I know. Nobody in America can keep a secret. In fact there ARE no secrets, everybody knows everything.
As a result of the cumulative experiences of the past 30 years, I have a decided tendency not to trust the government and especially where money is concerned, not to trust the media especially where truth is concerned, not to be very much impressed with what is popular or faddish. I don't watch TV, I read. A lot. A WHOLE lot. I used to have whole libraries at my disposal, now I can do even better with a keyboard and a handful of subscriptions paid for on my own. I started using computers professionally in 1975 and have worked hard at keeping up with the practical applications of the technology. It's amazing. It's FUN.
And done right, it's profitable too.
I also think that eventually this current economic cycle based on 'things' will come to a close and a new cycle based on paper (well, these days it'll be digits) will begin. When that becomes evident I will shift out of things and into digits. But not right now. Right now there is more money to be made with more safety in stuff- the RIGHT stuff- than in digits. But that too will eventually change again...
lpl/nc
Post by: Art Eatman on March 15, 2006, 10:52:27 AM
Sorry 'bout dat.
I've done a smaller-scale sort of thing. And, worked out a way to buy land in front of the mob, so I could enjoy playing on it (quail, dove, coyote & javelina hunting) while I watched folks drive up the "value"--or the price, anyway.
I developed my "ten-percent theory": Buy a hundred acres at $100/acre. Sell ten, ten-acre tracts at $1,000/acre. Carry paper; 10% down, 10 years at 10%. That way, I make ten percent on my money.
I can think in terms of ten.Beats working for a living...
Art
Post by: Justin on April 23, 2006, 05:26:44 PM
Is there a compelling reason why I wouldn't just order them directly from Uncle Sam, and squirrel them away?
Also, I realize that gold is rising in price. I have no intention of buying gold to make a profit, but rather simply as a way to store some wealth as a physical asset to hedge against {insert your favorite societal-collapsing disaster *here*}.
If I want to purchase gold for that reason, it seems like a bad idea if the price has gone up.
Would one be better off storing their wealth in a physical asset other than gold or silver?
Post by: The Rabbi on April 23, 2006, 05:33:49 PM
Post by: Justin on April 23, 2006, 05:40:36 PM
Thanks, though.
Post by: The Rabbi on April 24, 2006, 03:23:05 AM
Quote from: Justin
Not helping with my questions.
Thanks, though.
OK.Thanks, though.
Here are the answers:
Gold bullion coins are sold at price of bullion plus small mark up. Find the seller with the smallest mark up, including shipping costs. I have found eBay to be pretty good. I havent looked at the gov't's site to see what they charge.
Diversification of assets applies within asset classes as well. Thus, gold is one physical asset. Silver might be another. Palladium another. Ammunition has always done OK. Other things used as a hedge against inflation are antiques, art works, rare books and even Elvis statues for all I know. Considerations are storage, cost to acquire, wide enough market to provide liquidity when you want/need to sell.
Post by: Guest on April 24, 2006, 03:26:01 AM
Shop for 'the most metal for the money.' Proof coins are numismatics, or collectible coins, and you pay a premium above the value of the gold or silver they contain to get a pretty coin. NOT what you want to do, if you are buying for 'insurance' purposes, as you profess to be doing. Tulving ( http://www.tulving.com/goldbull.html ) lists 1 oz. gold Eagles for $658.50 (4/23), while the Mint lists the proofs for $770. Is the proof going to fetch that extra $110 in the future? I don't know, but that $110 is a sixth of the way toward another coin... .
If you don't have any precious metals holdings at all, start with junk silver. The same link to Tulving gives you prices for a full bag of 90% silver US coins, either dimes or quarters. My advice is to get dimes, if it really is an insurance buy you're making, you will want the smallest recognizeable unit of metal if you ever have to really use it to buy something. The old question of 'how will you get change from an ounce of gold' is worth consideration.
Is there anything better as monetary insurance than gold or silver, you ask? Well, there hasn't been for several thousand years of human history. This blind faith in paper and digits has only been around since 1913, when the Federal Reserve was created. It's like religion, you get to believe in whatever you want. I'll take precious metals, thanks.
The "price" of precious metals is essentially irrelevant any more. It is the value of the dollar that is changing, an ounce of gold is still worth an ounce of gold. Speaking of prices in dollars is like trying to measure something with a tape measure made of rubber- there is no real standard when the measuring device is not the same from use to use. It's OK to wait to buy during drops, as there will certainly be volatility- but if you try to time any market all the time you are apt to get your head handed to you. Buy when you have the money to do it, buy over time and dollar-cost-average your purchases.
Yes, it was a lot less painful to be buying when gold was under $300 an ounce. You weren't buying then because you couldn't see the need to do so. Now you do see the need to buy some, and are worried about the price. Well, worry about the DOLLAR- then your worries will be well placed. How much will the gold be worth in dollars as the value of the dollar continues to decline? Is Ben Bernanke going to all of a sudden turn into Paul Volcker and boost interest rates to 20%? I don't think so... .
Find a local coin deler if you have one/some, start with small purchases, build some trust and confidence as you learn the ropes. IMO this rise in prices for PMs has a ways to go yet, as the dollar continues to decline. In fact, it's my guess you ain't seen nothin' yet- a double in gold and a triple in silver is just the beginning.
Good luck, feel free to email me if you have questions... .
lpl/nc
Post by: The Rabbi on April 24, 2006, 04:39:25 AM
Quote from: Lee Lapin
Justin,
Tulving ( http://www.tulving.com/goldbull.html ) lists 1 oz. gold Eagles for $658.50 (4/23), while the Mint lists the proofs for $770. Is the proof going to fetch that extra $110 in the future? I don't know, but that $110 is a sixth of the way toward another coin... .
I
I looked at their site. Am I missing something or is their minimum order really 20 oz? To get 20 K-rands would cost around $13,000. I am not sure I would spend 13k on insurance, no matter what the risk.Tulving ( http://www.tulving.com/goldbull.html ) lists 1 oz. gold Eagles for $658.50 (4/23), while the Mint lists the proofs for $770. Is the proof going to fetch that extra $110 in the future? I don't know, but that $110 is a sixth of the way toward another coin... .
I
Look at www.ajpm.com. Their k-rands are quoted at $640 sell this am, shipping fee (under 10 oz) but no minimum. I have used them before and they deliver.
Post by: Justin on April 25, 2006, 07:59:26 AM
Post by: Guest on April 25, 2006, 02:36:42 PM
Know what you're looking for, US 90% silver coins (dimes, quarters, half dollars)were minted up until 1964 and circulated until all were taken out of circulation by people like me who understood Gresham's Law (I'm old enough to remember LBJ's speech that 'silver was too valuable to use in coins'). Also, Kennedy half dollars were minted in 40% silver from 1965 till 1969. Look for loose coins or rolls, and always check each coin just to be sure.
Be aware that as the quantity of coins you buy goes down, the price per coin goes up. IOW, on a per-coin basis, its cheaper buying a whole bag than one coin at the time. But if you can't spring for $10,000 at one time, then you just buy whatever you can afford on a recurring basis. But find a place to note 'bag' prices and figure the markup on smaller quantities based on that- AJPM offers less-than-bag quantities and updates their prices too- see http://apmex.com/shop/buy/90_and_40_Silver_Coins.asp?orderid=0 .
Good luck with it,
lpl/nc