While I would agree with your premise what about this scenario:
Do you think your neighbors would stand idly by if they knew you had 500 ounces of gold in your possession as it skyrocketed to $2,000+ per ounce? Or a tanker of heating oil on your property as oil soars to $150/gallon? While you were becoming a mini-bank/nation unto yourself, and fully insulated from the potential shock waves of drastically lowered real estate prices, etc. and your neighbors were out of work and wallowing in debt .....don't you think our benevolent govt would step in to appease the masses and punish you for your foresight? They'd be asking for your head. Just as they did to the oil companies during Katrina when they made billions. After all, isn't it your purient desire to own gold and oil responsible for their plight. Gold is a relic and now this gold bug has helped unbalance the fiat society. Stoning is too good for them.
Since the masses don't own gold or oil companies, it's pretty easy to point to them as the scapegoat of the economy when it turns south. Don't dare blame it on their foolish spending habits or on bankers for handing out insane levels of credit. It's gold's or oil's fault.
So pick an isolated object (gold bug or oil company) and spread the wealth and the pain so to speak. Sort of like "burn the witch." It's happened in the past. Look at the Hunt brothers. No one likes an isolated winner when the masses are desperate and in turmoil. Such a scenario could come about....even if unlikely. Legislation seems to come about when the masses are unhappy.
Burning a few gold bugs and blaming them for the plights of the economy might just be what the doctor ordered. Hey, the 18th century French did that via the guillotine. But the real culprits then as today are the bankers and the politicians. They were at fault during Katrina (not the oil companies) and are usually the ones responsible for most economic woes. But the gig is to blame it on someone else as that gets votes.
RR an interesting analogy. Here is another quote from that author,
”Speculative financial episodes periodically emerge. In fact, the desire for quick profits where fiat money abounds has created market bubbles without exception,”
I never really made any connection to moral decay and fiat money, but like many things that have changed the last few decades, gambling was once looked on as a vice if not a sin.
My personal observation in these crazy times is that most of what is called investing these days is more akin to gambling than anything else.
roadrunner has a good example with the Hunt brothers. They were succeeding..... in cornering the silver market. Until the rules were changed on them so they could no longer continue.
There are no guarantees in this world. We know many of the 'promises' that are made..... Roth IRA's will not be taxed when you draw the money out..... Proof American Eagles will not be subject to confiscation due to numismatic values.... BUT....
Rules can be changed at any time for the benefit of those who hold the reins of power. Individual rights? You only have those when the government wants you to have those, and can be waived at any time. For instance... who has any individual rights during martial law??
And... case in point.... look at the Supreme? Court decision a couple of months ago..... where anyone can take anyone else property just by saying they can give the government more tax money by doing so. Now no-one is safe from having their property taken.
Topstuff, those cards will always have 3 uses in even the worst of times so that beats gold which only has 2:
cards: flip 'em with your friends, burn 'em for heat, put 'em on your bike wheels as a cheap warning signal.
gold: book ends, door stops, boat anchors / looks pretty on the mantlepiece
Goldsaint, investing left the arena years ago. We've had pure speculation since sometime in the 1980's as the money supply was pumped beyond reason. You can probably link it all up with coming off the gold standard in 1971 or to FED creation in 1913. There is no real investment anymore.
My guess would be that all pre 1933 gold would be exempt and the Modern proofs that had large premiums. I think several factor would protect obsolete coinage.
1. The government is slow to react and by the time they outlawed ownership it would be so high they wouldn't come after old coinage. They would be paying the global market rate for gold.
2. While MS65 coins are common in the Saint series, it's somewhat uncommon in the Lib series. Putting a grade on what's collectable just wouldn't work with older coinage. If they take one they take em all IMO.
3. Most common date coins aren't as common as many believe. Just because they made a million or ever 4 million in a series doesn't mean they are all out there. Many have been melted, made into jewelry, or just plan lost in natural disasters. I don't how many of each date would have survived but I bet it wouldn't be over 25% of the total mintage and that doesn't make it worth the effort IMO.
I think what's more likely is that the government has a currency (red back) for outside the U.S. that is maybe backed by gold and an internal currency for domestic consumption that won't be backed. Now if your in an ETF or a kitco type pool watch out, very little gold is held by the public no days, it's traded like stocks.
Oh this is silly. 50 years from now, people will still be complaining about the security monitors throughout their cells and the corner soldiers. Even those who feasted on coin collectors and bullion speculators during the panic of 2008 will be grousing about the Maximum Allowable Age Act passed to save Social Security. And some will still even be espousing censure of Walmart for it's "shoot the employee" program designed to eliminate lunch hours even though it will mean thousands of extra jobs for the unemployed kept in the state confinement pits. And there will still be talk of "confiscation" of post-2008 vital organs needed to keep the legislators who were infected by the latest Asian viruses alive. They won't even think of the credits they saved on banana substitute made from used noodles from China. You just can't please everyone.
Well, then they mention the gold you bought from US Gold Inc. this year. Says here it was $55,000. US Gold, Inc. identified you as a major buyer and a possible AML threat since you have a PO Box and an unlisted phone number, and your last name sounded middle eastern.
The IRS figures that if you don't have it, then you must have sold it. That means you just violated Patriot Act 2 #352...money laundering statute. What? You have no written AML plan? Off to jail with you and nice fine to boot!
Another money launderer taken off the streets for democracy. Thank you Patriot Act 2. roadrunner
<< <i>Goldcorp is one of the lowest production-cost gold producers in the world. Officially, it cost them $115 an ounce to pull it out of the ground in 2004. So, for the 628,005 ounces they dug up and processed this past year, it cost them $72,220,575. >>
<< <i>Toronto-based Barrick Gold Corp. made a $9.2 billion hostile offer to Vancouver-based Placer Dome Inc., which would create the world's largest gold producer, according to The Wall Street Journal >>
Do the above quotes make anyone nervous about buying gold at $500/ounce for an investment?
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
Why should those scare us? That 19 tons of production at Goldcorp makes it a fine stock to own but a drop in the bucket in the 2500 tons of gold produced per year (existing world supply is around 100,000 tons). Makes no difference. There are other miners who are losing money or have shut down. The price of oil and other supplies has hampered many gold miners. Net gold production per year is still falling short of demand. And it will continue that way for years. The gold carry trade and CB selling saw to the demise of 1990's gold production. Actually those 2 quotes above make me very secure in gold "speculation."
Considering that total world currency is about $50 TRILLION, the total gold in the world is about $1.5 Trillion. Maybe half to one quarter of that is available to the market. Compare that to the $300 or so TRILLION in derivatives world-wide and it pales in comparison. Most of that $300 TRILLION is in interest rate derivatives.
<< <i>I don't believe confiscation is a serious risk; the situation is just too different now than it was 70 years ago. In general, the public is less passive now -- I certainly wouldn't turn in my gold, and I suspect that I would joined by many others -- I would also consider a court challenge to the whole concept. Given that the government has in essence been encouraging diversification into bullion for the past 20 years through the American Eagles program, confiscation would be an awkward position to support.
(On another topic, I've been following silver sales on ebay for the past few months -- it is a surprisingly efficient market -- this seems like a good means for a seller to get full value for bullion) >>
I've been of this opinion all along. I just simply don't see confiscation at all. If it ever came to that, we'd have far more serious problems to consider and there wouldn't be any differentiation between bullion and numismatic gold. Gold is gold. What makes a wedding ring any more exempt than a credit swisse bar for that matter? They'd have to be thinking of confiscating guns to go along with that scenario. It's just not gonna happen.
My position would also be, "Gold? What gold?" I've bought and sold enough over the years to provide sales receipts to more than cover any and all gold I've ever bought. So many purchases were of a private nature, with no paper trail, that there is no way the Feds could ever cover every citizen like me. My bank deposit boxes would simply be filled with paper. Titles, important documents, etc. It's never going to come to that, but even if it were considered, the citizenry is already one-two steps ahead of the Feds.
Silver is also an excellent/better bet as far as a hedge against our crazed politicians. In the meantime, 100 ounce bars make great door stops and bookends.
I've heard the redback/greenback story before and have even heard the notes are already printed. Greenbacks would be worthless overseas and would have to be exchanged for redbacks. That would go a long way to defunding the criminal and terrorist element. Not to mention the incredible bump in the US economy when all those greenbacks were surreptitiously used ASAP to purchase anything and everything at inflated prices within US borders.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Nice link.....It just cannot go on for much longer....Everyone I know has become a real estate investor and/or broker.....How many of your friends and acquaintances have gotten their real estate licenses?
Its going to be a very interesting couple of years in the financial arena and I still am a believer in gold....
I am now starting to fear that private gold ownership is in jeopardy.....
I do know a few of my acquaintances that have gotten their real estate licenses.... and have several others that are into the 'flipping' game with real estate.... buy a property, hold for 6 months, then sell and buy another bigger property, etc.... Kind of like musical chairs. And kind of like the late 1990's when everyone was a stock investing expert and everyone was doing it and bragging about their profits, etc.
I guess if all we have to do is have MS65 graded coins to keep the government from taking them we'll all be sending our coins to AGC,NTC, and all the other bottom feeders
Actually ttown, that may be a consideration.... a cheap slab with the MS65 grade on it. Then use the PCGS price guide to prove what the value is.... instant numismatic valuable coin and thus not subject to consfication! After all.... as we all know in this hobby.... grading is subjective..... so who is to say whether or not the coin is truely an MS65 or not?
Although I do have to say I am mostly in the group that believes consfication of gold is probably extremely remote. Now.... changing currency worries me more. That would be.... relatively easy..... to do. Many examples exist in the world. One of the latest was the German Marks to Deutschmarks and then on to Euros... Devalue the old and give you less of the new. Nearly instant way to get rid of the national debt.... make you pay for it in one fell swoop.
<< <i>I do know a few of my acquaintances that have gotten their real estate licenses.... and have several others that are into the 'flipping' game with real estate.... buy a property, hold for 6 months, then sell and buy another bigger property, etc.... Kind of like musical chairs. And kind of like the late 1990's when everyone was a stock investing expert and everyone was doing it and bragging about their profits, etc.
Yep, it will stop at some point. >>
It's already stopped in Southeast Texas, a primary reason I was able to grab a larger, better home at a rock bottom price, well below appraisal value.
I have a good friend who retired young and comfortable by getting out of the dotcom craziness just before the bust. After 6 months of retirement, he started into real estate speculation, got his license, etc. and did quite well at it for the last several years. The last couple of times we've seen each other he told me that was a dead end now and he was easing out of it. He wanted to know about precious metals. I saw him again a few weeks ago when gold was at it's recent high. The first thing he said was, "you were right, gold and silver are doing just what you told me they would".
Now he's looking into/studying precious metals as a storehouse for what he sees coming down the economic highway. He's just one guy, but he could drop 7 figures into the physical market at the next dip. How many people like him will it take to really run this bull? My guess is not that many. How many people like him are out there? My guess is more than we might think.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Now he's looking into/studying precious metals as a storehouse for what he sees coming down the economic highway. He's just one guy, but he could drop 7 figures into the physical market at the next dip. How many people like him will it take to really run this bull? My guess is not that many. How many people like him are out there? My guess is more than we might think. >>
This is the point I keep trying to get across when people tell me that silver can't go up again because there are no Hunt brothers and no one crazy enough to try it. When the Hunt brothers started the silver was widely dispersed in homes and storehouses. There was also a great deal more silver in the world in those days. The Hunts picked silver primarily because they correctly figured they had enough money in the small consortium to acquire all of the readily available silver and force users to buy it from them. They did this with only a few hundred million dollars available. Today there's less silver and a lower price. There are people all over the world interested in the metal. Much more silver is used for many more applications today and most of this consumption wouldn't be affected even by far higher prices. Few people have much silver in their houses anymore because it was sold in '80 and '81.
Someday the silver price will break out and when it does it will be years before it has much effect on production. Mining of low grade silver is an expensive proposition and will not be cheaper in the future.
It appears to me as long as we are well diversified, we cover our investments from every angle possible, then we should prosper or at least reduce our chance of loss. I believe, much like Van Eeden says that the housing market was the life support of the economy/stock market for the last few years. Of course, I also believe that Fannie Mae and Freddy Mac were the only ones really making the big bucks through all this as Greenspan said many times over. But let’s face it, more and more this country is out sourcing everything we built this country on. We are not a production country, we are a purchasing country (with credit no less). Less jobs. Most of the oil is bought in the east. NAFTA and now CAFTA were intended to create and build a better economy for our nation (importing/exporting goods, not jobs), Less jobs. Although I'm sure it looked good on paper, it was a better way to out source jobs legally so our corporations could give the same jobs to other countries cheaper meaning more profits and yes, less jobs here. They do not have to worry about rising hourly rates, paid vacations, holidays, medical benefits, etc... Added to the fact that the dollar is declining and the housing market is in trouble, even the industrial automotive (American) corps are folding. along with a few other economy factors, experts are suggesting the purchase of PM's. Well they too can decline. I guess what I am trying to say is become diversified, invest within your means, and do your homework. This is my opinion. Please correct if need be.
For those of you that are leery of $500 gold as an investment (I am as well - the $260 days are fresh in my mind), what is your preferred investment vehicle?
Second - Regarding the issue that miners are able to pull it out of the ground for cheap (and that somehow makes gold unattractive) - and comparing that to dealers who buy coins way under market value - does that make you less interested in buying coins at retail (because you know the dealer obtained it for a much cheaper price?).
I think rare coins are a great investment - as long as the economy is strong (or) there is a lot of money sloshing around looking for a tangible investment. If the overall economy goes south - the rare coin market may go with it. If things get tough, I'd prefer to have the PM's over rare coins.
Pre-turb, my sentiments exactly. While MS63-64 Saints & MS62-63 $20 Libs (and other generics) may not be "rare", they do possess a double-edged sword in that they have gold value should rare coins tumble. And even in that scenario gold could still prosper. Though if we look back to 1979-1980 gold bullion peaked out first and was already crashing as rare coins continued to march forward for another 2 months or so. Gold held its value far better than rare coins as a whole. Assuming you were crazy enough to buy gold during it's 2 weeks of insanity in Feb 1980 where it went up 70%, you still retained about 50-60% of your value into 1982. But by summer 1982, rare coins were going for 20-25 cents on the dollar. Had you missed those 14 crazy gold trading days, you would have about broke even on gold bullion....not too bad considering almost every other investment was losing money.
Anyone recall something that did well from mid-1980 to mid-1982...other than treasuries? (treasuries were paying nearly 10% for 30 years at that point) Just reminded me on the govt defaulting on the 1979 - 30 year note last year. They were tired of paying 9% interest per year and figured another 5 years was too much.
<< <i>That 19 tons of production at Goldcorp makes it a fine stock to own but a drop in the bucket in the 2500 tons of gold produced per year >>
Goldcorp is projecting 62 tons in 2006, I know, still a drop in the bucket. Barrick, 262 tons for 2006 vrs 156 tons in 2004. Newmont 234 tons projected in 2006. China produced 90 tons in 1994 and 212 tons in 2004. All of these are a drop in the bucket.
<< <i>For those of you that are leery of $500 gold as an investment (I am as well - the $260 days are fresh in my mind), what is your preferred investment vehicle? >>
I don't know the best investment, so I diversify and have little or no debt - 401K's, Roth IRA's - less then 40% in stocks. A house. A small amount of gold. My rare coins are more of an obsession than an investment.
<< <i>Second - Regarding the issue that miners are able to pull it out of the ground for cheap (and that somehow makes gold unattractive) - and comparing that to dealers who buy coins way under market value - does that make you less interested in buying coins at retail (because you know the dealer obtained it for a much cheaper price?). >>
Since my coin buying is an obsession and not rational, I don't mind the markups. The wholesale cost of coins also increases in a bull market, but with gold the cost of production has gone up, but not as fast as the price of gold. Profits for mining corporations are mostly up, merger activity is way up, which indicates a much larger output. As prices rise, supply curves shift to the right, although gold bugs apparently think the supply is fixed and the laws of supply and demand don't apply to the magical yellow metal. But I am not an investment advisor, so don't believe what I have said.
Prospecting for gold can be a lot of fun, I have been a member of a local club for quite a few years, but not much time these days to prospect. It is amazing how much gold is out there to be found or mined - gold is found almost everywhere on Earth. I found this gold last summer in just a few evenings after work less than 45 minutes from Seattle:
At $500, I would rather find it myself!
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
For those of you that follow Peter Schiff, I received this email this morning, and below is my reply.
Terry,
I will be appearing on CNBC "Power Lunch" tomorrow, Dec 29th, at 1:20 PM Eastern Time.
It will be another bull vs. bear debate, only this time I will be uncharacteristically arguing the bullish case. The topic will be international investing. My opponent will be bearish on foreign stocks, making me the bull.
If you can not watch live make sure to set your recording device to the appropriate time and channel.
Regards Peter,
Peter,
Thanks for the mail; I will be sure to watch. Unfortunately I do not share your enthusiasm for foreign investments. What I am reading, as well as hearing from friends around the world, is that most foreign markets as well as their currencies are in as bad a condition as ours. Although we pay great attention here in the U.S. to the poor conditions of our markets and the coming disasters with pension problems, entitlements, fiat printing presses running wild, it is my belief that this is a worldwide phenomenon.
Most of the world has in place at this time socialistic or communistic types of governments that are not self-sustaining. Europe, Japan and many other sectors of the world face the same problems we have here, with large soon to be retiring baby boom generations, that have approved entitlement programs beyond their countries ability to pay.
From my perspective what I see is a world gone mad with gambling fever trying to keep up, this will only lead to disaster in nearly all markets around the globe. At this point in time I believe that true investors are few and far between. In addition, with the globalization of corporations, monetary systems, etc. my view is that most of the worlds markets are a house of cards whereby when a major failure occurs much of the worlds systems will begin to fail.
My friends in China tell me that the banking system and stock markets there are an absolute disaster. With the banks all on the verge of bankruptcy without the constant help of the government. If and when the American consumers runs to the end of their capacity to buy endless amounts of junk, much of China’s system will also collapse.
Just yesterday the AP reported the following,
“ Saudis have stock market mania, and the obsession is as close to gambling as one can get in a kingdom that bans it. Five years ago, about 50,000 Saudis had dealings with the stock market. Today, there are more than 2 million active investors in a country of 26 million people.
"For some people, it's an addiction that's almost akin to the addiction to the casinos of Las Vegas," said Prince Mohammed Al-Faisal, a businessman. The index went up by 85 percent in 2004, closing at 8200 at year's end. This year, it has grown by more than 100 percent.”
I am not so pessimistic that I feel there is no more time for people to protect their assets, and families, but I do believe as you do that that clock is ticking.
My personal belief is that asset and debt consolidation is the key. Those that will make it through these trying times ahead will be those that pay off debt, rid themselves of credit cards, stop buying endless amounts of junk from China / Asia as well as electronic toys. Folks need to be paying off debt, buying Gold, silver, and other hard assets, saving some cash, and selling all paper assets that can be manipulated either by governments or corporations. Terry
I don't understand what's so bad with (fixed rate) debt in a case of inflation running amok. Certainly, one would be better off with a house and a mortgage rather than neither, no? Also, given that most voters are deep in debt, I believe the government would better screw / defraud the wealthy than let endebted households on their own.
"The greatest productive force is human selfishness." Robert A. Heinlein
“I don't understand what's so bad with (fixed rate) debt in a case of inflation running amok. Certainly, one would be better off with a house and a mortgage rather than neither, no?”
JD I use these broad terms concerning debt here since everyone’s situation is very different, but unless you are very rich and can pay off all debt on short notice, most debt is a longer-term situation that cannot be dealt with in a crisis.
In a perfect world you have debt with an interest rate that is at the inflation rate. Your income goes up as inflation occurs and you pay off your debt with cheaper future money. Unfortunately most folks are in debt because they could not pay for their purchases, and not because they are smart rich folks playing the inflation game.
The problem with ever increasing inflation is that it is volatile, and debt is disastrous to those that have it if a monetary reevaluation, recession, or deflation occurs.
Debt is not like an investment that can be dealt with or changed in a short span of time. For most folks even credit card debt is a multi year payout process, to say nothing of interest rates that may float and increase past ones ability to pay.
So in a particular cases, in the right housing market, with the right low fixed rate mortgage, yes it would be better to own a home rather than not.
That said read this statement below published yesterday in one of the top U.S. business papers.
“Debt may deliver disaster for millions in 2006
It is the year that $1 trillion of adjustable rate mortgages and interest only mortgage loans come due for conversion to fixed rate mortgages.
The victims will be those who could not have managed to make monthly loan payments on fixed rate loans so they opted for lower rate loans.
How many will be able to afford a loan payment when their interest goes from a 2.7 percent ARM to a 7 percent fixed?
Consider this: There never has been a number like the $1 trillion to hit our banking system. Never - not even close. Personal savings are at the lowest rate since the Great Depression. Most people have no backup for emergencies.”
Yeh, this may be a long thread.... but one of much importance. The scenario is still evolving, and I believe we are experiencing some interesting times. The standard of living that many enjoy may be at risk, depending upon how they prepare for what may be taking place.
Christmas was rather sobering for me again. As I shopped, I check the country of origin for every item I looked at for purchase. China.... on nearly everything. I'm beginning to think China owns this country. Try as I might, to find anything not made in China, was not an easy task. About a year ago, I was shopping for a couple of new luggage items.... and the same story. Every piece of luggage I looked at was made in China. Even Sigg luggage, that was prominently displaying that it was a quality Swiss brand luggage.... was made in China.
I realize competition is necessary... and companies need to remain competitive.... but having China to be our main/only supplier cannot be good for our country. I am trying very much not to purchase items made in China... but it appears nearly impossible to do so.
Try to find something made in America, including your cars. Even if it is made in America chances are it was assembled in Mexico. Thanks to NAFTA we have something like a 90%import and 10% export. As I said before, now we have to work with CAFTA. The numbers will not be that different. It is very scary, but, corporate America can find no reason to keep the jobs here, it is not financially sound. Yes, it sucks for Americans but saves money for them. As for China, their economy would collapse if we did not buy their goods. They rely on us more than we do them. These are scary numbers. What’s next ?
I just bought some mousetraps--you know the sticky kind that traps the mouse---and they were made in America. They cost $5 for a package of 4. I could have bought the old fashioned kind--made in China-- for half that.
If Americans were willing to pay 3x more for all of their products then much more would be manufactured here. Americans who wish to spend, spend, spend, are the reason so much is produced overseas. If Americans demand $25+ per hour, free healthcare, low income taxes, 2-4 weeks vacation and a retirement plan, then you better damn well be prepared to pay more for goods. Most Americans could live on 1/2 their current income if they really tried. Cancel all those frivilous expenses and see how much $$$ you can save. Buy groceries at Wal-Mart instead of Whole Foods. You will save a bundle. Live within your means and everything will be fine.
Agreed cohodk. We all want inexpensive things... and will usually purchase whatever has the best price/value. That's human nature, and I certainly have done my share of it.
I think the main problem I have with this scenario is that China is NOT a country that is a friend to us. So I have difficulty understanding why our country has given them most favored nation trading status.... and given them that much power over us. The only thing I can come up with... is that we are using trade as a weapon of sorts.... we are fighting them with capitalism. Just like the Soviet Union was defeated by overspending, driven by the US forcing them to try to keep up.... perhaps the US strategy is to flood them with exposure to capitalism, and then they will get deeply hooked and the rest will fall into place. Perhaps that is the overall strategy.
But till then... I keep looking at the labels. If I can avoid China made products... I try to do so. If it is made in Philippines, not a problem- I will purchase it. Same if made in Mexico, Canada, etc. At least these other countries are allies of some sort with us (although that can be debated at times also!)
They have not deviated one iota from their promise to conquer us. And WE are in full cooperation.
To save a bit of money.
Bleah
The YELLOW PERIL is as it has always been. Your stocks that have benefited from the outsourcing to China will not help your retirement account. They will KILL you.
It is amazing to watch this ....voluntary.... mass suicide.
"...soon enough, predictions are going to be history repeating itself"
George Santayana: Those who cannot learn from history are doomed to repeat it.
This thread is entertaining and serious at the same time. We have been weeks or even months ahead of the economic happenings...some of my favorites come to mind:
GM/US car manufacturers Outsourcing Gold/Silver activity-predictions The effect of ARM's on go-go buyers Credit card minimum pmt increases necessary and effects of new bankrupt filing issues Housing bubble Peak Oil (bunk!) Credit crunch (still waiting but it's gotta be coming) Emergence and dominance of China's economy Dicey stock market Bond markets/Investing choices
There are a number of other good topics, these are just of the top of my head. There has been a nice transition of this thread, from a wild shoot 'em up to a cordial and thoughtful debate of issues and predictions. The best part of this thread is it helps readers "pay attention" better to economic activity...just as the thread title offers. I quoted Pay Attention because I believe there are three things that people must do to survive the masses:
Be Prepared Pay Attention Have a Plan
This thread has helped identify mass influences and effects to the benefit of readers and there is value in this. I have seen the masses just recently in the hurricain Rita when they decided to evacuate Houston...woah, what a bad move but it did incite the masses into hysteria...gasoline, cash, food gone in a few hours, physical fighting at the pumps and in the grocery check-out lines, credit card readers down...a cash only society in just a few hours and all the atm's were empty. Though that was weather related, it speaks volumes in any venue, be it economic markets, disaster response (Kastrina), political discord, media hype...herd mentality. It's real and is huge...Be Prepared.
Over the year, a number of folk came to this thread with questions or requests for advice or explanation of some financial term. Folk here were quick to help and offer advice, good advice, excellent stuff. This is not a doom and gloom post on new year's eve but an optimistic post. If we just pay attention a little, we can avoid many of the pitfalls that loom on the horizion of '06, pitfalls that the uninformed probably can not avoid...like all the ARM buyers, they may well be the lynch-pin of change in the economy of the US for the common man...Pay Attention.
Individual economic stability and survivability is the key to individual independence. If we succumb to debt, if we have only a small pool of assets to draw on then our options become fewer. If we have enough investment, enough assets in cash/metal/coins/retirement plans/income producing paper/equities, then we can maintain our individual ability to direct our individual future but with out enough savings, we have little mobility and we are more vulnerable to losing our individual freedom. That's why metal comes up here a lot, because it is the foundation of world wealth. While currencies fluctuate, corporations come and go for what ever reason, governments change, countries win or lose, the metal is constant, it is responsive and international. The metal is the financial foundation of international commodities (things we need to live) and you can get a good bit information for consideration right here in this thread...Have A Plan.
I'm going out on a limb with the rest of this thread but it's fun to participate in this thread so be gentle...
So, my predictions:
1. Commodities, across the board, will be in greater demand on the international playing field and will rise in cost. Construction materials will see double digit increases over '04 and early '05 levels.
2. A massive credit crunch will accompany housing weakness. The federal government will be asked to help but there is little it can do. This change will have international effects and will begin the inevitable change in the way the US economy operates, the beginning of what's next. Credit histories/Credit ratings will become more public and more a measure of the individual than deeds. There will be major skirmishes over entitlements with the aging population challenging the disenfranchised for their part of the pie.
3. Environmentalism will increase and there will be a strong international effort to "save the earth" fiscially and physically. The Kyoto agreements will evolve into a major issue as will the '06 economic summit meeting. The world stage will become more inclusive of smaller countries and more sensitive to human need. The only bad part of this is that everyone in the world wants a car, an education, a job, some cash, a stable government, and all the things that go with being a modern person (thank the internet for that)...the only bad thing is that it ain't gonna happin for most of them so terrorism will increase as in France in late '05. People will demand more and expect their respective governments to provide the means to get what they need.
4. Media will go through a casting of the old skin and it will have to grow a new one. Music, movies, news sources, broadcast television, all go into a state of change. Media will see a change in kind instead of a change in degree. Public agencies/governments will become more protective of their media profile and media will get more sensationalistic.
5. Value systems will be in the news more. There is a great change coming with inclusion of China...just some quick stats: US pop current-297 Million, China pop (2000) 1.26 Billion, World pop current 6.5 billion. That works out to the US having 5% of the world's population and having 1/4 the population of China (probably more like 1/5). As roughly 1/6 of the worlds population is in China as and they come more mainstream, they will have a stong influence. This will be the big story in '06...the emergence of China.
6. Cash will be king in '06 as credit lenders become even more predatory. Good investments...Medicine/Healthcare, Robotics, Commodities. Keep your powder dry and your muskets loaded.
So....in conclusion....ladies and gentlemen...it has been moved and seconded that our first order of business shall be to carpet bomb the REST of the world with thermonuclear devices beginning Tuesday.
Well, I'm off on Monday so that's a non-starter...Wednesday look's good, the bowl games will pretty much be done but we have to get this done by opening day for baseball or there may be some problems.
Comments
While I would agree with your premise what about this scenario:
Do you think your neighbors would stand idly by if they knew you had 500 ounces of gold in your possession as it skyrocketed to $2,000+ per ounce? Or a tanker of heating oil on your property as oil soars to $150/gallon? While you were becoming a mini-bank/nation unto yourself, and fully insulated from the potential shock waves of drastically lowered real estate prices, etc. and your neighbors were out of work and wallowing in debt .....don't you think our benevolent govt would step in to appease the masses and punish you for your foresight? They'd be asking for your head. Just as they did to the oil companies during Katrina when they made billions. After all, isn't it your purient desire to own gold and oil responsible for their plight. Gold is a relic and now this gold bug has helped unbalance the fiat society. Stoning is too good for them.
Since the masses don't own gold or oil companies, it's pretty easy to point to them as the scapegoat of the economy when it turns south. Don't dare blame it on their foolish spending habits or on bankers for handing out insane levels of credit. It's gold's or oil's fault.
So pick an isolated object (gold bug or oil company) and spread the wealth and the pain so to speak. Sort of like "burn the witch." It's happened in the past. Look at the Hunt brothers. No one likes an isolated winner when the masses are desperate and in turmoil. Such a scenario could come about....even if unlikely. Legislation seems to come about when the masses are unhappy.
Burning a few gold bugs and blaming them for the plights of the economy might just be what the doctor ordered. Hey, the 18th century French did that via the guillotine. But the real culprits then as today are the bankers and the politicians. They were at fault during Katrina (not the oil companies) and are usually the ones responsible for most economic woes. But the gig is to blame it on someone else as that gets votes.
roadrunner
Here is another quote from that author,
”Speculative financial episodes periodically emerge. In fact, the desire for quick profits where fiat money abounds has created market bubbles without exception,”
I never really made any connection to moral decay and fiat money, but like many things that have changed the last few decades, gambling was once looked on as a vice if not a sin.
My personal observation in these crazy times is that most of what is called investing these days is more akin to gambling than anything else.
There are no guarantees in this world. We know many of the 'promises' that are made..... Roth IRA's will not be taxed when you draw the money out..... Proof American Eagles will not be subject to confiscation due to numismatic values.... BUT....
Rules can be changed at any time for the benefit of those who hold the reins of power. Individual rights? You only have those when the government wants you to have those, and can be waived at any time. For instance... who has any individual rights during martial law??
And... case in point.... look at the Supreme? Court decision a couple of months ago..... where anyone can take anyone else property just by saying they can give the government more tax money by doing so. Now no-one is safe from having their property taken.
I finally got tired of correcting people who said the Hunts crashed the silver market.
However, it will ALSO prove very costly to those who attempt to TAKE any personal assets.
heh heh heh
cards: flip 'em with your friends, burn 'em for heat, put 'em on your
bike wheels as a cheap warning signal.
gold: book ends, door stops, boat anchors / looks pretty on the
mantlepiece
Goldsaint, investing left the arena years ago. We've had pure speculation since sometime in the 1980's as the money supply was pumped beyond reason. You can probably link it all up with coming off the gold standard in 1971 or to FED creation in 1913. There is no real investment anymore.
roadrunner
1. The government is slow to react and by the time they outlawed ownership it would be so high they wouldn't come after old coinage. They would be paying the global market rate for gold.
2. While MS65 coins are common in the Saint series, it's somewhat uncommon in the Lib series. Putting a grade on what's collectable just wouldn't work with older coinage. If they take one they take em all IMO.
3. Most common date coins aren't as common as many believe. Just because they made a million or ever 4 million in a series doesn't mean they are all out there. Many have been melted, made into jewelry, or just plan lost in natural disasters. I don't how many of each date would have survived but I bet it wouldn't be over 25% of the total mintage and that doesn't make it worth the effort IMO.
I think what's more likely is that the government has a currency (red back) for outside the U.S. that is maybe backed by gold and an internal currency for domestic consumption that won't be backed. Now if your in an ETF or a kitco type pool watch out, very little gold is held by the public no days, it's traded like stocks.
D'oH!
That is just what I will say when they come to my door. Never hurts to be prepared.
Tom
The IRS figures that if you don't have it, then you must have sold it.
That means you just violated Patriot Act 2 #352...money laundering statute. What? You have no written AML plan? Off to jail with you and nice fine to boot!
Another money launderer taken off the streets for democracy.
roadrunner
No good, freak, yer icon will give you away. They're ON to stuff like that
UUGHHHH !! Why does the 15th only come once a month ??? I will change my icon... maybe give it a beard and sun glasses.
Tom
Ah hah! A Jihadist! SWAT team....FIRE!!!!
Ah hah! A Jihadist! SWAT team....FIRE!!!!
Tom
<< <i>Goldcorp is one of the lowest production-cost gold producers in the world. Officially, it cost them $115 an ounce to pull it out of the ground in 2004. So, for the 628,005 ounces they dug up and processed this past year, it cost them $72,220,575. >>
<< <i>Toronto-based Barrick Gold Corp. made a $9.2 billion hostile offer to Vancouver-based Placer Dome Inc., which would create the world's largest gold producer, according to The Wall Street Journal >>
Do the above quotes make anyone nervous about buying gold at $500/ounce for an investment?
Tom
Considering that total world currency is about $50 TRILLION, the total gold in the world is about $1.5 Trillion. Maybe half to one quarter of that is available to the market. Compare that to the $300 or so TRILLION in derivatives world-wide and it pales in comparison.
Most of that $300 TRILLION is in interest rate derivatives.
roadrunner
Realestate Peak?
<< <i>I don't believe confiscation is a serious risk; the situation is just too different now than it was 70 years ago. In general, the public is less passive now -- I certainly wouldn't turn in my gold, and I suspect that I would joined by many others -- I would also consider a court challenge to the whole concept. Given that the government has in essence been encouraging diversification into bullion for the past 20 years through the American Eagles program, confiscation would be an awkward position to support.
(On another topic, I've been following silver sales on ebay for the past few months -- it is a surprisingly efficient market -- this seems like a good means for a seller to get full value for bullion) >>
I've been of this opinion all along. I just simply don't see confiscation at all. If it ever came to that, we'd have far more serious problems to consider and there wouldn't be any differentiation between bullion and numismatic gold. Gold is gold. What makes a wedding ring any more exempt than a credit swisse bar for that matter? They'd have to be thinking of confiscating guns to go along with that scenario. It's just not gonna happen.
My position would also be, "Gold? What gold?" I've bought and sold enough over the years to provide sales receipts to more than cover any and all gold I've ever bought. So many purchases were of a private nature, with no paper trail, that there is no way the Feds could ever cover every citizen like me. My bank deposit boxes would simply be filled with paper. Titles, important documents, etc. It's never going to come to that, but even if it were considered, the citizenry is already one-two steps ahead of the Feds.
Silver is also an excellent/better bet as far as a hedge against our crazed politicians. In the meantime, 100 ounce bars make great door stops and bookends.
I've heard the redback/greenback story before and have even heard the notes are already printed. Greenbacks would be worthless overseas and would have to be exchanged for redbacks. That would go a long way to defunding the criminal and terrorist element. Not to mention the incredible bump in the US economy when all those greenbacks were surreptitiously used ASAP to purchase anything and everything at inflated prices within US borders.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Nice link.....It just cannot go on for much longer....Everyone I know has become a real estate investor and/or broker.....How many of your friends and acquaintances have gotten their real estate licenses?
Its going to be a very interesting couple of years in the financial arena and I still am a believer in gold....
I am now starting to fear that private gold ownership is in jeopardy.....
$20 Saint Gaudens Registry Set
Yep, it will stop at some point.
Although I do have to say I am mostly in the group that believes consfication of gold is probably extremely remote. Now.... changing currency worries me more. That would be.... relatively easy..... to do. Many examples exist in the world. One of the latest was the German Marks to Deutschmarks and then on to Euros... Devalue the old and give you less of the new. Nearly instant way to get rid of the national debt.... make you pay for it in one fell swoop.
<< <i>I do know a few of my acquaintances that have gotten their real estate licenses.... and have several others that are into the 'flipping' game with real estate.... buy a property, hold for 6 months, then sell and buy another bigger property, etc.... Kind of like musical chairs. And kind of like the late 1990's when everyone was a stock investing expert and everyone was doing it and bragging about their profits, etc.
Yep, it will stop at some point. >>
It's already stopped in Southeast Texas, a primary reason I was able to grab a larger, better home at a rock bottom price, well below appraisal value.
I have a good friend who retired young and comfortable by getting out of the dotcom craziness just before the bust. After 6 months of retirement, he started into real estate speculation, got his license, etc. and did quite well at it for the last several years. The last couple of times we've seen each other he told me that was a dead end now and he was easing out of it. He wanted to know about precious metals. I saw him again a few weeks ago when gold was at it's recent high. The first thing he said was, "you were right, gold and silver are doing just what you told me they would".
Now he's looking into/studying precious metals as a storehouse for what he sees coming down the economic highway. He's just one guy, but he could drop 7 figures into the physical market at the next dip. How many people like him will it take to really run this bull? My guess is not that many. How many people like him are out there? My guess is more than we might think.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>
Now he's looking into/studying precious metals as a storehouse for what he sees coming down the economic highway. He's just one guy, but he could drop 7 figures into the physical market at the next dip. How many people like him will it take to really run this bull? My guess is not that many. How many people like him are out there? My guess is more than we might think. >>
This is the point I keep trying to get across when people tell me that silver can't go up again because there are no Hunt brothers and no one crazy enough to try it. When the Hunt brothers started the silver was widely dispersed in homes and storehouses. There was also a great deal more silver in the world in those days. The Hunts picked silver primarily because they correctly figured they had enough money in the small consortium to acquire all of the readily available silver and force users to buy it from them. They did this with only a few hundred million dollars available. Today there's less silver and a lower price. There are people all over the world interested in the metal. Much more silver is used for many more applications today and most of this consumption wouldn't be affected even by far higher prices. Few people have much silver in their houses anymore because it was sold in '80 and '81.
Someday the silver price will break out and when it does it will be years before it has much effect on production. Mining of low grade silver is an expensive proposition and will not be cheaper in the future.
Tom
Second - Regarding the issue that miners are able to pull it out of the ground for cheap (and that somehow makes gold unattractive) - and comparing that to dealers who buy coins way under market value - does that make you less interested in buying coins at retail (because you know the dealer obtained it for a much cheaper price?).
I think rare coins are a great investment - as long as the economy is strong (or) there is a lot of money sloshing around looking for a tangible investment. If the overall economy goes south - the rare coin market may go with it. If things get tough, I'd prefer to have the PM's over rare coins.
Had you missed those 14 crazy gold trading days, you would have about broke even on gold bullion....not too bad considering almost every other investment was losing money.
Anyone recall something that did well from mid-1980 to mid-1982...other than treasuries? (treasuries were paying nearly 10% for 30 years at that point) Just reminded me on the govt defaulting on the 1979 - 30 year note last year. They were tired of paying 9% interest per year and figured another 5 years was too much.
roadrunner
<< <i>That 19 tons of production at Goldcorp makes it a fine stock to own but a drop in the bucket in the 2500 tons of gold produced per year >>
Goldcorp is projecting 62 tons in 2006, I know, still a drop in the bucket. Barrick, 262 tons for 2006 vrs 156 tons in 2004. Newmont 234 tons projected in 2006. China produced 90 tons in 1994 and 212 tons in 2004. All of these are a drop in the bucket.
<< <i>For those of you that are leery of $500 gold as an investment (I am as well - the $260 days are fresh in my mind), what is your preferred investment vehicle? >>
I don't know the best investment, so I diversify and have little or no debt - 401K's, Roth IRA's - less then 40% in stocks. A house. A small amount of gold. My rare coins are more of an obsession than an investment.
<< <i>Second - Regarding the issue that miners are able to pull it out of the ground for cheap (and that somehow makes gold unattractive) - and comparing that to dealers who buy coins way under market value - does that make you less interested in buying coins at retail (because you know the dealer obtained it for a much cheaper price?). >>
Since my coin buying is an obsession and not rational, I don't mind the markups. The wholesale cost of coins also increases in a bull market, but with gold the cost of production has gone up, but not as fast as the price of gold. Profits for mining corporations are mostly up, merger activity is way up, which indicates a much larger output. As prices rise, supply curves shift to the right, although gold bugs apparently think the supply is fixed and the laws of supply and demand don't apply to the magical yellow metal. But I am not an investment advisor, so don't believe what I have said.
Prospecting for gold can be a lot of fun, I have been a member of a local club for quite a few years, but not much time these days to prospect. It is amazing how much gold is out there to be found or mined - gold is found almost everywhere on Earth. I found this gold last summer in just a few evenings after work less than 45 minutes from Seattle:
At $500, I would rather find it myself!
Recession coming.
Recession coming. "
HD, Perhaps, but Gold is going back up even if the Stock market is dropping like a rock, We are know negitive for the year.
Terry,
I will be appearing on CNBC "Power Lunch" tomorrow, Dec 29th, at 1:20 PM Eastern Time.
It will be another bull vs. bear debate, only this time I will be uncharacteristically arguing the bullish case. The topic will be international investing. My opponent will be bearish on foreign stocks, making me the bull.
If you can not watch live make sure to set your recording device to the appropriate time and channel.
Regards Peter,
Peter,
Thanks for the mail; I will be sure to watch. Unfortunately I do not share your enthusiasm for foreign investments. What I am reading, as well as hearing from friends around the world, is that most foreign markets as well as their currencies are in as bad a condition as ours. Although we pay great attention here in the U.S. to the poor conditions of our markets and the coming disasters with pension problems, entitlements, fiat printing presses running wild, it is my belief that this is a worldwide phenomenon.
Most of the world has in place at this time socialistic or communistic types of governments that are not self-sustaining. Europe, Japan and many other sectors of the world face the same problems we have here, with large soon to be retiring baby boom generations, that have approved entitlement programs beyond their countries ability to pay.
From my perspective what I see is a world gone mad with gambling fever trying to keep up, this will only lead to disaster in nearly all markets around the globe. At this point in time I believe that true investors are few and far between. In addition, with the globalization of corporations, monetary systems, etc. my view is that most of the worlds markets are a house of cards whereby when a major failure occurs much of the worlds systems will begin to fail.
My friends in China tell me that the banking system and stock markets there are an absolute disaster. With the banks all on the verge of bankruptcy without the constant help of the government. If and when the American consumers runs to the end of their capacity to buy endless amounts of junk, much of China’s system will also collapse.
Just yesterday the AP reported the following,
“ Saudis have stock market mania, and the obsession is as close to gambling as one can get in a kingdom that bans it.
Five years ago, about 50,000 Saudis had dealings with the stock market. Today, there are more than 2 million active investors in a country of 26 million people.
"For some people, it's an addiction that's almost akin to the addiction to the casinos of Las Vegas," said Prince Mohammed Al-Faisal, a businessman.
The index went up by 85 percent in 2004, closing at 8200 at year's end. This year, it has grown by more than 100 percent.”
I am not so pessimistic that I feel there is no more time for people to protect their assets, and families, but I do believe as you do that that clock is ticking.
My personal belief is that asset and debt consolidation is the key. Those that will make it through these trying times ahead will be those that pay off debt, rid themselves of credit cards, stop buying endless amounts of junk from China / Asia as well as electronic toys. Folks need to be paying off debt, buying Gold, silver, and other hard assets, saving some cash, and selling all paper assets that can be manipulated either by governments or corporations.
Terry
Robert A. Heinlein
JD
I use these broad terms concerning debt here since everyone’s situation is very different, but unless you are very rich and can pay off all debt on short notice, most debt is a longer-term situation that cannot be dealt with in a crisis.
In a perfect world you have debt with an interest rate that is at the inflation rate. Your income goes up as inflation occurs and you pay off your debt with cheaper future money.
Unfortunately most folks are in debt because they could not pay for their purchases, and not because they are smart rich folks playing the inflation game.
The problem with ever increasing inflation is that it is volatile, and debt is disastrous to those that have it if a monetary reevaluation, recession, or deflation occurs.
Debt is not like an investment that can be dealt with or changed in a short span of time. For most folks even credit card debt is a multi year payout process, to say nothing of interest rates that may float and increase past ones ability to pay.
So in a particular cases, in the right housing market, with the right low fixed rate mortgage, yes it would be better to own a home rather than not.
That said read this statement below published yesterday in one of the top U.S. business papers.
“Debt may deliver disaster for millions in 2006
It is the year that $1 trillion of adjustable rate mortgages and interest only mortgage loans come due for conversion to fixed rate mortgages.
The victims will be those who could not have managed to make monthly loan payments on fixed rate loans so they opted for lower rate loans.
How many will be able to afford a loan payment when their interest goes from a 2.7 percent ARM to a 7 percent fixed?
Consider this:
There never has been a number like the $1 trillion to hit our banking system. Never - not even close.
Personal savings are at the lowest rate since the Great Depression. Most people have no backup for emergencies.”
Christmas was rather sobering for me again. As I shopped, I check the country of origin for every item I looked at for purchase. China.... on nearly everything. I'm beginning to think China owns this country. Try as I might, to find anything not made in China, was not an easy task. About a year ago, I was shopping for a couple of new luggage items.... and the same story. Every piece of luggage I looked at was made in China. Even Sigg luggage, that was prominently displaying that it was a quality Swiss brand luggage.... was made in China.
I realize competition is necessary... and companies need to remain competitive.... but having China to be our main/only supplier cannot be good for our country. I am trying very much not to purchase items made in China... but it appears nearly impossible to do so.
Try to find something made in America, including your cars. Even if it is made in America chances are it was assembled in Mexico. Thanks to NAFTA we have something like a 90%import and 10% export. As I said before, now we have to work with CAFTA. The numbers will not be that different. It is very scary, but, corporate America can find no reason to keep the jobs here, it is not financially sound. Yes, it sucks for Americans but saves money for them. As for China, their economy would collapse if we did not buy their goods. They rely on us more than we do them. These are scary numbers. What’s next ?
Tom
If Americans were willing to pay 3x more for all of their products then much more would be manufactured here. Americans who wish to spend, spend, spend, are the reason so much is produced overseas. If Americans demand $25+ per hour, free healthcare, low income taxes, 2-4 weeks vacation and a retirement plan, then you better damn well be prepared to pay more for goods. Most Americans could live on 1/2 their current income if they really tried. Cancel all those frivilous expenses and see how much $$$ you can save. Buy groceries at Wal-Mart instead of Whole Foods. You will save a bundle. Live within your means and everything will be fine.
Knowledge is the enemy of fear
I think the main problem I have with this scenario is that China is NOT a country that is a friend to us. So I have difficulty understanding why our country has given them most favored nation trading status.... and given them that much power over us. The only thing I can come up with... is that we are using trade as a weapon of sorts.... we are fighting them with capitalism. Just like the Soviet Union was defeated by overspending, driven by the US forcing them to try to keep up.... perhaps the US strategy is to flood them with exposure to capitalism, and then they will get deeply hooked and the rest will fall into place. Perhaps that is the overall strategy.
But till then... I keep looking at the labels. If I can avoid China made products... I try to do so. If it is made in Philippines, not a problem- I will purchase it. Same if made in Mexico, Canada, etc. At least these other countries are allies of some sort with us (although that can be debated at times also!)
Take a look, folks
They have not deviated one iota from their promise to conquer us. And WE are in full cooperation.
To save a bit of money.
Bleah
The YELLOW PERIL is as it has always been. Your stocks that have benefited from the outsourcing to China will not help your retirement account. They will KILL you.
It is amazing to watch this ....voluntary.... mass suicide.
Well, the link doesn't seem to work. If you would ...like... to read it, it is at:
http://www.pbs.org/newshour/extra/features/july-dec05/china_10-19.html
Maybe.
George Santayana:
Those who cannot learn from history are doomed to repeat it.
This thread is entertaining and serious at the same time. We have been weeks or even months ahead of the economic happenings...some of my favorites come to mind:
GM/US car manufacturers
Outsourcing
Gold/Silver activity-predictions
The effect of ARM's on go-go buyers
Credit card minimum pmt increases necessary and effects of new bankrupt filing issues
Housing bubble
Peak Oil (bunk!)
Credit crunch (still waiting but it's gotta be coming)
Emergence and dominance of China's economy
Dicey stock market
Bond markets/Investing choices
There are a number of other good topics, these are just of the top of my head. There has been a nice transition of this thread, from a wild shoot 'em up to a cordial and thoughtful debate of issues and predictions. The best part of this thread is it helps readers "pay attention" better to economic activity...just as the thread title offers. I quoted Pay Attention because I believe there are three things that people must do to survive the masses:
Be Prepared
Pay Attention
Have a Plan
This thread has helped identify mass influences and effects to the benefit of readers and there is value in this. I have seen the masses just recently in the hurricain Rita when they decided to evacuate Houston...woah, what a bad move but it did incite the masses into hysteria...gasoline, cash, food gone in a few hours, physical fighting at the pumps and in the grocery check-out lines, credit card readers down...a cash only society in just a few hours and all the atm's were empty. Though that was weather related, it speaks volumes in any venue, be it economic markets, disaster response (Kastrina), political discord, media hype...herd mentality. It's real and is huge...Be Prepared.
Over the year, a number of folk came to this thread with questions or requests for advice or explanation of some financial term. Folk here were quick to help and offer advice, good advice, excellent stuff. This is not a doom and gloom post on new year's eve but an optimistic post. If we just pay attention a little, we can avoid many of the pitfalls that loom on the horizion of '06, pitfalls that the uninformed probably can not avoid...like all the ARM buyers, they may well be the lynch-pin of change in the economy of the US for the common man...Pay Attention.
Individual economic stability and survivability is the key to individual independence. If we succumb to debt, if we have only a small pool of assets to draw on then our options become fewer. If we have enough investment, enough assets in cash/metal/coins/retirement plans/income producing paper/equities, then we can maintain our individual ability to direct our individual future but with out enough savings, we have little mobility and we are more vulnerable to losing our individual freedom. That's why metal comes up here a lot, because it is the foundation of world wealth. While currencies fluctuate, corporations come and go for what ever reason, governments change, countries win or lose, the metal is constant, it is responsive and international. The metal is the financial foundation of international commodities (things we need to live) and you can get a good bit information for consideration right here in this thread...Have A Plan.
I'm going out on a limb with the rest of this thread but it's fun to participate in this thread so be gentle...
So, my predictions:
1. Commodities, across the board, will be in greater demand on the international playing field and will rise in cost. Construction materials will see double digit increases over '04 and early '05 levels.
2. A massive credit crunch will accompany housing weakness. The federal government will be asked to help but there is little it can do. This change will have international effects and will begin the inevitable change in the way the US economy operates, the beginning of what's next. Credit histories/Credit ratings will become more public and more a measure of the individual than deeds. There will be major skirmishes over entitlements with the aging population challenging the disenfranchised for their part of the pie.
3. Environmentalism will increase and there will be a strong international effort to "save the earth" fiscially and physically. The Kyoto agreements will evolve into a major issue as will the '06 economic summit meeting.
The world stage will become more inclusive of smaller countries and more sensitive to human need. The only bad part of this is that everyone in the world wants a car, an education, a job, some cash, a stable government, and all the things that go with being a modern person (thank the internet for that)...the only bad thing is that it ain't gonna happin for most of them so terrorism will increase as in France in late '05. People will demand more and expect their respective governments to provide the means to get what they need.
4. Media will go through a casting of the old skin and it will have to grow a new one. Music, movies, news sources, broadcast television, all go into a state of change. Media will see a change in kind instead of a change in degree. Public agencies/governments will become more protective of their media profile and media will get more sensationalistic.
5. Value systems will be in the news more. There is a great change coming with inclusion of China...just some quick stats: US pop current-297 Million, China pop (2000) 1.26 Billion, World pop current 6.5 billion. That works out to the US having 5% of the world's population and having 1/4 the population of China (probably more like 1/5). As roughly 1/6 of the worlds population is in China as and they come more mainstream, they will have a stong influence. This will be the big story in '06...the emergence of China.
6. Cash will be king in '06 as credit lenders become even more predatory. Good investments...Medicine/Healthcare, Robotics, Commodities. Keep your powder dry and your muskets loaded.
Feel free to add your predictions...
Happy New Year
The meeting is now adjourned and God bless.
huh?
Please don't push the button til 9pm PT 1/4/05