Who really cares why gold and silver are going up! Take the ride and make a little money. Get over it! Dont fight a rising market in anything. Welcome AValde. I have the curse of the Gauden's as well. Also Twenty Libs, Ten Indians, Five Indians, hey I like them all when they are 64 or higher! They will be where the most money is made on gold when gold finally makes it over the 450 hump. When that will be who knows or who cares. It will happen sometime. I think it will be sooner rather than later.
In an insane society, a sane person will appear to be insane.
Thanks. Mine are 64 and 65s. Not beyond. I started it as an investment and then I kind of started liking it so decided I will not sell them. I have 120 of them.
I do believe topstuf is right. I dont know how high gold will go in the near future, cause the Fed has ways of controlling its price to some extent .They dont want americans to see what is really going on, how our nation is bankrupt and currency is worthless. The only reason america took Iraq so easily is not because america is a great super power, but because the rest of the world is impoverished, and dont have the military might they once did. Why was viet nam imposible for the usa to take, because the soviets were backing them. Saddam hoped that his allies would of come to his rescue but they didnt cause they are just too poor and cant challenge the usa like they once did.I was watching new years eve live from time square new york last night and it seemed more like the 4th of july with the patriotic music. Since when did new years eve turn into another 4th of july, when all the `rebellers` penned in like cattle, nice and safe from the threat that dont seem to exist.
<< <i>If the economy collapsed, we WOULD indeed go to a barter system. Just look at some historical examples like Russia. Their currency has such huge inflation that many people don't even use it. They ALSO don't use GOLD!!!!!! They use a black market barter system, trading goods and services for goods and services. A few rich families and governments controlling a good or commodity has, historically, not controlled something long-term as the above thread suggests. The multitudes of the middle class are what long-term controls the economy. And, they are NOT buying NOR are they using gold in the real world -- even where economies are shaky. >>
When the Russian economy "collapsed" (it didn't really fully collapse) during the transition from communism, the average citizen didn't use gold. Because they didn't have any !!! You can't use something you don't have. But they would have used it if they had any.
Russia recently announced that they have increased their official gold reserves and may be looking to increase them further.
Look at the prices of common Czarist Russian gold coins. They've gone up quite a bit lately - more so than just the price of gold. Since the economy in Russia has improved, maybe more Russian citizens are buying gold coins.
But here is an article that gives a good example of how a people in another part of the world view gold vs paper currency during tough times:
I doubt there would ever be a situation again where the economy of the US would collapse. There are blocks on the stock exchange which prevent a fast, huge decline and now there is a large amount of 401K money in the market that will stay put in bad times (like the last few years), largely because the people with these accounts do not move their money much. If everyone would have moved their 401K money out of stocks and into bonds 3 years ago, we would be in deep caca right now. The 401K money lent stability to the market at a time when most who play the market were bailing.
Dcarr, that reference is questionable at best. I read the article, and, of course, I disagree. The U.S. is one of the strongest nations on the face of the earth. Yes, it has a large debt, and yes, the dollar is at an all-time low against the euro. There will always be volitility in the currency markets, so what? If you read more mainstream experts, you will find that most financial experts agree that gold is a poor investment -- ESPECIALLY right now when the price is high. Now, if this country was Iraq or something like that, things would be different. But, that is not the case. Even if this WAS the case, people STILL don't INVEST in, NOR do they USE gold as a medium of exchange. Even you agreed with this.
If you guys and gals want to invest in gold, go ahead. The bottom line is, I STILL think precious metals stink, and I will continue to put my faith in our country, stocks, and real estate. I am not going to worry about the sky falling down on my head. I am going to follow basic investment principles -- the ones that other self-made millionaires follow. I think the U.S. dollar will rebound against other currencies, and will continue to be the preferred medium of exchange in this country.
<< <i>The bottom line is, I STILL think precious metals stink, and I will continue to put my faith in our country, stocks, and real estate. I am not going to worry about the sky falling down on my head. >>
You see thats just it, I have NO faith in my country what so ever. Gold is a form of currency, when the fed currency dont buy anything of value,in my opinion, based on my economic circumstances, So I convert my fed currency into a form of money that I feel comfortable with, Gold. Only the wealthy in america benifit from this type of economy, and more and more are becoming poor. Good investment or not, If I have $800 to spend I am going to buy a gold coin with it because I know I can always sell it at anytime, either for a loss or a profit, at least I can get some or most of my money back.Not so with anything else.
Bringing up the 9-11 thing prompts me to post. This is for all those who feel so secure in the US that they feel no need to prepare for a problem.
I have been employed in the electrical generation and distribution field for over 20 years, so believe me when I say that at any given time, the US is only a few moments, or at best hours away from problems that make 9-11 look like a stubbed toe. Because of the vast expense associated with producing components for our power plants and substations (turbine/generators, transformers), some equipment is only made and used for one plant or application...there are no spare parts for many things. The turn around time for some of this equipment can be measured in months, or even years. Much of this equipment is very vulnerable to attack, some can be removed from service from afar with a rifle.
The plants are networked together by an electrical grid of interconnected lines, transformers, breakers and switches. As was seen last year on the east coast, at times of great stress on the system (generally the summer cooling or winter heating seasons), the tripping of one plant can have a domino effect whereby whole areas of the US are without power.
If you know what you are doing (believe me, the terrorists are not ignorant of this), a few people with rifles could do things to the United States electrical system that would have great areas, such as the whole eastern or western seaboard for instance without power for a period of months. Do you think that this would have an effect on US business?
Imagine a situation where the US was blacked out from the Mississippi east to the Atlantic coast during the winter months. No electricity, no heat, broken pipes, no way to pump fuel for your car. no computer. Many thousands, if not millions would freeze to death. What would your stock be worth then?
It was not always like this. In the not too distant past, the utilitys were for the most part regulated and planned ahead for increases in electrical demand and failures in the system. Then came the years with the threat of deregulation...power companies were under the gun to reduce costs. Many times preventative maintainence was overlooked on things to keep the budgets down. If extra parts were being held for equipment, they were taken out of stock and gotten rid of so that the companies were not charged for holding large inventories. Many areas of the power industry cannot operate reliably in a "just in time" world.
What would your job turn into if you did not have electricity for six months? Would you still have a job? How would you eat? As a rule, the US population is very smug in the fact that they have this, that, or some other material goods to make them feel important; believe me, as many in foreign nations have found out when their infrastructure crumbles, most college degrees and marketable skills in business have very little worth.
If your living your life believing that the good old USA is invincible, pull your head out of the sand. This is not a "chicken little" scenario, but a wake up call. I don't know if holding precious metals is the answer, but at least explore the option. Take a look at your life style...plant a garden...and realize that you're not getting the whole picture on US problems from the government or the news. Take a look into the frailty of our power system and understand where we're really at. A few crashed planes is the least of our worries.
What a great thread. Everyone has really done a good job putting his or her points out there. One last point from me. All gloom and doom theories aside. It has always been our human nature to own those things that others did not have. The rarer an item is the higher the price, and it really does not matter what the rare item is made from. It could be a panting, a pieces of pottery, a stone carving, or a gold coin. The Mona Lisa, a piece of canvas with oil paint, has a market value greater than 100 of the worlds rarest coins. Forgetting all of the inflation and deflation theories in all countries, and the world as a whole, the price or Gold and Silver must go steadily up during the next decade if for only one reason. Gold and Silver in comparison to most other things on the planet are rare. During the last short 20-year period hundreds of millions, if not billions, of people in the world have gained their economic freedom. Our brothers and sister in the world who have been chained by communism and other oppressive forms of government are just like us. They also want to own the rarer things in life. Paper and ink are cheap, and not RARE, and as we have seen in the last decade those with the power to print money, stock, and other " valuble" paper have lost their morality. Here is one last thing you might keep in mind as you put your hard earned money into assets for your future in this New Year, “The entire worldwide gold mining industry is worth less than any one company in the Dow Jones Industrial Average.”
Instead of printing more "I owe you" dollars, the Bush admin or any future admin may be trying to let the dollar fall and they could retire the country's debt in gold by raising the Fed Gold Reserve hold price from $42.2222 per troy ounce to say may be $ 100.
That way they do not lose anything. They already hold underpriced gold what's there to lose by raising it by say 105%...it will still be below spot.
Just a rant.... please let me know if this argument holds any validity.
A Valde......You GOT it! WHEN.....the problem becomes untenable (as it must since there is no wage inflation to count on) the US Treasury will .....FIRST..... BUY...(yes, BUY) gold for whatever it takes to get it. They print the money, they can afford it. MOST goldbugs would jump at the chance of getting $5000 per oz...........UNTIL............it was revalued (as is the ONLY solution to a dying currency) to $10,000 or $20,000 or whatever is necessary to restore gold to its historical job of being a regulator of currency.
Absurd?
Well, they did it in 1933.
Would you rather have kept your Saints for your future or turned them in for twenty bucks?
Now....someone....has gotta come up with "but you could have INVESTED the 20 bucks in real estate." And that is true. And it would have done more than the Saint has done to date.
BUT....for the time after the revaluation, you would have had less than the guy who KEPT the gold and AFTERWARDS sold it and invested in RE.
HOWEVER......what everyone seems determined to overlook is that "means testing" is just around the corner. To save Social Security, they will (have to an extent) CHANGE THE RULES. This is not YOUR government. It is your MASTER. It taketh and does not dispenseth to the "takees." Even now, as we speak, people are devising ways to "spend down" assets to qualify for Medicaid. Now....would you rather spend down your assets or have some invisible assets for your old age?
One glaring problem is that we are too damn busy trying to "make ends meet" to pay any attention to the effect of a dollar dump.
"No effect yet seen" on the dollar dump? Wait til spring and check out the prices of IMPORTED clothing and junk. UP A BUNCH it will be.
Hey. Maybe buying "imports" will again be fashionable and for the wealthy.
I know I'm not going to change any opinions one way or the other, but please consider this real world example. Look at Iraq. At the beginning of 2003, it was a huge debtor nation. Its currency was being printed, but had little to back it. The economic and political situation was completely unstable. No one bought gold. Even Saddam Hussein and his family put their money in U.S. dollars and euros, in addition to real estate (presidential palaces). Then, we invaded it in March. Still, no one bought or used gold. After the "end of hostilities", still no one bought or used gold. In fact, after the "end of hostilities", our military found stashes of U.S. currency all over Iraq throughout 2003. At the end of 2003, when we found Saddam Hussein, guess what? He was found with $750,000 in U.S. currency. Not a single ounce of gold by even the richest man in Iraq. How about that? Well, like I said, this is a very recent real world example to consider, and I probably won't change any minds here. People are trading goods and services for goods and services. Now, a new currency is taking the place of the old currency in Iraq. No gold here. I'm still going to follow my basic long-term investment strategy that most financial experts advise, and I'm still going to have faith in this country. You cannot buy good growth-stock mutual funds and paid-for real estate with gold in this country. People normally will accept U.S. currency in a business transaction, not gold. In spite of all of our problems, we are still one of the strongest and richest countries in the world. Even if this were not the case, I still cannot logically see a case for gold. The only purposes I see for gold are industrial (in ICs) and in jewelry or coins if you enjoy it.
Edited to Add: I don't believe the U.S. dollar is necessarily the world's standard. If it crashes, there will be other currencies (countries) to take its place. As I said, people would revert to trading goods and services for goods and services until a new currency was put in place. Not gold. The reason is very simple. Normal people who make up the bulk of the population and, thus, the economic control, cannot afford to buy gold. A few rich people buying gold is not going to have a significant impact on this.
<< <i>Look at Iraq. At the beginning of 2003, it was a huge debtor nation. Its currency was being printed, but had little to back it. >>
The US happens to be the largest debtor nation. So the Iraqi dinar had little to back it, please enlighten me as to what is backing the US dollar. I must have cut class that day.
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I'm not saying the dollar is strong...but what backs the U.S. dollar is the "full faith and credit of the U.S. government" which includes its ability to levy taxes upon the entire population of the U.S. and all its businesses.
The U.S. has never defaulted on a debt in its over 225 years of existence and has taxed at rates in excess of of over 90% in the past in order to repay its obligations.
The U.S. will not fail to meet its obligations.....however; that may mean an inflation rate of 18% per year which is a different kind of tax.
Yes, you are correct that the U.S. is the greatest debtor nation, I think we all agree on that. What backs the U.S. dollar is faith in the country and in God. That faith is in the people themselves, not a useless metal, my friend. People are the ones who leave the cave, kill something, and drag it home. They make things happen. They create jobs and income. They are the lifeblood of a country.
Except we are creating far more jobs and income for India, Asia, and every other third world country than we are here. We then import these goods that they manufacture and buy them on credit, or with the proceeds of the third refinance of the family home. Yes, this is a sure-fire plan for long term economic success.
Dollardude, Saddam had US $750,000 becuz he wuz RUNNIN' We do not KNOW if he had gold holdings and probably never will. That is the BEAUTY of the gold.
When we had the idiotic idea to invade Iraq, if we had put our dollars in gold, we would now have more dollars. Gold is simply a "haven." And when its day comes, the .....rich ..... people will be selling it to the little guy who will be scampering for it at any price. I have seen it happen. As for the "currency" of gold, ask any Vietnam immigrant what was needed to get on the boat to the welfare state of America......gold. If you didn't have any, you were dumped off the boat. While they collected welfare here, they sold gold taels to me in my coin shop.
WHAT? They were on welfare with GOLD? Oh yeh.
Even steven.....well.....even ...jbsteven... will find that the demand for his online passports (if there is an exodus) will come from gold holding evacuees. 100 oz of gold is the ...........ONLY............International currency. Gold will set you up in any nation in the world. Now it may be a hut with some goats or it may be a scone stand, but ONLY gold will be purchased GLOBALLY......in whatever currency holds the local "full faith and credit." Gold is simply now in its cycle. The cycle goes from gold to debt. When gold was $800, smart money sold it and bought bonds. They will do so again. Income to storage....storage to income. endlessly.
In your edit you state, "If it crashes, there will be other currencies (countries) to take its place" Very true.....but.....If it crashes, what are you gonna use to get those "other currencies?"
I disagree. I will concede that a few wealthy people will buy gold for whatever reason. I still contend that the majority of people in the middle class will not buy gold simply because they do not have the money. They are simply trying to make ends meet, living paycheck to paycheck, and they cannot continuously buy gold, trade it in for U.S. dollars, pay their bills, get paid in U.S. dollars, trade it back for gold, etc. This is absurd. They are the ones who drive the economy -- not a few wealthy people. Yes, you can put money in gold, but, as I said earlier, since Napoleon's time, gold has averaged a pitiful 2% rate of return. Over just the past 50 years, it has averaged 4.4%. So, you are at a much greater risk with gold at losing your money due to not keeping up with inflation and not building wealth than anything that happens politically. Yes, any currency fluctuates in price, so what? I would rather take my chances with a fluctuating currency and build wealth long term than potentially lose my butt in gold.
Edited to Add: Not only does gold suck as a long-term wealth-building investment, but so do bonds. I do not have a single dollar in either one, nor to I plan on it. The only time I might consider bonds is if I were already retired, had millions of dollars in assets, and were just trying to obtain some tax-free income.
Seems like every time there is a perceived crisis we have the guns/ammo, stockpile and survivalists crowd come out of the woodwork.
If there were a true crisis like a Great Depression or worse does anyone really believe anything will have appreciable value? If you have lost your life savings/job will you buy a car? A house/apt building? Coins? Gold? How will gold go up or maintain its value if no one has money to buy it? Assuming "smart money" has some form of money they will probably be preparing for the next boom and NOT be buying gold but real estate, companies in bankruptcy, etc.
What Americans are blind to is that we are witnessing a growing rift between the "classes". Those affected seek scapegoats [Dems/Reps/Illegals/etc. take your pick] to assess blame and make themselves feel good. Reality is the world's affluence is growing and people who have a fraction of what Americans have want cars, refrigerators, homes, etc. This creates demand and since we hardly manufacture anything anymore that demand has zero impact on our economy.
Part two of this scenario is the advent of the computer/internet based commerce. White collar office jobs are going overseas and will continue to do so. The government can slow down the process but not stop it. We are our own worse enemy, we demand lower prices to consume more but really cannot afford to consume what we do so to keep the cycle going so costs have to come down. The easiest way to do that is going offshore.
Reality is if we are the largest market in the world and we stop consuming, what happens if the rest of the world cannot consume like we do? Suddenly there is no demand for what they make.
Relax and buy some value stocks, dump gold except for a Saint or two. Your money is better spent generating more paper...yes dollars!
Well, I certainly don't know what is going to happen, but sure don't have all my eggs in one basket.
I've got stocks, I've got bonds, there's gold and silver in my safe, and there is also guns and ammo.
I've got a house 2/3 paid for, and some bottled water and canned goods, and also some mutual funds.
I hold some foreign stocks, as well as some foreign currencies.
Come hell or high water, I think the key to protecting yourself is diversification among asset classes.
That, and asset allocation (meaning rebalancing your holdings, when the market moves) have served me very well these past 20 years, and my suspicion is that they will continue to work just fine for the next 20.
<< <i>Well, I certainly don't know what is going to happen, but sure don't have all my eggs in one basket.
I've got stocks, I've got bonds, there's gold and silver in my safe, and there is also guns and ammo.
I've got a house 2/3 paid for, and some bottled water and canned goods, and also some mutual funds.
I hold some foreign stocks, as well as some foreign currencies.
Come hell or high water, I think the key to protecting yourself is diversification among asset classes.
That, and asset allocation (meaning rebalancing your holdings, when the market moves) have served me very well these past 20 years, and my suspicion is that they will continue to work just fine for the next 20.
Great thread, good luck to all... >>
Yes. This makes perfect sense. It is the best way to thrive and survive.
Just as it can make sense to occasionally take a flyer on a lottery ticket, it can make perfect sense to occassionally put a lot more money in one bas- ket. If you're sure something will increase and you can cut your losses if you are wrong then taking some added risk from time to time can be reward- ing behavior.
By the same token those who continuously assume such risk will tend to eventually be wiped out. Some will make and lose several fortunes in a lifetime, though.
Yes, no one in Iraq bought gold because no one was willing to sell gold for "worthless" paper money. But I'm certain that those few individuals that were lucky enough to have a few gold coins were able to exchange them for needed goods. Gold certainly wasn't the primary medium of exchange, but it was certainly an accepted (if not preferred) medium of exchange. At the end of hostilities, US forces were looking to confiscate all Iraqi governement stockpiles of gold and searched high and low for it. Remember the story about the truckload of bars trying to make it to Syria ? At first it was reported that these were gold bars. But the next day the "official" statement was corrected to say that they were brass bars. Yea, right.
And yes, the new currency in Iraq has nothing to do with gold. I wouldn't expect aything else, given that their new economy is being set up by the anti-gold US.
True, you can't buy real estate or many other things in this country with gold (unless the seller is willing to accept gold, which some might). But you can't buy things with loafs of bread either, even though bread is probably the ultimate essential commodity. The US has never defaulted on it's obligations, and all non-confederate paper money printed since 1861 is still valid at face value. But that doesn't mean that it's *value* is constant.
If the US economy were to collapse, gold would not immediately step in and be a major medium of exchange because the US economy, more than any other economy in the history of the developed world, has been weened off gold and is entirely fed by paper (and faith in that paper). But gold would increase in *value* and it would be accepted in exchange for goods.
I don't see any kind of gold standard ever returning to the US. The powers that be get just too big a benefit from the fiat paper money issuance to ever give it up.
During the Great Dpression, the price of gold (and it's purchasing power) went UP. Money was not destroyed during the Great Depression. What really happened was that the money became concentrated in the hands of fewer people. The rise, and subsequent drop, in the stock market ultimately was a benefit to the rich elites at the expense of the broader population. The wealthy elites sold stocks in 1929 and bought gold throughout the depression. The reason gold went up during the depression was that faith in banks decreased and cretit worthiness across the board was in question. People wanted a place to park their money that was not tied to someone else's promise to pay.
But again, I don't believe that there will be any sort of collapse in the US economy, so long as energy (petroleum) is available. But a scenario could unfold that has characteristics of both the 1929-1933 and 1976-1980 time periods - what I would call "hyper-stagflation".
<< <i>I know I'm not going to change any opinions one way or the other, but please consider this real world example. Look at Iraq. At the beginning of 2003, it was a huge debtor nation. Its currency was being printed, but had little to back it. The economic and political situation was completely unstable. No one bought gold. Even Saddam Hussein and his family put their money in U.S. dollars and euros, in addition to real estate (presidential palaces). Then, we invaded it in March. Still, no one bought or used gold. After the "end of hostilities", still no one bought or used gold. In fact, after the "end of hostilities", our military found stashes of U.S. currency all over Iraq throughout 2003. At the end of 2003, when we found Saddam Hussein, guess what? He was found with $750,000 in U.S. currency. Not a single ounce of gold by even the richest man in Iraq. How about that? Well, like I said, this is a very recent real world example to consider, and I probably won't change any minds here. People are trading goods and services for goods and services. Now, a new currency is taking the place of the old currency in Iraq. No gold here. I'm still going to follow my basic long-term investment strategy that most financial experts advise, and I'm still going to have faith in this country. You cannot buy good growth-stock mutual funds and paid-for real estate with gold in this country. People normally will accept U.S. currency in a business transaction, not gold. In spite of all of our problems, we are still one of the strongest and richest countries in the world. Even if this were not the case, I still cannot logically see a case for gold. The only purposes I see for gold are industrial (in ICs) and in jewelry or coins if you enjoy it.
Edited to Add: I don't believe the U.S. dollar is necessarily the world's standard. If it crashes, there will be other currencies (countries) to take its place. As I said, people would revert to trading goods and services for goods and services until a new currency was put in place. Not gold. The reason is very simple. Normal people who make up the bulk of the population and, thus, the economic control, cannot afford to buy gold. A few rich people buying gold is not going to have a significant impact on this. >>
Here is a theory (of mine offcourse). Forgive me if it sounds ridiculous.
Iraq had moved over to the Euro for Oil. They no longer were taking in dollars for their oil. I still believe that Uday, Qusay and Saddam were all carrying dollars to bribe the US solidiers by offering them some greenbacks, if they were caught.
When saddam came out and said "let's negotiate", he didn't intend negotiate to mean, with the US Govt or the coalition. He meant, Mr. Joe GiJoe, let's negotiate.
<< <i>Here is a theory (of mine offcourse). Forgive me if it sounds ridiculous. Iraq had moved over to the Euro for Oil. They no longer were taking in dollars for their oil. I still believe that Uday, Qusay and Saddam were all carrying dollars to bribe the US solidiers by offering them some greenbacks, if they were caught. When saddam came out and said "let's negotiate", he didn't intend negotiate to mean, with the US Govt or the coalition. He meant, Mr. Joe GiJoe, let's negotiate. >>
I'm not sure about that, but it is not totally "ridiculous".
I have heard the theory that one of the major reasons for the war was that Iraq had switched the pricing of their oil from Dollars to Euros. One of the main reasons that the US Dollar is used as a reserve currency around the world is because most world oil is priced in Dollars. So, to some extent, countries keep Dollars around to buy oil if needed. This is a possible reason why the US may not want oil prices to decline. Lower oil prices could equate to a lower demand for reserve dollars.
If several oil-producing countries were to switch the pricing of oil from Dollars to Euros (or gold), then the resrve status of the Dollar could take a hit (some Dollar reserves would be liquidated). The US Governement doesn't want that - they want foreigners to hold on to those Dollars. So while the Dollar falls against commodities and other currencies, it is like a tax on all the foreign holders of Dollars. Essentially, we end up getting a lot of those imported goods for next to nothing. A good deal for the US. That is, until the average consumer loses their job and/or starts to feel the bite of higher prices in their wallet.
Of course, now that the US has taken over, Iraqi oil is once again priced in Dollars. And, possibly, one reason the US doesn't want European interests involved in the rebuilding is that the US doesn't want any Euro control over the oil. Think about it - the only major Europen countries that sided with the US are not part of the Euro - England and Spain (and, I think, Poland too).
Anyway, just a theory (not mine) that is circulating around.
I think that Iraq theory of carrying U.S. dollars is possible. I also concede that the U.S. dollar has taken a hit in the international market. I also think it will recover, as the economy is expected to continue to recover this year. I don't even like George Bush, and I have to admit that the economy is improving. This should put upward pressure on our currency to help stabilize the world's economy. We can't keep getting a free ride for nothing. The fed has relaxed interest rates right now, while the economy recovers, and the supply of money is increasing to help stimulate the recovery (and because inflation is low). Yes, we have a trade and a job deficit right now, but I see that improving in 2004. Remember back in college in Economics 101 when we were taught the theory of "comparative advantage?" Well, I think this is taking shape now as we become more of a world economy. Nations are becoming more specialized at certain goods and services in this new world economy. It is becoming economically advantageous for certain countries to produce specific goods and services. I don't have a problem with this. I think our country is good at things like aerospace, defense, agriculture, pharmaceuticals, certain industrial products, and certain technologies. If we concentrate our efforts on the things we are good at, we can continue to improve the economy, and, thus, the currency, which is really just a reflection of the economy. The way we do this is to have confidence in our government and invest in the businesses that will create new jobs.
I pretty much buy into Strauss and Howe's The Fourth Turning. They also don't paint any Kodak moments for Boomers. But they don't paint a pretty picture for anyone else either. Their theory is based on cycles they call the High, the Awakening, the Unraveling, and the Crisis. The last Unraveling according to them was the Dapper/Flapper Era and the Crisis that followed was the Great Depression that culminated with World War ll. All Crisis Eras, cumulate with a major, major event that is usually unforeseeable at the start of the Crisis. Before WWll, the crisis culmination was the Civil War and before that it was the American Revolution. So far Crisis Eras have propelled us higher but they don't have to. The culmination of a Crisis Era can also destroy us since they have always been, gloves off, to the death between opposing forces.
If what they say on page 300 comes to pass, we're all deep do-do. Especially since they believe we *might* be coming to the end of the current unraveling and entering the Crisis phase in 2005.
"What present-day tensions will the next Fourth Turning resolve? Most likely, they will be Culture Wars updates of the perennial struggle between the individual and the collective--with new labels dating back to our recent Consciousness Revolution." End Quote
That sounds to me like a cute way of saying Civil War. ??? Well, gold, silver and even copper did well during the last one.
"It's an experimental division at Ft. Benning, and your lucky to be assigned there rather than anywhere else, because nobody knows anything about it, which means that you should know quickly as much about it as anybody." 1st Cav in Vietnam Shelby Stanton
The dollar has resumed its fall. This is really inevitable and would likely occur with or without government assistence. They are probably talking down the euro largely to slow the descent of the dollar. It's about to hit maximum velocity this week and we'll be able to get a better idea of where it will end up when it slows.
So far markets have been very well behaved but a breakout in gold will cause the central banks to attempt to slow the fall. Gold should be sharply higher by weeks end.
It's way too early to panic as all these moves to date will work to stabilize the markets and prevent a sudden and overdone shift in sentiment.
The 19th Century was for the Europeans. The 20th Century was for the old US of A. The 21st Century is for China. They are growing economically at a rate 8 times our country. My Chinese stocks have been amazing.
Charis, eleos, kai eireenee para Theou (Grace, mercy, and peace from God, in ancient Koine Greek),
Perro: yes, China and more accurately Asia will run the 21st century.
The United States is an aging superpower and closely resembles The Roman Empire of AD 175.
We are in the midst of a Patriot Act to protect ourselves from enemies within. Enforcement of current laws is not enough according to our leaders. We must trust our military and law enforcement to run our country.
Souinds eerily remiscent of the internal fight Marcus Aurelius faced in AD 175 when he finally realized that returning Rome back to the original Republic was the only way to save the Empire. He faced resistance in almost all quarters including his generals and his family.
Another parallel is the British Empire of 1890-1900.
Just wait when China formally runs over Taiwan. That day is coming. We will do nothing. China plus Taiwan plus Hong Kong will make us wake up too late to realize that we are just a paper tiger.
The dollar has resumed its fall. . . . It's about to hit maximum velocity this week.
What do you base this on? Be interesting if it does, as I recently purchased some calls in a company whose business is silver. (If anyone cares, PAAS is the co, contracts are the 7/04 $17.50 calls. Me likes me leverage!)
Just spent a 1/2 hr reading this thread. Lots of folks here with thoughtful opinions on the topic. I'd have to agree with the position that in a crisis, the general population will not think to buy gold to protect themselves. Take Argentina, for instance. Here's a country that has experienced multiple events where the savings of a large segment of the population was wiped out by inflation. Yet gold ownership is not high there. The population buys buy dollars. In fact, if you travel the world, you'll notice that in countries with a history of currency problems, and that's most except the most developed countries, a short stack of Ben Franklins is virtually guaranteed to get you out of just about any jam. The reason is simple. The dollar has held steady for so long that it's become, in the minds of most people, as good as gold. It is in fact one of the few currencies in the world that has never been recalled... you can still spend a dollar that was printed 100 years ago; you may not want to, but unlike most currencies, you could. In one important way dollars are better than gold because you can just spend them, unlike gold which has to be sold and then the cash spent.
Ok, now that I've sung the dollar's praises, here's the problem. This is long, so please bear with me. I can't state the problem any better than investor Jim Rogers so I'll quote an article of his from Feb. 2003 that you can find on his web site
In late January, the Senate confirmed John Snow as our new U.S. Treasury Secretary, the 73rd in the government agency’s two-hundred plus year history. Snow, like Paul O’Neill and Robert Rubin before him, promised to follow a strong dollar policy and take steps to help spur on a U.S. economic recovery and long-term growth.
Well, I know you’ve just started your new job, Mr. Snow, but I’ve got some sobering news for you. You and your pals can keep talking about this alleged "strong dollar policy" until you’re blue in the face, but it’s not going to make a lick of difference if you don’t start managing our currency more responsibly. The dollar is not just in decline; it’s a mess. If something isn’t done soon, I believe the dollar could lose its status as the world’s reserve currency and medium of exchange, something that would lead to a huge decline in the standard of living for U.S. citizens like nothing we’ve seen in nearly a century.
"Oh, Jim," the disbelievers crow. "You’re just being extreme. That would never happen. After all, the dollar has reigned supreme for several decades"
True, but it seems to me that people forget that that supremacy isn’t a gimme. A sound currency, after all, reflects solid economic fundamentals: little to no debt, a trade surplus, a stable balance of payments—the difference between a nation's receipts of foreign currency and its expenditures of foreign currency—and growing international reserves.
That’s not exactly the picture you get when you look at the U.S. balance sheet. Our national debt to foreigners is now around $6.4 trillion, with interest payments alone last year totaling $333 billion. We’re importing far more goods than we are exporting. International reserves remain around $60 billion, but we’re attracting far less direct foreign investment every year. Our current account deficit runs at roughly $500 billion a year, or five percent of our gross domestic product. Think of it this way: It costs us about $1.3 billion a day in the foreign markets just to keep the dollar afloat. Our $60 billion of reserves against our obligations would last 3 minutes if creditors begin cashing in. We’re like the untrustworthy brother-in-law who keeps borrowing money, promising to pay it back, but can never seem to get out of debt. Eventually, people cut that guy off.
I noted this same trend earlier, in the summer of 1999 when gold was at $258, silver $5.3 and platinum $350 per oz and was heavily buying all of them. I figured that these historically very low prices were due to a combination of over-valuation of the dollar and a pricing-in of expected decline in demand for these commodities post-bubble.
Turns out to have been a good bet. With gold now at $409, silver $6.22 and platinum $860 per oz, if I sold I'd make a good profit. The question for me is, do I take profits now or will the trend stay in place, with the dollar continuing to decline and demand continuing to increase? For this bet to pay off, the U.S. economy doesnt' have to go to hell, although that's not as unlikely a possibility as you might think, but all other countries have to continue doing relatively better. Meaning, the U.S. has been so successful at exporting its economic system worldwide, that not only China and India are doing well, but so are Romania, Brazil, Mexico, Russia... you name it. In other words, in aggregate, all these other countries represent to each other a more significant trading block than the U.S. does to all of them alone. This means that the U.S. centric system that was created back in the 1980s, as signified by the Plaza Accord (agreement among Ministers of Finance and Central Bank Governors of France, Germany, Japan, the United Kingdom, and the United States), is coming apart. The system has the U.S. borrowing the savings from the world's exporters (Asia export block and European export block) and buying their exports with it. The U.S.-centric trade and currency era is coming to an end and a new system is developing to take its place. Evidence that the system is now very strained is that for the past six months or so the export block's central banks are buying tons of US Treasury bonds and building massive dollar reserves in the process in order to take up the slack left by departing individual investors worldwide. If they don't do this, 1) US long rates raise, which hurts the US economy and weakens US demand for their exports to the US and 2) the dollar weakens further and their currencies strengthen, also hurting exports.
All that needs to happen to crash this system is for one medium sized export block country's central bank to break ranks. One may be motivated to do it as a result of domestic demand and trade relationships outside the US which together make the US less important as a trading partner. One day they may decide that the pain of not buying dollars is less than the pain from buying them. Then the results could be highly unpredictable. Here's what Peter Drucker, not exactly the doom-and-gloom type, has to say about it:
Question: You sound fairly sanguine about the state of the U.S. economy. Do you see any danger signs?
Answer: Oh, yes. The biggest problem I see is our total dependence on foreign money to cover our government debt. Never before has a major debtor country owed its debt in its own currency. It is unprecedented in economic history. Japan, by contrast, owes all its foreign debt in dollars. Now if you devalue the dollar, the Japanese economy benefits, because their imports become much cheaper. And the value of their debt goes down also. The individual Japanese companies that invest in dollars would lose, but the overall Japanese economy gains. But we have no experience about what will happen here when we owe so much debt in our own currency and we're forced to devalue the dollar. Sooner or later, we're going to find out.
What's more, there is an enormous amount of surplus capital in the world for which there is no productive investment. The supply greatly exceeds the demand. So there is a very jittery body of excess money that is desperately in need of returns, and it could become panic-prone. We have no economic theory or model for this.
The trend for a long term decline in the dollar and rising global commodity demand is firmly in place. The old US centric system, central to the world economy since the mid-1980s, is reaching a critical transition point. One can argue that the transition will be sudden and catastrophic resulting in a sudden decline of the dollar and a major impact on the living standards of US citizens or it will be gradual, resulting in a steady decline in living standards unless the US can quickly build a new capital formation base on top of as-yet undeveloped products and services new innovations to export. For this reason I expect to hang onto my commodity investments and expect them to continue to hedge dollar risk (increasing naminal value) and increase in value due to rising demand (increasing real value).
Very interested to hear your comments.
Estragon: I can't go on like this. Vladimir: That's what you think. - Samuel Beckett, Waiting For Godot
Great post! I respect the opinions of both Jimmy Rogers and Peter Drucker, and appreciate you pointing them out. Good move to invest in Au, Ag & Pt when the prices were at inflation-adjusted historic lows a while back.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
oreville--I couldn't agree with you more! I don't want it to happen. I'll fight it as hard as I can because I love my country, but I'm afraid it will be like trying to stop a meteor with will power and your pinky finger. Funny, when I was writing a post on this topic in great depth, with economics & history, along with current trends, the first thing I thought of as Rome. I've been saying to myself, we are in decline & decay and in the meantime, there isn't a single politician or group or politicians,nor any president that is willing to take on the decay because they are afraid to and worry only about themselves and because if they did what was necessary, we would all object so strenuously becaude we are blissfully asleep & comfortable. But not Asia, they are wide awake, motivated and the hardest working people in the world (politics aside). Good Post!!!
Charis, eleos, kai eireenee para Theou (Grace, mercy, and peace from God, in ancient Koine Greek),
It seems that nature including the affairs of man will create an opportunity for new cultures and societies to arise and prosper. But all societies seem incapable of any real change. Instead they make small adjustments based on the established order until they either blissfully fade into history or more likely crash and burn. The seeds of a societies destruction are always present even in their establishment, but it is the change in nature and the closing of the niche which eventually does them in.
The US is one of the most adaptable societies which has existed. Ultimately this won't be sufficient, but our changeable constitution and technology should allow us to hang on for many more years. It could even give us time to make real change though it would be wise to begin the process immediately since there are so many unknowns.
"How's all this controversy related to coin collecting anyway??" --Aussilover
As Orville mentioned, it affects the prices of coins. Not only that, but precious metals such as gold and silver have been the main ingredients of coins (also called "hard money") for thousands of years. This topic is extremely relevant to coin collecting.
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
The scary part is that we modeled our society upon the British system which in itself was modeled on the Roman system.
We have only been around less than 300 years. World superpower less than half of that. A blip compared to the Roman economic domination of the world.
What does this mean in coins?
Once we decline in economic importance will we still want to collect our coins? Will the Asians still want to collect our gold stellas? Perhaps for a generation or so but not much more.
Once we recede in importance and settle back to the rest of the world, Russian style, and pay our allegiance to the new superpowers whoever they may be, the world will no longer consider our coins as historically important as now.
I foresee a long term decline in our hobby after the mid 21st century to that approximately the level of the British and Roman coin hobby. Their coins are cheap and very plentiful. Our coins are also plentiful and will remain plentiful but become much cheaper unlike now. Why? Our coins will become interesting novelties of a "former empire" just as the Roman and British are now. Their history is fascinating but is not worth paying too much for.
Most of us wiill never see this in our lifetimes although, our younger collectors such as airplanut et, al will see all of this unfolding over the next 20-50 years.
We have abused our own economic system for too long now to reverse the tide. Too many of us fail to get it. We buy at the WalMarts and concern ourselves with price only and buy only foreign made (now mostly China) products and put our next door neighbor out of a job. I daresay that in my opinion, WalMart is now probably the most unpatriotic company I have ever seen in my entire life. Shocking when they were on the Buy American campaign while Sam Walton was alive. He is turning over in his grave right now. In my opinion, Walmart has done more to destroy our country economic base than any other single entity. You wait and see.
On this gloom and doom scenario, I would opine that China is not without its own obstacles and difficulties in achieving the world dominance you forsee for them, not the least of which stems from the treatment of their own populace. I would also think that, radical Islamists' daydreams to the contrary, this is far less of an "us vs. them" world than at any other time in history.
Comments
> hey I like them all when they are 64 or higher!
Thanks. Mine are 64 and 65s. Not beyond. I started it as an investment and then I kind of started
liking it so decided I will not sell them. I have 120 of them.
<< <i>If the economy collapsed, we WOULD indeed go to a barter system. Just look at some historical examples like Russia. Their currency has such huge inflation that many people don't even use it. They ALSO don't use GOLD!!!!!! They use a black market barter system, trading goods and services for goods and services. A few rich families and governments controlling a good or commodity has, historically, not controlled something long-term as the above thread suggests. The multitudes of the middle class are what long-term controls the economy. And, they are NOT buying NOR are they using gold in the real world -- even where economies are shaky. >>
When the Russian economy "collapsed" (it didn't really fully collapse) during the transition from communism, the average citizen didn't use gold. Because they didn't have any !!! You can't use something you don't have. But they would have used it if they had any.
Russia recently announced that they have increased their official gold reserves and may be looking to increase them further.
Look at the prices of common Czarist Russian gold coins. They've gone up quite a bit lately - more so than just the price of gold. Since the economy in Russia has improved, maybe more Russian citizens are buying gold coins.
But here is an article that gives a good example of how a people in another part of the world view gold vs paper currency during tough times:
The Pharisee's Role In Gold And The Dollar Crash
If you guys and gals want to invest in gold, go ahead. The bottom line is, I STILL think precious metals stink, and I will continue to put my faith in our country, stocks, and real estate. I am not going to worry about the sky falling down on my head. I am going to follow basic investment principles -- the ones that other self-made millionaires follow. I think the U.S. dollar will rebound against other currencies, and will continue to be the preferred medium of exchange in this country.
Check out a Vanguard Roth IRA.
<< <i>The bottom line is, I STILL think precious metals stink, and I will continue to put my faith in our country, stocks, and real estate. I am not going to worry about the sky falling down on my head. >>
You see thats just it, I have NO faith in my country what so ever. Gold is a form of currency, when the fed currency dont buy anything of value,in my opinion, based on my economic circumstances, So I convert my fed currency into a form of money that I feel comfortable with, Gold. Only the wealthy in america benifit from this type of economy, and more and more are becoming poor. Good investment or not, If I have $800 to spend I am going to buy a gold coin with it because I know I can always sell it at anytime, either for a loss or a profit, at least I can get some or most of my money back.Not so with anything else.
Sir, on 9/12/2001 the stock market was 0. Dow, S&P, whatever you want to call it..... it was 0.
I have been employed in the electrical generation and distribution field for over 20 years, so believe me when I say that at any given time, the US is only a few moments, or at best hours away from problems that make 9-11 look like a stubbed toe. Because of the vast expense associated with producing components for our power plants and substations (turbine/generators, transformers), some equipment is only made and used for one plant or application...there are no spare parts for many things. The turn around time for some of this equipment can be measured in months, or even years. Much of this equipment is very vulnerable to attack, some can be removed from service from afar with a rifle.
The plants are networked together by an electrical grid of interconnected lines, transformers, breakers and switches. As was seen last year on the east coast, at times of great stress on the system (generally the summer cooling or winter heating seasons), the tripping of one plant can have a domino effect whereby whole areas of the US are without power.
If you know what you are doing (believe me, the terrorists are not ignorant of this), a few people with rifles could do things to the United States electrical system that would have great areas, such as the whole eastern or western seaboard for instance without power for a period of months. Do you think that this would have an effect on US business?
Imagine a situation where the US was blacked out from the Mississippi east to the Atlantic coast during the winter months. No electricity, no heat, broken pipes, no way to pump fuel for your car. no computer. Many thousands, if not millions would freeze to death. What would your stock be worth then?
It was not always like this. In the not too distant past, the utilitys were for the most part regulated and planned ahead for increases in electrical demand and failures in the system. Then came the years with the threat of deregulation...power companies were under the gun to reduce costs. Many times preventative maintainence was overlooked on things to keep the budgets down. If extra parts were being held for equipment, they were taken out of stock and gotten rid of so that the companies were not charged for holding large inventories. Many areas of the power industry cannot operate reliably in a "just in time" world.
What would your job turn into if you did not have electricity for six months? Would you still have a job? How would you eat? As a rule, the US population is very smug in the fact that they have this, that, or some other material goods to make them feel important; believe me, as many in foreign nations have found out when their infrastructure crumbles, most college degrees and marketable skills in business have very little worth.
If your living your life believing that the good old USA is invincible, pull your head out of the sand. This is not a "chicken little" scenario, but a wake up call. I don't know if holding precious metals is the answer, but at least explore the option. Take a look at your life style...plant a garden...and realize that you're not getting the whole picture on US problems from the government or the news. Take a look into the frailty of our power system and understand where we're really at. A few crashed planes is the least of our worries.
Instead of printing more "I owe you" dollars, the Bush admin or any future admin may be trying to let the dollar fall and they could retire the country's debt in gold by raising the Fed Gold Reserve hold price from $42.2222 per troy ounce to say may be $ 100.
That way they do not lose anything. They already hold underpriced gold what's there to lose by raising it by say 105%...it will still be below spot.
Just a rant.... please let me know if this argument holds any validity.
Also refer to this link, it has some interesting things to say.
Absurd?
Well, they did it in 1933.
Would you rather have kept your Saints for your future or turned them in for twenty bucks?
Now....someone....has gotta come up with "but you could have INVESTED the 20 bucks in real estate."
And that is true. And it would have done more than the Saint has done to date.
BUT....for the time after the revaluation, you would have had less than the guy who KEPT the gold and AFTERWARDS sold it and invested in RE.
HOWEVER......what everyone seems determined to overlook is that "means testing" is just around the corner. To save Social Security, they will (have to an extent) CHANGE THE RULES. This is not YOUR government. It is your MASTER. It taketh and does not dispenseth to the "takees." Even now, as we speak, people are devising ways to "spend down" assets to qualify for Medicaid.
Now....would you rather spend down your assets or have some invisible assets for your old age?
One glaring problem is that we are too damn busy trying to "make ends meet" to pay any attention to the effect of a dollar dump.
"No effect yet seen" on the dollar dump? Wait til spring and check out the prices of IMPORTED clothing and junk. UP A BUNCH it will be.
Hey. Maybe buying "imports" will again be fashionable and for the wealthy.
What a comedy.
RYK - Words of wisdom.
Tyler
Edited to Add: I don't believe the U.S. dollar is necessarily the world's standard. If it crashes, there will be other currencies (countries) to take its place. As I said, people would revert to trading goods and services for goods and services until a new currency was put in place. Not gold. The reason is very simple. Normal people who make up the bulk of the population and, thus, the economic control, cannot afford to buy gold. A few rich people buying gold is not going to have a significant impact on this.
Check out a Vanguard Roth IRA.
<< <i>Look at Iraq. At the beginning of 2003, it was a huge debtor nation. Its currency was being printed, but had little to back it. >>
The US happens to be the largest debtor nation. So the Iraqi dinar had little to back it, please enlighten me as to what is backing the US dollar. I must have cut class that day.
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The U.S. has never defaulted on a debt in its over 225 years of existence and has taxed at rates in excess of of over 90% in the past in order to repay its obligations.
The U.S. will not fail to meet its obligations.....however; that may mean an inflation rate of 18% per year which is a different kind of tax.
Check out a Vanguard Roth IRA.
Except we are creating far more jobs and income for India, Asia, and every other third world country than we are here. We then import these goods that they manufacture and buy them on credit, or with the proceeds of the third refinance of the family home. Yes, this is a sure-fire plan for long term economic success.
A sobering link
http://www.publicdebt.treas.gov/opd/opdpenny.htm
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We do not KNOW if he had gold holdings and probably never will. That is the BEAUTY of the gold.
When we had the idiotic idea to invade Iraq, if we had put our dollars in gold, we would now have more dollars. Gold is simply a "haven."
And when its day comes, the .....rich ..... people will be selling it to the little guy who will be scampering for it at any price. I have seen it happen.
As for the "currency" of gold, ask any Vietnam immigrant what was needed to get on the boat to the welfare state of America......gold. If you didn't have any, you were dumped off the boat.
While they collected welfare here, they sold gold taels to me in my coin shop.
WHAT? They were on welfare with GOLD? Oh yeh.
Even steven.....well.....even ...jbsteven... will find that the demand for his online passports (if there is an exodus) will come from gold holding evacuees.
100 oz of gold is the ...........ONLY............International currency.
Gold will set you up in any nation in the world. Now it may be a hut with some goats or it may be a scone stand, but ONLY gold will be purchased GLOBALLY......in whatever currency holds the local "full faith and credit."
Gold is simply now in its cycle. The cycle goes from gold to debt. When gold was $800, smart money sold it and bought bonds. They will do so again.
Income to storage....storage to income. endlessly.
In your edit you state, "If it crashes, there will be other currencies (countries) to take its place"
Very true.....but.....If it crashes, what are you gonna use to get those "other currencies?"
Edited to Add: Not only does gold suck as a long-term wealth-building investment, but so do bonds. I do not have a single dollar in either one, nor to I plan on it. The only time I might consider bonds is if I were already retired, had millions of dollars in assets, and were just trying to obtain some tax-free income.
Check out a Vanguard Roth IRA.
If there were a true crisis like a Great Depression or worse does anyone really believe anything will have appreciable value? If you have lost your life savings/job will you buy a car? A house/apt building? Coins? Gold? How will gold go up or maintain its value if no one has money to buy it? Assuming "smart money" has some form of money they will probably be preparing for the next boom and NOT be buying gold but real estate, companies in bankruptcy, etc.
What Americans are blind to is that we are witnessing a growing rift between the "classes". Those affected seek scapegoats [Dems/Reps/Illegals/etc. take your pick] to assess blame and make themselves feel good. Reality is the world's affluence is growing and people who have a fraction of what Americans have want cars, refrigerators, homes, etc. This creates demand and since we hardly manufacture anything anymore that demand has zero impact on our economy.
Part two of this scenario is the advent of the computer/internet based commerce. White collar office jobs are going overseas and will continue to do so. The government can slow down the process but not stop it. We are our own worse enemy, we demand lower prices to consume more but really cannot afford to consume what we do so to keep the cycle going so costs have to come down. The easiest way to do that is going offshore.
Reality is if we are the largest market in the world and we stop consuming, what happens if the rest of the world cannot consume like we do? Suddenly there is no demand for what they make.
Relax and buy some value stocks, dump gold except for a Saint or two. Your money is better spent generating more paper...yes dollars!
I've got stocks, I've got bonds, there's gold and silver in my safe, and there is also guns and ammo.
I've got a house 2/3 paid for, and some bottled water and canned goods, and also some mutual funds.
I hold some foreign stocks, as well as some foreign currencies.
Come hell or high water, I think the key to protecting yourself is diversification among asset classes.
That, and asset allocation (meaning rebalancing your holdings, when the market moves) have served me very well these past 20 years, and my suspicion is that they will continue to work just fine for the next 20.
Great thread, good luck to all...
Liberty: Parent of Science & Industry
<< <i>Well, I certainly don't know what is going to happen, but sure don't have all my eggs in one basket.
I've got stocks, I've got bonds, there's gold and silver in my safe, and there is also guns and ammo.
I've got a house 2/3 paid for, and some bottled water and canned goods, and also some mutual funds.
I hold some foreign stocks, as well as some foreign currencies.
Come hell or high water, I think the key to protecting yourself is diversification among asset classes.
That, and asset allocation (meaning rebalancing your holdings, when the market moves) have served me very well these past 20 years, and my suspicion is that they will continue to work just fine for the next 20.
Great thread, good luck to all... >>
Yes. This makes perfect sense. It is the best way to thrive and survive.
Just as it can make sense to occasionally take a flyer on a lottery ticket, it
can make perfect sense to occassionally put a lot more money in one bas-
ket. If you're sure something will increase and you can cut your losses if
you are wrong then taking some added risk from time to time can be reward-
ing behavior.
By the same token those who continuously assume such risk will tend to
eventually be wiped out. Some will make and lose several fortunes in a
lifetime, though.
And yes, the new currency in Iraq has nothing to do with gold. I wouldn't expect aything else, given that their new economy is being set up by the anti-gold US.
True, you can't buy real estate or many other things in this country with gold (unless the seller is willing to accept gold, which some might). But you can't buy things with loafs of bread either, even though bread is probably the ultimate essential commodity. The US has never defaulted on it's obligations, and all non-confederate paper money printed since 1861 is still valid at face value. But that doesn't mean that it's *value* is constant.
If the US economy were to collapse, gold would not immediately step in and be a major medium of exchange because the US economy, more than any other economy in the history of the developed world, has been weened off gold and is entirely fed by paper (and faith in that paper). But gold would increase in *value* and it would be accepted in exchange for goods.
I don't see any kind of gold standard ever returning to the US. The powers that be get just too big a benefit from the fiat paper money issuance to ever give it up.
During the Great Dpression, the price of gold (and it's purchasing power) went UP. Money was not destroyed during the Great Depression. What really happened was that the money became concentrated in the hands of fewer people. The rise, and subsequent drop, in the stock market ultimately was a benefit to the rich elites at the expense of the broader population. The wealthy elites sold stocks in 1929 and bought gold throughout the depression. The reason gold went up during the depression was that faith in banks decreased and cretit worthiness across the board was in question. People wanted a place to park their money that was not tied to someone else's promise to pay.
But again, I don't believe that there will be any sort of collapse in the US economy, so long as energy (petroleum) is available. But a scenario could unfold that has characteristics of both the 1929-1933 and 1976-1980 time periods - what I would call "hyper-stagflation".
<< <i>I know I'm not going to change any opinions one way or the other, but please consider this real world example. Look at Iraq. At the beginning of 2003, it was a huge debtor nation. Its currency was being printed, but had little to back it. The economic and political situation was completely unstable. No one bought gold. Even Saddam Hussein and his family put their money in U.S. dollars and euros, in addition to real estate (presidential palaces). Then, we invaded it in March. Still, no one bought or used gold. After the "end of hostilities", still no one bought or used gold. In fact, after the "end of hostilities", our military found stashes of U.S. currency all over Iraq throughout 2003. At the end of 2003, when we found Saddam Hussein, guess what? He was found with $750,000 in U.S. currency. Not a single ounce of gold by even the richest man in Iraq. How about that? Well, like I said, this is a very recent real world example to consider, and I probably won't change any minds here. People are trading goods and services for goods and services. Now, a new currency is taking the place of the old currency in Iraq. No gold here. I'm still going to follow my basic long-term investment strategy that most financial experts advise, and I'm still going to have faith in this country. You cannot buy good growth-stock mutual funds and paid-for real estate with gold in this country. People normally will accept U.S. currency in a business transaction, not gold. In spite of all of our problems, we are still one of the strongest and richest countries in the world. Even if this were not the case, I still cannot logically see a case for gold. The only purposes I see for gold are industrial (in ICs) and in jewelry or coins if you enjoy it.
Edited to Add: I don't believe the U.S. dollar is necessarily the world's standard. If it crashes, there will be other currencies (countries) to take its place. As I said, people would revert to trading goods and services for goods and services until a new currency was put in place. Not gold. The reason is very simple. Normal people who make up the bulk of the population and, thus, the economic control, cannot afford to buy gold. A few rich people buying gold is not going to have a significant impact on this. >>
Well Mr Iraq was selling $25 million worth of oil every day, so I don't find it surprising that he had a stash of dollars.
And I *loved* that "brass bars" story. I can't tell you how many times I thought I had gold but it turned out to be a brass bar instead!
Here is a theory (of mine offcourse). Forgive me if it sounds ridiculous.
Iraq had moved over to the Euro for Oil. They no longer were taking in dollars for their oil. I still believe that Uday, Qusay and Saddam were all carrying dollars to bribe the US solidiers by offering them some greenbacks, if they were caught.
When saddam came out and said "let's negotiate", he didn't intend negotiate to mean, with the US Govt or the coalition. He meant, Mr. Joe GiJoe, let's negotiate.
<< <i>Here is a theory (of mine offcourse). Forgive me if it sounds ridiculous.
Iraq had moved over to the Euro for Oil. They no longer were taking in dollars for their oil. I still believe that Uday, Qusay and Saddam were all carrying dollars to bribe the US solidiers by offering them some greenbacks, if they were caught.
When saddam came out and said "let's negotiate", he didn't intend negotiate to mean, with the US Govt or the coalition. He meant, Mr. Joe GiJoe, let's negotiate. >>
I'm not sure about that, but it is not totally "ridiculous".
I have heard the theory that one of the major reasons for the war was that Iraq had switched the pricing of their oil from Dollars to Euros. One of the main reasons that the US Dollar is used as a reserve currency around the world is because most world oil is priced in Dollars. So, to some extent, countries keep Dollars around to buy oil if needed. This is a possible reason why the US may not want oil prices to decline. Lower oil prices could equate to a lower demand for reserve dollars.
If several oil-producing countries were to switch the pricing of oil from Dollars to Euros (or gold), then the resrve status of the Dollar could take a hit (some Dollar reserves would be liquidated). The US Governement doesn't want that - they want foreigners to hold on to those Dollars. So while the Dollar falls against commodities and other currencies, it is like a tax on all the foreign holders of Dollars. Essentially, we end up getting a lot of those imported goods for next to nothing. A good deal for the US. That is, until the average consumer loses their job and/or starts to feel the bite of higher prices in their wallet.
Of course, now that the US has taken over, Iraqi oil is once again priced in Dollars. And, possibly, one reason the US doesn't want European interests involved in the rebuilding is that the US doesn't want any Euro control over the oil. Think about it - the only major Europen countries that sided with the US are not part of the Euro - England and Spain (and, I think, Poland too).
Anyway, just a theory (not mine) that is circulating around.
Check out a Vanguard Roth IRA.
I pretty much buy into Strauss and Howe's The Fourth Turning. They
also don't paint any Kodak moments for Boomers. But they don't paint
a pretty picture for anyone else either. Their theory is based on cycles
they call the High, the Awakening, the Unraveling, and the Crisis.
The last Unraveling according to them was the Dapper/Flapper Era and
the Crisis that followed was the Great Depression that culminated with
World War ll. All Crisis Eras, cumulate with a major, major event that
is usually unforeseeable at the start of the Crisis. Before WWll,
the crisis culmination was the Civil War and before
that it was the American Revolution. So far Crisis Eras have propelled us higher
but they don't have to. The culmination of a Crisis Era can also destroy us
since they have always been, gloves off, to the death between opposing forces.
If what they say on page 300 comes to pass, we're all deep do-do.
Especially since they believe we *might* be coming to the end of the
current unraveling and entering the Crisis phase in 2005.
"What present-day tensions will the next Fourth Turning resolve? Most
likely, they will be Culture Wars updates of the perennial struggle between
the individual and the collective--with new labels dating back to our recent
Consciousness Revolution." End Quote
That sounds to me like a cute way of saying Civil War. ???
Well, gold, silver and even copper did well during the
last one.
"It's an experimental division at Ft. Benning, and
your lucky to be assigned there rather than anywhere
else, because nobody knows anything about it, which
means that you should know quickly as much about it
as anybody."
1st Cav in Vietnam
Shelby Stanton
I'm an optimist though. I think things will be just fine for people, as they always are.
sure there are struggles, and highs and lows. But overall, people end up figuring things out.
Liberty: Parent of Science & Industry
or without government assistence. They are probably talking down the euro largely
to slow the descent of the dollar. It's about to hit maximum velocity this week and
we'll be able to get a better idea of where it will end up when it slows.
So far markets have been very well behaved but a breakout in gold will cause the
central banks to attempt to slow the fall. Gold should be sharply higher by weeks
end.
It's way too early to panic as all these moves to date will work to stabilize the markets
and prevent a sudden and overdone shift in sentiment.
ttt- for those interested.
perro
Tbig
The United States is an aging superpower and closely resembles The Roman Empire of AD 175.
We are in the midst of a Patriot Act to protect ourselves from enemies within. Enforcement of current laws is not enough according to our leaders. We must trust our military and law enforcement to run our country.
Souinds eerily remiscent of the internal fight Marcus Aurelius faced in AD 175 when he finally realized that returning Rome back to the original Republic was the only way to save the Empire. He faced resistance in almost all quarters including his generals and his family.
Another parallel is the British Empire of 1890-1900.
Just wait when China formally runs over Taiwan. That day is coming. We will do nothing. China plus Taiwan plus Hong Kong will make us wake up too late to realize that we are just a paper tiger.
The changeover will happen around the year 2020.
What do you base this on? Be interesting if it does, as I recently purchased some calls in a company whose business is silver. (If anyone cares, PAAS is the co, contracts are the 7/04 $17.50 calls. Me likes me leverage!)
It has to do with coins in that it affects the price of US and foreign coins that we buy and sell.
Ok, now that I've sung the dollar's praises, here's the problem. This is long, so please bear with me. I can't state the problem any better than investor Jim Rogers so I'll quote an article of his from Feb. 2003 that you can find on his web site
http://www.jimrogers.com/content/stories/articles/THE_DOWNWARD_SPIRAL.htm
In late January, the Senate confirmed John Snow as our new U.S. Treasury Secretary, the 73rd in the government agency’s two-hundred plus year history. Snow, like Paul O’Neill and Robert Rubin before him, promised to follow a strong dollar policy and take steps to help spur on a U.S. economic recovery and long-term growth.
Well, I know you’ve just started your new job, Mr. Snow, but I’ve got some sobering news for you. You and your pals can keep talking about this alleged "strong dollar policy" until you’re blue in the face, but it’s not going to make a lick of difference if you don’t start managing our currency more responsibly. The dollar is not just in decline; it’s a mess. If something isn’t done soon, I believe the dollar could lose its status as the world’s reserve currency and medium of exchange, something that would lead to a huge decline in the standard of living for U.S. citizens like nothing we’ve seen in nearly a century.
"Oh, Jim," the disbelievers crow. "You’re just being extreme. That would never happen. After all, the dollar has reigned supreme for several decades"
True, but it seems to me that people forget that that supremacy isn’t a gimme. A sound currency, after all, reflects solid economic fundamentals: little to no debt, a trade surplus, a stable balance of payments—the difference between a nation's receipts of foreign currency and its expenditures of foreign currency—and growing international reserves.
That’s not exactly the picture you get when you look at the U.S. balance sheet. Our national debt to foreigners is now around $6.4 trillion, with interest payments alone last year totaling $333 billion. We’re importing far more goods than we are exporting. International reserves remain around $60 billion, but we’re attracting far less direct foreign investment every year. Our current account deficit runs at roughly $500 billion a year, or five percent of our gross domestic product. Think of it this way: It costs us about $1.3 billion a day in the foreign markets just to keep the dollar afloat. Our $60 billion of reserves against our obligations would last 3 minutes if creditors begin cashing in. We’re like the untrustworthy brother-in-law who keeps borrowing money, promising to pay it back, but can never seem to get out of debt. Eventually, people cut that guy off.
I noted this same trend earlier, in the summer of 1999 when gold was at $258, silver $5.3 and platinum $350 per oz and was heavily buying all of them. I figured that these historically very low prices were due to a combination of over-valuation of the dollar and a pricing-in of expected decline in demand for these commodities post-bubble.
Turns out to have been a good bet. With gold now at $409, silver $6.22 and platinum $860 per oz, if I sold I'd make a good profit. The question for me is, do I take profits now or will the trend stay in place, with the dollar continuing to decline and demand continuing to increase? For this bet to pay off, the U.S. economy doesnt' have to go to hell, although that's not as unlikely a possibility as you might think, but all other countries have to continue doing relatively better. Meaning, the U.S. has been so successful at exporting its economic system worldwide, that not only China and India are doing well, but so are Romania, Brazil, Mexico, Russia... you name it. In other words, in aggregate, all these other countries represent to each other a more significant trading block than the U.S. does to all of them alone. This means that the U.S. centric system that was created back in the 1980s, as signified by the Plaza Accord (agreement among Ministers of Finance and Central Bank Governors of France,
Germany, Japan, the United Kingdom, and the United States), is coming apart. The system has the U.S. borrowing the savings from the world's exporters (Asia export block and European export block) and buying their exports with it. The U.S.-centric trade and currency era is coming to an end and a new system is developing to take its place. Evidence that the system is now very strained is that for the past six months or so the export block's central banks are buying tons of US Treasury bonds and building massive dollar reserves in the process in order to take up the slack left by departing individual investors worldwide. If they don't do this, 1) US long rates raise, which hurts the US economy and weakens US demand for their exports to the US and 2) the dollar weakens further and their currencies strengthen, also hurting exports.
All that needs to happen to crash this system is for one medium sized export block country's central bank to break ranks. One may be motivated to do it as a result of domestic demand and trade relationships outside the US which together make the US less important as a trading partner. One day they may decide that the pain of not buying dollars is less than the pain from buying them. Then the results could be highly unpredictable. Here's what Peter Drucker, not exactly the doom-and-gloom type, has to say about it:
Question: You sound fairly sanguine about the state of the U.S. economy. Do you see any danger signs?
Answer: Oh, yes. The biggest problem I see is our total dependence on foreign money to cover our government debt. Never before has a major debtor country owed its debt in its own currency. It is unprecedented in economic history. Japan, by contrast, owes all its foreign debt in dollars. Now if you devalue the dollar, the Japanese economy benefits, because their imports become much cheaper. And the value of their debt goes down also. The individual Japanese companies that invest in dollars would lose, but the overall Japanese economy gains. But we have no experience about what will happen here when we owe so much debt in our own currency and we're forced to devalue the dollar. Sooner or later, we're going to find out.
What's more, there is an enormous amount of surplus capital in the world for which there is no productive investment. The supply greatly exceeds the demand. So there is a very jittery body of excess money that is desperately in need of returns, and it could become panic-prone. We have no economic theory or model for this.
The trend for a long term decline in the dollar and rising global commodity demand is firmly in place. The old US centric system, central to the world economy since the mid-1980s, is reaching a critical transition point. One can argue that the transition will be sudden and catastrophic resulting in a sudden decline of the dollar and a major impact on the living standards of US citizens or it will be gradual, resulting in a steady decline in living standards unless the US can quickly build a new capital formation base on top of as-yet undeveloped products and services new innovations to export. For this reason I expect to hang onto my commodity investments and expect them to continue to hedge dollar risk (increasing naminal value) and increase in value due to rising demand (increasing real value).
Very interested to hear your comments.
Vladimir: That's what you think.
- Samuel Beckett, Waiting For Godot
Great post! I respect the opinions of both Jimmy Rogers and Peter Drucker, and appreciate you pointing them out. Good move to invest in Au, Ag & Pt when the prices were at inflation-adjusted historic lows a while back.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
When we are planning for posterity, we ought to remember that virtue is not hereditary.
Thomas Paine
perro
cultures and societies to arise and prosper. But all societies seem incapable of any
real change. Instead they make small adjustments based on the established order
until they either blissfully fade into history or more likely crash and burn. The seeds
of a societies destruction are always present even in their establishment, but it is the
change in nature and the closing of the niche which eventually does them in.
The US is one of the most adaptable societies which has existed. Ultimately this won't
be sufficient, but our changeable constitution and technology should allow us to hang
on for many more years. It could even give us time to make real change though it would
be wise to begin the process immediately since there are so many unknowns.
As Orville mentioned, it affects the prices of coins. Not only that, but precious metals such as gold and silver have been the main ingredients of coins (also called "hard money") for thousands of years. This topic is extremely relevant to coin collecting.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
We have only been around less than 300 years. World superpower less than half of that. A blip compared to the Roman economic domination of the world.
What does this mean in coins?
Once we decline in economic importance will we still want to collect our coins? Will the Asians still want to collect our gold stellas? Perhaps for a generation or so but not much more.
Once we recede in importance and settle back to the rest of the world, Russian style, and pay our allegiance to the new superpowers whoever they may be, the world will no longer consider our coins as historically important as now.
I foresee a long term decline in our hobby after the mid 21st century to that approximately the level of the British and Roman coin hobby. Their coins are cheap and very plentiful. Our coins are also plentiful and will remain plentiful but become much cheaper unlike now. Why? Our coins will become interesting novelties of a "former empire" just as the Roman and British are now. Their history is fascinating but is not worth paying too much for.
Most of us wiill never see this in our lifetimes although, our younger collectors such as airplanut et, al will see all of this unfolding over the next 20-50 years.
We have abused our own economic system for too long now to reverse the tide. Too many of us fail to get it. We buy at the WalMarts and concern ourselves with price only and buy only foreign made (now mostly China) products and put our next door neighbor out of a job. I daresay that in my opinion, WalMart is now probably the most unpatriotic company I have ever seen in my entire life. Shocking when they were on the Buy American campaign while Sam Walton was alive. He is turning over in his grave right now. In my opinion, Walmart has done more to destroy our country economic base than any other single entity. You wait and see.
<< <i>
www.quickpassport.com
www.usbirthcertificate.com
>>
If I were a terrorist, would you be able to help me get the fake IDs I need?
Check out a US coin price book from 1980 and you'll see what a bull market in hard assets has to do with the value of coin collections.
-Atomic
Vladimir: That's what you think.
- Samuel Beckett, Waiting For Godot
In my opinion, Walmart has done more to destroy our country economic base than any other single entity. You wait and see. >>
I agree with you 100%