Rumors have abounded for years that the gold is gone from depositories, but there is no evidence of this. If this gold were actually gone the repercussions would be severe and immediate. >>
Actually, there appears to be at least some evidence of this. The fact that the repercussions would be so severe is a compelling reason to believe that that secret will remain a secret for as long as possible.
Our Government has a history of keeping such radically severe news a tightly closed secret. Our leaders felt it was better to let Bill Clinton slide on his crimes because they didn't feel the American public could handle the whole ugly truth, remember there were two semi truckloads of evidence and Janet Reno ordered them sealed for 50 years and that's just the most recent case. Remember the Warren Comission?
FDR and the military knew about Pearl Harbor weeks before and allowed it to happen because they felt the war would be good for our economy and finally end the depression. There is a great deal of evidence to that effect, but you'll never see it as accepted fact. The Federal reserve has never been audited, and it never will be. The late John Connelly, Governor of Texas and shot in the Kennedy assasination said many time before his death that if the truth about that ever came out, there would be a violent revolt and all politicians would be killed or imprisioned for life.
I am not trying to promote conspiracy theories here, just point out that there are many things the public will never learn about because we have leaders who look upon the citizenry as children and uneducated masses.
They are after all, an elite class and meant to rule. At least that's how they see it and they don't believe the laws nor the Constitution applies to them.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
"2. Cut out the middle man (the bank) ! If you have assets, cash them out to pay off debt. For example, it makes no sense to have high-interest debt and an IRA. Get out of that circle.
3. The absolute LAST thing you should put your money into right now is US dollar-denominated bonds."
I would always agree with getting out of high interest debt -- but I would point out that owning US dollar denominated bonds is the opposite of being in debt. Is your concern with US dollar denominated bonds credit risk or inflation risk? If you anticipate inflation, being in debt is not a bad thing.
"The Chinese governement very likely controls the majority of the world's gold supply and they are still buying it up"
(a) They definitely don't own the 261 million ounces held by the United States
(b) They are unlikely to have much of an interest in the gold mines of South Africa, the US, Canada, Australia, and Russia which produce about 45 million ounces per year
(c) The Chinese understand very well that wealth arises from education, capital investment and the resulting economic activity it produces. If the Chinese economy passes ours in the coming decades, it will be due to this knowledge rather than any gold conspiracy.
"The Chinese governement very likely controls the majority of the world's gold supply and they are still buying it up"
(a) They definitely don't own the 261 million ounces held by the United States
(b) They are unlikely to have much of an interest in the gold mines of South Africa, the US, Canada, Australia, and Russia which produce about 45 million ounces per year >>
How can you be sure the US holds 261 million ounces? Where do you get that info? What I have read is nothing but conflicting reports. The US Governement certainly has none as they have to buy it along with silver just to produce coins.
I would suggest you look into the buying habits of both the Red Chinese governement and the oil producing Arab states. There has beeen a long and ongoing trend to aquire large amounts of gold bullion by both. I don't recall saying there was any conspiracy here.
While I am well aware of the growing Chinese economy and vast industrial growth, the Chinese government still believes world power comes primarily from military might. I would disagree with you about their intrests in the gold producing mines in Russia.
Ask the people in Tiawan about the Red Chinese objectives. I don't think the words economy, education or capitol investment will be included anywhere in their answer.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
There are conflicting sentiments here. If inflation and devaluation of the dollar is so rampant, doesn't it makes sense to leverage as many of these dollars as possible now? I mean, why pay off all of your debt (especially mortgage debt which is VERY GOOD debt) when you could pay them back tomorrow with much cheaper money?
Millionaires are people with at least a million in paid for assets above what they owe. Multi-millionaires have at least 2 million above what they owe. Multi- Multi Millionaires need to have at least 5 million above what they owe. I don’t know why that is, but here is what all the Multi- multi Millionaires I know are doing. 1. Invest in very short term bonds, notes, C.D.’s, 90 days or less because the rates are going to start going up as the new paper money hits the streets, or the Chinese, and Europeans sell U.S. paper. 2. Buy Gold but even better buy Silver, the 15 to 1 ratio is way out of whack, now 75 to 1. 3. Buy other hard assets for your personal use, a house, a good car, good rental property. 4. Still try to keep your debt low, so you have cash flow to buy hard assets as the paper money devalues. 5. Get out of most of the stock market except for short term bond funds or money markets. Buy Gold and metals funds, and stay in very high quality don’t buy small cap Gold companies . 6. Do not run your credit cards, bank borrowings, mortgages up just to try to catch a wave. There will be lots of waves and you want to own stuff, not have loan or margin calls. 7. Don’t be in to big of a hurry this is a long term trend, the market is up today because the Chinese are selling Dollars, buying gold, and Euro’s. They are not going to do this until Gold is $500 today, they are just nibbling.
"2. Cut out the middle man (the bank) ! If you have assets, cash them out to pay off debt. For example, it makes no sense to have high-interest debt and an IRA. Get out of that circle.
3. The absolute LAST thing you should put your money into right now is US dollar-denominated bonds."
I would always agree with getting out of high interest debt -- but I would point out that owning US dollar denominated bonds is the opposite of being in debt. Is your concern with US dollar denominated bonds credit risk or inflation risk? If you anticipate inflation, being in debt is not a bad thing. >>
Interest rates are currently as low as thay are going to go. That means bond prices are at their peak. And the US dollar is going to continue to decline. And more US goverment bonds are going to be issued to cover the deficit, thus increasing the supply of bonds (while the demand for bonds stays constant or declines). A tripple-whammy against bonds ! Just a flat-out BAD investment at this point. You want to buy bonds when interest rates are high, but falling. Do not buy bonds when interest rates are low and about to go up.
About cutting out the middle-man - To me, it makes no sense to have a 6% mortgage while earning only 3% in an IRA. The bank that is holding both of these for you is probably laughing all the way to, well, the bank ! I say cash out the IRA, pay the penalties, pay off the mortgage, and be free !
Another (probably better) option would be to put your IRA funds in precious metals. Certain coins and bullion bars (those approved for trade on NYMEX/COMEX) are allowed in IRAs. I don't have an IRA but my wife does. Three years ago I convinced her to dump her Janus funds and put the money in a simple money market. Good thing I did ! The funds dropped like a rock and now Janus is being investigated in the mutual fund scandal. Last year, I convinced my wife to put her IRA funds in precious metals. We purchased the metals via futures contracts. Our IRA trust firm said we were only the second party to ever do it that way. We wanted some palladium, but didn't want to pay the high retail markup charged on palladium. We bought one contract for silver, one contract for gold, and two contracts for palladium. Then we just waited for the contracts to mature and took physical delivery. As per IRA regulations, we are not able to hold the bars ourselves. They are stored at a special trust depository in Delaware. But we do have nice pictures of our five Johnson Matthey London 1000 oz silver bars, Royal Bank of Canada 100 oz gold bar, and two 100 oz "USSR" palladium bars.
So that is the extent or our precious metal holdings. I'm glad we did it when we did. See the bars here.
The average cost of production for gold worldwide is $270/oz. Barrick mines gold in Nevada for $154, has aquired a mine in Peru that produces gold at $50/oz. I find gold in nearly every stream in the Cascade mountains for the cost of gasoline to get me there. Mines have reduced production in recent years due to low prices and central bank selling. Remember that gold is found nearly everywhere in the world, and there is a lot of very, very cheap labor worldwide. Technology has also reduced the cost of mining gold from continuous improvements, this will always continue. Look for mines to increase gold output sharply this year.
Short-term futures speculation could drive prices to wild levels, but don't count on any dealer to buy bullion at $800/oz (remember 1980). Recent price increases are speculative and are not from physical demand.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
<< <i> Recent price increases are speculative and are not from physical demand. >>
Sorry, but your last statement here simply isn't true. Price increases are from more buyers wanting to take possession than there are sellers willing to part with it.
I live in a fairly large metropolitan area, Houston, Texas. You may have heard of it. Try getting on the phone and calling all the shops that normally carry bullion.
There isn't a single 1 ounce Gold Eagle to be found today and it's been this way for months now. It's rare to find any available. There are waiting lists that you can get on, but don't hold your breath.
A couple of weeks ago I got a call from a shop and was told he had a twenty coin roll of 1 ounce gold Eagles. I told him I'd take 10 and headed down to the shop. On the way there, I decided I'd just go ahead and buy them all.
Didn't happen, the other ten were already physically gone in the 20 minutes it took me to get there.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Deadhorse, there are some gold eagles on Ebay right now. Would you recommend Ebay? >>
We all know the pitfalls of the bay of E. I have bought several there over the last few years. One, you can get small quantities and sales tax is no issue.
Often the prices there go too high for my blood, particularly with anything smaller than 1 oz. coins.
I'd check the shipping costs and the seller's feedback first, that usually decides for me whether I even consider bidding.
Then again, it's the price. If I can get one for no more than $9 over spot including shipping then I go for it.
If I am buying large amounts, I can get prices just a buck or so above spot, so while I used to buy on eBay alot more, I don't do it quite so often anymore.
So I'd say sure, just be carefull like you would naything else on eBay. I did get ripped for $800 there about a year ago with a seller who had a good track record but went belly up and ripped several people out of thousands all combined.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Short-term demand for bullion will not affect the spot price of gold, but it may increase the spread between spot and bullion. The price of gold is determined in the futures markets with central banks, speculators, and commercial buyers and sellers. The commercial buyers of physical gold are reducing purchases at this level (India is the largest physical buyer of gold).
Buyers of bullion can make profits, as I have the last few months. But I have not bought over $300/oz.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
dcarr -- my main point is that if you are really convinced that interest rates have nowhere to go but up, a 6 % mortgage is a pretty good deal.
I agree that there are scenarios that could lead to significantly higher US dollar denominated interest rates(failure to get consumption under control, a war, unrealistic medicare promises, etc). These are not inevitable. If globalization continues without major disruption, a low interest, low inflation environment could persist for a long time. Interest rates can go below where they are now. I would not bet on this happening, any more than I would bet on $ 600/ounce gold. But, in developing an investment strategy, whether individual or institutional, you should not assume that interest rates, even at current levels, can go in only one direction.
Regarding "While I am well aware of the growing Chinese economy and vast industrial growth, the Chinese government still believes world power comes primarily from military might"
Actually, that is not true. The Chinese are well aware that economic power is the source of world power, and the primary goal of Chinese government policy is economic growth. (A night flight from Hong Kong to Beijing will give you a sense of how remarkably successful this policy has been over the past 20 years.)
They are of course aware of the geo-political implications of military might. But, Chinese leaders have a very good sense of cause and effect, and know very well that they will never be able to project global power unless they continue to pursue a policy aimed at economic growth.
The US gold is stored mainly in four locations as follows (troy ounces):
Denver, Colorado -- 44 million Fort Know -- 147 million West Point -- 54 million Federal Reserve Bank of NY - 13 million
A decision to buy precious metals premised on a belief that the US government does not own gold is a very misinformed decision. >>
I don't think there has been a complete (unbiased 3rd party) audit and assay on the governmnt's gold in a long time, if ever. So no one really knows how much is there. I've seen those ounce totals, and I don't have complete confidence that they are correct. Even if there is that much gold stored there, it is possible that a lot of it has been leased and/or it is owned by someone else. The latest government reports now list gold reserves as "deep storage gold" when they used to say "custodial gold". Some people believe that "custodial gold" means gold bars in possession, while "deep storage gold" means gold in the ground that hasn't been mined yet.
The government may have leased gold to proxies (bullion banks JMP, CitiBank, and Goldman Sacs) at a very low interest rate. The bullion banks then sold it in exchange for promises of future delivery by mining companies who conducted forward sales to lock in prices (so-called "gold hedging"). In the meantime, the bullion banks have the proceeds from selling the gold and they invest it earning a much higher rate of return than they have to pay the government. The bullion banks now owe this future gold production to the government. They may not have hedged all their gold short exposure and may be far "under water" due to the higher gold prices.
Essentially, what the government may have done (via proxy) is trade gold bars in hand for future gold production that is still in the ground (thus the change in designation from "custodial" to "deep storage"). That is the theory, anyway. There may be some truth to it.
If true, what it essentially means for the gold market is this: During the last 10 years, 20 years worth of gold production has entered the market. During the next 10 years, 20 years worth of gold demand will enter the market.
But I wouldn't base my investment decisions on this unconfirmed information. There are plenty of other reasons to buy gold - namely the faltering US dollar due to the huge twin deficits.
PS: I do know how much silver the US government is in possession of:
Denver mint: 0 ounces Fort Knox: 0 ounces West Point Mint: 0 ounces NY Federal Reserve Bank: 0 ounces Other: 0 ounces
<< <i>dcarr -- my main point is that if you are really convinced that interest rates have nowhere to go but up, a 6 % mortgage is a pretty good deal. >>
True, but they would have to go WAY up before you could earn 6% on a bank deposit. By then, the value of a typical IRA (invested in stocks and/or bonds) would have taken a huge hit.
A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge. I do think precious metals have a good chance at appreciating more than 6% a year for the next couple years, though.
I don't see interest rates increasing much in the next year or two (but they won't be going down any). They are so low now that the interest paid on most bonds and bank deposits hardly amounts to squat.
"A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge"
Agreed. (However, if I were advising a disciplined person holding a 6 % mortgage and good cash flow, I would probably suggest that they keep the mortgage. In spite of rising real estate values, my gut feeling [and it is a gut feeling rather than the result of any hard analysis] is that leveraged high quality real estate that doubles as your home is better than gold as an inflation hedge)
Regarding the substantial US silver holdings you refer to (), I think this is a reflection of the fact that the US and much of the world really has fully demonetized silver, whereas we have not quite taken that leap with gold. I believe this explains the higher than historical gold to silver price ratios that have persisted for the past few decades. I approach investment strategies based on a view that silver will effectively be remonetized with caution.
"A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge"
Agreed. (However, if I were advising a disciplined person holding a 6 % mortgage and good cash flow, I would probably suggest that they keep the mortgage. In spite of rising real estate values, my gut feeling [and it is a gut feeling rather than the result of any hard analysis] is that leveraged high quality real estate that doubles as your home is better than gold as an inflation hedge)
Regarding the substantial US silver holdings you refer to (), I think this is a reflection of the fact that the US and much of the world really has fully demonetized silver, whereas we have not quite taken that leap with gold. I believe this explains the higher than historical gold to silver price ratios that have persisted for the past few decades. I approach investment strategies based on a view that silver will effectively be remonetized with caution. >>
The problem with real estate as an investment is that it is taxed (property taxes) even if you don't make any profit on it. And the other problem is that it isn't portable. Gold you can take with you, hide, or send overseas.
But I agree that real estate can be a good investment when interest rates are falling, and in inflationary times (so long as general wages are keeping up with inflation).
I don't believe that silver will ever be remonetized (except in a few limited cases such as the Malaysian Dirham or whatever it is). I also think the odds are against any sort of US gold standard comming back. I'm not sure that would be good for gold prices anyway. It does look like silver demand will stay relatively stable, but the supply will decrease because of less dis-hoarding.
Silver has a lot of unique properties and potential uses in energy technology. It might get a big boost in prices when the REAL energy crisis hits. Silver is the most reflective metal (mirrors for solar furnces), has the highest electrical conductivity of any metal (electrical transmission), has the highest thermal conductivity of any metal (heat exchangers), and the highest photo-sensitivity of any metal (solar cells). Add to that it's possible use in batteries, and it's ability to safely kill germs and mold on contact (water treatment, wood preservative, etc.).
SUDDENLY IT IS A DONE DEAL AND HE HAS ALREADY ORDERED PANDA'S!
FASTEST MORTGAGE APPY THAT I 'AVE EVER SEEN.
BACK TO LURKING MODE. >>
I've been working on this for a few weeks, the only thing left was to pull the trigger. Taking equity out of your home and refinancing isn't anywhere near buying a new home as far as the legalese and paperwork.
Yes, at the end it was simple matter of signing a few documents and being handed a large check. Credit unions aren't the same as regular banks and mortgage companies and one's history, salary and credit rating have a lot to do with it.
I had other funds available prior to the refinance as well. Something tells me you haven't seen many, if any mortgages in your life anyay. BTW, the caps lock key is on the left and can be your friend if used correctly.
Go back to lurking and laughing to yourself. You have contributed nothing to this thread but a personal insult to me. I'll be a gentleman and just leave it at that.
Bye, bye.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
The US gold is stored mainly in four locations as follows (troy ounces):
Denver, Colorado -- 44 million Fort Know -- 147 million West Point -- 54 million Federal Reserve Bank of NY - 13 million
A decision to buy precious metals premised on a belief that the US government does not own gold is a very misinformed decision. >>
My decision had very little to nothing to do with whether or not the US owns gold, I am of the belief that you shouldn't trust what the US Government says. particularly with regard to economics.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Regarding "While I am well aware of the growing Chinese economy and vast industrial growth, the Chinese government still believes world power comes primarily from military might"
Actually, that is not true. The Chinese are well aware that economic power is the source of world power, and the primary goal of Chinese government policy is economic growth. (A night flight from Hong Kong to Beijing will give you a sense of how remarkably successful this policy has been over the past 20 years.)
They are of course aware of the geo-political implications of military might. But, Chinese leaders have a very good sense of cause and effect, and know very well that they will never be able to project global power unless they continue to pursue a policy aimed at economic growth. >>
Do you think the Chinese intend to buy Tiawan? I think they intend to invade and murder those who oppose a repressive communist government.
I think you are being niave with regards to the Chinese. They are our enemy and are now armed with a generational advance in missle and multi-entry warheads thanks to Bill Clinton selling our tecnology for illegal campaign funds. I suspect hundreds of millions if not billions also went into Swiss accounts in Bill and Hillary's name.
In the long term, I see war with China as the only possible enevitability, hopefully far down the road. A Chinese/Arab axis could well be what leads to the next and perhaps final world war. Not to take this off into world politics but to not address what the Chinese appear to be looking toward is shortsighted if not downright foolish.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge. >>
DO NOT BORROW MONEY TO INVEST! PERIOD! GET COMPLETELY OUT OF DEBT, THEN INVEST! PERIOD! Borrowing money on your house at, say, 6%, and then thinking you can make 6+x% is STUPID! If you pay your house off, when something like 9/11 happens, you won't be worrying that someone will take your house from you! Why would you put your and/or your family's shelter at risk? If you want to be a math nerd about it, you need to add x% for RISK to the equation. Get out of debt first, then you will have plenty of cash flow to invest in whatever you so choose! I hope I wasn't unclear.
<< <i><< A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge. >>
DO NOT BORROW MONEY TO INVEST! PERIOD! GET COMPLETELY OUT OF DEBT, THEN INVEST! PERIOD! Borrowing money on your house at, say, 6%, and then thinking you can make 6+x% is STUPID! If you pay your house off, when something like 9/11 happens, you won't be worrying that someone will take your house from you! Why would you put your and/or your family's shelter at risk? If you want to be a math nerd about it, you need to add x% for RISK to the equation. Get out of debt first, then you will have plenty of cash flow to invest in whatever you so choose! I hope I wasn't unclear. >>
That is sort of what I've been saying. Obviously if you take equity out of your house and pay 6% on it, and invest it in something that pays more than 6%, you'd better be darn sure that what you are investing in is safe (will hold it's value). I believe that gold, in the current environment, qualifies. But generally, I'm all for cutting out debt and the middle man (the bank).
What if it was sort of the other way around. Suppose a person already had a 6% $100k mortgage on their $300k house and also had bought $100K worth of precious metals and/or rare coins over the years. Should that person sell all and pay off the house ? I say, not yet. If, however, they had $100k worth of stocks and/or bonds, then I say ABSOLUTELY dump them all and pay off the house.
If you mortgage your house at 6% interest, there is no guarantee that you will make 6% or more to cover this debt you have created. If you pay off your 6% mortgage, you are GUARANTEED a 6% return. I'm not going to argue about this. All I can say is that I started with nothing, followed our culture's advice to go into debt for anything you want, got wiped out in 1991, started over with nothing under the OLD way of thinking (stay out of debt), and have rebuilt my wealth. God has blessed me this time around, and I have kept my wealth. Now I am telling everyone on this board, hey, I used to think the way our culture did too and borrowed money without thinking. I have now gotten wiser, and have rebuilt my wealth, and am now telling you to stay out of debt. Once you get completely out of debt, if you want to invest in gold, then have at it. Just please do so with cash.
There is an additional Risk also: if I sue you I can take your stash of stocks or Gold! But I cannot take your house or home equity.
Laws vary from state to state, and maybe my point is invalid in your state, but I know for me that home equity is shielded in certain legal ways and therefore, carries less Risk than other securities and assets.
Given the look-back time periods and methods used by courts to determine assets, I think it would be difficult to establish a large, "secret" position that would be invisible to court judgements.
First, I re-financed at less than 5%. Second it was my equity/money anyway. I believe that bullion will return a better % than my mortgage rate.
Don't forget there are tax breaks on the mortgage interest as well. I re-financed at 8 years and my salary will cover my total overhead by a factor of more than twice.
I wll also throw extra payments at the mortgage or add more bullion depending on the rates at the time. I thought I made it clear that I have no other dependants, I have already put my children through college and they are doing fine on their own.
I am getting the feeling that I am being put into a position of defending my move. I don't have to do that, it's my money to start with. I wasn't trying to convince anyone else to do this, nor have I tried to influence anyone to do it either.
I don't feel I have risked anything but a small percentage versus a possible large upside.
I almost kept this move a secret because I knew there would be those who would feel the need to lecture me on my foolishness. Then of course there was the idiotic post in all caps, I guess you have to expect that since computers have become so easy to use, even a neanderthal can plug in an AOL disk these days.
However, I feel so strongly about what silver and gold are going to do that I had to put my money where my mouth was and where my posts have been on this subject as well.
I'll make this prediction, in a year from now, if gold is at $500 or more there will still be those who will say it's a bad investment. paper is better , etc. etc.
I say each to his own, I have never criticized anyone else for their investment strategies, even those I disagree with, I have read and tried to learn from them.
For those who do believe in bullion, well, I am here to say I'm not afraid to "go for it" and they needn't think that they are in the wrong just because paper traders tell them that gold and silver are barbaric throwbacks with no real investment value.
I do thank those who have said good luck and wished me well, I hold no grudge against those who feel I am stupid or foolish. I Know I am neither. I do not have a garage full of canned goods and ammunition to last a decade. I believe we are in the first crest of a wave and the bulls are correct about this one. I was buying gold back at $320 and silver at a little over $4.00 awhile ago, I just felt the need to hold alot more as my investments there weren't large enough to produce that once in a lifetime return.
We'll see how it turns out, but I feel better about it now than I thought I would when I was agonizing over doing this for the previous 6 weeks.
I do respect most of your comments and some have been enlightening. If I am right about where this is going I promise not to post a "Nah Nah, I told you so" type of shot at my critics. They will know how badly they screwed up without some jerk reminding them.
This has been a most enlightening threadand probably the longest one I've ever taken an active part in.
Zardoz, haven't heard from you on this. I'm sure you remember our coverstation at the Pasadena show a couple of weeks ago. I was very close to telling you what I as planning on doing back then, there were a couple of times when I had to bite my tongue. I'm sure you would have agreed with my plans though, you thought I was being conservative.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Given the look-back time periods and methods used by courts to determine assets, I think it would be difficult to establish a large, "secret" position that would be invisible to court judgements. >>
I think you might be surpeised about that. You are obviously not privey to pricey divorce battles.
That's really the least of my worries, I have great insurance for 99% of such possibilities and many things are easy to keep from disclosure. I won't go into my secrets there, but it isn't nearly as difficult as you might think.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>I'll make this prediction, in a year from now, if gold is at $500 or more there will still be those who will say it's a bad investment. paper is better , etc. etc. >>
No need to wait really. Gold is very likely to be over $500 a year from now but that doesn't make it a good investment. It is obviously a great speculation and if you want to accept the risks there is no reason not to do it.
One really should have started backing out of paper in 1996 and slowly increasing hard assets since.
<< <i>There is an additional Risk also: if I sue you I can take your stash of stocks or Gold! But I cannot take your house or home equity.
Laws vary from state to state, and maybe my point is invalid in your state, but I know for me that home equity is shielded in certain legal ways and therefore, carries less Risk than other securities and assets.
Given the look-back time periods and methods used by courts to determine assets, I think it would be difficult to establish a large, "secret" position that would be invisible to court judgements. >>
If you get sued they cant take your gold if they dont know about it. Thats one advantage to owning gold it is invisable, assuming you keep it at home.
<< <i>I'll make this prediction, in a year from now, if gold is at $500 or more there will still be those who will say it's a bad investment. paper is better , etc. etc. >>
No need to wait really. Gold is very likely to be over $500 a year from now but that doesn't make it a good investment. >>
Now wait up just one minute here. If/when gold is at $500 or more in a year, then that would mean it would be at a 65% return over 24 months.
How on earth could anyone say with a straight face that that wasn't a good investment?
Are we talking semantics here? What am I missing when it comes to the definition of a good investment? People are quite happy with 8 to 12% when the stock market motors along at it's typical pace and that is a good investment.
But a return of 500 to 800% over that isn't a good investment?
Please explain this to this poor old Texas boy who just isn't up with the East Coast stock market elite types who claim to know all. (No, I am not including you in that group, I was just being a temporary smartazz)
Thanks in advance.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Perhaps to some extent. The point is that it's impossible to predict the future. While gold is likely a good investment now, using significant portions of ones wealth to buy it is more like a speculation. No matter how sure one is of the future, it will almost always play out in unforeseen ways so it becomes necessary to always hedge one's bets. This will limit the potential return but more importantly will limit the potential loss.
Gold will at some point in the future return to the lousy investment it has long been. There can be no certainty it will occur at any specific point or won't.
Even thoughI have nearly all my eggs in one basket, it is certainly not for the long, long term. I just see this as the best avenue right now with the potential for runaway profits and a neglible downside.
While I don't have a specific $$ figure in mind for bailing out, I hope my gut feelings tell me when it's time to move away.
I really do think that this bull run is going to go on for at least 2 more years and perhaps 3 to 5. I think Gold will level off but I also think that silver will continue to rise for a time after that.
I intend to hold quite abit more silver than gold for that reason. I consider it an "investment" based on your terminology as I will be divesting myself of all of it in 5 years at the most and I intend to sell before both reach their highs.
Of course, it's knowing when that time is that makes the real difference. By the time the hoard mentality hits, I will be sitting back and smiling at the frenzy. At least that's how I did it in the early 80s snd plan on doing it again.
We'll see, but for now, I'm excited about it.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
"Do you think the Chinese intend to buy Tiawan? I think they intend to invade and murder those who oppose a repressive communist government.
I think you are being niave with regards to the Chinese. "
Actually, I am not naive at all. I have enough historical context, and enough first hand knowledge that I am not naive about the potentiial for conflict. But, your view of the Taiwan situation suggests a rather superficial understanding. China is very serious about wanting Taiwan back. They are and will continue rattling sabers, but they are not stupid enough to use military force when they can achieve the same objective by increasing economic ties and, ultimately using economic pressure. War is a real possibiility, but both sides -- especially the mainland and Taiwanese business people who work together in increasing numbers on a daily basis -- would much rather see gradual economic integration, coupled with political liberalization in China, prevent this from happening.
Deadhorse, actually what you are doing is a good move subject to your personal criteria i.e. if you are young, have a good job, etc. Most wealthy people hate debt because they realize early on paying interest on that debt wastes their hard earned money. If you buy coins at Grey sheet bid on your credit card and it takes a year or two to pay the debt at 18% did you really get a bargain? Maybe, if the coins went up at least 18%. Debt in an inflationary time at low rates is a good play if the money is put into liquid hard assets, or metals funds. You can then pay off dollars worth less at a later time. Buying PAPER assets with borrowed money is a totally different gamble as many Americans have seen over the last few years. Paper is totally different than hard assets. All paper products can be multiplied at will by the controlling parties. If you buy an ounce of gold you know what you have in relationship to the others holding ounces. Yes some additional mining can take place, but the reserve of gold can not be doubled in a short amount of time, and that time to produce more, gives you the opportunity to decide to hold or sell. This is not the case with any paper. What gets most stockowners in trouble is that they may buy a share of stock, look at the company’s outstanding shares, and think they own a percentage of that total. That is only true for that one moment that they purchased. If the company CEO decides he wants some additional shares to pay himself and his insiders he can AT WILL dilute your interest by have the transfer company issue lots of new shares. As we have all seen over the past several months those issues can be MILLIONS of new shares. Here is the most important question anyone must ask when buying any hard asset on credit. Can I pay off the debt I have incurred from my personal earnings without selling my asset, or drastically affecting my lifestyle? If that answer is yes, then GO FOR IT!
Deadhorse, I agree with your sentiments about gold, and have been telling people the same thing for 8 years. I've also put my money where my mouth is, but my ability to do that is limited by my relatively low income. Plus, I sold all of my slabbed Eagles and Double Eagles about 6 years ago in order to invest in my own company. And then, the price of gold was about what it was when I bought, and I broke even. Nevertheless, I still feel the same about gold and I believe the time is rapidly approaching when we'll see some tremendous jumps in the price of gold (and silver too ,for that matter). A tidal wave that will make the recent rise from $240 to $400/oz seem like a little ripple.
I can't comment either way on your decision to refinance your house, but I can say that it is a way to leverage your buying power, and that you do own the equity value, so I see nothing ethically wrong with that position, notwithstanding what Dollardude says about the Christian and ethical standard of staying debt-free. I rent my apartment. But I do feel that your equity value is your own money, and you could sell your house at any time.
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
Comments
<< <i>Waynme's link
Rumors have abounded for years that the gold is gone from depositories, but
there is no evidence of this. If this gold were actually gone the repercussions
would be severe and immediate. >>
Actually, there appears to be at least some evidence of this. The fact that the repercussions would be so severe is a compelling reason to believe that that secret will remain a secret for as long as possible.
Our Government has a history of keeping such radically severe news a tightly closed secret. Our leaders felt it was better to let Bill Clinton slide on his crimes because they didn't feel the American public could handle the whole ugly truth, remember there were two semi truckloads of evidence and Janet Reno ordered them sealed for 50 years and that's just the most recent case. Remember the Warren Comission?
FDR and the military knew about Pearl Harbor weeks before and allowed it to happen because they felt the war would be good for our economy and finally end the depression. There is a great deal of evidence to that effect, but you'll never see it as accepted fact. The Federal reserve has never been audited, and it never will be. The late John Connelly, Governor of Texas and shot in the Kennedy assasination said many time before his death that if the truth about that ever came out, there would be a violent revolt and all politicians would be killed or imprisioned for life.
I am not trying to promote conspiracy theories here, just point out that there are many things the public will never learn about because we have leaders who look upon the citizenry as children and uneducated masses.
They are after all, an elite class and meant to rule. At least that's how they see it and they don't believe the laws nor the Constitution applies to them.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
dcarr, I'm curious about the following:
"2. Cut out the middle man (the bank) ! If you have assets, cash them out to pay off debt. For example, it makes no sense to have high-interest debt and an IRA. Get out of that circle.
3. The absolute LAST thing you should put your money into right now is US dollar-denominated bonds."
I would always agree with getting out of high interest debt -- but I would point out that owning US dollar denominated bonds is the opposite of being in debt. Is your concern with US dollar denominated bonds credit risk or inflation risk? If you anticipate inflation, being in debt is not a bad thing.
"The Chinese governement very likely controls the majority of the world's gold supply and they are still buying it up"
(a) They definitely don't own the 261 million ounces held by the United States
(b) They are unlikely to have much of an interest in the gold mines of South Africa, the US, Canada, Australia, and Russia which produce about 45 million ounces per year
(c) The Chinese understand very well that wealth arises from education, capital investment and the resulting economic activity it produces. If the Chinese economy passes ours in the coming decades, it will be due to this knowledge rather than any gold conspiracy.
<< <i>Deadhorse, regarding
"The Chinese governement very likely controls the majority of the world's gold supply and they are still buying it up"
(a) They definitely don't own the 261 million ounces held by the United States
(b) They are unlikely to have much of an interest in the gold mines of South Africa, the US, Canada, Australia, and Russia which produce about 45 million ounces per year >>
How can you be sure the US holds 261 million ounces? Where do you get that info? What I have read is nothing but conflicting reports. The US Governement certainly has none as they have to buy it along with silver just to produce coins.
I would suggest you look into the buying habits of both the Red Chinese governement and the oil producing Arab states. There has beeen a long and ongoing trend to aquire large amounts of gold bullion by both. I don't recall saying there was any conspiracy here.
While I am well aware of the growing Chinese economy and vast industrial growth, the Chinese government still believes world power comes primarily from military might. I would disagree with you about their intrests in the gold producing mines in Russia.
Ask the people in Tiawan about the Red Chinese objectives. I don't think the words economy, education or capitol investment will be included anywhere in their answer.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
2 Cam-Slams!
1 Russ POTD!
1. Invest in very short term bonds, notes, C.D.’s, 90 days or less because the rates are going to start going up as the new paper money hits the streets, or the Chinese, and Europeans sell U.S. paper.
2. Buy Gold but even better buy Silver, the 15 to 1 ratio is way out of whack, now 75 to 1.
3. Buy other hard assets for your personal use, a house, a good car, good rental property.
4. Still try to keep your debt low, so you have cash flow to buy hard assets as the paper money devalues.
5. Get out of most of the stock market except for short term bond funds or money markets. Buy Gold and metals funds, and stay in very high quality don’t buy small cap Gold companies .
6. Do not run your credit cards, bank borrowings, mortgages up just to try to catch a wave. There will be lots of waves and you want to own stuff, not have loan or margin calls.
7. Don’t be in to big of a hurry this is a long term trend, the market is up today because the Chinese are selling Dollars, buying gold, and Euro’s. They are not going to do this until Gold is $500 today, they are just nibbling.
<< <i>Going back to one of the earlier points --
dcarr, I'm curious about the following:
"2. Cut out the middle man (the bank) ! If you have assets, cash them out to pay off debt. For example, it makes no sense to have high-interest debt and an IRA. Get out of that circle.
3. The absolute LAST thing you should put your money into right now is US dollar-denominated bonds."
I would always agree with getting out of high interest debt -- but I would point out that owning US dollar denominated bonds is the opposite of being in debt. Is your concern with US dollar denominated bonds credit risk or inflation risk? If you anticipate inflation, being in debt is not a bad thing. >>
Interest rates are currently as low as thay are going to go. That means bond prices are at their peak. And the US dollar is going to continue to decline. And more US goverment bonds are going to be issued to cover the deficit, thus increasing the supply of bonds (while the demand for bonds stays constant or declines). A tripple-whammy against bonds ! Just a flat-out BAD investment at this point. You want to buy bonds when interest rates are high, but falling. Do not buy bonds when interest rates are low and about to go up.
About cutting out the middle-man -
To me, it makes no sense to have a 6% mortgage while earning only 3% in an IRA. The bank that is holding both of these for you is probably laughing all the way to, well, the bank ! I say cash out the IRA, pay the penalties, pay off the mortgage, and be free !
Another (probably better) option would be to put your IRA funds in precious metals. Certain coins and bullion bars (those approved for trade on NYMEX/COMEX) are allowed in IRAs. I don't have an IRA but my wife does. Three years ago I convinced her to dump her Janus funds and put the money in a simple money market. Good thing I did ! The funds dropped like a rock and now Janus is being investigated in the mutual fund scandal. Last year, I convinced my wife to put her IRA funds in precious metals. We purchased the metals via futures contracts. Our IRA trust firm said we were only the second party to ever do it that way. We wanted some palladium, but didn't want to pay the high retail markup charged on palladium. We bought one contract for silver, one contract for gold, and two contracts for palladium. Then we just waited for the contracts to mature and took physical delivery. As per IRA regulations, we are not able to hold the bars ourselves. They are stored at a special trust depository in Delaware. But we do have nice pictures of our five Johnson Matthey London 1000 oz silver bars, Royal Bank of Canada 100 oz gold bar, and two 100 oz "USSR" palladium bars.
So that is the extent or our precious metal holdings. I'm glad we did it when we did.
See the bars here.
Short-term futures speculation could drive prices to wild levels, but don't count on any dealer to buy bullion at $800/oz (remember 1980). Recent price increases are speculative and are not from physical demand.
<< <i> Recent price increases are speculative and are not from physical demand. >>
Sorry, but your last statement here simply isn't true. Price increases are from more buyers wanting to take possession than there are sellers willing to part with it.
I live in a fairly large metropolitan area, Houston, Texas. You may have heard of it. Try getting on the phone and calling all the shops that normally carry bullion.
There isn't a single 1 ounce Gold Eagle to be found today and it's been this way for months now. It's rare to find any available. There are waiting lists that you can get on, but don't hold your breath.
A couple of weeks ago I got a call from a shop and was told he had a twenty coin roll of 1 ounce gold Eagles. I told him I'd take 10 and headed down to the shop. On the way there, I decided I'd just go ahead and buy them all.
Didn't happen, the other ten were already physically gone in the 20 minutes it took me to get there.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Deadhorse, there are some gold eagles on Ebay right now. Would you recommend Ebay?
<< <i>Deadhorse, there are some gold eagles on Ebay right now. Would you recommend Ebay? >>
We all know the pitfalls of the bay of E. I have bought several there over the last few years. One, you can get small quantities and sales tax is no issue.
Often the prices there go too high for my blood, particularly with anything smaller than 1 oz. coins.
I'd check the shipping costs and the seller's feedback first, that usually decides for me whether I even consider bidding.
Then again, it's the price. If I can get one for no more than $9 over spot including shipping then I go for it.
If I am buying large amounts, I can get prices just a buck or so above spot, so while I used to buy on eBay alot more, I don't do it quite so often anymore.
So I'd say sure, just be carefull like you would naything else on eBay. I did get ripped for $800 there about a year ago with a seller who had a good track record but went belly up and ripped several people out of thousands all combined.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Buyers of bullion can make profits, as I have the last few months. But I have not bought over $300/oz.
<< <i>Predication for 12/04? >>
12/2004: Gold $425, Silver $5.75. [Gold hits $475.00 & Silver hits $6.10 in Sept. 2004]
I have a 100 coin Silver Eagle lot listed on eBay. Investment lot. Click on my link at the bottom of my post.
Wayne,
There are 5 ending within the next 15 minutes.
THIS ONE IS LAUGHABLE AT BEST
7PM AT NIGHT HE IS THINKING ABOUT IT.
7AM THE PAPER WORK IS BEING FILLED OUT,
SUDDENLY IT IS A DONE DEAL AND HE HAS ALREADY ORDERED PANDA'S!
FASTEST MORTGAGE APPY THAT I 'AVE EVER SEEN.
BACK TO LURKING MODE.
The US gold is stored mainly in four locations as follows (troy ounces):
Denver, Colorado -- 44 million
Fort Know -- 147 million
West Point -- 54 million
Federal Reserve Bank of NY - 13 million
A decision to buy precious metals premised on a belief that the US government does not own gold is a very misinformed decision.
I agree that there are scenarios that could lead to significantly higher US dollar denominated interest rates(failure to get consumption under control, a war, unrealistic medicare promises, etc). These are not inevitable. If globalization continues without major disruption, a low interest, low inflation environment could persist for a long time. Interest rates can go below where they are now. I would not bet on this happening, any more than I would bet on $ 600/ounce gold. But, in developing an investment strategy, whether individual or institutional, you should not assume that interest rates, even at current levels, can go in only one direction.
Regarding "While I am well aware of the growing Chinese economy and vast industrial growth, the Chinese government still believes world power comes primarily from military might"
Actually, that is not true. The Chinese are well aware that economic power is the source of world power, and the primary goal of Chinese government policy is economic growth. (A night flight from Hong Kong to Beijing will give you a sense of how remarkably successful this policy has been over the past 20 years.)
They are of course aware of the geo-political implications of military might. But, Chinese leaders have a very good sense of cause and effect, and know very well that they will never be able to project global power unless they continue to pursue a policy aimed at economic growth.
<< <i>Deadhorse --
The US gold is stored mainly in four locations as follows (troy ounces):
Denver, Colorado -- 44 million
Fort Know -- 147 million
West Point -- 54 million
Federal Reserve Bank of NY - 13 million
A decision to buy precious metals premised on a belief that the US government does not own gold is a very misinformed decision. >>
I don't think there has been a complete (unbiased 3rd party) audit and assay on the governmnt's gold in a long time, if ever. So no one really knows how much is there. I've seen those ounce totals, and I don't have complete confidence that they are correct. Even if there is that much gold stored there, it is possible that a lot of it has been leased and/or it is owned by someone else. The latest government reports now list gold reserves as "deep storage gold" when they used to say "custodial gold". Some people believe that "custodial gold" means gold bars in possession, while "deep storage gold" means gold in the ground that hasn't been mined yet.
The government may have leased gold to proxies (bullion banks JMP, CitiBank, and Goldman Sacs) at a very low interest rate. The bullion banks then sold it in exchange for promises of future delivery by mining companies who conducted forward sales to lock in prices (so-called "gold hedging"). In the meantime, the bullion banks have the proceeds from selling the gold and they invest it earning a much higher rate of return than they have to pay the government. The bullion banks now owe this future gold production to the government. They may not have hedged all their gold short exposure and may be far "under water" due to the higher gold prices.
Essentially, what the government may have done (via proxy) is trade gold bars in hand for future gold production that is still in the ground (thus the change in designation from "custodial" to "deep storage"). That is the theory, anyway. There may be some truth to it.
If true, what it essentially means for the gold market is this:
During the last 10 years, 20 years worth of gold production has entered the market. During the next 10 years, 20 years worth of gold demand will enter the market.
But I wouldn't base my investment decisions on this unconfirmed information. There are plenty of other reasons to buy gold - namely the faltering US dollar due to the huge twin deficits.
PS: I do know how much silver the US government is in possession of:
Denver mint: 0 ounces
Fort Knox: 0 ounces
West Point Mint: 0 ounces
NY Federal Reserve Bank: 0 ounces
Other: 0 ounces
<< <i>dcarr -- my main point is that if you are really convinced that interest rates have nowhere to go but up, a 6 % mortgage is a pretty good deal. >>
True, but they would have to go WAY up before you could earn 6% on a bank deposit. By then, the value of a typical IRA (invested in stocks and/or bonds) would have taken a huge hit.
A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge. I do think precious metals have a good chance at appreciating more than 6% a year for the next couple years, though.
I don't see interest rates increasing much in the next year or two (but they won't be going down any). They are so low now that the interest paid on most bonds and bank deposits hardly amounts to squat.
"A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge"
Agreed. (However, if I were advising a disciplined person holding a 6 % mortgage and good cash flow, I would probably suggest that they keep the mortgage. In spite of rising real estate values, my gut feeling [and it is a gut feeling rather than the result of any hard analysis] is that leveraged high quality real estate that doubles as your home is better than gold as an inflation hedge)
Regarding the substantial US silver holdings you refer to (
<< <i>dcarr --
"A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge"
Agreed. (However, if I were advising a disciplined person holding a 6 % mortgage and good cash flow, I would probably suggest that they keep the mortgage. In spite of rising real estate values, my gut feeling [and it is a gut feeling rather than the result of any hard analysis] is that leveraged high quality real estate that doubles as your home is better than gold as an inflation hedge)
Regarding the substantial US silver holdings you refer to (
The problem with real estate as an investment is that it is taxed (property taxes) even if you don't make any profit on it. And the other problem is that it isn't portable. Gold you can take with you, hide, or send overseas.
But I agree that real estate can be a good investment when interest rates are falling, and in inflationary times (so long as general wages are keeping up with inflation).
I don't believe that silver will ever be remonetized (except in a few limited cases such as the Malaysian Dirham or whatever it is). I also think the odds are against any sort of US gold standard comming back. I'm not sure that would be good for gold prices anyway. It does look like silver demand will stay relatively stable, but the supply will decrease because of less dis-hoarding.
Silver has a lot of unique properties and potential uses in energy technology. It might get a big boost in prices when the REAL energy crisis hits. Silver is the most reflective metal (mirrors for solar furnces), has the highest electrical conductivity of any metal (electrical transmission), has the highest thermal conductivity of any metal (heat exchangers), and the highest photo-sensitivity of any metal (solar cells). Add to that it's possible use in batteries, and it's ability to safely kill germs and mold on contact (water treatment, wood preservative, etc.).
<< <i>NORMALLY I READ AND DON'T RESPOND,
THIS ONE IS LAUGHABLE AT BEST
7PM AT NIGHT HE IS THINKING ABOUT IT.
7AM THE PAPER WORK IS BEING FILLED OUT,
SUDDENLY IT IS A DONE DEAL AND HE HAS ALREADY ORDERED PANDA'S!
FASTEST MORTGAGE APPY THAT I 'AVE EVER SEEN.
BACK TO LURKING MODE. >>
I've been working on this for a few weeks, the only thing left was to pull the trigger. Taking equity out of your home and refinancing isn't anywhere near buying a new home as far as the legalese and paperwork.
Yes, at the end it was simple matter of signing a few documents and being handed a large check. Credit unions aren't the same as regular banks and mortgage companies and one's history, salary and credit rating have a lot to do with it.
I had other funds available prior to the refinance as well. Something tells me you haven't seen many, if any mortgages in your life anyay. BTW, the caps lock key is on the left and can be your friend if used correctly.
Go back to lurking and laughing to yourself. You have contributed nothing to this thread but a personal insult to me. I'll be a gentleman and just leave it at that.
Bye, bye.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Deadhorse --
The US gold is stored mainly in four locations as follows (troy ounces):
Denver, Colorado -- 44 million
Fort Know -- 147 million
West Point -- 54 million
Federal Reserve Bank of NY - 13 million
A decision to buy precious metals premised on a belief that the US government does not own gold is a very misinformed decision. >>
My decision had very little to nothing to do with whether or not the US owns gold, I am of the belief that you shouldn't trust what the US Government says. particularly with regard to economics.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Deadhorse --
Regarding "While I am well aware of the growing Chinese economy and vast industrial growth, the Chinese government still believes world power comes primarily from military might"
Actually, that is not true. The Chinese are well aware that economic power is the source of world power, and the primary goal of Chinese government policy is economic growth. (A night flight from Hong Kong to Beijing will give you a sense of how remarkably successful this policy has been over the past 20 years.)
They are of course aware of the geo-political implications of military might. But, Chinese leaders have a very good sense of cause and effect, and know very well that they will never be able to project global power unless they continue to pursue a policy aimed at economic growth. >>
Do you think the Chinese intend to buy Tiawan? I think they intend to invade and murder those who oppose a repressive communist government.
I think you are being niave with regards to the Chinese. They are our enemy and are now armed with a generational advance in missle and multi-entry warheads thanks to Bill Clinton selling our tecnology for illegal campaign funds. I suspect hundreds of millions if not billions also went into Swiss accounts in Bill and Hillary's name.
In the long term, I see war with China as the only possible enevitability, hopefully far down the road. A Chinese/Arab axis could well be what leads to the next and perhaps final world war. Not to take this off into world politics but to not address what the Chinese appear to be looking toward is shortsighted if not downright foolish.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
DO NOT BORROW MONEY TO INVEST! PERIOD! GET COMPLETELY OUT OF DEBT, THEN INVEST! PERIOD! Borrowing money on your house at, say, 6%, and then thinking you can make 6+x% is STUPID! If you pay your house off, when something like 9/11 happens, you won't be worrying that someone will take your house from you! Why would you put your and/or your family's shelter at risk? If you want to be a math nerd about it, you need to add x% for RISK to the equation. Get out of debt first, then you will have plenty of cash flow to invest in whatever you so choose! I hope I wasn't unclear.
Check out a Vanguard Roth IRA.
<< <i><< A 6% mortgage is a good deal IF you can invest the money someplace and earn MORE than 6% in return. In this environment, that is a major challenge. >>
DO NOT BORROW MONEY TO INVEST! PERIOD! GET COMPLETELY OUT OF DEBT, THEN INVEST! PERIOD! Borrowing money on your house at, say, 6%, and then thinking you can make 6+x% is STUPID! If you pay your house off, when something like 9/11 happens, you won't be worrying that someone will take your house from you! Why would you put your and/or your family's shelter at risk? If you want to be a math nerd about it, you need to add x% for RISK to the equation. Get out of debt first, then you will have plenty of cash flow to invest in whatever you so choose! I hope I wasn't unclear. >>
That is sort of what I've been saying. Obviously if you take equity out of your house and pay 6% on it, and invest it in something that pays more than 6%, you'd better be darn sure that what you are investing in is safe (will hold it's value). I believe that gold, in the current environment, qualifies. But generally, I'm all for cutting out debt and the middle man (the bank).
What if it was sort of the other way around. Suppose a person already had a 6% $100k mortgage on their $300k house and also had bought $100K worth of precious metals and/or rare coins over the years. Should that person sell all and pay off the house ? I say, not yet. If, however, they had $100k worth of stocks and/or bonds, then I say ABSOLUTELY dump them all and pay off the house.
Check out a Vanguard Roth IRA.
There is an additional Risk also: if I sue you I can take your stash of stocks or Gold! But I cannot take your house or home equity.
Laws vary from state to state, and maybe my point is invalid in your state, but I know for me that home equity is shielded in certain legal ways and therefore, carries less Risk than other securities and assets.
Given the look-back time periods and methods used by courts to determine assets, I think it would be difficult to establish a large, "secret" position that would be invisible to court judgements.
Don't forget there are tax breaks on the mortgage interest as well. I re-financed at 8 years and my salary will cover my total overhead by a factor of more than twice.
I wll also throw extra payments at the mortgage or add more bullion depending on the rates at the time. I thought I made it clear that I have no other dependants, I have already put my children through college and they are doing fine on their own.
I am getting the feeling that I am being put into a position of defending my move. I don't have to do that, it's my money to start with. I wasn't trying to convince anyone else to do this, nor have I tried to influence anyone to do it either.
I don't feel I have risked anything but a small percentage versus a possible large upside.
I almost kept this move a secret because I knew there would be those who would feel the need to lecture me on my foolishness. Then of course there was the idiotic post in all caps, I guess you have to expect that since computers have become so easy to use, even a neanderthal can plug in an AOL disk these days.
However, I feel so strongly about what silver and gold are going to do that I had to put my money where my mouth was and where my posts have been on this subject as well.
I'll make this prediction, in a year from now, if gold is at $500 or more there will still be those who will say it's a bad investment. paper is better , etc. etc.
I say each to his own, I have never criticized anyone else for their investment strategies, even those I disagree with, I have read and tried to learn from them.
For those who do believe in bullion, well, I am here to say I'm not afraid to "go for it" and they needn't think that they are in the wrong just because paper traders tell them that gold and silver are barbaric throwbacks with no real investment value.
I do thank those who have said good luck and wished me well, I hold no grudge against those who feel I am stupid or foolish. I Know I am neither. I do not have a garage full of canned goods and ammunition to last a decade. I believe we are in the first crest of a wave and the bulls are correct about this one. I was buying gold back at $320 and silver at a little over $4.00 awhile ago, I just felt the need to hold alot more as my investments there weren't large enough to produce that once in a lifetime return.
We'll see how it turns out, but I feel better about it now than I thought I would when I was agonizing over doing this for the previous 6 weeks.
I do respect most of your comments and some have been enlightening. If I am right about where this is going I promise not to post a "Nah Nah, I told you so" type of shot at my critics. They will know how badly they screwed up without some jerk reminding them.
This has been a most enlightening threadand probably the longest one I've ever taken an active part in.
Zardoz, haven't heard from you on this. I'm sure you remember our coverstation at the Pasadena show a couple of weeks ago. I was very close to telling you what I as planning on doing back then, there were a couple of times when I had to bite my tongue. I'm sure you would have agreed with my plans though, you thought I was being conservative.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Given the look-back time periods and methods used by courts to determine assets, I think it would be difficult to establish a large, "secret" position that would be invisible to court judgements. >>
I think you might be surpeised about that. You are obviously not privey to pricey divorce battles.
That's really the least of my worries, I have great insurance for 99% of such possibilities and many things are easy to keep from disclosure. I won't go into my secrets there, but it isn't nearly as difficult as you might think.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>I'll make this prediction, in a year from now, if gold is at $500 or more there will still be those who will say it's a bad investment. paper is better , etc. etc. >>
No need to wait really. Gold is very likely to be over $500 a year from now but that
doesn't make it a good investment. It is obviously a great speculation and if you want
to accept the risks there is no reason not to do it.
One really should have started backing out of paper in 1996 and slowly increasing hard
assets since.
Obviously bigger gambles can always pay more.
<< <i>There is an additional Risk also: if I sue you I can take your stash of stocks or Gold! But I cannot take your house or home equity.
Laws vary from state to state, and maybe my point is invalid in your state, but I know for me that home equity is shielded in certain legal ways and therefore, carries less Risk than other securities and assets.
Given the look-back time periods and methods used by courts to determine assets, I think it would be difficult to establish a large, "secret" position that would be invisible to court judgements. >>
If you get sued they cant take your gold if they dont know about it. Thats one advantage to owning gold it is invisable, assuming you keep it at home.
<< <i>
<< <i>I'll make this prediction, in a year from now, if gold is at $500 or more there will still be those who will say it's a bad investment. paper is better , etc. etc. >>
No need to wait really. Gold is very likely to be over $500 a year from now but that
doesn't make it a good investment. >>
Now wait up just one minute here. If/when gold is at $500 or more in a year, then that would mean it would be at a 65% return over 24 months.
How on earth could anyone say with a straight face that that wasn't a good investment?
Are we talking semantics here? What am I missing when it comes to the definition of a good investment? People are quite happy with 8 to 12% when the stock market motors along at it's typical pace and that is a good investment.
But a return of 500 to 800% over that isn't a good investment?
Please explain this to this poor old Texas boy who just isn't up with the East Coast stock market elite types who claim to know all. (No, I am not including you in that group, I was just being a temporary smartazz)
Thanks in advance.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Perhaps to some extent. The point is that it's impossible to predict the future. While gold
is likely a good investment now, using significant portions of ones wealth to buy it is more
like a speculation. No matter how sure one is of the future, it will almost always play out in
unforeseen ways so it becomes necessary to always hedge one's bets. This will limit the
potential return but more importantly will limit the potential loss.
Gold will at some point in the future return to the lousy investment it has long been. There
can be no certainty it will occur at any specific point or won't.
Even thoughI have nearly all my eggs in one basket, it is certainly not for the long, long term. I just see this as the best avenue right now with the potential for runaway profits and a neglible downside.
While I don't have a specific $$ figure in mind for bailing out, I hope my gut feelings tell me when it's time to move away.
I really do think that this bull run is going to go on for at least 2 more years and perhaps 3 to 5. I think Gold will level off but I also think that silver will continue to rise for a time after that.
I intend to hold quite abit more silver than gold for that reason. I consider it an "investment" based on your terminology as I will be divesting myself of all of it in 5 years at the most and I intend to sell before both reach their highs.
Of course, it's knowing when that time is that makes the real difference. By the time the hoard mentality hits, I will be sitting back and smiling at the frenzy. At least that's how I did it in the early 80s snd plan on doing it again.
We'll see, but for now, I'm excited about it.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
"Do you think the Chinese intend to buy Tiawan? I think they intend to invade and murder those who oppose a repressive communist government.
I think you are being niave with regards to the Chinese. "
Actually, I am not naive at all. I have enough historical context, and enough first hand knowledge that I am not naive about the potentiial for conflict. But, your view of the Taiwan situation suggests a rather superficial understanding. China is very serious about wanting Taiwan back. They are and will continue rattling sabers, but they are not stupid enough to use military force when they can achieve the same objective by increasing economic ties and, ultimately using economic pressure. War is a real possibiility, but both sides -- especially the mainland and Taiwanese business people who work together in increasing numbers on a daily basis -- would much rather see gradual economic integration, coupled with political liberalization in China, prevent this from happening.
Here is the most important question anyone must ask when buying any hard asset on credit. Can I pay off the debt I have incurred from my personal earnings without selling my asset, or drastically affecting my lifestyle? If that answer is yes, then GO FOR IT!
I can't comment either way on your decision to refinance your house, but I can say that it is a way to leverage your buying power, and that you do own the equity value, so I see nothing ethically wrong with that position, notwithstanding what Dollardude says about the Christian and ethical standard of staying debt-free. I rent my apartment. But I do feel that your equity value is your own money, and you could sell your house at any time.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22