In terms of puchasing power the DOW and NASDAQ have taken quite a tumble over the last 8 years. That puts quite a dent in anyone's 401K. Of course the "gains" are still taxable even though you really incurred a loss in purchasing power. The system's a total scam at this point in history.
More people need to understand exactly that.
The stumbling block - If you withdraw your 401K or IRA now, you incur a 10% penalty AND you must pay taxes (30%-35%?) on all of the "gains", based on your current marginal tax rate. That's quite a chunk.
But, if you analyze a little further - The alternative is to let the money sit there, losing purchasing power, and you STILL have to pay taxes on the realized gains whenever you withdraw it. The long-held conventional wisdom with such a retirement plan was that you would likely be in a lower tax bracket when you retire, due to your lower earnings. The problem is - Inflation destroys the model based on that assumption. So, the real decision is whether to trust the government as far as inflation is concerned or to eat the 10% penalty now and re-deploy the money outside of the stock market.
Let's talk about that purchasing power issue. Right now, **real inflation** is estimated at what? 12%? 14% in the U.S.? That means for every year you leave money in the stock market, you HAVE to see a 12% or 14% rise just to break even (before taxes!) If the market is flat, you've lost enough money in less than one year to make up for that 10% early withdrawal penalty.
Now (apolitically-speaking), along comes a Congress and quite likely a President who want to raise the capital gains tax rate back up from 15% to 35% (just for starters). If that happens, it really doesn't matter whether or not you are in a lower tax bracket, because all of your realized capital gains are subject to 20% higher taxes (than they are right now) from the get-go. That includes both non-retirement and retirement money, so you really can't shelter anything from a tax increase like that (in this country).
My overall assessment is that the government/politicians will keep looking for "pools of money" that they can pilfer in order to buy votes from people who are always on the prowl to game the system for a handout, and this process will ruin anyone who isn't wise to it. Wall Street and the investment banks do the same thing, only much more effectively. They can react faster with money schemes faster than Congress can legislate, so they can usually get away with alot of destructive "investment vehicles" that do nothing other than enrich themselves at someone else's expense, and with very little risk to themselves. It's the same old story as far as the banks and "money managers".
I've chosen to remove my money from the system in chunks, usually in direct response to some boneheaded social policy or new development that I don't particularly like at the time. When I see another step toward the ultimate goal of socialism in America, I take another chunk and re-deploy it into something that will be more useful than imaginary dollars, sitting in an electronic bank or brokerage account. It may or may not be the right move, but I feel better now about having my finances under control than I did before, and the net results have been very good.
Be careful with your money. The government AND the financial establishment are both predatory toward your savings. Just a word to the wise. I hope this doesn't qualify as a political post, and I know that it's not specifically coin-related, but it does relate to being able to afford the purchase of coins. This board has been useful to me, and I really hope that the moderators don't choose to squelch financial commentary.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>For my recent birthday my wife bought me the HBO series, “John Adams”, what a great look into what our forefathers gave us, and what they sacrificed to give us true freedom from over powering government control.
Over the last 60 years as we Americans have become more socialistic relying on BIG government to solve our problems, and serve our daily needs, most never considered what we were giving up. Our over indulgence, and socialistic attitudes are not only destroying our real freedoms but in the end these two things will cost us our very country and bring us once again under foreign control.
This week it was reported that foreigners now own more property in the USA than Americans own in other countries!
After many years of the USA buying more stuff from other countries than it is selling to them, the USA really has no other way of paying for things other than with property. Foreign individuals, companies and governments who own dollars are finding the best place to spend them is right here in America. With the dollar being low the Euro being high and billons being spent for foreign oil and other products, property has become cheap for foreign interests. This country is slowly being sold to everyone but us. >>
Yes and unfortunately the general public has become so ignorant they cannot even define the underlying principles that differentiate socialism from freedom, hence believe that being given something that's been taken from someone else has become a right.
Far as the foreigners owning property. The US was first in the world to establish real property rights. Since the beginning of time, mankind has desired to own the land beneath him and what shows the brilliance of the founders, the creation of property rights which are to inseparable to human rights. ie: no property rights = no human rights with varying degrees in between.
It was an absolute in America which is written in the Constitution. That great document which has been torn, trashed and rewritten from almost every president , really starting with lincoln who trashed it. That absolute has been chipped away to where we've even seen hundreds of homeowners here in SW Fla essentially FORCED out in order to sell to private developers, who then backed out of the deal, ( murdock village, port charlotte ) now we the taxpayers have seen our own property taxes tripled in order to pay the debt on this horrible action. Those property "rights" which were carved into granite are being eroded. Perhaps the greatest tragedy in world history.
There's still significant rights which allow ownership that is "different" than most places on earth, therefore the desire to make the investment remains. That is being diluted by other countries however in a rush to "compete" for world investment dollars we've seen "property rights" being born, albeit not as strongly as ours used to be in places like communist China and other places. One of the strongest planks in communism is the "lack" of property rights, hence this "change" in marxist countries should be interesting to watch as it's a direct challenge to the entire marxist philosophy. What's tragic of course is how we see with our own eyes the changes from absolute totalitarian dictarships to free market capitalism these countries are going in, the almost complete opposite we are heading in.
<< <i>The stock market should be able to take care of itself. >>
The stock market has become no more than another manipulative tool in the US government's pact with business to suck the people dry. Take care of itself indeed...if the stock market were a person he/she couldn't even wipe his own arse. If the market falls too much in one day, trading is suspended...if it takes a dip, the government steps in with an influx of taxpayer money to guarantee that there's not a sell off, if things look bad for the economy, there's always a government sponsored news team (under the guise of a govt. department of course) of cheerleaders to get the sheeple to invest when they're actually losing money by doing so when you consider the drop in the dollar and the actual cost of living (not the one reported by the government). The stock market is communist, just like most other things in the United States. There is no free-market system, there is no supply/demand...there's just manipulation of the people by government to benefit the wealthy campaign contributors and others who help keep certain political families in power. Let's call it what it is. IMHO, if we're going to live in a communist country, at least we could make an effort to funnel a little of the money to the average person.
Blackhawk; I don't wholly disagree but I do think that there will be a lot more money chasing stocks than there are stocks in the not distant future. "Buy and hold" will still not be a winning strat- egy unless you keep a very close eye on your portfolio. There is likely to be even more churning caused by changes in technology and "other forces" going forward.
I expect a more value oriented approach by stock buyers which should serve to stabilize things a little. Growth and dividend is- sues should excell.
"Over the last 60 years as we Americans have become more socialistic relying on BIG government to solve our problems, and serve our daily needs, most never considered what we were giving up."
This comment is valid and brings to mind a rather interesting shift in our body politic. Though I haven't seen this in any media this shift is something I have noticed. For example: highway funds, public school funds, public agency funds, public mass transit funds, hospital program funds, and more and more are all financially supported by the federal government in government "programs" to the states. As a result, the receivers of those funds and support must adhere to a certain set of guidelines to receive the money. If a state doesn't toe the line regarding administration and application of the funds according to the provisions of the award, the funds are reduced or cut off. So, the states have become well beholden to the federal government to do many of the public things that states "do" for it's constituents. As we have deeded more and more of our state and local obligations to the the federal government, we have in effect become more socialistic or (new word) fedcentric and the states have become less self directed. In some states, that is bad but in some states that is good so, it's a wash. The net result is that the federal government is now so much more relied upon and considered fundamental to our success and in this transition we have given a little to get a little. It all works out but we have become more socialistic and will likely become much more so with time.
It seems like a non-issue since it wouldn't be that way if peoples representatives didn't want it that way. But the point comes when the federal budget is supported by more and higher taxes and use fees. So the tax payers give more taxes to the federal govenment in exchange for not having to pay higher taxes at the state level. So, the fed is now the bank. We have shifted what were once considered the responsibilities of the state government to the federal government. This is good and though it does have costs, particularly in consideration of states rights and self determination issues, it is still not so bad of a deal; make the federal tax payers pay more of what were once consdiered individual state obligations.
One thing that has to come from this is that as we become more socialistic and more fedcentric, those that don't have to rely on government programs or public assistance will have considerably more freedom than those that do. There is still plenty of room for the self directed, successful, dilligent individual and I would suspect that they will be much more likely to prosper in the future. As we move to a more socialized method of delivery of services and assistance, we create more polarity in the social system that led us to this point in time. We are heading toward a system that takes better care of those in need. This is done at the cost of requiring compliance to participate and on the other hand we have preserved the opportunity for success for those that want to give it a go. For those that don't have the need, it's still a cornucopia of opportunity and freedom rings. Not to worry about more socialization, individual responsibility is not for everyone as there are a large number of individuals that don't think the federal government owes them anything that are perfectly willing to take care of themselves. This leaves good reason for those that can to keep their imprint small, reduce the radar image a little, try and keep a little autonomy about your self; a little more cash, a few PM's, a little less debt, everybody knows the drill. This individual responsibility to try and take care of your self will lead to more individual freedom for those that can.
(Hopefully this will be filed under socio-economic discourse and not political diatribe)
<< <i>The stock market should be able to take care of itself. >>
The stock market has become no more than another manipulative tool in the US government's pact with business to suck the people dry. Take care of itself indeed...if the stock market were a person he/she couldn't even wipe his own arse. If the market falls too much in one day, trading is suspended...if it takes a dip, the government steps in with an influx of taxpayer money to guarantee that there's not a sell off, if things look bad for the economy, there's always a government sponsored news team (under the guise of a govt. department of course) of cheerleaders to get the sheeple to invest when they're actually losing money by doing so when you consider the drop in the dollar and the actual cost of living (not the one reported by the government). The stock market is communist, just like most other things in the United States. There is no free-market system, there is no supply/demand...there's just manipulation of the people by government to benefit the wealthy campaign contributors and others who help keep certain political families in power. Let's call it what it is. IMHO, if we're going to live in a communist country, at least we could make an effort to funnel a little of the money to the average person. >>
One could argue that the creation of the stock market has been the greatest thing to ever happen in this country. It has allowed companies--even very tiny ones--access to money that they could never have borrowed from a bank. That has enabled this country to grow and prosper like no other.
....still more to go 'cause the printing press isn't broke yet and the big banks finances are only getting worse and harder to hide.
Something (or some things) has to reanchor the fiat system when it's time for a major chiropratic procedure, so why not precious metals, rare coins, etc.?
Seems like the metal has been pretty quiet and sleepy lately, albeit at a higher price than we are used to paying. $900 is still a fair chunk of Bens for one oz, US. We seem to be at a strange place, somewhat like being stuck on a bridge gapping a valley of fire. On one side of the valley we have the high price of gold, on the other side we have the need to continue accumulation, and below is...well, the valley of fire or asset destruction. Gold is getting pretty expensive for casual acquisition but the carnage in stock accounts is even more painful. It's a great pleasure to get your little portfolio out and see that you only lost 1.5% yesterday and after a six months of this most have lost 9% or so and there is no whisp of relief in sight, maybe we can finish the year and only lose maybe %15 of the value of our paper assets.
Currently, if you want to accumulate PM, there has to be a different strategy for the regular guy and I'm not talking ETF's although for the gold backed funds, this might just be part of the answer. I'm talking about buying half ozers instead of the full boat. I call this new fate, Fractional Survival. When gold price rises, it takes the numismatic premium of 20th century coins down a little to where the more common the material is more closely aligned to spot. Common 20th centruy eagles are a good example of half ozers trading for near spot, but they have always been near spot. The trick is to go to a dealer that is willing to give them up for the spot value that they are and this might almost require patience until a show comes to town.
So, if you go into a show or a B&M with lust in your heart and the dealer sees that he might have a little numismatic premium bump to put on the eagle for you then he will probably try and get some of that. If you approach it a little differently such as "do you have any raw US bullion for near spot" and you are pressing on a 1906 D eagle that's in real good shape maybe ms, that's worth $450 or so and the darn thing is over a hundred years old! That's what I'm talking about. So, you pay your $450 get it home, put it in the box with his brothers and sisters, and you got some! Life is good. Just because the asset is getting expensive doesn't mean you have to use the same old strategies nor do you have to give up the goal of PM accumulation...be creative, keep accumulating because some is always better than none. Fortunately, there is an abundance of MS 100 yr old gold out there right now, that could change.
....still more to go 'cause the printing press isn't broke yet and the big banks finances are only getting worse and harder to hide.
Something (or some things) has to reanchor the fiat system when it's time for a major chiropratic procedure, so why not precious metals, rare coins, etc.?
Does no one have a problem with the continuous an unabated printing of paper money. Is there no limit to the amount of monopoly money that our government will print? Is this what happens when you get a degree in economics, you figure out that printing money on paper turns out to be very lucrative?
....still more to go 'cause the printing press isn't broke yet and the big banks finances are only getting worse and harder to hide.
Something (or some things) has to reanchor the fiat system when it's time for a major chiropratic procedure, so why not precious metals, rare coins, etc.?
Does no one have a problem with the continuous an unabated printing of paper money. Is there no limit to the amount of monopoly money that our government will print? Is this what happens when you get a degree in economics, you figure out that printing money on paper turns out to be very lucrative? >>
Does no one have a problem with the continuous an unabated printing of paper money. Is there no limit to the amount of monopoly money that our government will print? Is this what happens when you get a degree in economics, you figure out that printing money on paper turns out to be very lucrative? >>
i did get a degree in econ, macro beat me up, i am not the brightest bulb
we as a nation will need to make large changes in lifestyles and learn how to live on a budget (within your means) and rediscover a simpler and more satisfying life (yes i believe that) than what the majority of us (JQ Public, Joe Lunchbox, etc.....are doing now)
our local, state and federal.....well they will never do that (live on a budget)
So this is kind of interesting the short interest in the USO oil fund is now 210.28% and the short interest in the XLE is 89.20%. Do you think there are those that think the price is being manipulated?
Detailed Quote for Tuesday, June 24, 2008 2:24 PM Company Name: United States Oil Fund (USO) Dow Jones Industry: Exchange: AMEX Shares Outstanding: 8,700,000 Market Cap: 962.9 Million Short Interest: 18,294,400 (210.28%)
XLE Select Sector SPDR: Energy Select Sector SPDR Fund Dow Jones Industry: Exchange: AMEX Shares Outstanding: 69,166,000 Market Cap: 6.1 Billion Short Interest: 61,697,520 (89.20%)
<< <i>So this is kind of interesting the short interest in the USO oil fund is now 210.28% and the short interest in the XLE is 89.20%. Do you think there are those that think the price is being manipulated?
Detailed Quote for Tuesday, June 24, 2008 2:24 PM Company Name: United States Oil Fund (USO) Dow Jones Industry: Exchange: AMEX Shares Outstanding: 8,700,000 Market Cap: 962.9 Million Short Interest: 18,294,400 (210.28%)
XLE Select Sector SPDR: Energy Select Sector SPDR Fund Dow Jones Industry: Exchange: AMEX Shares Outstanding: 69,166,000 Market Cap: 6.1 Billion Short Interest: 61,697,520 (89.20%) >>
Who do "those" think are doing the manipulation ?.. the shorts?
An article by perrenial gold bug Howard Ruff. Interesting that he talks about stock bull Dave Ramsey. We discussed Mr. Ramsey in this thread back in 2004 when he was predicting massive gains in the Dow/S&P by 2007.....I know, we're still waiting for those gains. To take advantage of a clock being right at least twice a day, Mr. Ramsey is still maintaining his bullish stance on growth stock mutual funds for the near future.
An article by perrenial gold bug Howard Ruff. Interesting that he talks about stock bull Dave Ramsey. We discussed Mr. Ramsey in this thread back in 2004 when he was predicting massive gains in the Dow/S&P by 2007.....I know, we're still waiting for those gains. To take advantage of a clock being right at least twice a day, Mr. Ramsey is still maintaining his bullish stance on growth stock mutual funds for the near future.
>>
I've never figured out why anyone would ever take financial advice. The bulls are always bulls and the bears are always bears. The most popular advisors predict current events and are taken as geniuses. Most people just gravitate to whatever they want to hear.
If you do your own thinking and just remember to buy low and sell high you'll do far better than the bulls, the bears, or the geniuses.
I did see one bull turn bearish after out running the collapsing World Trade Cen- ter. She'd have been much more right if she had remained bullish.
<< The gold bears have been right far more than wrong. As have the stock bulls. >>
You might want to qualify that statement, even a broken clock is right twice a day. For the last 8 years or so it looks like the stock bulls couldn't have been more wrong to me. Even if stocks go up it will be in response to an inflated money supply that makes it cost more money for other items to be purchased with the so-called "gains". In terms of puchasing power the DOW and NASDAQ have taken quite a tumble over the last 8 years. That puts quite a dent in anyone's 401K. Of course the "gains" are still taxable even though you really incurred a loss in purchasing power. The system's a total scam at this point in history.
That's fair. But 8 years historically is a short period of time. If you use '92 to to '99, the Nasdaq would be the place to invest.
Around 25 years ago when I entered the workforce, gold was ~$400 per ounce and the Dow Jones was ~1200. Today gold is ~$900 per ounce. That's 3.5% annual growth, or just about the rate of inflation. And if you think inflation's much higher as some here do, than you've lost money in real terms. Meanwhile, the Dow stands ~12,000. That's 10% annual growth, and that doesn't even take into account reinvested dividends. As for taxes, you have to pay them when you realize gains whether you sell stocks or gold.
Needless to say, I'm glad I invested in mutual funds instead of Kruggerands. I'm not saying gold doesn't belong in a portfolio, because I think it does. But it should be a small % IMO.
That's fair. But 8 years historically is a short period of time. If you use '92 to to '99, the Nasdaq would be the place to invest.
But it's only the most recent 8 years (current trend) that counts. The Nasdaq game ended and you can't go back to 1992. If we get to go back in time then I'll pick up silver in 1971 at not much more than $1 /ounce. 9 years later it was at $35-$50.
Around 25 years ago when I entered the workforce, gold was ~$400 per ounce and the Dow Jones was ~1200. Today gold is ~$900 per ounce. That's 3.5% annual growth, or just about the rate of inflation. And if you think inflation's much higher as some here do, than you've lost money in real terms. Meanwhile, the Dow stands ~12,000. That's 10% annual growth, and that doesn't even take into account reinvested dividends. As for taxes, you have to pay them when you realize gains whether you sell stocks or gold.
Gold should be in a portfolio during the times that it does well (hint...it's been doing well for years). The fact that the DOW outperformed gold from 1980 to 2005 is precisely the reason why one expect Gold to outperform the Dow from 2001 to 2015. What relevance does the 1980-2001 rise in the Dow have today other than to confirm that it's probably been in a secular bear market for 7 years and counting? Those bears have typically have lasted 15-20 years. It took 25 years (to 1954) for the 1929 stock peak to be exceeded. That's 25 years to break even for those who bought near the top. It also took 21 years for the highs of 1966 to be exceeded in 1987. When will the most recent Dow highs be taken out again? 2020-2024 could be a long time to wait if history repeats. As far as paying taxes on gold, it's up to the individual unlike stocks where the paper trail is well documented and forwarded to the IRS.
Needless to say, I'm glad I invested in gold/gold products in 2002 rather than the Dow. I'm not saying that growth stocks don't belong in a portfolio, because I think they do. But they should be a small % IMO at the current time. Stocks will be very worthwhile to own when everyone thinks they stink and is crying about how much they've lost by hanging on. We aren't there yet due to early and frequent FED interventions beginning in 2002.
Coolest, it's pretty clear you haven't read anything but the last couple posts in this thread. If that's all you've gotten out of the 4-1/2 years of information listed here, there's not much than can be done for you. A better summary of this thread would be "gold and commodities will outperform the general stock market for years to come....derivatives, banks, brokers, and hedge funds, will ultimately sink the economy."
Another Dave Ramsey fan I presume?
The thread will probably end when the commodity bull finally turns over in a couple of years or when CU shutsdown this site. Until then, it marches on. The interesting part of this thread is that 4 years ago it talked about how today's conditions would come about. No doubt we're talking about things now that will happen in the next few years. When this thread finally closes shop, it may will be time to buy stocks with both fists. That could be as soon as 2015.
<< <i>Coolest, it's pretty clear you haven't read anything but the last couple posts in this thread. If that's all you've gotten out of the 4-1/2 years of information listed here, there's not much hope for you.
Another Dave Ramsey fan I presume?
The thread will probably end when the commodity bull finally turns over in a couple of years or when CU shutsdown this site. Until then, it marches on.
<< <i>Coolest, it's pretty clear you haven't read anything but the last couple posts in this thread. If that's all you've gotten out of the 4-1/2 years of information listed here, there's not much than can be done for you.
Another Dave Ramsey fan I presume?
The thread will probably end when the commodity bull finally turns over in a couple of years or when CU shutsdown this site. Until then, it marches on. The interesting part of this thread is that 4 years ago it talked about how today's conditions would come about. No doubt we're talking about things now that will happen in the next few years.
roadrunner >>
I guess you are not in the mood for a little humor? But you are right there is no hope for me. -Coolest
I took 8 courses of Economics at a pretty prestigious University 32-37 years ago. I even took several courses at the London School of Economics.
Reading all 7000+ posts is more educational than half of the economics course I took COMBINED!
In the early 1970's, the top economists of the day including Milton Freedman did not really understand why Richard Nixon closed the gold window to foreign nations in 1971.
Today, we understand the history so much more clearly in light of what has happened since.
<< <i>I took 8 courses of Economics at a pretty prestigious University 32-37 years ago. I even took several courses at the London School of Economics.
Reading all 7000+ posts is more educational than half of the economics course I took COMBINED!
In the early 1970's, the top economists of the day including Milton Freedman did not really understand why Richard Nixon closed the gold window to foreign nations in 1971.
Today, we understand the history so much more clearly in light of what has happened since. >>
There is a lot of spectacular advice, insight, and knowledge in this thread.
I wish I had the time to sit down and try to understand all of it.
Speaking of predictions here is a new one. I really expect to see a world wide grab for all hard assets and commodities by many investors as well as country funds over the next eighteen months. As we settle into worldwide stagflation, Central Bankers around the world will begin to raise interest rates, and investors and countries will grab whatever raw materials they can.
If we see a significant dip in current prices this may be the last train out for several years.
The real crisis in the dollar should come at this time since the U.S. must still borrow one trillion plus per year just to keep its economy and government going. I believe that those that have been buying U.S. paper will shift their attention to buying up worldwide commodities and the prices across the board will continue to climb through out 2009.
The U.S. Fed is now caught in its own trap, neither can it raise rates to compete worldwide with out further crashing the U.S. hosing market, stock market, and the Banks, but it now is the proud holder of a half a trillion dollars of junk paper that it may never be able to relieved its self of if it raise rates substantially.
In addition I think you will see a shift in China after the Olympics. One whereby China draws back from its current sought after attention to a more internal protective mode. It will become more intense on protecting its own economy from U.S. imported inflation and more concerned, along with all other countries, in securing huge amounts of commodities for future development.
Less and less will those countries with hard goods be willing to exchange those goods for dollars, and less and less will be the likelihood that the U.S. will be able to continue down endless road of borrowing and spending.
Once again we will be faced with one of the key questions in this thread, “Who will buy our debt”
LONDON (Market W.) -- The European Central Bank could boost its key interest rate by a quarter of a percentage point next week in an effort to arrest growing inflation pressures, ECB President Jean-Claude Trichet said Wednesday. European Parliament committee in Brussels. Markets widely expect the ECB to hike its main lending rate to 4.25%, up from 4% currently.
The U.S. Fed is now caught in its own trap, neither can it raise rates to compete worldwide with out further crashing the U.S. hosing market, stock market, and the Banks, but it now is the proud holder of a half a trillion dollars of junk paper that it may never be able to relieved its self of if it raise rates substantially
Agreed, but of bigger concern may be the trap the rest of the world has yet to spring.
When a high flying stock, lets use RIMM as an example as it is timely today, opens down $14 there is a monetary destruction of $7 billion dollars. There are many high flying economies and currencies.
Now that the FED and PPT levers have been "released" following the FOMC meeting, stocks sharply down, gold and gold stocks up. A close at $910 might be the breakout signal. The decreasing wedge is getting awfully narrow with little maneuvering room.
Nixon was afraid that DeGaulle and the others would end up with all our gold. He was smart enough to close the gold window but probably would have never guessed how big our debt (and derivatives) would become. The economic courses I took in the early 1970's were all heavy into Keynesian behavior. It warped me for a number of years.
<<But it's only the most recent 8 years (current trend) that counts. The Nasdaq game ended and you can't go back to 1992.>>
That’s my point exactly. How can anyone be sure the gold game hasn’t ended, and you can’t go back to 2002? A lot of people still loved tech stocks after their 8 year run, and were sure that the trend would continue. That’s why I used a 25 year period for comparison.
<<Gold should be in a portfolio during the times that it does well (hint...it's been doing well for years).>>
That’s true of anything. The problem is you can’t predict the future based recent performance. Otherwise, you could just load up on Google. It’s up 400% in 4 years.
<<It took 25 years (to 1954) for the 1929 stock peak to be exceeded. That's 25 years to break even for those who bought near the top. It also took 21 years for the highs of 1966 to be exceeded in 1987. When will the most recent Dow highs be taken out again? 2020-2024 could be a long time to wait if history repeats.>>
You can’t assume “buying at the top”, because most people dollar cost average into their retirement funds. If you use that test, anyone who bought gold at the top in 1980 is just breaking even after 28 years.
<<As far as paying taxes on gold, it's up to the individual unlike stocks where the paper trail is well documented and forwarded to the IRS.>>
Legally, it’s really not up to the individual, but if someone wants to cheat on his taxes that’s his call. But you can’t remove taxes from the equation for gold but not for stocks and still make a fair comparison.
Look, I know I’m never going to convince a gold bug that gold isn’t a great investment. I also know we’ve been in a cycle of rising commodity prices. The question is how long it will last, and the answer is that no one knows. But decades of history show that long term, equities outperform everything else. Maybe you can predict what will happen between now and 2024, but I’m not smart enough to do it successfully, so I wouldn’t bet my retirement on it.
<< <i>Now that the FED and PPT levers have been "released" following the FOMC meeting, stocks sharply down, gold and gold stocks up. A close at $910 might be the breakout signal. The decreasing wedge is getting awfully narrow with little maneuvering room.
Nixon was afraid that DeGaulle and the others would end up with all our gold. He was smart enough to close the gold window but probably would have never guessed how big our debt (and derivatives) would become. The economic courses I took in the early 1970's were all heavy into Keynesian behavior. It warped me for a number of years.
I'm thinking that they have two problems: they are out of bullets, and the word is out...commodities.
Interesting but boring article on CNN Money about gold moving and about 900 being some kind of magical point at this time. They don't seem to realize that 1000 is the point we are looking at. The financial folk don't want to cow tow to hard asset mavens...they gotta have their paper and even more importantly, they gotta have the 401K's, fund managers, and retirement plans deep in paper. Getting paper people to like hard assets is like getting a fish to like living on land. We've been saying for over a year here that the paper people were going to have their butts handed to them on a platter but they kept beating the same drum, singing kumbayaa to each other and holding hands.
<< <i>The U.S. Fed is now caught in its own trap, neither can it raise rates to compete worldwide with out further crashing the U.S. hosing market, stock market, and the Banks, but it now is the proud holder of a half a trillion dollars of junk paper that it may never be able to relieved its self of if it raise rates substantially
Agreed, but of bigger concern may be the trap the rest of the world has yet to spring.
When a high flying stock, lets use RIMM as an example as it is timely today, opens down $14 there is a monetary destruction of $7 billion dollars. There are many high flying economies and currencies. >>
"...monetary destruction of $7 billion dollars..." Unrealized destruction, and don't forget about the other side of the transactions - 3% of the shares are short.
<< <i> The financial folk don't want to cow tow to hard asset mavens...they gotta have their paper and even more importantly, they gotta have the 401K's, fund managers, and retirement plans deep in paper. Getting paper people to like hard assets is like getting a fish to like living on land. We've been saying for over a year here that the paper people were going to have their butts handed to them on a platter but they kept beating the same drum, singing kumbayaa to each other and holding hands. >>
it just makes me real to think how much of a collapse there may be.....
in other words i really don't want to use my junk silver war nickels as a barter of $5 in value, but i have them
The question is how long it will last, and the answer is that no one knows. But decades of history show that long term, equities outperform everything else. Maybe you can predict what will happen between now and 2024, but I’m not smart enough to do it successfully, so I wouldn’t bet my retirement on it.
But we do know something. Cycles over the past 50-90 years (since the FED showed up in 1913) are fairly well defined. The history from pure fiat and zero gold backing from 1971 is only 37 years old, but there's enough history there to determine some trending. Without the biggest run-up in history from 1987 to 2001 you basically have no great uptrends in stocks. What, the market tripled from 1929 to 1987? Big deal. Inflation adjustments would probably leave you in the hole as would putting back the losers into the Dow equation. The factors that drove those unparalleled 24 years from 1987-2001 will likely never be present again in our lifetime. To call that brief period of massive credit binging on the backs of the 3rd world the "norm" for the 20th century and even going forward into the 21st century is a huge leap of faith. Take out those 2-3 decades on "craziness" and what real performance are you left with? Another truth to the FED's fiat experiment begun in 1913 is that the cycles have been getting more volatile all along. And that implies we will "out swing" the 1970's commodities volatility. This is because the FED over time, continues to over-manipulate to try and control this fiat beast. There's a reason why great rare coin prices are up 50X or more since 1971 and great works of art are up 100-300X.
Let's not forget the pure fiat experiment is still very, very short lived. The FED got involved in it by the late 70's and killed it after approx 14-16 years. Stock and commodity cycles have lasted 20-25 yrs and 15-20 years respectively over the past 90 years, why would you expect something radically different now? Factor in the various known economic cycles and you can basically model what should be coming. It's no secret that several long term cycles are converging in the next few years with stocks expected to finish in a major bear washout. But that's what the long term cycles and trends say. For lack of anything more concrete (or Haley's comet), I'll go with the statistical trends.
I'm betting my retirement on hard/real assets because there is nothing else to bet on other than a repeat of "401K la la land from 1987-2001. The last thing I want to do is to bet my retirement on something I don't have conviction in. We seem to be headed to a retest of just under 11,000 on the Dow. Maybe that will rebound yet another time so TPTB can profit from it. At some point I see it slipping past 10,000 and keep going.....probably in tune with the USD Index finally busting under .70.
I think that the world wide investment community has finally woke up to the fact that all of this paper is just that, PAPER, and they want something solid for their futures. What do you think?
percentage change for the year, · Crude oil up 42.5% · Ethanol up 20.7% · Heating oil up 43.9% · Natural gas up 76.5% · Unleaded gas up 39.5% · Cattle up 1.0% · Corn up 58.8% · Soy beans up; 26.4% · Coffee up 5.9% · Aluminum up 32.7% · Copper up 25.7% · Platinum up 33.4% · Gold up 6.0% · Silver up 13.4%. · S&P 500 down 10.24% · Frankfurt DAX down 18.32% · London FTSE down 12.23% · Paris CAC down 19.64% · Hong Kong Hang Sang down 18.33%. · Tokyo Nikkei down 9.47% · Singapore Straits down 14.04%. · Seoul Composite down 9.57% · Sydney All Ordinary down 15.76% · Taipei Telex down 7.40%
<< <i>So what now for the stock market, after the trashing it took today??
Are we near a point, after which it will free fall? >>
No.
The stock market remains the only game in town to make money in commerce and industry for most people. Inflation will affect profits and stock prices too. It may not keep up with inflation but it will have a hard time making steep and prolonged drops in this enviroment.
Comments
More people need to understand exactly that.
The stumbling block - If you withdraw your 401K or IRA now, you incur a 10% penalty AND you must pay taxes (30%-35%?) on all of the "gains", based on your current marginal tax rate. That's quite a chunk.
But, if you analyze a little further - The alternative is to let the money sit there, losing purchasing power, and you STILL have to pay taxes on the realized gains whenever you withdraw it. The long-held conventional wisdom with such a retirement plan was that you would likely be in a lower tax bracket when you retire, due to your lower earnings. The problem is - Inflation destroys the model based on that assumption. So, the real decision is whether to trust the government as far as inflation is concerned or to eat the 10% penalty now and re-deploy the money outside of the stock market.
Let's talk about that purchasing power issue. Right now, **real inflation** is estimated at what? 12%? 14% in the U.S.? That means for every year you leave money in the stock market, you HAVE to see a 12% or 14% rise just to break even (before taxes!) If the market is flat, you've lost enough money in less than one year to make up for that 10% early withdrawal penalty.
Now (apolitically-speaking), along comes a Congress and quite likely a President who want to raise the capital gains tax rate back up from 15% to 35% (just for starters). If that happens, it really doesn't matter whether or not you are in a lower tax bracket, because all of your realized capital gains are subject to 20% higher taxes (than they are right now) from the get-go. That includes both non-retirement and retirement money, so you really can't shelter anything from a tax increase like that (in this country).
My overall assessment is that the government/politicians will keep looking for "pools of money" that they can pilfer in order to buy votes from people who are always on the prowl to game the system for a handout, and this process will ruin anyone who isn't wise to it. Wall Street and the investment banks do the same thing, only much more effectively. They can react faster with money schemes faster than Congress can legislate, so they can usually get away with alot of destructive "investment vehicles" that do nothing other than enrich themselves at someone else's expense, and with very little risk to themselves. It's the same old story as far as the banks and "money managers".
I've chosen to remove my money from the system in chunks, usually in direct response to some boneheaded social policy or new development that I don't particularly like at the time. When I see another step toward the ultimate goal of socialism in America, I take another chunk and re-deploy it into something that will be more useful than imaginary dollars, sitting in an electronic bank or brokerage account. It may or may not be the right move, but I feel better now about having my finances under control than I did before, and the net results have been very good.
Be careful with your money. The government AND the financial establishment are both predatory toward your savings. Just a word to the wise. I hope this doesn't qualify as a political post, and I know that it's not specifically coin-related, but it does relate to being able to afford the purchase of coins. This board has been useful to me, and I really hope that the moderators don't choose to squelch financial commentary.
I knew it would happen.
<< <i>For my recent birthday my wife bought me the HBO series, “John Adams”, what a great look into what our forefathers gave us, and what they sacrificed to give us true freedom from over powering government control.
Over the last 60 years as we Americans have become more socialistic relying on BIG government to solve our problems, and serve our daily needs, most never considered what we were giving up. Our over indulgence, and socialistic attitudes are not only destroying our real freedoms but in the end these two things will cost us our very country and bring us once again under foreign control.
This week it was reported that foreigners now own more property in the USA than Americans own in other countries!
After many years of the USA buying more stuff from other countries than it is selling to them, the USA really has no other way of paying for things other than with property. Foreign individuals, companies and governments who own dollars are finding the best place to spend them is right here in America. With the dollar being low the Euro being high and billons being spent for foreign oil and other products, property has become cheap for foreign interests. This country is slowly being sold to everyone but us. >>
Yes and unfortunately the general public has become so ignorant they cannot even define the underlying principles that differentiate socialism from freedom, hence believe that being given something that's been taken from someone else has become a right.
Far as the foreigners owning property. The US was first in the world to establish real property rights. Since the beginning of time, mankind has desired to own the land beneath him and what shows the brilliance of the founders, the creation of property rights which are to inseparable to human rights. ie: no property rights = no human rights with varying degrees in between.
It was an absolute in America which is written in the Constitution. That great document which has been torn, trashed and rewritten from almost every president , really starting with lincoln who trashed it. That absolute has been chipped away to where we've even seen hundreds of homeowners here in SW Fla essentially FORCED out in order to sell to private developers, who then backed out of the deal, ( murdock village, port charlotte ) now we the taxpayers have seen our own property taxes tripled in order to pay the debt on this horrible action. Those property "rights" which were carved into granite are being eroded. Perhaps the greatest tragedy in world history.
There's still significant rights which allow ownership that is "different" than most places on earth, therefore the desire to make the investment remains. That is being diluted by other countries however in a rush to "compete" for world investment dollars we've seen "property rights" being born, albeit not as strongly as ours used to be in places like communist China and other places. One of the strongest planks in communism is the "lack" of property rights, hence this "change" in marxist countries should be interesting to watch as it's a direct challenge to the entire marxist philosophy. What's tragic of course is how we see with our own eyes the changes from absolute totalitarian dictarships to free market capitalism these countries are going in, the almost complete opposite we are heading in.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>The stock market should be able to take care of itself. >>
The stock market has become no more than another manipulative tool in the US government's pact with business to suck the people dry. Take care of itself indeed...if the stock market were a person he/she couldn't even wipe his own arse. If the market falls too much in one day, trading is suspended...if it takes a dip, the government steps in with an influx of taxpayer money to guarantee that there's not a sell off, if things look bad for the economy, there's always a government sponsored news team (under the guise of a govt. department of course) of cheerleaders to get the sheeple to invest when they're actually losing money by doing so when you consider the drop in the dollar and the actual cost of living (not the one reported by the government). The stock market is communist, just like most other things in the United States. There is no free-market system, there is no supply/demand...there's just manipulation of the people by government to benefit the wealthy campaign contributors and others who help keep certain political families in power. Let's call it what it is. IMHO, if we're going to live in a communist country, at least we could make an effort to funnel a little of the money to the average person.
be a lot more money chasing stocks than there are stocks in the
not distant future. "Buy and hold" will still not be a winning strat-
egy unless you keep a very close eye on your portfolio. There is
likely to be even more churning caused by changes in technology
and "other forces" going forward.
I expect a more value oriented approach by stock buyers which
should serve to stabilize things a little. Growth and dividend is-
sues should excell.
This comment is valid and brings to mind a rather interesting shift in our body politic. Though I haven't seen this in any media this shift is something I have noticed. For example: highway funds, public school funds, public agency funds, public mass transit funds, hospital program funds, and more and more are all financially supported by the federal government in government "programs" to the states. As a result, the receivers of those funds and support must adhere to a certain set of guidelines to receive the money. If a state doesn't toe the line regarding administration and application of the funds according to the provisions of the award, the funds are reduced or cut off. So, the states have become well beholden to the federal government to do many of the public things that states "do" for it's constituents. As we have deeded more and more of our state and local obligations to the the federal government, we have in effect become more socialistic or (new word) fedcentric and the states have become less self directed. In some states, that is bad but in some states that is good so, it's a wash. The net result is that the federal government is now so much more relied upon and considered fundamental to our success and in this transition we have given a little to get a little. It all works out but we have become more socialistic and will likely become much more so with time.
It seems like a non-issue since it wouldn't be that way if peoples representatives didn't want it that way. But the point comes when the federal budget is supported by more and higher taxes and use fees. So the tax payers give more taxes to the federal govenment in exchange for not having to pay higher taxes at the state level. So, the fed is now the bank. We have shifted what were once considered the responsibilities of the state government to the federal government. This is good and though it does have costs, particularly in consideration of states rights and self determination issues, it is still not so bad of a deal; make the federal tax payers pay more of what were once consdiered individual state obligations.
One thing that has to come from this is that as we become more socialistic and more fedcentric, those that don't have to rely on government programs or public assistance will have considerably more freedom than those that do. There is still plenty of room for the self directed, successful, dilligent individual and I would suspect that they will be much more likely to prosper in the future. As we move to a more socialized method of delivery of services and assistance, we create more polarity in the social system that led us to this point in time. We are heading toward a system that takes better care of those in need. This is done at the cost of requiring compliance to participate and on the other hand we have preserved the opportunity for success for those that want to give it a go. For those that don't have the need, it's still a cornucopia of opportunity and freedom rings. Not to worry about more socialization, individual responsibility is not for everyone as there are a large number of individuals that don't think the federal government owes them anything that are perfectly willing to take care of themselves. This leaves good reason for those that can to keep their imprint small, reduce the radar image a little, try and keep a little autonomy about your self; a little more cash, a few PM's, a little less debt, everybody knows the drill. This individual responsibility to try and take care of your self will lead to more individual freedom for those that can.
(Hopefully this will be filed under socio-economic discourse and not political diatribe)
<< <i>
<< <i>The stock market should be able to take care of itself. >>
The stock market has become no more than another manipulative tool in the US government's pact with business to suck the people dry. Take care of itself indeed...if the stock market were a person he/she couldn't even wipe his own arse. If the market falls too much in one day, trading is suspended...if it takes a dip, the government steps in with an influx of taxpayer money to guarantee that there's not a sell off, if things look bad for the economy, there's always a government sponsored news team (under the guise of a govt. department of course) of cheerleaders to get the sheeple to invest when they're actually losing money by doing so when you consider the drop in the dollar and the actual cost of living (not the one reported by the government). The stock market is communist, just like most other things in the United States. There is no free-market system, there is no supply/demand...there's just manipulation of the people by government to benefit the wealthy campaign contributors and others who help keep certain political families in power. Let's call it what it is. IMHO, if we're going to live in a communist country, at least we could make an effort to funnel a little of the money to the average person.
One could argue that the creation of the stock market has been the greatest thing to ever happen in this country. It has allowed companies--even very tiny ones--access to money that they could never have borrowed from a bank. That has enabled this country to grow and prosper like no other.
Knowledge is the enemy of fear
of the future in preserving ones actual value in real dollars.
However, this is predicated on one knowing what the hell
you are doing and why you are doing it.
Camelot
<< <i>Bizarre as it may seem, PMs and rare coins may be the thing
of the future in preserving ones actual value in real dollars.
However, this is predicated on one knowing what the hell
you are doing and why you are doing it. >>
Uh oh.
That's it guys. This is the market top.
....still more to go 'cause the printing press isn't broke yet and the big banks finances are only getting worse and harder to hide.
Something (or some things) has to reanchor the fiat system when it's time for a major chiropratic procedure, so why not precious metals, rare coins, etc.?
Alex Wallenwein....one more kick down and off to the races
roadrunner
Currently, if you want to accumulate PM, there has to be a different strategy for the regular guy and I'm not talking ETF's although for the gold backed funds, this might just be part of the answer. I'm talking about buying half ozers instead of the full boat. I call this new fate, Fractional Survival. When gold price rises, it takes the numismatic premium of 20th century coins down a little to where the more common the material is more closely aligned to spot. Common 20th centruy eagles are a good example of half ozers trading for near spot, but they have always been near spot. The trick is to go to a dealer that is willing to give them up for the spot value that they are and this might almost require patience until a show comes to town.
So, if you go into a show or a B&M with lust in your heart and the dealer sees that he might have a little numismatic premium bump to put on the eagle for you then he will probably try and get some of that. If you approach it a little differently such as "do you have any raw US bullion for near spot" and you are pressing on a 1906 D eagle that's in real good shape maybe ms, that's worth $450 or so and the darn thing is over a hundred years old! That's what I'm talking about. So, you pay your $450 get it home, put it in the box with his brothers and sisters, and you got some! Life is good. Just because the asset is getting expensive doesn't mean you have to use the same old strategies nor do you have to give up the goal of PM accumulation...be creative, keep accumulating because some is always better than none. Fortunately, there is an abundance of MS 100 yr old gold out there right now, that could change.
Coin ON!
<< <i>
Alex Wallenwein....one more kick down and off to the races
roadrunner >>
something weird happened yesterday....what was it? (not the % drop just that small small yet vertical step down?
also the inflation thingy and the Fed wanting to strengthen the dollar....yet printing money like Charmin TP....it's in such opposition....
<< <i>Printing Money Like There is No Tomorrow
....still more to go 'cause the printing press isn't broke yet and the big banks finances are only getting worse and harder to hide.
Something (or some things) has to reanchor the fiat system when it's time for a major chiropratic procedure, so why not precious metals, rare coins, etc.?
Alex Wallenwein....one more kick down and off to the races
roadrunner >>
Does no one have a problem with the continuous an unabated printing of paper money. Is there no limit to the amount of monopoly money that our government will print? Is this what happens when you get a degree in economics, you figure out that printing money on paper turns out to be very lucrative?
<< <i>
<< <i>Printing Money Like There is No Tomorrow
....still more to go 'cause the printing press isn't broke yet and the big banks finances are only getting worse and harder to hide.
Something (or some things) has to reanchor the fiat system when it's time for a major chiropratic procedure, so why not precious metals, rare coins, etc.?
Alex Wallenwein....one more kick down and off to the races
roadrunner >>
Does no one have a problem with the continuous an unabated printing of paper money. Is there no limit to the amount of monopoly money that our government will print? Is this what happens when you get a degree in economics, you figure out that printing money on paper turns out to be very lucrative? >>
Dont worry. Money will be destroyed.
Knowledge is the enemy of fear
<< <i>
Does no one have a problem with the continuous an unabated printing of paper money. Is there no limit to the amount of monopoly money that our government will print? Is this what happens when you get a degree in economics, you figure out that printing money on paper turns out to be very lucrative? >>
i did get a degree in econ, macro beat me up, i am not the brightest bulb
we as a nation will need to make large changes in lifestyles and learn how to live on a budget (within your means) and rediscover a simpler and more satisfying life (yes i believe that) than what the majority of us (JQ Public, Joe Lunchbox, etc.....are doing now)
our local, state and federal.....well they will never do that (live on a budget)
Detailed Quote for Tuesday, June 24, 2008 2:24 PM
Company Name: United States Oil Fund (USO)
Dow Jones Industry:
Exchange: AMEX
Shares Outstanding: 8,700,000
Market Cap: 962.9 Million
Short Interest: 18,294,400 (210.28%)
XLE Select Sector SPDR: Energy Select Sector SPDR Fund
Dow Jones Industry: Exchange: AMEX
Shares Outstanding: 69,166,000
Market Cap: 6.1 Billion
Short Interest: 61,697,520 (89.20%)
<< <i>So this is kind of interesting the short interest in the USO oil fund is now 210.28% and the short interest in the XLE is 89.20%. Do you think there are those that think the price is being manipulated?
Detailed Quote for Tuesday, June 24, 2008 2:24 PM
Company Name: United States Oil Fund (USO)
Dow Jones Industry:
Exchange: AMEX
Shares Outstanding: 8,700,000
Market Cap: 962.9 Million
Short Interest: 18,294,400 (210.28%)
XLE Select Sector SPDR: Energy Select Sector SPDR Fund
Dow Jones Industry: Exchange: AMEX
Shares Outstanding: 69,166,000
Market Cap: 6.1 Billion
Short Interest: 61,697,520 (89.20%) >>
Who do "those" think are doing the manipulation ?.. the shorts?
An article by perrenial gold bug Howard Ruff. Interesting that he talks about stock bull Dave Ramsey. We discussed Mr. Ramsey in this thread back in 2004 when he was predicting massive gains in the Dow/S&P by 2007.....I know, we're still waiting for those gains. To take advantage of a clock being right at least twice a day, Mr. Ramsey is still maintaining his bullish stance on growth stock mutual funds for the near future.
Ruffer times ahead.....Enrico Orlandini
Another interesting summary of where we are today and what portends for stocks, gold, etc....in the author's opinion.
roadrunner
<< <i>
An article by perrenial gold bug Howard Ruff. Interesting that he talks about stock bull Dave Ramsey. We discussed Mr. Ramsey in this thread back in 2004 when he was predicting massive gains in the Dow/S&P by 2007.....I know, we're still waiting for those gains. To take advantage of a clock being right at least twice a day, Mr. Ramsey is still maintaining his bullish stance on growth stock mutual funds for the near future.
>>
I've never figured out why anyone would ever take financial advice. The bulls
are always bulls and the bears are always bears. The most popular advisors
predict current events and are taken as geniuses. Most people just gravitate
to whatever they want to hear.
If you do your own thinking and just remember to buy low and sell high you'll
do far better than the bulls, the bears, or the geniuses.
I did see one bull turn bearish after out running the collapsing World Trade Cen-
ter. She'd have been much more right if she had remained bullish.
Go figure.
You might want to qualify that statement, even a broken clock is right twice a day.
For the last 8 years or so it looks like the stock bulls couldn't have been more wrong to me. Even if stocks go up it will be in response to an inflated money supply that makes it cost more money for other items to be purchased with the so-called "gains". In terms of puchasing power the DOW and NASDAQ have taken quite a tumble over the last 8 years. That puts quite a dent in anyone's 401K. Of course the "gains" are still taxable even though you really incurred a loss in purchasing power. The system's a total scam at this point in history.
That's fair. But 8 years historically is a short period of time. If you use '92 to to '99, the Nasdaq would be the place to invest.
Around 25 years ago when I entered the workforce, gold was ~$400 per ounce and the Dow Jones was ~1200. Today gold is ~$900 per ounce. That's 3.5% annual growth, or just about the rate of inflation. And if you think inflation's much higher as some here do, than you've lost money in real terms. Meanwhile, the Dow stands ~12,000. That's 10% annual growth, and that doesn't even take into account reinvested dividends. As for taxes, you have to pay them when you realize gains whether you sell stocks or gold.
Needless to say, I'm glad I invested in mutual funds instead of Kruggerands. I'm not saying gold doesn't belong in a portfolio, because I think it does. But it should be a small % IMO.
But it's only the most recent 8 years (current trend) that counts. The Nasdaq game ended and you can't go back to 1992. If we get to go back in time then I'll pick up silver in 1971 at not much more than $1 /ounce. 9 years later it was at $35-$50.
Around 25 years ago when I entered the workforce, gold was ~$400 per ounce and the Dow Jones was ~1200. Today gold is ~$900 per ounce. That's 3.5% annual growth, or just about the rate of inflation. And if you think inflation's much higher as some here do, than you've lost money in real terms. Meanwhile, the Dow stands ~12,000. That's 10% annual growth, and that doesn't even take into account reinvested dividends. As for taxes, you have to pay them when you realize gains whether you sell stocks or gold.
Gold should be in a portfolio during the times that it does well (hint...it's been doing well for years). The fact that the DOW outperformed gold from 1980 to 2005 is precisely the reason why one expect Gold to outperform the Dow from 2001 to 2015. What relevance does the 1980-2001 rise in the Dow have today other than to confirm that it's probably been in a secular bear market for 7 years and counting? Those bears have typically have lasted 15-20 years. It took 25 years (to 1954) for the 1929 stock peak to be exceeded. That's 25 years to break even for those who bought near the top. It also took 21 years for the highs of 1966 to be exceeded in 1987. When will the most recent Dow highs be taken out again? 2020-2024 could be a long time to wait if history repeats. As far as paying taxes on gold, it's up to the individual unlike stocks where the paper trail is well documented and forwarded to the IRS.
Needless to say, I'm glad I invested in gold/gold products in 2002 rather than the Dow. I'm not saying that growth stocks don't belong in a portfolio, because I think they do. But they should be a small % IMO at the current time. Stocks will be very worthwhile to own when everyone thinks they stink and is crying about how much they've lost by hanging on. We aren't there yet due to early and frequent FED interventions beginning in 2002.
roadrunner
Buy gold as a hedge against inflation.
And,
Don’t buy gold because stocks always out perform gold.
Another Dave Ramsey fan I presume?
The thread will probably end when the commodity bull finally turns over in a couple of years or when CU shutsdown this site. Until then, it marches on. The interesting part of this thread is that 4 years ago it talked about how today's conditions would come about. No doubt we're talking about things now that will happen in the next few years. When this thread finally closes shop, it may will be time to buy stocks with both fists. That could be as soon as 2015.
roadrunner
what would happen and when. If one takes the time
it is possible to see who talks the talk and those who
actually walk the walk.
Camelot
<< <i>Coolest, it's pretty clear you haven't read anything but the last couple posts in this thread. If that's all you've gotten out of the 4-1/2 years of information listed here, there's not much hope for you.
Another Dave Ramsey fan I presume?
The thread will probably end when the commodity bull finally turns over in a couple of years or when CU shutsdown this site. Until then, it marches on.
roadrunner >>
As it should Mr Roadrunner
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Coolest, it's pretty clear you haven't read anything but the last couple posts in this thread. If that's all you've gotten out of the 4-1/2 years of information listed here, there's not much than can be done for you.
Another Dave Ramsey fan I presume?
The thread will probably end when the commodity bull finally turns over in a couple of years or when CU shutsdown this site. Until then, it marches on. The interesting part of this thread is that 4 years ago it talked about how today's conditions would come about.
No doubt we're talking about things now that will happen in the next few years.
roadrunner >>
I guess you are not in the mood for a little humor? But you are right there is no hope for me.
-Coolest
Reading all 7000+ posts is more educational than half of the economics course I took COMBINED!
In the early 1970's, the top economists of the day including Milton Freedman did not really understand why Richard Nixon closed the gold window to foreign nations in 1971.
Today, we understand the history so much more clearly in light of what has happened since.
<< <i>I took 8 courses of Economics at a pretty prestigious University 32-37 years ago. I even took several courses at the London School of Economics.
Reading all 7000+ posts is more educational than half of the economics course I took COMBINED!
In the early 1970's, the top economists of the day including Milton Freedman did not really understand why Richard Nixon closed the gold window to foreign nations in 1971.
Today, we understand the history so much more clearly in light of what has happened since. >>
There is a lot of spectacular advice, insight, and knowledge in this thread.
I wish I had the time to sit down and try to understand all of it.
Speaking of predictions here is a new one. I really expect to see a world wide grab for all hard assets and commodities by many investors as well as country funds over the next eighteen months. As we settle into worldwide stagflation, Central Bankers around the world will begin to raise interest rates, and investors and countries will grab whatever raw materials they can.
If we see a significant dip in current prices this may be the last train out for several years.
The real crisis in the dollar should come at this time since the U.S. must still borrow one trillion plus per year just to keep its economy and government going. I believe that those that have been buying U.S. paper will shift their attention to buying up worldwide commodities and the prices across the board will continue to climb through out 2009.
The U.S. Fed is now caught in its own trap, neither can it raise rates to compete worldwide with out further crashing the U.S. hosing market, stock market, and the Banks, but it now is the proud holder of a half a trillion dollars of junk paper that it may never be able to relieved its self of if it raise rates substantially.
In addition I think you will see a shift in China after the Olympics. One whereby China draws back from its current sought after attention to a more internal protective mode. It will become more intense on protecting its own economy from U.S. imported inflation and more concerned, along with all other countries, in securing huge amounts of commodities for future development.
Less and less will those countries with hard goods be willing to exchange those goods for dollars, and less and less will be the likelihood that the U.S. will be able to continue down
endless road of borrowing and spending.
Once again we will be faced with one of the key questions in this thread, “Who will buy our debt”
LONDON (Market W.) -- The European Central Bank could boost its key interest rate by a quarter of a percentage point next week in an effort to arrest growing inflation pressures, ECB President Jean-Claude Trichet said Wednesday.
European Parliament committee in Brussels. Markets widely expect the ECB to hike its main lending rate to 4.25%, up from 4% currently.
Agreed, but of bigger concern may be the trap the rest of the world has yet to spring.
When a high flying stock, lets use RIMM as an example as it is timely today, opens down $14 there is a monetary destruction of $7 billion dollars. There are many high flying economies and currencies.
Knowledge is the enemy of fear
CG
Nixon was afraid that DeGaulle and the others would end up with all our gold. He was smart enough to close the gold window but probably would have never guessed how big our debt (and derivatives) would become. The economic courses I took in the early 1970's were all heavy into Keynesian behavior. It warped me for a number of years.
roadrunner
That’s my point exactly. How can anyone be sure the gold game hasn’t ended, and you can’t go back to 2002? A lot of people still loved tech stocks after their 8 year run, and were sure that the trend would continue. That’s why I used a 25 year period for comparison.
<<Gold should be in a portfolio during the times that it does well (hint...it's been doing well for years).>>
That’s true of anything. The problem is you can’t predict the future based recent performance. Otherwise, you could just load up on Google. It’s up 400% in 4 years.
<<It took 25 years (to 1954) for the 1929 stock peak to be exceeded. That's 25 years to break even for those who bought near the top. It also took 21 years for the highs of 1966 to be exceeded in 1987. When will the most recent Dow highs be taken out again? 2020-2024 could be a long time to wait if history repeats.>>
You can’t assume “buying at the top”, because most people dollar cost average into their retirement funds. If you use that test, anyone who bought gold at the top in 1980 is just breaking even after 28 years.
<<As far as paying taxes on gold, it's up to the individual unlike stocks where the paper trail is well documented and forwarded to the IRS.>>
Legally, it’s really not up to the individual, but if someone wants to cheat on his taxes that’s his call. But you can’t remove taxes from the equation for gold but not for stocks and still make a fair comparison.
Look, I know I’m never going to convince a gold bug that gold isn’t a great investment. I also know we’ve been in a cycle of rising commodity prices. The question is how long it will last, and the answer is that no one knows. But decades of history show that long term, equities outperform everything else. Maybe you can predict what will happen between now and 2024, but I’m not smart enough to do it successfully, so I wouldn’t bet my retirement on it.
<< <i>Now that the FED and PPT levers have been "released" following the FOMC meeting, stocks sharply down, gold and gold stocks up. A close at $910 might be the breakout signal. The decreasing wedge is getting awfully narrow with little maneuvering room.
Nixon was afraid that DeGaulle and the others would end up with all our gold. He was smart enough to close the gold window but probably would have never guessed how big our debt (and derivatives) would become. The economic courses I took in the early 1970's were all heavy into Keynesian behavior. It warped me for a number of years.
roadrunner >>
it warped most all of us
so no more PPT monkey business???
I'm thinking that they have two problems: they are out of bullets, and the word is out...commodities.
Interesting but boring article on CNN Money about gold moving and about 900 being some kind of magical point at this time. They don't seem to realize that 1000 is the point we are looking at. The financial folk don't want to cow tow to hard asset mavens...they gotta have their paper and even more importantly, they gotta have the 401K's, fund managers, and retirement plans deep in paper. Getting paper people to like hard assets is like getting a fish to like living on land. We've been saying for over a year here that the paper people were going to have their butts handed to them on a platter but they kept beating the same drum, singing kumbayaa to each other and holding hands.
Edited for spelnig...
<< <i>The U.S. Fed is now caught in its own trap, neither can it raise rates to compete worldwide with out further crashing the U.S. hosing market, stock market, and the Banks, but it now is the proud holder of a half a trillion dollars of junk paper that it may never be able to relieved its self of if it raise rates substantially
Agreed, but of bigger concern may be the trap the rest of the world has yet to spring.
When a high flying stock, lets use RIMM as an example as it is timely today, opens down $14 there is a monetary destruction of $7 billion dollars. There are many high flying economies and currencies.
"...monetary destruction of $7 billion dollars..." Unrealized destruction, and don't forget about the other side of the transactions - 3% of the shares are short.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i> The financial folk don't want to cow tow to hard asset mavens...they gotta have their paper and even more importantly, they gotta have the 401K's, fund managers, and retirement plans deep in paper. Getting paper people to like hard assets is like getting a fish to like living on land. We've been saying for over a year here that the paper people were going to have their butts handed to them on a platter but they kept beating the same drum, singing kumbayaa to each other and holding hands. >>
it just makes me real
in other words i really don't want to use my junk silver war nickels as a barter of $5 in value, but i have them
Evolution can be rough.
I knew it would happen.
But we do know something. Cycles over the past 50-90 years (since the FED showed up in 1913) are fairly well defined. The history from pure fiat and zero gold backing from 1971 is only 37 years old, but there's enough history there to determine some trending. Without the biggest run-up in history from 1987 to 2001 you basically have no great uptrends in stocks. What, the market tripled from 1929 to 1987? Big deal. Inflation adjustments would probably leave you in the hole as would putting back the losers into the Dow equation. The factors that drove those unparalleled 24 years from 1987-2001 will likely never be present again in our lifetime. To call that brief period of massive credit binging on the backs of the 3rd world the "norm" for the 20th century and even going forward into the 21st century is a huge leap of faith. Take out those 2-3 decades on "craziness" and what real performance are you left with? Another truth to the FED's fiat experiment begun in 1913 is that the cycles have been getting more volatile all along. And that implies we will "out swing" the 1970's commodities volatility. This is because the FED over time, continues to over-manipulate to try and control this fiat beast. There's a reason why great rare coin prices are up 50X or more since 1971 and great works of art are up 100-300X.
Let's not forget the pure fiat experiment is still very, very short lived. The FED got involved in it by the late 70's and killed it after approx 14-16 years. Stock and commodity cycles have lasted 20-25 yrs and 15-20 years respectively over the past 90 years, why would you expect something radically different now? Factor in the various known economic cycles and you can basically model what should be coming. It's no secret that several long term cycles are converging in the next few years with stocks expected to finish in a major bear washout. But that's what the long term cycles and trends say. For lack of anything more concrete (or Haley's comet), I'll go with the statistical trends.
I'm betting my retirement on hard/real assets because there is nothing else to bet on other than a repeat of "401K la la land from 1987-2001. The last thing I want to do is to bet my retirement on something I don't have conviction in. We seem to be headed to a retest of just under 11,000 on the Dow. Maybe that will rebound yet another time so TPTB can profit from it. At some point I see it slipping past 10,000 and keep going.....probably in tune with the USD Index finally busting under .70.
roadrunner
Picked up some gold, silver, and XAU today. You have been warned!
Can anyone guess what happened at the point in time indicated in red?
Edit: I'll give you a hint - that line marks January, 1981
Edit2: Ok... I'll just tell ya's - It's the Birth of the 401K, Jan 4th 1981
...
percentage change for the year,
· Crude oil up 42.5%
· Ethanol up 20.7%
· Heating oil up 43.9%
· Natural gas up 76.5%
· Unleaded gas up 39.5%
· Cattle up 1.0%
· Corn up 58.8%
· Soy beans up; 26.4%
· Coffee up 5.9%
· Aluminum up 32.7%
· Copper up 25.7%
· Platinum up 33.4%
· Gold up 6.0%
· Silver up 13.4%.
· S&P 500 down 10.24%
· Frankfurt DAX down 18.32%
· London FTSE down 12.23%
· Paris CAC down 19.64%
· Hong Kong Hang Sang down 18.33%.
· Tokyo Nikkei down 9.47%
· Singapore Straits down 14.04%.
· Seoul Composite down 9.57%
· Sydney All Ordinary down 15.76%
· Taipei Telex down 7.40%
<< <i> The economic courses I took in the early 1970's were all heavy into Keynesian behavior. It warped me for a number of years.
roadrunner >>
Thankfully you've been saved!
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Oil $140, gold up $30+... usually the commodities get smashed after the FOMC meets. Fed losing credibility? >>
BINGO!
Unfortunately the only way they can gain credibility is to raise rates and if they raise rates then its "hello great depression part 2"
Are we near a point, after which it will free fall?
<< <i>So what now for the stock market, after the trashing it took today??
Are we near a point, after which it will free fall? >>
No.
The stock market remains the only game in town to make
money in commerce and industry for most people. Inflation
will affect profits and stock prices too. It may not keep up
with inflation but it will have a hard time making steep and
prolonged drops in this enviroment.