I am sure most of you are right that I calculated these numbers incorrectly, but the gains were as I wrote,
Central Texas Real-estate, appreciation plus rents for the six year period + 72% Numismatic coins, mostly Bust halve dollars and Type over six years + 130% Cash in C.D.’s average over six years + 19% currently 5% Gold over six years +100 Silver over six years +200%
There is no way for me to sit down and figure exact rates for each year without a day at the computer. In fact my rates were much higher than the above totals.
I figured only my C.D. annual rates and not compounded interest.
Most of the Gold I buy are numismatic slabed pieces close to spot for the day, this makes them a lot less volatile than the gold Bullion markets, so $50 PCGS PR 69 American Eagles have not dropped by the $125 the market has gone down the last few weeks.
I have not calculated any tax depreciation in my real-estate gains.
I do try to keep my allocations close, but yes there are times that one market looks better than others.
As far as my risk in this system, there is very little.
I do not buy on leverage, and therefore I am not pushed to do anything in a panic. If my real-estate appreciation drops my rents generally increase, which is the current case.
This posting is in no way is a slam on Lloyd. His rates of return are very good for a guy in his group that buys only paper.
That being said it is my personal belief that the Government lies about the CPI, and we have in fact had a minimum of 5% per year inflation over these six years. Therefore any investor must earn at least that 5% per year to break even, and that 5% must be deducted from anyone’s portfolio when figuring out how much they have earned.
The question here then is can anyone do what I am doing, of course. Will this same simple system duplicate these rates the next six years? No reason why not.
Neither gold nor silver has ever adjusted for the inflation that even the government admits.
U.S. Real-estate, in none bubble areas, MUST continue to go up simply because the Chinese, Indian’s, Russians, East block countries are going to build 500 million new homes and apartments the next 10 years and the prices of copper, lumber, carpet, roofing materials are going to accelerate in price, and push the price of construction here.
The dollar will get weaker as we borrow more and more we can never repay.
There are going to be millions of new coin collectors in the next six years all from foreign lands that have no coin history of their own, or trusted certification companies.
C.D. rates are moving up to inflation break even.
Fianally, silver will follow gold, copper, and a weaker dollar.
<< <i>There is no way for me to sit down and figure exact rates for each year without a day at the computer. In fact my rates were much higher than the above totals. >>
Did you at least factor out the transaction costs, including travels to coin show (and I suppose to prospect for properties or keep an eye on them)?
<< <i>I have not calculated any tax depreciation in my real-estate gains. >>
I don't think you need to, but you should calculate the tax cost of anything you actually sold at a profit - including coins (I suspect that people who collect coins don't file their profits as income, but for a comparison with investments, you need to do that).
<< <i>That being said it is my personal belief that the Government lies about the CPI >>
I agree that it is a bad measure of inflation.
<< <i>U.S. Real-estate, in none bubble areas, MUST continue to go up simply because the Chinese, Indian’s, Russians, East block countries are going to build 500 million new homes and apartments the next 10 years and the prices of copper, lumber, carpet, roofing materials are going to accelerate in price, and push the price of construction here. >>
I agree that Demand will go up, but you're making the implied assumption that Supply will not be able to follow and I'm not sure I agree.
"The greatest productive force is human selfishness." Robert A. Heinlein
Here's a question. The trade deficit was 63 billion )or so) in April. It's at about 700 bil for a year. Now if T-Bills pay 5% or so and foreigners have a trillion or 2. Does this 50-100 billion in "interest" get included in these figures??
“Did you at least factor out the transaction costs, including travels to coin show (and I suppose to prospect for properties or keep an eye on them)?”
JDelage
I have been to two coin shows in six years I drove to both less than 300 miles away; I buy everything on the Net.
I live in a community of 25 thousand, and my properties are small commercial. I am not a trader, or flipper, unlike with paper stocks, there is no reason to sell. I do not wake up one morning and find out my Vontage has been manipulated by the short sellers.
“I agree that it is a bad measure of inflation.”
You Sir, of course, can believe those stories out of Washington if you chose, I prefer to believe my own eyes, as prices of food, fuel, housing, cars, utilities, etc.etc. go up. If Washington wants to calculated the inflation rate by what Chinese goods cost coming into the country, that’s is up to them.
“ I agree that Demand will go up, but you're making the implied assumption that Supply will not be able to follow and I'm not sure I agree.”
I am not concerned here about supply and demand of any properties here in the U.S. What I am saying is that if the World on its present course builds more homes around the World in the next ten years than currently exist in the entire United States, the prices of all of these hundreds of products that go into building homes are going to go through the roof. It just can be no other way. Our contractors here must compete for all of these products.
I do agree with you "gold bugs" on quite a bit. I do believe the core inflation is HIGHER than we are told. Higher costs of oil effects not only manufacturing, but packaging, building, etc.
Furthermore, my charts show commodities having had the greatest returns in the past 5 years, like GOLDSAINT shows. But how many people honestly had a heavy allocation or their retirement money or other money in GOLD or SILVER. (I'm talking like $100,000 out of $300,000 from their pension lump sum, for example). I would bet most (Americans, including the posters on this thread), haven't made much to even talk about (a $$$ return on GOLD). (Maybe roadrunner, because he is so into it. But I would need proof if it was decent).
It SEEMS to be reported today that housing is slowing down. Well, wouldn't DEMAND for building materials slow down if this was the case, thus LOWERING the cost for commodities??
Supply & demand also affect commodities - the supply for most commodities will increase along with demand. There will be lags, and it's possible that prices will go up, but I suspect not that much. There's also the fact that alternative technologies are improving all the time.
GoldSaint - not to be a PITA, but did you include your tax payments in your returns?
Regarding inflation, I happen to largely agree with you.
"The greatest productive force is human selfishness." Robert A. Heinlein
I am with you on GOLDSAINTS returns. I don't quite get it, except the AVERAGE was NOT 86.8% a year, but the 12+% you came up with. I didnt include Real Estate in my figures. I have NEVER had someone take money out fo the home and invest it - just not my job or interest. But I assure you, RE numbers look O.K. for them also.
Remember, my clients are RETIRED. They LIVE off these returns. Is GOLDSAINT withdrawing about $39,000 a year, and his principle has gone up ??? (Average retiree accounts about $489,000 TODAY. Both figures AVERAGES of each of my retiree clients). Hard to compare apples to apples. Someone can beat their chest about a great return, but how much was invested, and/or how much risk did they take???
Was it $400,000 of ALL their retirement money invested, or just a measly $10,000 on the side???
Gentleman, First of all I do not believe there is a single “gold bug” in this entire thread of 3,000 plus posts. I see lots of paper bugs that are 90% plus invested in stocks and other paper, but I have heard no comments about anyone here even 50% invested in gold. In my case it may be 15%.
Perhaps a better name for those on the opposite side of paper, would be the HARD ASSET GUYS.
In China alone there are now 171 cites with a population of one million or more, and most of these exceeded one million the last ten years. The U.S. currently has 11. This is just China. More people will move to these cites in China during the next ten years than the entire population of the U.S., and this is just China.
During the next six years in the U.S. the prices of construction materials will go up a minimum of 50%, it just cannot do anything else, and oil will see $100 per barrel, it also just cannot do anything else.
Perhaps some of the hard assets are taking a breather for a few months, but the growth in this area has just begun. What do you paper guys say, buy and hold, and buy the dips, I love that it is just what I intend to do!
<< <i>During the next six years in the U.S. the prices of construction materials will go up a minimum of 50%, it just cannot do anything else, and oil will see $100 per barrel, it also just cannot do anything else. >>
I forsee the same thing, and am quite concerned. I am only 29 and do not have a lot of accumulated assets to play with. If anyone wants to throw some advice my way on how someone with limited means can invest/prepare for the kind of problems this is going to cause, please let fly.
I believe economics are inherently unpredictable...well, I should say current economics are unpredictable, because it's a confidence game, and that game could be up any day. Or it could go on for years.
With a little luck and fortitude, I will have zero debt in three to five years. No mortgage, no nothing. I'm worried I might not have three to five years before the SHTF.
Current hard assets are palty...200 ounces of silver, a FAL and 1000 rounds of ammo.
Your #1 priority should be to repay your debt. There's no reason to hoard silver when you have debt. You're just gambling that the silver is going to go up by more than your interest rate...
The exception to that is if you have a subsidized student loan or something of the sort. If that's the case, it might make sense for you to keep it on. I would save 25% to 33% of your gross pay and invest it in a diversified portfolio of stock index funds - Vanguard's Total Stock Index is a good first step until you have enough capital to add other funds to that. Metal is a good insurance policy, but it doesn't pay dividends.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i> Your #1 priority should be to repay your debt. There's no reason to hoard silver when you have debt. You're just gambling that the silver is going to go up by more than your interest rate...
The exception to that is if you have a subsidized student loan or something of the sort. If that's the case, it might make sense for you to keep it on. I would save 25% to 33% of your gross pay and invest it in a diversified portfolio of stock index funds - Vanguard's Total Stock Index is a good first step until you have enough capital to add other funds to that. Metal is a good insurance policy, but it doesn't pay dividends. >>
Debt is definitely #1 priority...even though all of it is at low rates. Even the mortgage is about 5%, and it's the highest, but I hate debt.
I should have clarified--I piled up the silver as insurance and to hold long term, so that I wouldn't be caught penniless in any situation.
How would you balance debt repayment (given interest rates of 3-5%) vs. investment? The Fed seems poised to tank the economy (perhaps to avoid something worse, I don't claim to know). Aren't stocks likely to take it in the chin in the near term?
If you have debt at 3-5% then I would not be in a hurry to pay it off. You may never seen interest rates like that ever again. You could put the $$$ into CD's at a higher interest rate.
I have thought about paying off my mortgage. But I would be a fool. If I can use that $$$ and get 10% per yr, then why would I pay off my house at 6% and lose the tax breaks?
I agree. If your debt is at low rate, it makes sense to take your time.
In that case, your #1 priority should be to maximize your contributions to a 401(k) AND an IRA or Roth IRA. Invest in low cost, no load index funds such as Vanguard's index funds. At first, invest in one unique diversified index such as the Total Stock Index fund, or an S&P 500 index. If you already have a well funded 401(k) in stocks, start building a (Roth) IRA with tax inefficient investments such as a REIT (Bonds are tax inefficient too, but at your age I would invest entirely in stock index funds).
#1 ex-aequo would be a fund equal to 2 or 3 months income, put in a safe investment (CDs, maybe high quality bonds). This is your emergency savings - it's meant to cover for medical problems, or other unexpected catastrophes, and to cover your living expenses in case you would loose your job. It is NOT meant to save in prevision of a nice purchase you'd like to make or a new kitchen.
#2 is a normal retirement account. Again, I recommend Vanguard, and Vanguard index funds. Start with a broad diversified index, and when you get to $50k or so, start diversifying your portfolio, investing for example in international stock index funds and small cap index funds. Rebalance your investment allocation no more than once or twice a year.
Your goal between #1 and #2 should be to save at least 25%, maybe as much as 40% of your GROSS pay (that is, before taxes). It's not going to leave you much play money.
#3 is a small pool of "play" money, for things like coins, vacations, home improvements, etc. The goal is to not have to rely on credit cards or home equity loans.
A great forum to ask questions about investment strategies is: Vanguard Diehards.
"The greatest productive force is human selfishness." Robert A. Heinlein
Having watched stocks that I owned closely from 1968 to 1987, I experienced a period that showed how poorly stocks can do for a long period. This gave me a very healthy dose of reality and probably is what turned me into a hard asset guy by 1974. I was hooked. To those that think that are we soon to relive the 80's and 90's for another 20 years, I can only say, good luck to you. While I missed out on way too much of the 1990's, I don't plan to compounding the problem by betting on stock funds (other than commodities and selected contrarian funds) from 2006 to 2016. This will be a good 10 years to be totally out of the standard stock market. Gauging the stock market from 1989 to date is certainly not my measure of reality, any more than gauging gold's future direction by how it performed from 1980 to 2000.
Gold bug? Depends, but I do have my share of generic gold from $1's to $20's with a concentration on the $20's. Works for me for the time being. Probably have less than 5% in pure gold/silverbullion. Can't claim any where near the 85% of Goldsaint.
So what if the DOW heads for 5000-7000 next? That would be expected based on historic cycles. Yet I don't see any indication that anyone here in stocks thinks that is even remotely possible. Those same people see gold at $300 before the DOW could ever hit 7000 again. Time will tell. $300 gold, $300 google, or 3000 DOW. Place your bets.
<< <i>Having watched stocks that I owned closely from 1968 to 1987, I experienced a period that showed how poorly stocks can do for a long period. This gave me a very healthy dose of reality and probably is what turned me into a hard asset guy by 1974. I was hooked. To those that think that are we soon to relive the 80's and 90's for another 20 years, I can only say, good luck to you. >>
This is my concern. I don't understand people who get up on the soap box for stocks, or commodities, or whatever else, without reference to particular times and conditions. There have been great times for stocks, that does not mean all times are good for stocks. Same for everything else you can conceivably put your money in.
I am no expert in investing, but I have made a long study in the "what the F is wrong with the world around me" department, and what seems clear is that the next hundred years will not be like the last hundred years, and more importantly not like the last 50.
The unsustainability of so many aspects of our present way of life has been commented on enough in the foregoing posts. Everything from debt, to commodities, to agriculture. It can't last. It has taken everything the planet has to give to raise a small portion of the total population to our current "high" standard of living. To view it as high, you must subscribe to philosophical materialism, because by any qualitative standard we live in a desert, and lucky are those who can make an oasis for themselves, and find some contentment that lies not in baubles.
The 21st century looks to me to be destined to be a century of scarcity, as the last half of the 20th was of abundance. The developing world will find that there are not enough resources to develop, and what then?
I do not know when worldwide oil production will reach it's maximum, but I know that it will, and soon, and what then? How can you have economic growth while consuming LESS energy, every year? How can you build wealth through investments when the economy is contracting? If we cannot find a way to grow without using more energy, there will come a point when that economic contraction will be a fixed condition.
Theories on sustainable society are full of uncomfortable demands--immensely less energy use, a human population as little as 10% it's present size.
I would not venture a guess as to when, or how, whether the crisis will be one of energy or of currency or of someting else unforeseen, but the 21st century looks to one, long "disorderly adjustment."
This does not mean, for the moment, I will spurn the advice to look at stocks and other paper assets. There may be a few boom and bust cycles left, but I do not for a moment believe I will be settling down to a nice retirement paid for by a lifetime of careful investment, as my parents are now doing. They are reaping the last reward of victory in the second world war. My generation will not be so lucky.
There are others...but they certainly don't go around waving flags.
For a while, I was torn. I know wraped J&Ms or Engelhards are certainly the proper medium for exchange for storing wealth. But then I see a Humbert $50, or a beautiful $20 roman numeral, or catch myself lustfully leering at an AU 15s oct that strays into the market place and I start penciling in my discretionary dollars, my rat-holed dollars, my change jar, any available dollars and once again just settle back into my waiting mode knowing I can't really put together a competitive bid. I relieve the frustration by picking up a nice $5 indian or big shiny lib. or a crusty original $10 indian. It has happened to me a number of times and I've been doing that for a while...a little bit at a time for a few years.
It occurs to me that maybe we stalk the perfect investments so much that maybe we fail to see the forest for all the darned trees that are in the way. Has there been an investment vehicle that has yielded more than rare US gold? Have you priced what was a $700 US pre-'33 US gold coin just a few months ago, recently? Bring your $1300-$1800 for that coin today. Double money in just a few months...is there really a better investment? The value of my gold coins has nearly doubled in less than 6 months while the equivilent weight in bars has managed a fraction of the increase. So, I finally woke up and said to myself...Duh?
Those wrapped bars are just going to have to wait in line with the paper stocks and etf's...man, I'm too busy getting coins. Maybe those proof buffalos will come out soon. This is just too much fun and profitable too.
And another thing while we are at it...High oil prices aren't all bad. There is an entire economy in the US that is in the awlbidnes. There are thousands and thousands of individual mineral lease holders that make fair money from their oil leases. There is a standard here in Houston that for every $1 increase in oil, the local industry creates 1000 jobs, and that has been measured and it is a fairly valid extrapolation. Houston is about oil as California is about tech. The point is that while oil is certainly becoming more expensive as the pressures of demand meet the reality of the international market place...it's not all bad and all the money is not just going back into a hole the desert that is filled with those tribal civilizations. The price of oil also provides significant value in the US economy, both at the individual lease owner level and at the corporate level. There...I feel much better now.
You can't just base your judgement on one small period. You need to look at the long term - 20 to 40 years if you're thinking about retirement. Also, one shouldn't look at the one period that best matches their wishes (like looking at stocks for any period ending in 87 after October, which was the largest crash in US history since the 30's). What was the 1 oz gold 30 year ago? How does it compare to the gains in a well diversified stock portfolio?
Malikovski, the only advice I can give you is to also read things that disagree with your thinking, and judge their merits on the strength of their argument. For starters, you may check Lomborg's "The Skeptical Environmentalist" regarding your fears wrt natural resources, and Malkiel's "A Random Walk Down Wall Street" wrt investment strategies.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i>It SEEMS to be reported today that housing is slowing down. Well, wouldn't DEMAND for building materials slow down if this was the case, thus LOWERING the cost for commodities?? >>
You are too US centric. The building boom in China, Russia India Brazil, populations 10 times ours, is just getting started.
US centricty: Therefore, you could conclude that one's investments should be slanted towards other nations currencies and other nation's markets.
Take a look at those generic US gold coins carefully. They have corrected considerably in the past 2 weeks and there is the potential for futher drops. If the supporters of the $10 Indian market decide to leave, that market would fall by more than 50% nearly overnight. $20 Saints have been pummeled in the last week to the point where the CDN cannot keep up. Take another 5-10% off many of the currently listed prices. It is most curious that MS65 saints are now off 25%. You could say that moving out of generic gold that has held most of its value to date, into $20's would be a value play.
A 20 year time fram in equities is a long enough period for me. We went through 20 years up ending in 2001. It's not hard to see what the most likely long term trend should be for the foreseeable future. I have no need to read a bull stocker's view of 36,000 Dow. Of course if we quintuple the money supply again, 36,000 Dow just may be in the cards.
RR I am sure you are right about the generic gold market as you follow this as closely as anyone here. On the other hand what has really changed to make gold drop? The stock market is supposedly dropping on inflation news. If I remember the market correctly the late 70’s had a lousy stock market due to inflation? Who wants dividends at 5% in a 6% inflationary economy?
I see this gold market as a real opportunity, and I for one have been buying all week.
I am sure there are those here that do day trading in the metals, but picking tops and bottoms are just not for most of us. Even our buddy Sinclair says $100 swings are the most likely from here on out.
Until something drastic changes in our very dangerous financial world, there is no real reason not to buy the dips. I love this panicky market; I even bought some PCGS ms69 American Eagles this past week at $14.00 each, just silver no slabbing fee.
I can understand the dealer’s point of view, they need to keep inventory moving. If they want to unload at break even or even losses, that is a breath of fresh air for a change in this market.
Here is something I did that some others here might like. I set up a line of credit at the bank with some C.D.’s as collateral. The bank charges me 1.5% interest above my C.D. rate. Having this line allows me to buy when the market dips, and gives me weeks or months to pay back the loan getting ready for the next drop.
If these central bankers want to panic everyone buy dropping the markets that is just fine. Until the fundamentals change I for one will be in there every time, buying a few hand fulls.
If you want to look at a 20 yr period, you should look at a sample. Say, the last 10 or 15 20-yr periods (the 20-yr periods ending in 2005, 2004, 2003, etc, all the way to 1990), and look at the returns of gold over a diversified stock portfolio (for example, the S&P500 as a proxy). It's a bit too easy to choose 2001 as a comparison, and disregard all the other years.
"The greatest productive force is human selfishness." Robert A. Heinlein
Our stock market has had nearly 6 years to recover its losses, and yet it still drags along in the same trading range producing pathetic returns adjusted for inflation.
If you look out there in the real world there is no way one might conclude that a past 20 year performance might bring the same results in this upcoming market.
Today’s U.S. economy looks nothing like the last 20 years.
Besides all the up hill battles this market has, debt, inflation, increasing interest rates etc. the single biggest problem it faces is that its main supporters are going to take all their money out. Without doubt the baby boomers are going to need their money out of this market to reduce their monthly nuts, and pay down debt to retire. Within 24 months huge waves of millions of folks each year are going to be able to take their money out of their 401’K and other retirement stock vehicles. Just like all the money millions of them sucked out of their homes, they will withdraw their money from this stock market, and every year from then on there are going to be more sellers than buyers.
In addition to that, their buying habits will be forced to change to a much-reduced level. They will go from $100,000 annual incomes to $35,000 incomes, producing much smaller returns for our corporations.
Any adjustments downward in a broke Social Security program will just accelerate this process, so if checks are reduced, or the age limit is moved up, the boomers will pull more money out of the stock market.
Who, or what, will take their place? The next generation is smaller, and burdened by high home prices, expensive fuel and other daily bills, to say nothing of all the taxes the boomers allowed to be passed.
There is NO MORE long term buy and hold strategies left for the boomer group, and a great majority of the money in the stock market belongs to them. Even looking out ten years, is it more likely that hard assets like Gold, Silver, and real property might double in value? So do you think that Gold might go to $1,200 and Silver to $22 and homes in smaller retirement cities selling at $175,00 might go to $350,000 or is it more likely that the Dow will go to 21,500 and the S&P to 2,500?
June 6, 2006: 11:15 AM EDT
NEW YORK (CNNMoney.com) – A new retirement risk index released Tuesday estimates that 43 percent of working-age households are not likely to have enough retirement income to replicate their current standard of living.
Interesting piece, Saint...particularly the boomers taking that money out of the 401K at retirement, that's gotta be right but couldn't they move all that to dividend stocks in a private account if they don't need the cash? That is sure going to change the current business model for a lot of companies.
Growth in equities is predicated on nothing but growth in the underlying companies. You cannot fiddle and pretend Rome isn't burning when your tunic is ablaze. The population in the United States is rapidly transitioning from a working asset to a legacy liability as the boomer center advances toward retirement. The absolute worst planning for that is to offshore everything. Yes, there is a responsible balance that can be achieved in doing some globalization in a managed way, but that has not been how it has gone. The balance of retention of talent and valuable intellectual property must clearly be maintained and, in fact, grow for the economy to support acceptable economic standards. The US economy cannot just coast on widow's dividends of some global portfolio. That is the delusion too many are buying into. We are also just inside the door of an age where access to opportunity via massive information resources levels the playing field in many ways against the traditional top players of the latter half of the 20th century. Smart people are making individual decisions that insulate themselves personally as much as possible from the economy and its uncertainties and trends. Trading out of dollars/euros into precious metals may or may not be among the wise decisions, but schema for wealth protection is a serious matter that needs continual monitoring. (This looks like just a buch of disconnected ramblings. Oh well, I have posted worse.)
<< <i>Our stock market has had nearly 6 years to recover its losses, and yet it still drags along in the same trading range producing pathetic returns adjusted for inflation.
If you look out there in the real world there is no way one might conclude that a past 20 year performance might bring the same results in this upcoming market.
Today’s U.S. economy looks nothing like the last 20 years.
Besides all the up hill battles this market has, debt, inflation, increasing interest rates etc. the single biggest problem it faces is that its main supporters are going to take all their money out. Without doubt the baby boomers are going to need their money out of this market to reduce their monthly nuts, and pay down debt to retire. Within 24 months huge waves of millions of folks each year are going to be able to take their money out of their 401’K and other retirement stock vehicles. Just like all the money millions of them sucked out of their homes, they will withdraw their money from this stock market, and every year from then on there are going to be more sellers than buyers.
In addition to that, their buying habits will be forced to change to a much-reduced level. They will go from $100,000 annual incomes to $35,000 incomes, producing much smaller returns for our corporations.
Any adjustments downward in a broke Social Security program will just accelerate this process, so if checks are reduced, or the age limit is moved up, the boomers will pull more money out of the stock market.
Who, or what, will take their place? The next generation is smaller, and burdened by high home prices, expensive fuel and other daily bills, to say nothing of all the taxes the boomers allowed to be passed.
There is NO MORE long term buy and hold strategies left for the boomer group, and a great majority of the money in the stock market belongs to them. Even looking out ten years, is it more likely that hard assets like Gold, Silver, and real property might double in value? So do you think that Gold might go to $1,200 and Silver to $22 and homes in smaller retirement cities selling at $175,00 might go to $350,000 or is it more likely that the Dow will go to 21,500 and the S&P to 2,500?
June 6, 2006: 11:15 AM EDT
NEW YORK (CNNMoney.com) – A new retirement risk index released Tuesday estimates that 43 percent of working-age households are not likely to have enough retirement income to replicate their current standard of living. >>
That would be true if CD's/HMMA/bond funds returned enough for them to retire on, but I think we can all say that isn't going to happen... imagine the yields if $100 billion USD was to enter the cash equivalent markets... yield would go down to practically nothing, much like the various hedge funds begging plp to take their money. Boomers can't afford to take their money out of stocks; from my recent travels, I've noticed how many senior citizens have taken up entry level jobs, but there are limits on what they can do physically.
Life goes on, even the biggest debt defaults didn't end the world, the bond holders just take their "haircut" and we'll still have potato salad on Saturday... we as a people have face "the end" so many times already and yet, we continue... if we stay united.
Gold isn't necessary, if it becomes too expensive, plp will just barter like the old days... we need love, food & security, not barbarous relics hoarded by the perceived well to do.
I listen to your voice like it was music, [ y o u ' r e ] the song I want to know.
I'd give you the world, just because...
Speak to me of loved ones, favorite places and things, loves lost and gained, tears shed for joy and sorrow, of when I see the sparkle in your eye ... and the blackness when the dream dies, of lovers, fools, adventurers and kings while I sip my wine and contemplate the Chi.
<< <i>...The population in the United States is rapidly transitioning from a working asset to a legacy liability as the boomer center advances toward retirement. ... >>
The population of "Gen X" is tiny, you have to remember there is also "Gen Y" (which is huge) & the 911 babies (also huge), throw in immigrants (from where ever) and things look pretty good.
Does no one remember the US after Vietnam? This country was a basket case, the current generations didn't inherit very much (material wise), almost everything we take for granted right now, has been worked-on/updated in the past 20 years... we didn't become an empire until the 1990's (late).
Piece by piece, the WWII crowd and Gen X rebuilt this country... the reluctant empire...
I listen to your voice like it was music, [ y o u ' r e ] the song I want to know.
I'd give you the world, just because...
Speak to me of loved ones, favorite places and things, loves lost and gained, tears shed for joy and sorrow, of when I see the sparkle in your eye ... and the blackness when the dream dies, of lovers, fools, adventurers and kings while I sip my wine and contemplate the Chi.
The study, published last week by PricewaterhouseCoopers (PwC), the global professional services firm, showed massive capital spending by miners, jumps in unit costs and concern over increased price volatility, all long-term bearish signals for gold.
<< <i>Jeff Christian, managing director of New York-based commodity-consulting company CPM Group, is projecting increased mining output of approximately 15 million ounces over the next five years, which would add substantially to worldwide production. CPM estimates 63 million ounces of gold were produced in 2005. >>
<< <i>"What we tell clients is that some mine capacity developed in the late 1980s is closing, but producers may cut back on the closing" because of the higher prices, he says. "Overall, what we expect is a 20% net increase in [mined] supply." >>
Finally, someone recognized that when gold prices rise, more will come out of the ground. Gold bugs always talk demand, demand, demand and ignore the supply side of the equation.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
<< <i>Jeff Christian, managing director of New York-based commodity-consulting company CPM Group, is projecting increased mining output of approximately 15 million ounces over the next five years, which would add substantially to worldwide production. CPM estimates 63 million ounces of gold were produced in 2005. >>
<< <i>"What we tell clients is that some mine capacity developed in the late 1980s is closing, but producers may cut back on the closing" because of the higher prices, he says. "Overall, what we expect is a 20% net increase in [mined] supply." >>
Finally, someone recognized that when gold prices rise, more will come out of the ground. Gold bugs always talk demand, demand, demand and ignore the supply side of the equation. >>
You better consider the price of energy to get this metal out of the ground. I've hear a lot of folks think it will drop to $40 to $50 a barrel but at it's present rate it's more likely to be $70 to $100 a barrel. This makes mining not only a risky but expensive to produce the yellow stuff and just like the big oil companies, unless there's a return on investment exploration will be on hold until the price point to make it profitable. Other factors will drive the price of goods labor, shipping, materials and they're all going up big time.
<< <i>Toronto-based Barrick said it is on track to produce between 5.4 million and 5.5 million ounces of gold for the year at an average total cash cost of between $220 and $230 (U.S.) an ounce. >>
5/12/06
<< <i>More expensive steel and tires also threaten to cut into mining companies' profit margins -- though those costs have so far been offset by the skyrocketing gold price. >>
<< <i>"Our margins have expanded," Borg said. "But nonetheless our costs have gone up." Barrick said last week that its earnings tripled in the January-March quarter from a year ago, citing the surge in selling prices and added production from its $10 billion acquisition of Placer Dome. >>
Operating costs have increased, but not nearly at the same pace as gold price increases compared to a year ago.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
<< <i>Our stock market has had nearly 6 years to recover its losses, and yet it still drags along in the same trading range producing pathetic returns adjusted for inflation.
If you look out there in the real world there is no way one might conclude that a past 20 year performance might bring the same results in this upcoming market. >>
Because the last SIX years have been bad??? How do you think people felt 6 years after 1929 - and yet, look at the performance! Or take the US economy in the mid-Seventies - and look at what happened later on!
<< <i>Without doubt the baby boomers are going to need their money out of this market to reduce their monthly nuts, and pay down debt to retire. Within 24 months huge waves of millions of folks each year are going to be able to take their money out of their 401’K and other retirement stock vehicles. Just like all the money millions of them sucked out of their homes, they will withdraw their money from this stock market, and every year from then on there are going to be more sellers than buyers. >>
By the time baby boomers retire, most of their investment has already been shifted to bonds and other less volatile vehicles than equity. Plus their spending will go to a variety of US (and yes, some non US) businesses, who will use their profits to increase productivity, buy back shares, etc.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i>Malikovski, the only advice I can give you is to also read things that disagree with your thinking, and judge their merits on the strength of their argument. For starters, you may check Lomborg's "The Skeptical Environmentalist" regarding your fears wrt natural resources, and Malkiel's "A Random Walk Down Wall Street" wrt investment strategies. >>
That's good advice for anybody, and I appreciate the specific reading suggestings, although I've read enough severe reviews of "The Skeptical Environmentalist" in the past to have some reservations about credibility. I will certainly investigate the other title you suggest.
The sky is not falling at the moment, and until it does, I don't doubt there is money still to be made in stocks, et cetera. If oil prices do spike, it's good news for some companies, and I probably need to learn about short selling for those companies to whom it will be very bad news.
To be honest, finance bores me--I don't have the gambler's instinct--but I don't think I can any longer afford to be ignorant of it.
The way ALL of the markets, in every venue, are acting at the current time I think it is a good time to take a vacation. It certainly appears we are in for a long settling summer, not a good time to be jump into anything.
These periods are excellent for just setting back gathering a little cash and paying down debt. Over the next several months something will break open to give us all some new information to operate from.
<< <i>I've read enough severe reviews of "The Skeptical Environmentalist" in the past to have some reservations about credibility. >>
Only you can assess the strength and the validity of those arguments in all objectivity. No one else can do that for you. >>
That's true as well. Tell me something--does the book address the issues of supply and demand?
My concern is not the usual enviromentalist claims--global warming and actually running out of resources. My concern is scarcity caused by demand outpacing supply as the developing world attempts to westernize, and the effect this will have on prices.
Running out isn't the issue, and destroying the environment isn't either, if we have an economic disaster before then.
If the book address that point, I would be very interested in reading what it has to say. It matters very much whether oil is going to cooperativly drop back down to $35, or go up to $100 and keep on rising, and I want to know which way it's going.
I havent hear a single person say oil is going to fall. All I hear is Iran, China, inflation and hurricanes. Therefore I believe oil will be in the 40's before 07.
I can't recall, and the book is burried in a box since my move.
I am not concerned with supply & demand because in reasonably Capitalistic economies, this is a self regulating issue - via prices. When demand outpaces supply, prices go up, which (1) checks the demand growth, and (2) creates incentive to develop alternative solutions.
Americans are concerned about oil prices, but the fact is, oil in the US is still 3X to 5X cheaper than it is in Europe - and Europe is reasonably competitive given the fact that it's shackled with job- and profit-destroying regulations and taxes. The human spirit of enterprise is incredibly resilient and adaptable.
Debt is a problem but we've had higher debt before. I don't think the end of the world is near.
"The greatest productive force is human selfishness." Robert A. Heinlein
Iran has been a thorn in the world's a$$ for 25 years now. This is no different. Demand for oil will decline as the price rises. Again all I hear is $100 oil. It ain't goin there.
All of the economies of the world are currently syncronized. This has never happened before. It has caused undue price pressures on commodities. Watch what happens when there is a GLOBAL slowdown. In the past there has always been another region to pick up the slack. It aint so this time.
Why dont we look at debt vs government revenue. GDP is not the right number to look at because the GDP number is an estimate of all goods and services produced. Since the government cannot trade cars manufactured by GM to reduce the national debt (unless we change our form of government), it would seem to me camparing it to the debt is useless information.
Uncle Sam is assuming the debt, so shouldnt we look at Uncle Sam's income to see if things are getting better or worse?
This might be a simplistic view, but it is seems to make sense to me
Mark Piersall Random Collector www.marksmedals.com
Comments
I am sure most of you are right that I calculated these numbers incorrectly, but the gains were as I wrote,
Central Texas Real-estate, appreciation plus rents for the six year period + 72%
Numismatic coins, mostly Bust halve dollars and Type over six years + 130%
Cash in C.D.’s average over six years + 19% currently 5%
Gold over six years +100
Silver over six years +200%
There is no way for me to sit down and figure exact rates for each year without a day at the computer.
In fact my rates were much higher than the above totals.
I figured only my C.D. annual rates and not compounded interest.
Most of the Gold I buy are numismatic slabed pieces close to spot for the day, this makes them a lot less volatile than the gold Bullion markets, so $50 PCGS PR 69 American Eagles have not dropped by the $125 the market has gone down the last few weeks.
I have not calculated any tax depreciation in my real-estate gains.
I do try to keep my allocations close, but yes there are times that one market looks better than others.
As far as my risk in this system, there is very little.
I do not buy on leverage, and therefore I am not pushed to do anything in a panic.
If my real-estate appreciation drops my rents generally increase, which is the current case.
This posting is in no way is a slam on Lloyd. His rates of return are very good for a guy in his group that buys only paper.
That being said it is my personal belief that the Government lies about the CPI, and we have in fact had a minimum of 5% per year inflation over these six years. Therefore any investor must earn at least that 5% per year to break even, and that 5% must be deducted from anyone’s portfolio when figuring out how much they have earned.
The question here then is can anyone do what I am doing, of course.
Will this same simple system duplicate these rates the next six years? No reason why not.
Neither gold nor silver has ever adjusted for the inflation that even the government admits.
U.S. Real-estate, in none bubble areas, MUST continue to go up simply because the Chinese, Indian’s, Russians, East block countries are going to build 500 million new homes and apartments the next 10 years and the prices of copper, lumber, carpet, roofing materials are going to accelerate in price, and push the price of construction here.
The dollar will get weaker as we borrow more and more we can never repay.
There are going to be millions of new coin collectors in the next six years all from foreign lands that have no coin history of their own, or trusted certification companies.
C.D. rates are moving up to inflation break even.
Fianally, silver will follow gold, copper, and a weaker dollar.
<< <i>There is no way for me to sit down and figure exact rates for each year without a day at the computer.
In fact my rates were much higher than the above totals. >>
Did you at least factor out the transaction costs, including travels to coin show (and I suppose to prospect for properties or keep an eye on them)?
<< <i>I have not calculated any tax depreciation in my real-estate gains. >>
I don't think you need to, but you should calculate the tax cost of anything you actually sold at a profit - including coins (I suspect that people who collect coins don't file their profits as income, but for a comparison with investments, you need to do that).
<< <i>That being said it is my personal belief that the Government lies about the CPI >>
I agree that it is a bad measure of inflation.
<< <i>U.S. Real-estate, in none bubble areas, MUST continue to go up simply because the Chinese, Indian’s, Russians, East block countries are going to build 500 million new homes and apartments the next 10 years and the prices of copper, lumber, carpet, roofing materials are going to accelerate in price, and push the price of construction here. >>
I agree that Demand will go up, but you're making the implied assumption that Supply will not be able to follow and I'm not sure I agree.
Robert A. Heinlein
“Did you at least factor out the transaction costs, including travels to coin show (and I suppose to prospect for properties or keep an eye on them)?”
JDelage
I have been to two coin shows in six years I drove to both less than 300 miles away; I buy everything on the Net.
I live in a community of 25 thousand, and my properties are small commercial. I am not a trader, or flipper, unlike with paper stocks, there is no reason to sell. I do not wake up one morning and find out my Vontage has been manipulated by the short sellers.
“I agree that it is a bad measure of inflation.”
You Sir, of course, can believe those stories out of Washington if you chose, I prefer to believe my own eyes, as prices of food, fuel, housing, cars, utilities, etc.etc. go up. If Washington wants to calculated the inflation rate by what Chinese goods cost coming into the country, that’s is up to them.
“ I agree that Demand will go up, but you're making the implied assumption that Supply will not be able to follow and I'm not sure I agree.”
I am not concerned here about supply and demand of any properties here in the U.S. What I am saying is that if the World on its present course builds more homes around the World in the next ten years than currently exist in the entire United States, the prices of all of these hundreds of products that go into building homes are going to go through the roof. It just can be no other way. Our contractors here must compete for all of these products.
Furthermore, my charts show commodities having had the greatest returns in the past 5 years, like GOLDSAINT shows. But how many people honestly had a heavy allocation or their retirement money or other money in GOLD or SILVER. (I'm talking like $100,000 out of $300,000 from their pension lump sum, for example). I would bet most (Americans, including the posters on this thread), haven't made much to even talk about (a $$$ return on GOLD). (Maybe roadrunner, because he is so into it. But I would need proof if it was decent).
It SEEMS to be reported today that housing is slowing down. Well, wouldn't DEMAND for building materials slow down if this was the case, thus LOWERING the cost for commodities??
GoldSaint - not to be a PITA, but did you include your tax payments in your returns?
Regarding inflation, I happen to largely agree with you.
Robert A. Heinlein
I am with you on GOLDSAINTS returns. I don't quite get it, except the AVERAGE was NOT 86.8% a year, but the 12+% you came up with. I didnt include Real Estate in my figures. I have NEVER had someone take money out fo the home and invest it - just not my job or interest. But I assure you, RE numbers look O.K. for them also.
Remember, my clients are RETIRED. They LIVE off these returns. Is GOLDSAINT withdrawing about $39,000 a year, and his principle has gone up ??? (Average retiree accounts about $489,000 TODAY. Both figures AVERAGES of each of my retiree clients). Hard to compare apples to apples. Someone can beat their chest about a great return, but how much was invested, and/or how much risk did they take???
Was it $400,000 of ALL their retirement money invested, or just a measly $10,000 on the side???
First of all I do not believe there is a single “gold bug” in this entire thread of 3,000 plus posts. I see lots of paper bugs that are 90% plus invested in stocks and other paper, but I have heard no comments about anyone here even 50% invested in gold. In my case it may be 15%.
Perhaps a better name for those on the opposite side of paper, would be the HARD ASSET GUYS.
In China alone there are now 171 cites with a population of one million or more, and most of these exceeded one million the last ten years. The U.S. currently has 11. This is just China. More people will move to these cites in China during the next ten years than the entire population of the U.S., and this is just China.
During the next six years in the U.S. the prices of construction materials will go up a minimum of 50%, it just cannot do anything else, and oil will see $100 per barrel, it also just cannot do anything else.
Perhaps some of the hard assets are taking a breather for a few months, but the growth in this area has just begun. What do you paper guys say, buy and hold, and buy the dips, I love that it is just what I intend to do!
<< <i>During the next six years in the U.S. the prices of construction materials will go up a minimum of 50%, it just cannot do anything else, and oil will see $100 per barrel, it also just cannot do anything else. >>
I forsee the same thing, and am quite concerned. I am only 29 and do not have a lot of accumulated assets to play with. If anyone wants to throw some advice my way on how someone with limited means can invest/prepare for the kind of problems this is going to cause, please let fly.
I believe economics are inherently unpredictable...well, I should say current economics are unpredictable, because it's a confidence game, and that game could be up any day. Or it could go on for years.
With a little luck and fortitude, I will have zero debt in three to five years. No mortgage, no nothing. I'm worried I might not have three to five years before the SHTF.
Current hard assets are palty...200 ounces of silver, a FAL and 1000 rounds of ammo.
Advice?
Your #1 priority should be to repay your debt. There's no reason to hoard silver when you have debt. You're just gambling that the silver is going to go up by more than your interest rate...
The exception to that is if you have a subsidized student loan or something of the sort. If that's the case, it might make sense for you to keep it on. I would save 25% to 33% of your gross pay and invest it in a diversified portfolio of stock index funds - Vanguard's Total Stock Index is a good first step until you have enough capital to add other funds to that. Metal is a good insurance policy, but it doesn't pay dividends.
Robert A. Heinlein
<< <i>
Your #1 priority should be to repay your debt. There's no reason to hoard silver when you have debt. You're just gambling that the silver is going to go up by more than your interest rate...
The exception to that is if you have a subsidized student loan or something of the sort. If that's the case, it might make sense for you to keep it on. I would save 25% to 33% of your gross pay and invest it in a diversified portfolio of stock index funds - Vanguard's Total Stock Index is a good first step until you have enough capital to add other funds to that. Metal is a good insurance policy, but it doesn't pay dividends. >>
Debt is definitely #1 priority...even though all of it is at low rates. Even the mortgage is about 5%, and it's the highest, but I hate debt.
I should have clarified--I piled up the silver as insurance and to hold long term, so that I wouldn't be caught penniless in any situation.
How would you balance debt repayment (given interest rates of 3-5%) vs. investment? The Fed seems poised to tank the economy (perhaps to avoid something worse, I don't claim to know). Aren't stocks likely to take it in the chin in the near term?
I have thought about paying off my mortgage. But I would be a fool. If I can use that $$$ and get 10% per yr, then why would I pay off my house at 6% and lose the tax breaks?
Knowledge is the enemy of fear
In that case, your #1 priority should be to maximize your contributions to a 401(k) AND an IRA or Roth IRA. Invest in low cost, no load index funds such as Vanguard's index funds. At first, invest in one unique diversified index such as the Total Stock Index fund, or an S&P 500 index. If you already have a well funded 401(k) in stocks, start building a (Roth) IRA with tax inefficient investments such as a REIT (Bonds are tax inefficient too, but at your age I would invest entirely in stock index funds).
#1 ex-aequo would be a fund equal to 2 or 3 months income, put in a safe investment (CDs, maybe high quality bonds). This is your emergency savings - it's meant to cover for medical problems, or other unexpected catastrophes, and to cover your living expenses in case you would loose your job. It is NOT meant to save in prevision of a nice purchase you'd like to make or a new kitchen.
#2 is a normal retirement account. Again, I recommend Vanguard, and Vanguard index funds. Start with a broad diversified index, and when you get to $50k or so, start diversifying your portfolio, investing for example in international stock index funds and small cap index funds. Rebalance your investment allocation no more than once or twice a year.
Your goal between #1 and #2 should be to save at least 25%, maybe as much as 40% of your GROSS pay (that is, before taxes). It's not going to leave you much play money.
#3 is a small pool of "play" money, for things like coins, vacations, home improvements, etc. The goal is to not have to rely on credit cards or home equity loans.
A great forum to ask questions about investment strategies is: Vanguard Diehards.
Robert A. Heinlein
This will be a good 10 years to be totally out of the standard stock market. Gauging the stock market from 1989 to date is certainly not my measure of reality, any more than gauging gold's future direction
by how it performed from 1980 to 2000.
Gold bug? Depends, but I do have my share of generic gold from $1's to $20's with a concentration on the $20's. Works for me for the time being. Probably have less than 5% in pure gold/silverbullion. Can't claim any where near the 85% of Goldsaint.
So what if the DOW heads for 5000-7000 next? That would be expected based on historic cycles. Yet I don't see any indication that anyone here in stocks thinks that is even remotely possible.
Those same people see gold at $300 before the DOW could ever hit 7000 again. Time will tell. $300 gold, $300 google, or 3000 DOW.
Place your bets.
roadrunner
<< <i>Having watched stocks that I owned closely from 1968 to 1987, I experienced a period that showed how poorly stocks can do for a long period. This gave me a very healthy dose of reality and probably is what turned me into a hard asset guy by 1974. I was hooked. To those that think that are we soon to relive the 80's and 90's for another 20 years, I can only say, good luck to you. >>
This is my concern. I don't understand people who get up on the soap box for stocks, or commodities, or whatever else, without reference to particular times and conditions. There have been great times for stocks, that does not mean all times are good for stocks. Same for everything else you can conceivably put your money in.
I am no expert in investing, but I have made a long study in the "what the F is wrong with the world around me" department, and what seems clear is that the next hundred years will not be like the last hundred years, and more importantly not like the last 50.
The unsustainability of so many aspects of our present way of life has been commented on enough in the foregoing posts. Everything from debt, to commodities, to agriculture. It can't last. It has taken everything the planet has to give to raise a small portion of the total population to our current "high" standard of living. To view it as high, you must subscribe to philosophical materialism, because by any qualitative standard we live in a desert, and lucky are those who can make an oasis for themselves, and find some contentment that lies not in baubles.
The 21st century looks to me to be destined to be a century of scarcity, as the last half of the 20th was of abundance. The developing world will find that there are not enough resources to develop, and what then?
I do not know when worldwide oil production will reach it's maximum, but I know that it will, and soon, and what then? How can you have economic growth while consuming LESS energy, every year? How can you build wealth through investments when the economy is contracting? If we cannot find a way to grow without using more energy, there will come a point when that economic contraction will be a fixed condition.
Theories on sustainable society are full of uncomfortable demands--immensely less energy use, a human population as little as 10% it's present size.
I would not venture a guess as to when, or how, whether the crisis will be one of energy or of currency or of someting else unforeseen, but the 21st century looks to one, long "disorderly adjustment."
This does not mean, for the moment, I will spurn the advice to look at stocks and other paper assets. There may be a few boom and bust cycles left, but I do not for a moment believe I will be settling down to a nice retirement paid for by a lifetime of careful investment, as my parents are now doing. They are reaping the last reward of victory in the second world war. My generation will not be so lucky.
There are others...but they certainly don't go around waving flags.
For a while, I was torn. I know wraped J&Ms or Engelhards are certainly the proper medium for exchange for storing wealth. But then I see a Humbert $50, or a beautiful $20 roman numeral, or catch myself lustfully leering at an AU 15s oct that strays into the market place and I start penciling in my discretionary dollars, my rat-holed dollars, my change jar, any available dollars and once again just settle back into my waiting mode knowing I can't really put together a competitive bid. I relieve the frustration by picking up a nice $5 indian or big shiny lib. or a crusty original $10 indian. It has happened to me a number of times and I've been doing that for a while...a little bit at a time for a few years.
It occurs to me that maybe we stalk the perfect investments so much that maybe we fail to see the forest for all the darned trees that are in the way. Has there been an investment vehicle that has yielded more than rare US gold? Have you priced what was a $700 US pre-'33 US gold coin just a few months ago, recently? Bring your $1300-$1800 for that coin today. Double money in just a few months...is there really a better investment? The value of my gold coins has nearly doubled in less than 6 months while the equivilent weight in bars has managed a fraction of the increase. So, I finally woke up and said to myself...Duh?
Those wrapped bars are just going to have to wait in line with the paper stocks and etf's...man, I'm too busy getting coins. Maybe those proof buffalos will come out soon. This is just too much fun and profitable too.
Coin on!
Saul Goode
Malikovski, the only advice I can give you is to also read things that disagree with your thinking, and judge their merits on the strength of their argument. For starters, you may check Lomborg's "The Skeptical Environmentalist" regarding your fears wrt natural resources, and Malkiel's "A Random Walk Down Wall Street" wrt investment strategies.
Robert A. Heinlein
<< <i>It SEEMS to be reported today that housing is slowing down. Well, wouldn't DEMAND for building materials slow down if this was the case, thus LOWERING the cost for commodities?? >>
You are too US centric. The building boom in China, Russia India Brazil, populations 10 times ours, is just getting started.
Take a look at those generic US gold coins carefully. They have corrected considerably in the past 2 weeks and there is the potential for futher drops. If the supporters of the $10 Indian market decide to leave, that market would fall by more than 50% nearly overnight. $20 Saints have been pummeled in the last week to the point where the CDN cannot keep up. Take another 5-10% off many of the currently listed prices. It is most curious that MS65 saints are now off 25%. You could say that moving out of generic gold that has held most of its value to date, into $20's would be a value play.
A 20 year time fram in equities is a long enough period for me. We went through 20 years up ending in 2001. It's not hard to see what the most likely long term trend should be for the foreseeable future. I have no need to read a bull stocker's view of 36,000 Dow.
Of course if we quintuple the money supply again, 36,000 Dow just may be in the cards.
roadrunner
RR
I am sure you are right about the generic gold market as you follow this as closely as anyone here. On the other hand what has really changed to make gold drop? The stock market is supposedly dropping on inflation news. If I remember the market correctly the late 70’s had a lousy stock market due to inflation? Who wants dividends at 5% in a 6% inflationary economy?
I see this gold market as a real opportunity, and I for one have been buying all week.
I am sure there are those here that do day trading in the metals, but picking tops and bottoms are just not for most of us. Even our buddy Sinclair says $100 swings are the most likely from here on out.
Until something drastic changes in our very dangerous financial world, there is no real reason not to buy the dips. I love this panicky market; I even bought some PCGS ms69 American Eagles this past week at $14.00 each, just silver no slabbing fee.
I can understand the dealer’s point of view, they need to keep inventory moving. If they want to unload at break even or even losses, that is a breath of fresh air for a change in this market.
Here is something I did that some others here might like. I set up a line of credit at the bank with some C.D.’s as collateral. The bank charges me 1.5% interest above my C.D. rate. Having this line allows me to buy when the market dips, and gives me weeks or months to pay back the loan getting ready for the next drop.
If these central bankers want to panic everyone buy dropping the markets that is just fine. Until the fundamentals change I for one will be in there every time, buying a few hand fulls.
Robert A. Heinlein
Our stock market has had nearly 6 years to recover its losses, and yet it still drags along in the same trading range producing pathetic returns adjusted for inflation.
If you look out there in the real world there is no way one might conclude that a past 20 year performance might bring the same results in this upcoming market.
Today’s U.S. economy looks nothing like the last 20 years.
Besides all the up hill battles this market has, debt, inflation, increasing interest rates etc. the single biggest problem it faces is that its main supporters are going to take all their money out. Without doubt the baby boomers are going to need their money out of this market to reduce their monthly nuts, and pay down debt to retire. Within 24 months huge waves of millions of folks each year are going to be able to take their money out of their 401’K and other retirement stock vehicles. Just like all the money millions of them sucked out of their homes, they will withdraw their money from this stock market, and every year from then on there are going to be more sellers than buyers.
In addition to that, their buying habits will be forced to change to a much-reduced level. They will go from $100,000 annual incomes to $35,000 incomes, producing much smaller returns for our corporations.
Any adjustments downward in a broke Social Security program will just accelerate this process, so if checks are reduced, or the age limit is moved up, the boomers will pull more money out of the stock market.
Who, or what, will take their place? The next generation is smaller, and burdened by high home prices, expensive fuel and other daily bills, to say nothing of all the taxes the boomers allowed to be passed.
There is NO MORE long term buy and hold strategies left for the boomer group, and a great majority of the money in the stock market belongs to them. Even looking out ten years, is it more likely that hard assets like Gold, Silver, and real property might double in value? So do you think that Gold might go to $1,200 and Silver to $22 and homes in smaller retirement cities selling at $175,00 might go to $350,000 or is it more likely that the Dow will go to 21,500 and the S&P to 2,500?
June 6, 2006: 11:15 AM EDT
NEW YORK (CNNMoney.com) – A new retirement risk index released Tuesday estimates that 43 percent of working-age households are not likely to have enough retirement income to replicate their current standard of living.
Hard assets are good.
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>Our stock market has had nearly 6 years to recover its losses, and yet it still drags along in the same trading range producing pathetic returns adjusted for inflation.
If you look out there in the real world there is no way one might conclude that a past 20 year performance might bring the same results in this upcoming market.
Today’s U.S. economy looks nothing like the last 20 years.
Besides all the up hill battles this market has, debt, inflation, increasing interest rates etc. the single biggest problem it faces is that its main supporters are going to take all their money out. Without doubt the baby boomers are going to need their money out of this market to reduce their monthly nuts, and pay down debt to retire. Within 24 months huge waves of millions of folks each year are going to be able to take their money out of their 401’K and other retirement stock vehicles. Just like all the money millions of them sucked out of their homes, they will withdraw their money from this stock market, and every year from then on there are going to be more sellers than buyers.
In addition to that, their buying habits will be forced to change to a much-reduced level. They will go from $100,000 annual incomes to $35,000 incomes, producing much smaller returns for our corporations.
Any adjustments downward in a broke Social Security program will just accelerate this process, so if checks are reduced, or the age limit is moved up, the boomers will pull more money out of the stock market.
Who, or what, will take their place? The next generation is smaller, and burdened by high home prices, expensive fuel and other daily bills, to say nothing of all the taxes the boomers allowed to be passed.
There is NO MORE long term buy and hold strategies left for the boomer group, and a great majority of the money in the stock market belongs to them. Even looking out ten years, is it more likely that hard assets like Gold, Silver, and real property might double in value? So do you think that Gold might go to $1,200 and Silver to $22 and homes in smaller retirement cities selling at $175,00 might go to $350,000 or is it more likely that the Dow will go to 21,500 and the S&P to 2,500?
June 6, 2006: 11:15 AM EDT
NEW YORK (CNNMoney.com) – A new retirement risk index released Tuesday estimates that 43 percent of working-age households are not likely to have enough retirement income to replicate their current standard of living. >>
That would be true if CD's/HMMA/bond funds returned enough for them to retire on, but I think we can all say that isn't going to happen... imagine the yields if $100 billion USD was to enter the cash equivalent markets... yield would go down to practically nothing, much like the various hedge funds begging plp to take their money. Boomers can't afford to take their money out of stocks; from my recent travels, I've noticed how many senior citizens have taken up entry level jobs, but there are limits on what they can do physically.
Life goes on, even the biggest debt defaults didn't end the world, the bond holders just take their "haircut" and we'll still have potato salad on Saturday... we as a people have face "the end" so many times already and yet, we continue... if we stay united.
Gold isn't necessary, if it becomes too expensive, plp will just barter like the old days... we need love, food & security, not barbarous relics hoarded by the perceived well to do.
I'd give you the world, just because...
Speak to me of loved ones, favorite places and things, loves lost and gained, tears shed for joy and sorrow, of when I see the sparkle in your eye ...
and the blackness when the dream dies, of lovers, fools, adventurers and kings while I sip my wine and contemplate the Chi.
<< <i>...The population in the United States is rapidly transitioning from a working asset to a legacy liability as the boomer center advances toward retirement. ... >>
The population of "Gen X" is tiny, you have to remember there is also "Gen Y" (which is huge) & the 911 babies (also huge), throw in immigrants (from where ever) and things look pretty good.
Does no one remember the US after Vietnam? This country was a basket case, the current generations didn't inherit very much (material wise), almost everything we take for granted right now, has been worked-on/updated in the past 20 years... we didn't become an empire until the 1990's (late).
Piece by piece, the WWII crowd and Gen X rebuilt this country... the reluctant empire...
I'd give you the world, just because...
Speak to me of loved ones, favorite places and things, loves lost and gained, tears shed for joy and sorrow, of when I see the sparkle in your eye ...
and the blackness when the dream dies, of lovers, fools, adventurers and kings while I sip my wine and contemplate the Chi.
The study, published last week by PricewaterhouseCoopers (PwC), the global professional services firm, showed massive capital spending by miners, jumps in unit costs and concern over increased price volatility, all long-term bearish signals for gold.
<< <i>Jeff Christian, managing director of New York-based commodity-consulting company CPM Group, is projecting increased mining output of approximately 15 million ounces over the next five years, which would add substantially to worldwide production. CPM estimates 63 million ounces of gold were produced in 2005. >>
<< <i>"What we tell clients is that some mine capacity developed in the late 1980s is closing, but producers may cut back on the closing" because of the higher prices, he says. "Overall, what we expect is a 20% net increase in [mined] supply." >>
Finally, someone recognized that when gold prices rise, more will come out of the ground. Gold bugs always talk demand, demand, demand and ignore the supply side of the equation.
<< <i>
<< <i>Jeff Christian, managing director of New York-based commodity-consulting company CPM Group, is projecting increased mining output of approximately 15 million ounces over the next five years, which would add substantially to worldwide production. CPM estimates 63 million ounces of gold were produced in 2005. >>
<< <i>"What we tell clients is that some mine capacity developed in the late 1980s is closing, but producers may cut back on the closing" because of the higher prices, he says. "Overall, what we expect is a 20% net increase in [mined] supply." >>
Finally, someone recognized that when gold prices rise, more will come out of the ground. Gold bugs always talk demand, demand, demand and ignore the supply side of the equation. >>
You better consider the price of energy to get this metal out of the ground. I've hear a lot of folks think it will drop to $40 to $50 a barrel but at it's present rate it's more likely to be $70 to $100 a barrel. This makes mining not only a risky but expensive to produce the yellow stuff and just like the big oil companies, unless there's a return on investment exploration will be on hold until the price point to make it profitable. Other factors will drive the price of goods labor, shipping, materials and they're all going up big time.
<< <i>Toronto-based Barrick said it is on track to produce between 5.4 million and 5.5 million ounces of gold for the year at an average total cash cost of between $220 and $230 (U.S.) an ounce. >>
5/12/06
<< <i>More expensive steel and tires also threaten to cut into mining companies' profit margins -- though those costs have so far been offset by the skyrocketing gold price. >>
<< <i>"Our margins have expanded," Borg said. "But nonetheless our costs have gone up." Barrick said last week that its earnings tripled in the January-March quarter from a year ago, citing the surge in selling prices and added production from its $10 billion acquisition of Placer Dome. >>
Operating costs have increased, but not nearly at the same pace as gold price increases compared to a year ago.
<< <i>Our stock market has had nearly 6 years to recover its losses, and yet it still drags along in the same trading range producing pathetic returns adjusted for inflation.
If you look out there in the real world there is no way one might conclude that a past 20 year performance might bring the same results in this upcoming market. >>
Because the last SIX years have been bad??? How do you think people felt 6 years after 1929 - and yet, look at the performance! Or take the US economy in the mid-Seventies - and look at what happened later on!
<< <i>Without doubt the baby boomers are going to need their money out of this market to reduce their monthly nuts, and pay down debt to retire. Within 24 months huge waves of millions of folks each year are going to be able to take their money out of their 401’K and other retirement stock vehicles. Just like all the money millions of them sucked out of their homes, they will withdraw their money from this stock market, and every year from then on there are going to be more sellers than buyers. >>
By the time baby boomers retire, most of their investment has already been shifted to bonds and other less volatile vehicles than equity. Plus their spending will go to a variety of US (and yes, some non US) businesses, who will use their profits to increase productivity, buy back shares, etc.
Robert A. Heinlein
<< <i>Malikovski, the only advice I can give you is to also read things that disagree with your thinking, and judge their merits on the strength of their argument. For starters, you may check Lomborg's "The Skeptical Environmentalist" regarding your fears wrt natural resources, and Malkiel's "A Random Walk Down Wall Street" wrt investment strategies. >>
That's good advice for anybody, and I appreciate the specific reading suggestings, although I've read enough severe reviews of "The Skeptical Environmentalist" in the past to have some reservations about credibility. I will certainly investigate the other title you suggest.
The sky is not falling at the moment, and until it does, I don't doubt there is money still to be made in stocks, et cetera. If oil prices do spike, it's good news for some companies, and I probably need to learn about short selling for those companies to whom it will be very bad news.
To be honest, finance bores me--I don't have the gambler's instinct--but I don't think I can any longer afford to be ignorant of it.
These periods are excellent for just setting back gathering a little cash and paying down debt. Over the next several months something will break open to give us all some new information to operate from.
<< <i>Over the next several months something will break open to give us all some new information to operate from. >>
The overall market will demand this sooner than later.
<< <i>I've read enough severe reviews of "The Skeptical Environmentalist" in the past to have some reservations about credibility. >>
Only you can assess the strength and the validity of those arguments in all objectivity. No one else can do that for you.
Robert A. Heinlein
<< <i>
<< <i>I've read enough severe reviews of "The Skeptical Environmentalist" in the past to have some reservations about credibility. >>
Only you can assess the strength and the validity of those arguments in all objectivity. No one else can do that for you. >>
That's true as well. Tell me something--does the book address the issues of supply and demand?
My concern is not the usual enviromentalist claims--global warming and actually running out of resources. My concern is scarcity caused by demand outpacing supply as the developing world attempts to westernize, and the effect this will have on prices.
Running out isn't the issue, and destroying the environment isn't either, if we have an economic disaster before then.
If the book address that point, I would be very interested in reading what it has to say. It matters very much whether oil is going to cooperativly drop back down to $35, or go up to $100 and keep on rising, and I want to know which way it's going.
Knowledge is the enemy of fear
<< <i>I see at least 1 crystal-baller is holding out for gold at $1600
Wonder how his crystal ball is this morning............I think I know who you are referring to
the exploding demand. Further the ability to refine the oil into usable
by products has not kept up demand. The price of oil will stay at the current
high level unless there is a world wide depression. Any significant cut off of
oil in any part of the world will cause a spike to 100 dollars a barrel.
Camelot
I am not concerned with supply & demand because in reasonably Capitalistic economies, this is a self regulating issue - via prices. When demand outpaces supply, prices go up, which (1) checks the demand growth, and (2) creates incentive to develop alternative solutions.
Americans are concerned about oil prices, but the fact is, oil in the US is still 3X to 5X cheaper than it is in Europe - and Europe is reasonably competitive given the fact that it's shackled with job- and profit-destroying regulations and taxes. The human spirit of enterprise is incredibly resilient and adaptable.
Debt is a problem but we've had higher debt before. I don't think the end of the world is near.
Robert A. Heinlein
<< <i>Oil unlike other commodities is unable to increase production to meet
the exploding demand. Further the ability to refine the oil into usable
by products has not kept up demand. The price of oil will stay at the current
high level unless there is a world wide depression. Any significant cut off of
oil in any part of the world will cause a spike to 100 dollars a barrel. >>
and I believe that Iran holds the key to everything.
We've had higher debt before? And what planet are you from again?
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Why America’s Debt Burden Is Declining
Granted, this only looks at Fed debt, but the point is that the debt burden needs to be put in relation with the GDP.
Robert A. Heinlein
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
All of the economies of the world are currently syncronized. This has never happened before. It has caused undue price pressures on commodities. Watch what happens when there is a GLOBAL slowdown. In the past there has always been another region to pick up the slack. It aint so this time.
Knowledge is the enemy of fear
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Uncle Sam is assuming the debt, so shouldnt we look at Uncle Sam's income to see if things are getting better or worse?
This might be a simplistic view, but it is seems to make sense to me
Random Collector
www.marksmedals.com