Based on the stock market and the action in metals, it seems to me that investors are hedging against fear of the destruction of the dollar (inflation? stagflation?). For all the theoretical talk about deflation, just look at your utility and grocery bill; deflation -- my foot. The three traditional ways to deal with inflation are: (1) stocks, (2) real estate, and (3) PMs.
Real estate is a no-go because the banks aren't lending. In addition, with shaky bank lending, who are you going to sell to?
I think that a good mix of quality common stocks (low debt, dividend payers, little exposure to recession and/or derivative funny-money games) and PM's (in hand) is the way to go.
<< <i>Based on the stock market and the action in metals, it seems to me that investors are hedging against fear of the destruction of the dollar (inflation? stagflation?). For all the theoretical talk about deflation, just look at your utility and grocery bill; deflation -- my foot. The three traditional ways to deal with inflation are: (1) stocks, (2) real estate, and (3) PMs.
Real estate is a no-go because the banks aren't lending. In addition, with shaky bank lending, who are you going to sell to?
I think that a good mix of quality common stocks (low debt, dividend payers, little exposure to recession and/or derivative funny-money games) and PM's (in hand) is the way to go. >>
Add some PM mining stocks to that mix.
American Numismatic Association Governor 2023 to 2025 - My posts reflect my own thoughts and are not those of the ANA.My Numismatics with Kenny Twitter Page
Volcker's memoirs indicate that one of his regrets was not taking action in the 1970's to supress the price of gold, esp. as it took off in the late 1970's. The documents from the 1970's in the above article show that Volcker was already an old pro at price management long before he became FED chief. So much for his memory. Don't believe what they say, but what they do. The FED chiefs are old pros at this game going back many decades.
Back to $1020 once again. How many times will gold knock on the $1018-$1025 door?
]In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
American Numismatic Association Governor 2023 to 2025 - My posts reflect my own thoughts and are not those of the ANA.My Numismatics with Kenny Twitter Page
American Numismatic Association Governor 2023 to 2025 - My posts reflect my own thoughts and are not those of the ANA.My Numismatics with Kenny Twitter Page
Who are the fools buying this JUNK. If the value of the dollar loses 10% of its value the next ten years what is your rate of return?
If a large dollar holder starts to get out, and the dollar crashes what do you own.
Remember the guy with the Treasury Bill website that posted on the old post. The guy that said owning gold was nuts and put all his clients in T-Bills. Lets here from him on this?
I bought some TBT today. It is the double inverse of the 20yr treasury. If rates go up, TBT goes up. Rates are at near all time lows and can only go up. I can wait till they do.
Denominated in dollars. You can buy them thru any broker just like any stock.
Note: there is a caveat to these double inverse funds; over time they degrade to zero like a radioactive isotope due to the cost of constantly buying the futures, puts/calls etc. So this is something you would hold for maybe 1 or 2 years, not forever. I figure interest rates will have to start to rise in the next year at most, if not sooner.
The only sure things are death, taxes,......and devaluing fiat currencies.
So this is something you would hold for maybe 1 or 2 years, not forever.
I don't know about 1-2 yrs. The decay on some of the other ETF's like SRS, SKF, FAZ have shown massive decay over months. I don't know if they're even good trading vehicles for more than days at a time. Anyone holding any of those 3 inverse leveraged bear funds have seen their dollars turn to pennies. Wasn't SRS over 200 at one time....now around 10. FAZ also was over 100+ and fell back to low single digits until they did an inverse 10-1 split. Now it's at around 20 (formerly 2). So what decays so rapidly on the way down, must decay rapidly on the way up as well. And now we're seeing investigations into these funds to check out "irregularities" in how they function. They might be more scam than wham. Our benevolent Wall Street types created these funds so J6P could participate more fully in the markets on both ends w/o using margin or futures. What swell guys those bankers are!
RR, I agree with you. The ETF'S you mentioned are just more scams. You can also put UNG into that camp, and I am sure there are others. It now appears that most of these ETF'S were set up as just another way to suck up the publics money rather than diversify risk. Many of these have turned out to be nothing but derivative plays! What little money I had in some of these I dumped several months ago, naturally at loss.
<< <i>The only sure things are death, taxes,......and devaluing fiat currencies.
So this is something you would hold for maybe 1 or 2 years, not forever.
I don't know about 1-2 yrs. The decay on some of the other ETF's like SRS, SKF, FAZ have shown massive decay over months. I don't know if they're even good trading vehicles for more than days at a time. Anyone holding any of those 3 inverse leveraged bear funds have seen their dollars turn to pennies. Wasn't SRS over 200 at one time....now around 10. FAZ also was over 100+ and fell back to low single digits until they did an inverse 10-1 split. Now it's at around 20 (formerly 2). So what decays so rapidly on the way down, must decay rapidly on the way up as well. And now we're seeing investigations into these funds to check out "irregularities" in how they function. They might be more scam than wham. Our benevolent Wall Street types created these funds so J6P could participate more fully in the markets on both ends w/o using margin or futures. What swell guys those bankers are!
roadrunner >>
I warned everyone of the danger of using leveraged etfs for long term hold last December. This should be nothing new. They are just like using futures or options. There are no irregularities. Anyone who know anything about mathematics can figure it out. It aint rocket science. Dont blame the etfs for your losing money. Blame yourself for not understanding the investment. Kind of like blaming your mortgage company for giving you a 500k loan when you only have 50k in income.
Hopefully gold will no finally live up to its expectations of being an inflation hedge. Its done a bang up job for the past 25 years now. Thats 1/2 a humans investing lifetime. Thats a long time to wait for promise.
"Hopefully gold will no finally live up to its expectations of being an inflation hedge. Its done a bang up job for the past 25 years now. Thats 1/2 a humans investing lifetime. Thats a long time to wait for promise. "
O.K. who has a calulator?
Lets say we have two men who are age 40 in 1985, they want to retire at age 65.
One buys an ounce of gold every single month for 25 years, and one invests the same few hundred dollars each month in an index fund.
You are isolating gold from all the precious metals. How about isolating a single stock from the index? Fair is fair right?
$1 in MSFT is over $50 today. $1 in INTC is over $40 today. $1 in WMT is $50 today. $1 in IBM is $12 today.
A single stock has the potential to go up 1000% or more in a year. Gold has never done that.
or if you like.
$1 in the SP-500 is almost $6 today.
History has shown that only one asset class has outperformed inflation and that has been equities. Maybe now it will revert to the norm like gold, or perhaps gold will catch up with equities. There are a heck of a lot more millionaires resulting from the stock market than gold.
All asset classes have their day in the sun and all perform badly. Platinum collapsed 67% last year. Silver 61%. Palladium 72%. These are precious metals, arent they. After all to do mint coins in these metals. Copper dropped 69% and aluminum 61%. I could go on with oil, natural gas, corn, wheat, soybeans, ect--all with similar price declines. Milk, bread, eggs all collapsed in the last 12 months.
Im not bashing gold nor promoting stock, just providing facts. Gold is promoted as an inflation hedge, yet it has failed miserably over the past 25 years. It has done well over the past 8 and stocks have faltered. But I am again hearing the cries of the almighty gold, just like I did in March 2008. Maybe now it is finally living up to its billing. I keep hearing gold has done well over the last 8 years and stocks suck. But when someone says stocks have done well over the past 25 years and gold sucks, he gets maligned to no end. How about stocks vs gold over the last 6 months? Fair is fair right? The only magic bullet in attaining wealth is the ability to be nimble. Overstay your welcome and you're killed. Let your convictions overwhelm reason and you will be killed.
You guys get so excited about a 10% move in gold in the last month. Heck, I made 16% in TZA--an evil ETF--in 3 days last week. And an even more evil etf---FAS is up over 19% in the last week. Yup, etfs are evil. Pure evil.
You guys constantly talk of manipulation and conspiracies holding gold down, yet you fail to see the greatest conspiracy and manipulation of all time. The manipulation of the dollar down. The FED is extremely concerned of deflation and is doing all in its power to keep rates low---you guys even say the FED is buying treasuries---hence killing the dollar. The G does not want to deflation to take root as its debt then becomes more expensive.
In 1996 I bought the entry model C-class Mercedes for about $37,000. Now, today, 13 years later, that car costs the same and I am getting more for my money. How many $40,000 cars are being sold today. The era of 40k+ cars is over for a long time. Where is the inflation in that? Where is the inflation in the real estate market that many say still has further to drop? The FED is EXTREMELY concerned of deflation.
Im happy you guys are so excited about your gold moving higher. Really I am. But when I hear ignorance preached of the stock market, it gets me a little riled up.
Don't get me wrong here a professional trader such as yourself, who spends hours each day studing the market might have done very well, but this is apples and oranges to the regular Joe six pack.
Index funds are not ETFs. Although many etfs mascarade as index funds.
SPY, DIA, QQQQ are the represntative etfs for the SP-500, Dow Jones Industrials and Nasdaq 100 respectively. Any deviation from these will come with added risk.
Also remember that index means AVERAGE. As in your returns will be average. If average is ok with you, then dont be disappointed when you acheive your goal. Personally, average is something to be avoided at all costs.
The leveraged etfs, like marraige are awesome, but come with risk. You can lose 1/2 overnight.
edited to add. There is no reason why J6P doesnt spend a few hours every night trying to learn. Might be better than watching Dancing with the Stars. Some on this board, namely Roadrunner, have done just that. And I believe his trading has improved exponentially.
Hopefully gold will now finally live up to its expectations of being an inflation hedge. Its done a bang up job for the past 25 years now. Thats 1/2 a humans investing lifetime. Thats a long time to wait for promise.
Gold basically performs against the currency. It's not so much whether you call it inflation or deflation. I've still never met a gold holder from 1979-1980 who hasn't let go. But my search continues. Someday I'll run into that guy if they don't die first. Let's not focus on the past 25 years as being the "norm" for gold or stocks. It's unlikely something like that will ever happen again in stocks, especially the part from 1989-1999....at least not until 2020-2030. It might however occur in China or somewhere else.
Thanks Cohodk. I'm contuning to learn about trading on a daily basis. But while my knowledge level has increased exponentially, I'm a long ways from seeing my trading improve all that much. It's a long road to haul to keep one's rat brain out of the decision making. I think in the end, the gold buyers that got in early back in 2001-2004 and held tight will probably end up doing far better than most of the amateur traders who kept getting in and out....assuming they eventually sell. But I'm not holding my breath that gold is going to fall into disuse like it did in 1982 and fall to 33% of it's high. I just don't think the G20 is going to allow all currencies to remain backed by merely "full faith and credit." The USA just did that for 25 years and it turned out fine for politicians, bankers, brokers, and the top 1-5% of wage earners.
I've still never met a gold holder from 1979-1980 who hasn't let go.
I let go after a great ride in 1980, and didn't start another precious metals position until 18 years later, in 1998.
I made some very, very good money in stocks - Intel, Williams Communications, Sprint PCS, and SGS Thompson Microelectonics - doubles, triples and even home runs! It was great!!
Why then, do I distrust banks, company stocks, and even government bonds now?
Maybe I just don't believe the hype anymore. Am I the only one, or does anyone else hear a giant sucking sound coming from Wall Street and the Treasury Dept?
Q: Are You Printing Money? Bernanke: Not Literally
Yesterday on Fox news, in a discussion about buying gold, one of the newscasters kept holding up a one ounce bar in a hard sealed plastic holder. Looked like a PCGS hard case.
Rob Kirby's latest expose claims that a near fail-to-deliver occured on the LMBA this past week. According to the article he claims on good authority that buyers of futures as late as 9/30 were demanding immediate delivery. With JPMorgan and Deutsche as the short side counterparties they didn't have the gold to pay off and some sovereign help (BOE) was required to prevent a default. According to his sources the banks offered $1250-$1300/oz in fiat to prevent having to deliver bullion. The naysayers will dismiss that as pure conjecture. To me, it just continues to add missing pieces to the puzzle. Why would a JPM or DB actually want to give up physical gold even if they had it?
Wow RR, if that's true at all then gold is going to soar. Although after much though, I find it hard to believe that the banks couldn't locate the bullion for $1250+/oz, unless it was an extreme quantity. Even then, I find it hard to believe that anyone would turn down a 25% premium. Furthermore, I kind of find it hard to believe that after incidences like this that the banks would continue to sell short contracts. I guess the banks don't have the best management, but they can't be that stupid, can they?
I suppose though, that the gold market will soar with $100+ up days the day that a few of those large banks decide that they're done selling. If or when that day ever comes (I'm not saying it's going to).
I made a trip to my 401K planner today. I flat out told him off the bat..."I'm thinking about pulling out, 100%, I have 0 confidence in the market, I want gold right now". I repeated I'm a doomsday type of guy (at least for the next 1 year). So we're going to get together on Monday. Fact, my 401k plan dosn't have much of a gold or metal option, so it kinda sucks. I just hope I'm making the right move. I have a little in phsycal gold/silver/ palladium right now, but I'd like more. He say's to expect to take a 30% hit, so that's my decision for this weekend.
"He say's to expect to take a 30% hit, so that's my decision for this weekend."
More like 38%...10% for taking the money and 28% (or so) income tax on the money. Heck, just call it a 40% hickey for trying to get your cash money into your pocket. Folk make the error of thinking they have a few wads of buks in their 401 but when you reach for the money you find out that you have considerably fewer actual cash dollars than you might have thought for yourself. They want your money in play and on the table, it does no good for anyone else if it is sitting in your pocket or in your cash account.
<< <i>Rob Kirby's latest expose claims that a near fail-to-deliver occured on the LMBA this past week. According to the article he claims on good authority that buyers of futures as late as 9/30 were demanding immediate delivery. With JPMorgan and Deutsche as the short side counterparties they didn't have the gold to pay off and some sovereign help (BOE) was required to prevent a default. According to his sources the banks offered $1250-$1300/oz in fiat to prevent having to deliver bullion. The naysayers will dismiss that as pure conjecture. To me, it just continues to add missing pieces to the puzzle. Why would a JPM or DB actually want to give up physical gold even if they had it?
Well, on the bright side at least they appear to know that a default in gold is simply unthinkable.
It would be far better to let gold go to a million dollars an ounce than to default. The economic problems and imbalances could still be addressed at higher gold prices but a default in this "com- modity" would result in total financial collapse within mere hours as everyone ran for the exits.
It look to me like they're gonna have to let this bull run a little farther. If those interests taking delivery are Chinese thay might have to let it run a lot farther.
Gold is finally performing well against all currencies, so this rally may be more than a dollar thing.
PRR, if you are uncomforable with the market over the next year, you may want to consider just liquidating and buying treasuries within the 401(k). I doubt the USA will default in the next year.
Folk make the error of thinking they have a few wads of buks in their 401 but when you reach for the money you find out that you have considerably fewer actual cash dollars than you might have thought for yourself. They want your money in play and on the table, it does no good for anyone else if it is sitting in your pocket or in your cash account.
Yep, just remember that the money in your IRA isn't really all yours. Get used to that concept, because no matter when you remove it, you don't get it all. The taxes were only deferred - not forgiven, and then there's that nasty penalty if you take it out early. Also, remember that the Bush tax cuts expire next year, so if you retire and withdraw IRA money later, it will be subject to higher tax rates than the current rates. There is no telling how high the politicians will want to jack up income tax rates for all those "wealthy" middle class Americans. Remember that the IRA is taxed at your marginal income tax rate when it is withdrawn.
I'm glad that I took my retirement funds out when I did in 2008, because the stock market then dropped and I had already put it into gold and silver. Now, it's the real thing that I can get my hands on if I want it, instead of an "account balance" that's under someone else's "management".
When the stock market crashed last year, I hardly noticed. That's not to say that I didn't have to go through a "mental adjustment" in my ways of thinking - after all, I'd had an IRA for about 30 years, having been sold on the idea of the great benefits of deferred taxes being withdrawn after retirement when your tax rates are supposed to be lower, but even that is questionable now. And much of that justification goes away in the face of persistant inflation (or a shrinking dollar - you choose the definition, same thing either way). If you can't protect the retirement stash against inflation, then you've got to be consistantly hitting the ball out of the park, just to stay ahead.
Q: Are You Printing Money? Bernanke: Not Literally
The similarities between the Nasdaq chart in 1991 and Oil back around 10 years are very similar to how the gold chart looks today. Both of those looked like bubbles at the time having already advanced about 4X (ie just like gold). Look where they ultimately ended up. Some good charts to ponder.
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.".........J.M. Keynes
Bubbles are dependant upon both magnitude(% increase) and duration.
Most equity markets have a hard time exceeding 5-6 years. Japan rallied 450% over 7 years. Naz 1500% over 9 years. The China rally was only about 2 years, but was 500%. India rallied 4.5 years for 600%. Russia rallied an astonashingly 6000% in the 10 years after they defaulted.
Oil rallied for about 9 years and 1100%. The real estate bubble lasted only about 6 years also.
I think the phrase "slow and steady" is very important. The Naz, Oil and Russia enjoyed tremendous returns largely because the first 70-80% of the rally was measured. The parabolic move in each toward the end of the move signified a massive sentiment change. Silver and platinum went parabolic last spring and suffered greatly. Gold's rally has been largely measured thus far but it entering its 9th year. Its clock is ticking. Perhaps a rally to $2500, or approx. its inflation adjusted high in the next 12-18 months will cement its place in history. $250 to $2500 in 9-10 years would not look out of place with other asset class bubbles.
Reaching the inflation adjusted value of gold is certainly a reasonable step that could be reached. That would even up things to where it stood in 1980 against the CPI index, assuming that the index adequately represents gold vs. all prices. We know that the basket of goods has significantly changed since 1980. But that doesn't necessarily even up gold against monetary supply changes since 1980. It's no secret that as holder of the world's reserve currency, was able to effectively export it's monetary inflation overseas for a 25 year period. The outcome of that is not yet factored into current prices. Also, "money" or even what money is has morphed into something quite different than it was in 1980. Derivatives have acted like money to the banks over the past 20 yrs. but were a total non-issue in 1980. Lastly, should there be an adjustment for the soundness of the Western world's financial/banking/manufacturing infrastructure comparing 1980 to 2009? The 1980 system was built on cash money while the newer system largely on credit and derivatives.
The author gives a very insightfull analysis of what methods work and which ones don't. One idea I've always liked is that even though the world hasn't had an official gold standard since 1971, the central banks still carry gold as an unofficial support to their currencies. Otherwise, why would they even own it? It never has made sense to say we have nothing backing the dollar...unless the 261 million ounces on the books no longer belongs to the US. The gold on the "books" does mean something. It's also why those books are such a tightly guarded secret.
The similarities between the Nasdaq chart in 1991 and Oil back around 10 years are very similar to how the gold chart looks today. Both of those looked like bubbles at the time having already advanced about 4X (ie just like gold). Look where they ultimately ended up. Some good charts to ponder.
That guy really likes the technicals, roadrunner. I can't say that I can argue with him, either.
But, here's another thought. The charts give you an idea of the possibilities, but I don't believe that the situations are identical.
I think that the situations absolutely must be considered before rhapsodizing over a chart or a trendline.
This situation is unprecedented in this country. Keep that in mind as we go forward. jmski.
p.s. - I feel like the Yorkie, telling the German Shepherd to be careful out there.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>All bubbles are bubbles for their own individual reasons. In the end, all bubbles are bubbles. There is no such thing as "this time its different."
Gold is not in a bubble at this time, although IMHO, it is most likely headed there. This is a great thing for those bullish on the metal. >>
This is funny, the two points i was going to post about, what a genius!
one thing for sure, is that gold has realllllllllly made it past the $1K mark and has been there 'for awhile' now, and I kind of expect it will stay above $1K for sure now for quite awhile -- until when remains to be seen?
I am confused tho, as to why silver is not following suit. clue?
Comments
Real estate is a no-go because the banks aren't lending. In addition, with shaky bank lending, who are you going to sell to?
I think that a good mix of quality common stocks (low debt, dividend payers, little exposure to recession and/or derivative funny-money games) and PM's (in hand) is the way to go.
<< <i>Based on the stock market and the action in metals, it seems to me that investors are hedging against fear of the destruction of the dollar (inflation? stagflation?). For all the theoretical talk about deflation, just look at your utility and grocery bill; deflation -- my foot. The three traditional ways to deal with inflation are: (1) stocks, (2) real estate, and (3) PMs.
Real estate is a no-go because the banks aren't lending. In addition, with shaky bank lending, who are you going to sell to?
I think that a good mix of quality common stocks (low debt, dividend payers, little exposure to recession and/or derivative funny-money games) and PM's (in hand) is the way to go. >>
Add some PM mining stocks to that mix.
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Volcker's memoirs indicate that one of his regrets was not taking action in the 1970's to supress the price of gold, esp. as it took off in the late 1970's. The documents from the 1970's in the above article show that Volcker was already an old pro at price management long before he became FED chief. So much for his memory. Don't believe what they say, but what they do. The FED chiefs are old pros at this game going back many decades.
Back to $1020 once again. How many times will gold knock on the $1018-$1025 door?
roadrunner
The demise of the dollar
siliconvalleycoins.com
GOLD: BREAKOUT ALERT - POWERFUL UPTREND IMMINENT - target and trajectory...
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Doing my best to introduce Young Numismatists and Young Adults into the hobby.
HDFC Bank looking at selling silver bars - exec
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ANA Life Member & Volunteer District Representative
2019 ANA Young Numismatist of the Year
Doing my best to introduce Young Numismatists and Young Adults into the hobby.
$20 bln 10-year Note Auction: Yield 3.210% (3.229% expected); Bid/Cover 3.01x (9-auction avg 2.56x, previous 2.77x); Indirect Bidders 47.4% (9-auction avg 34.9%, previous 55% YTD High)
Knowledge is the enemy of fear
<< <i>Another strong auction for long term money.
$20 bln 10-year Note Auction: Yield 3.210% (3.229% expected); Bid/Cover 3.01x (9-auction avg 2.56x, previous 2.77x); Indirect Bidders 47.4% (9-auction avg 34.9%, previous 55% YTD High) >>
Oh come on.
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Who are the fools buying this JUNK. If the value of the dollar loses 10% of its value the next ten years what is your rate of return?
If a large dollar holder starts to get out, and the dollar crashes what do you own.
Remember the guy with the Treasury Bill website that posted on the old post. The guy that said owning gold was nuts and put all his clients in T-Bills. Lets here from him on this?
What denominations are they?
Camelot
Denominated in dollars. You can buy them thru any broker just like any stock.
Note: there is a caveat to these double inverse funds; over time they degrade to zero like a radioactive isotope due to the cost of constantly buying the futures, puts/calls etc. So this is something you would hold for maybe 1 or 2 years, not forever. I figure interest rates will have to start to rise in the next year at most, if not sooner.
Camelot
What if it doesnt? Remember, the only guarantees are death and taxes.
Knowledge is the enemy of fear
So this is something you would hold for maybe 1 or 2 years, not forever.
I don't know about 1-2 yrs. The decay on some of the other ETF's like SRS, SKF, FAZ have shown massive decay over months. I don't know if they're even good trading vehicles for more than days at a time. Anyone holding any of those 3 inverse leveraged bear funds have seen their dollars turn to pennies. Wasn't SRS over 200 at one time....now around 10. FAZ also was over 100+ and fell back to low single digits until they did an inverse 10-1 split. Now it's at around 20 (formerly 2). So what decays so rapidly on the way down, must decay rapidly on the way up as well. And now we're seeing investigations into these funds to check out "irregularities" in how they function. They might be more scam than wham. Our benevolent Wall Street types created these funds so J6P could participate more fully in the markets on both ends w/o using margin or futures. What swell guys those bankers are!
roadrunner
I agree with you. The ETF'S you mentioned are just more scams. You can also put UNG into that camp, and I am sure there are others.
It now appears that most of these ETF'S were set up as just another way to suck up the publics money rather than diversify risk. Many of these have turned out to be nothing but derivative plays!
What little money I had in some of these I dumped several months ago, naturally at loss.
<< <i>The only sure things are death, taxes,......and devaluing fiat currencies.
So this is something you would hold for maybe 1 or 2 years, not forever.
I don't know about 1-2 yrs. The decay on some of the other ETF's like SRS, SKF, FAZ have shown massive decay over months. I don't know if they're even good trading vehicles for more than days at a time. Anyone holding any of those 3 inverse leveraged bear funds have seen their dollars turn to pennies. Wasn't SRS over 200 at one time....now around 10. FAZ also was over 100+ and fell back to low single digits until they did an inverse 10-1 split. Now it's at around 20 (formerly 2). So what decays so rapidly on the way down, must decay rapidly on the way up as well. And now we're seeing investigations into these funds to check out "irregularities" in how they function. They might be more scam than wham. Our benevolent Wall Street types created these funds so J6P could participate more fully in the markets on both ends w/o using margin or futures. What swell guys those bankers are!
roadrunner >>
I warned everyone of the danger of using leveraged etfs for long term hold last December. This should be nothing new. They are just like using futures or options. There are no irregularities. Anyone who know anything about mathematics can figure it out. It aint rocket science. Dont blame the etfs for your losing money. Blame yourself for not understanding the investment. Kind of like blaming your mortgage company for giving you a 500k loan when you only have 50k in income.
Hopefully gold will no finally live up to its expectations of being an inflation hedge. Its done a bang up job for the past 25 years now.
Knowledge is the enemy of fear
O.K. who has a calulator?
Lets say we have two men who are age 40 in 1985, they want to retire at age 65.
One buys an ounce of gold every single month for 25 years, and one invests the same few hundred dollars each month in an index fund.
They are both now 65, who did the best?
$1 in MSFT is over $50 today.
$1 in INTC is over $40 today.
$1 in WMT is $50 today.
$1 in IBM is $12 today.
A single stock has the potential to go up 1000% or more in a year. Gold has never done that.
or if you like.
$1 in the SP-500 is almost $6 today.
History has shown that only one asset class has outperformed inflation and that has been equities. Maybe now it will revert to the norm like gold, or perhaps gold will catch up with equities. There are a heck of a lot more millionaires resulting from the stock market than gold.
All asset classes have their day in the sun and all perform badly. Platinum collapsed 67% last year. Silver 61%. Palladium 72%. These are precious metals, arent they. After all to do mint coins in these metals. Copper dropped 69% and aluminum 61%. I could go on with oil, natural gas, corn, wheat, soybeans, ect--all with similar price declines. Milk, bread, eggs all collapsed in the last 12 months.
Im not bashing gold nor promoting stock, just providing facts. Gold is promoted as an inflation hedge, yet it has failed miserably over the past 25 years. It has done well over the past 8 and stocks have faltered. But I am again hearing the cries of the almighty gold, just like I did in March 2008. Maybe now it is finally living up to its billing. I keep hearing gold has done well over the last 8 years and stocks suck. But when someone says stocks have done well over the past 25 years and gold sucks, he gets maligned to no end. How about stocks vs gold over the last 6 months? Fair is fair right? The only magic bullet in attaining wealth is the ability to be nimble. Overstay your welcome and you're killed. Let your convictions overwhelm reason and you will be killed.
You guys get so excited about a 10% move in gold in the last month. Heck, I made 16% in TZA--an evil ETF--in 3 days last week. And an even more evil etf---FAS is up over 19% in the last week. Yup, etfs are evil. Pure evil.
You guys constantly talk of manipulation and conspiracies holding gold down, yet you fail to see the greatest conspiracy and manipulation of all time. The manipulation of the dollar down. The FED is extremely concerned of deflation and is doing all in its power to keep rates low---you guys even say the FED is buying treasuries---hence killing the dollar. The G does not want to deflation to take root as its debt then becomes more expensive.
In 1996 I bought the entry model C-class Mercedes for about $37,000. Now, today, 13 years later, that car costs the same and I am getting more for my money. How many $40,000 cars are being sold today. The era of 40k+ cars is over for a long time. Where is the inflation in that? Where is the inflation in the real estate market that many say still has further to drop? The FED is EXTREMELY concerned of deflation.
Im happy you guys are so excited about your gold moving higher. Really I am. But when I hear ignorance preached of the stock market, it gets me a little riled up.
Knowledge is the enemy of fear
$1 in Enron is worth $0 today.
<< <i>I'm just being facetious, but...
$1 in Enron is worth $0 today. >>
People used to get paid in salt also.
Knowledge is the enemy of fear
30-year Bond Auction: Yield 4.009% (Expected 3.994%); Bid/Cover 2.37x (2009 high- 2.92x, 7 auction average -2.44); Indirect Bidders 34.5% (Prior- 46.5%, 7 auction average- 43.8%)
Knowledge is the enemy of fear
$1 in INTC is over $40 today.
$1 in WMT is $50 today.
$1 in IBM is $12 today.
Dave I thought we were talking about Index Funds, what are now called ETF'S?
If you are going to cherry pick your stocks then I would like to cherry pick my PROOF gold coins from 25 years ago, O.K.
Index funds are not ETFs. Although many etfs mascarade as index funds.
SPY, DIA, QQQQ are the represntative etfs for the SP-500, Dow Jones Industrials and Nasdaq 100 respectively. Any deviation from these will come with added risk.
Also remember that index means AVERAGE. As in your returns will be average. If average is ok with you, then dont be disappointed when you acheive your goal. Personally, average is something to be avoided at all costs.
The leveraged etfs, like marraige are awesome, but come with risk. You can lose 1/2 overnight.
edited to add. There is no reason why J6P doesnt spend a few hours every night trying to learn. Might be better than watching Dancing with the Stars. Some on this board, namely Roadrunner, have done just that. And I believe his trading has improved exponentially.
Knowledge is the enemy of fear
I am not sure what EFT's were called 25 years ago, index funds is all I could think of. Same old game just a new name?
Gold basically performs against the currency. It's not so much whether you call it inflation or deflation. I've still never met a gold holder from 1979-1980 who hasn't let go. But my search continues. Someday I'll run into that guy if they don't die first. Let's not focus on the past 25 years as being the "norm" for gold or stocks. It's unlikely something like that will ever happen again in stocks, especially the part from 1989-1999....at least not until 2020-2030. It might however occur in China or somewhere else.
Thanks Cohodk. I'm contuning to learn about trading on a daily basis. But while my knowledge level has increased exponentially, I'm a long ways from seeing my trading improve all that much. It's a long road to haul to keep one's rat brain out of the decision making. I think in the end, the gold buyers that got in early back in 2001-2004 and held tight will probably end up doing far better than most of the amateur traders who kept getting in and out....assuming they eventually sell. But I'm not holding my breath that gold is going to fall into disuse like it did in 1982 and fall to 33% of it's high. I just don't think the G20 is going to allow all currencies to remain backed by merely "full faith and credit." The USA just did that for 25 years and it turned out fine for politicians, bankers, brokers, and the top 1-5% of wage earners.
roadrunner
I let go after a great ride in 1980, and didn't start another precious metals position until 18 years later, in 1998.
I made some very, very good money in stocks - Intel, Williams Communications, Sprint PCS, and SGS Thompson Microelectonics - doubles, triples and even home runs! It was great!!
Why then, do I distrust banks, company stocks, and even government bonds now?
Maybe I just don't believe the hype anymore. Am I the only one, or does anyone else hear a giant sucking sound coming from Wall Street and the Treasury Dept?
I knew it would happen.
And, who gets his Social Security tax-free.
Who knows who is selling their gold this way?
Rob Kirby digs for dirt again
roadrunner
I suppose though, that the gold market will soar with $100+ up days the day that a few of those large banks decide that they're done selling. If or when that day ever comes (I'm not saying it's going to).
More like 38%...10% for taking the money and 28% (or so) income tax on the money. Heck, just call it a 40% hickey for trying to get your cash money into your pocket. Folk make the error of thinking they have a few wads of buks in their 401 but when you reach for the money you find out that you have considerably fewer actual cash dollars than you might have thought for yourself. They want your money in play and on the table, it does no good for anyone else if it is sitting in your pocket or in your cash account.
<< <i>Rob Kirby's latest expose claims that a near fail-to-deliver occured on the LMBA this past week. According to the article he claims on good authority that buyers of futures as late as 9/30 were demanding immediate delivery. With JPMorgan and Deutsche as the short side counterparties they didn't have the gold to pay off and some sovereign help (BOE) was required to prevent a default. According to his sources the banks offered $1250-$1300/oz in fiat to prevent having to deliver bullion. The naysayers will dismiss that as pure conjecture. To me, it just continues to add missing pieces to the puzzle. Why would a JPM or DB actually want to give up physical gold even if they had it?
Rob Kirby digs for dirt again
roadrunner >>
Well, on the bright side at least they appear to know that a default in gold is simply unthinkable.
It would be far better to let gold go to a million dollars an ounce than to default. The economic
problems and imbalances could still be addressed at higher gold prices but a default in this "com-
modity" would result in total financial collapse within mere hours as everyone ran for the exits.
It look to me like they're gonna have to let this bull run a little farther. If those interests taking
delivery are Chinese thay might have to let it run a lot farther.
PRR, if you are uncomforable with the market over the next year, you may want to consider just liquidating and buying treasuries within the 401(k). I doubt the USA will default in the next year.
Knowledge is the enemy of fear
Yep, just remember that the money in your IRA isn't really all yours. Get used to that concept, because no matter when you remove it, you don't get it all. The taxes were only deferred - not forgiven, and then there's that nasty penalty if you take it out early. Also, remember that the Bush tax cuts expire next year, so if you retire and withdraw IRA money later, it will be subject to higher tax rates than the current rates. There is no telling how high the politicians will want to jack up income tax rates for all those "wealthy" middle class Americans. Remember that the IRA is taxed at your marginal income tax rate when it is withdrawn.
I'm glad that I took my retirement funds out when I did in 2008, because the stock market then dropped and I had already put it into gold and silver. Now, it's the real thing that I can get my hands on if I want it, instead of an "account balance" that's under someone else's "management".
When the stock market crashed last year, I hardly noticed. That's not to say that I didn't have to go through a "mental adjustment" in my ways of thinking - after all, I'd had an IRA for about 30 years, having been sold on the idea of the great benefits of deferred taxes being withdrawn after retirement when your tax rates are supposed to be lower, but even that is questionable now. And much of that justification goes away in the face of persistant inflation (or a shrinking dollar - you choose the definition, same thing either way). If you can't protect the retirement stash against inflation, then you've got to be consistantly hitting the ball out of the park, just to stay ahead.
I knew it would happen.
The similarities between the Nasdaq chart in 1991 and Oil back around 10 years are very similar to how the gold chart looks today. Both of those looked like bubbles at the time having already advanced about 4X (ie just like gold). Look where they ultimately ended up. Some good charts to ponder.
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.".........J.M. Keynes
roadrunner
Most equity markets have a hard time exceeding 5-6 years. Japan rallied 450% over 7 years. Naz 1500% over 9 years. The China rally was only about 2 years, but was 500%. India rallied 4.5 years for 600%. Russia rallied an astonashingly 6000% in the 10 years after they defaulted.
Oil rallied for about 9 years and 1100%. The real estate bubble lasted only about 6 years also.
I think the phrase "slow and steady" is very important. The Naz, Oil and Russia enjoyed tremendous returns largely because the first 70-80% of the rally was measured. The parabolic move in each toward the end of the move signified a massive sentiment change. Silver and platinum went parabolic last spring and suffered greatly. Gold's rally has been largely measured thus far but it entering its 9th year. Its clock is ticking. Perhaps a rally to $2500, or approx. its inflation adjusted high in the next 12-18 months will cement its place in history. $250 to $2500 in 9-10 years would not look out of place with other asset class bubbles.
Knowledge is the enemy of fear
How do you determine the price of gold?
The author gives a very insightfull analysis of what methods work and which ones don't. One idea I've always liked is that even though the world hasn't had an official gold standard since 1971, the central banks still carry gold as an unofficial support to their currencies. Otherwise, why would they even own it? It never has made sense to say we have nothing backing the dollar...unless the 261 million ounces on the books no longer belongs to the US. The gold on the "books" does mean something. It's also why those books are such a tightly guarded secret.
roadrunner
Box of 20
That guy really likes the technicals, roadrunner. I can't say that I can argue with him, either.
But, here's another thought. The charts give you an idea of the possibilities, but I don't believe that the situations are identical.
I think that the situations absolutely must be considered before rhapsodizing over a chart or a trendline.
This situation is unprecedented in this country. Keep that in mind as we go forward. jmski.
p.s. - I feel like the Yorkie, telling the German Shepherd to be careful out there.
I knew it would happen.
Gold is not in a bubble at this time, although IMHO, it is most likely headed there. This is a great thing for those bullish on the metal.
Knowledge is the enemy of fear
<< <i>All bubbles are bubbles for their own individual reasons. In the end, all bubbles are bubbles. There is no such thing as "this time its different."
Gold is not in a bubble at this time, although IMHO, it is most likely headed there. This is a great thing for those bullish on the metal. >>
This is funny, the two points i was going to post about, what a genius!
I am confused tho, as to why silver is not following suit. clue?