“So with that you could say, gold is also inflating at 1.7% per year. It's about 2000 tons/year. 120,000 metric tons of gold has been mined over the ages.”
RR , These numbers of current production seem high to me. At 2,000 tons per year that would mean 48 new tons were added from 1980 to the end of 2004. 48 tons is a large part of the total of 120. I wonder if these production numbers include recycling?
At any rate even at 1.7 percent increase in supply, and this being a Worldwide total we would also need to know the total amount of the increase in printed paper money supply Worldwide. This will be a much harder number to come by. We always have a tendency to look at these numbers through the eyes of an American, but how much new currency has Russia pumped out the last 24 years. How much new paper in England, or Japan trying to come out of its deep recessionary period, has been printed in these 24 years? Personally I think the worst is ahead. I don’t think any of the World governments have even begun to print the Money need to meet their up coming debt repayment needs, and year by year for at least the next ten years the World presses will be running at full tilt.
Sliderider, You are correct this can work either way, and what RR and I both see is not just large bouts of inflation coming but Stag-flation where prices of commodities and finished goods increase in price, but wages, rents, and corporate profits do not keep pace.
One last interesting observation here. We are long past the time where American citizens could buy the debt that we continually produce to pay for our overindulgent policies. In the 60’s and early 70’s we allowed the Japanese to move in and sell their cheap products as long as they agreed to buy our debt. Later as they had their own problems to deal with, we made deals with the Arabs, in particular the Saudi’s, then we allowed Korea, and other Eastern nations to come in, and now China. During many of the past decades we were the largest of the debtor Nation but now what happens during the next decade when we have a debtor World. Who will buy the debt of the U.S., England, Japan, Russia, and the East Block group? It is easy to see that we have lost a great deal of our American on shore manufacturing over the last several decades as we have allowed cheap products to come to our shores, this is evident in our continually growing trade deficit. If the Arabs, or the Chinese begin to refuse to take our worthless paper in trade for their hard goods, what products will we have left to trade for oil, clothing etc.? Lucky for us that all this paper is FEDERAL RESERVE, and no longer says “Backed by the good faith and credit of the U.S. government”
<< <i>One last interesting observation here. We are long past the time where American citizens could buy the debt that we continually produce to pay for our overindulgent policies. In the 60’s and early 70’s we allowed the Japanese to move in and sell their cheap products as long as they agreed to buy our debt. Later as they had their own problems to deal with, we made deals with the Arabs, in particular the Saudi’s, then we allowed Korea, and other Eastern nations to come in, and now China. During many of the past decades we were the largest of the debtor Nation but now what happens during the next decade when we have a debtor World. Who will buy the debt of the U.S., England, Japan, Russia, and the East Block group? It is easy to see that we have lost a great deal of our American on shore manufacturing over the last several decades as we have allowed cheap products to come to our shores, this is evident in our continually growing trade deficit. If the Arabs, or the Chinese begin to refuse to take our worthless paper in trade for their hard goods, what products will we have left to trade for oil, clothing etc.? Lucky for us that all this paper is FEDERAL RESERVE, and no longer says “Backed by the good faith and credit of the U.S. government” >>
The problem all started when the Federal Reserve Act was passed. The Federal Reserve is a private organization, not a government agency like most believe it to be. If it was a government agency there would be no national debt. How can you owe a debt to yourself?? The reason gold ownership was made illegal by Roosevelt was that after some 20 years of borrowing money from the Federal Reserve, the United States owed more debt payable in gold than there was gold in the entire world. The bankers at the Fed foreclosed on the debt and have literally owned the country ever since. Think you own the car you drive, the house you live in, or anything else that you think is 'yours'?? Guess again. When we went on Federal Reserve notes and stopped using gold and silver, our ability to actually pay for anything went away. All you can do is transfer debt from one person to another when you pass an FRN. Even if you make a purchase from someone who agrees to take gold or silver, that doesn't eliminate the past transactions involving those items and the gold or silver was likely bought with FRNs as well. We are a nation of tenants just as Jefferson feared we would become if we allowed the bankers too much free reign over the affairs of the government.
Really great thread. members are so educated. THE most important policy we need right now is to reduce government spending and lower taxes. Go ahead call, write, fax, e-mail your state and federal law makers. Demand it from them. A vote for Bush is a vote to lower taxes. Best of luck to all. P.S. I'll be looking to invest in one Gold coin this year.
<< <i>A vote for Bush is a vote to lower taxes. ; >>
Get real. That's like having your credit cards maxed out, and getting a notice in the mail that says you can skip this month's payment, and thinking that your debt has gone down. A vote for Bush is a vote for huge deficits that we will be paying off for many years to come. (Not to mention military adventures that have nothing to do with terrorism, cost billions of dollars and hundreds of lives.)
Once again, we need the Democrats to come in and clean up the Republican messes.
<< <i>Really great thread. members are so educated. THE most important policy we need right now is to reduce government spending and lower taxes. Go ahead call, write, fax, e-mail your state and federal law makers. Demand it from them. A vote for Bush is a vote to lower taxes.
You have 2 choices: right wing socialism, or left wing socialism.
And guess what, they aren't even choices up to you.
If voting could actually make real change then voting would be made illegal.
<< <i>A vote for Bush is a vote to lower taxes. ; >>
Get real. That's like having your credit cards maxed out, and getting a notice in the mail that says you can skip this month's payment, and thinking that your debt has gone down. A vote for Bush is a vote for huge deficits that we will be paying off for many years to come. (Not to mention military adventures that have nothing to do with terrorism, cost billions of dollars and hundreds of lives.)
Once again, we need the Democrats to come in and clean up the Republican messes. >>
yea baby, i am REAL. I was able to purchase more coins these past 4 years, than the 8 years under Clinton. Do you understand? Truth- Democrats won't make you wealthy, Republicans won't make you wealthy, but one of them will enable you to prosper, and be safer.
I better get out there and start picking up all those cans off the ground. The scrap yards should be paying well for them. >>
You laugh but once I was in a taxi traveling on 2nd ave and about 50th street in NYC ( somewhere around there, there's a place called Dustins I used to frequent), and I saw an old woman picking cans out of garbage cans. I felt so bad for her that I jumped out of the cab at a red light ( not a good idea before paying the fare), and offered her a 50 dollar bill.
She looked at me and said, "Thanks sonny boy, but I probably make more than you do, so save your money"
!!!!!!!!!!
Now fast forward to Hurricane Charley which blew down the vast majority of swimming pool enclosures in our area. I saw pick ups and even rented U-haul trucks ( the big ones) picking up "debris" all over the place for a couple of weeks. I wondered how many pounds would fit into those trucks.......and how much it was all worth.
Meanwhile, I believe gold is up again today.
Glad I have a few hundred pieces ( mostly bought between 268 and 380) All generic 20 Libs, raw and was too lazy to dispose of them earlier.
............ready for a bold statement?????????? if we balance the federal budget all the dizzying questions and opinions on gold will melt away. there, i said it.
Someone keeps mentioning aluminum. I used to work at one of the two major soda companies in the US, and we always hedged aluminum. It's historically not extremely volitile, but given that you need a lot of it to can soda, it was important enough to hedge so as to not cause wild swings in the financial results of the company if prices changed dramatically.
Always took candy from strangers Didn't wanna get me no trade Never want to be like papa Working for the boss every night and day --"Happy", by the Rolling Stones (1972)
I'm downtown at the CME and I spoke to some of the big institutional gold futures traders from the wire houses this morning. They told me where gold is going.
I will take the other side of the trade, Laura, with hypothetical money. I do not see a breakout type move for gold here yet. Higher highs and higher lows may be in order in which case I would peg the next low at or around $405--if I were a chartist, that is.
In short, I think we will see $405 before $435. Frankly, that's always the safer bet--getting to a level that you have been to recently rather than one you have not seen in years.
I called a gold coin dealer friend out west yesterday and asked him what he thought was the reason his customers were buying more gold coins now. He told me the biggest reason they are buying his libs and saints is the worry over terrorist threats.
"location, location, location...eye appeal, eye appeal, eye appeal" My website
Always took candy from strangers Didn't wanna get me no trade Never want to be like papa Working for the boss every night and day --"Happy", by the Rolling Stones (1972)
Why not just go to Kitco and open a gold account?? You can deposit your money into the account and not even take delivery. When gold rises again, just sell your account back to them.
You spoke too soon Laurie. The generics were beginning to move when you wrote that, anf now they are really moving. However if we see a retracement in gold, the generics will go right along with it. I think we will not see 405 again this year.
John Maben
Pegasus Coin and Jewelry (Brick and Mortar)
ANA LM, PNG, APMD, FUN, Etc
800-381-2646
From what I can see on the financial news wires, gold is moving up because the dollar is moving down against the euro (which makes it cheaper for Europeans to buy gold). I'd say that rising interest rates will help the dollar against the euro and therefore keep gold prices in check.
However, the latest economist I've read suggested that the Fed will pause after it raises interest rates another .25% on Nov. 10th (its next scheduled meeting), in which case, bonds might rally and therefore depress interest rates and the dollar, which would tend to increase the price of gold.
ready for a bold statement?????????? if we balance the federal budget all the dizzying questions and opinions on gold will melt away. there, i said it.
Not likely at any time in the next 4-8 years as this won't get anyone re-elected. Selling social programs to constituents and special interests is what moves the electorate. Who will be the first senior citizen to step up and vote to have their Soc Sec cut? You can write a long list. To balance our budget we need gold around $1650/oz right now. Or in other words, we'd have to make massive cuts in govt programs across the board to the tune of 30-60%. That's not going to happen. Or raise taxes 30%? That's not going to happen either. No, nothing will change until we our bankrupt and have no choice in the matter. Until then, live as high off the hog as you can because there won't be a 2nd chance for many years. Mr. Early, sell some of those $20's and lock in some profit. Gold will eventually reverse.
I concur with John Maben and Laura. $435 is more likely right now. The commercial interest in gold (gold banks, US govt, and the JPM's and Goldmans) are the ones keeping gold down. They so don't want to see it break over $435 where it's going to cost them billions and billions of dollars from hedges and spoil their paper games. I read an article yesterday where the normal derivatives on commodity markets runs about 3x the physical trading. In gold, the derivative action is 33x the physical trading. Hence = manipulation. Goldman, JPM and the boys will be selling short like crazy to keep the lid down. But I think their goose is cooked. They failed to kill gold on the last push down to just under $380 and its back again stronger than ever...and we aren't even close to the number of long contracts we had back in April. The trend in gold has been decidedly up on average since 2001.
Gold should make a new high, and oil is helping it out too. But as always, it will get hammerred back down too, but it should close above $400 after the smoke clears. Next time around the new low may be $435. We keep seeing higher highs and higher lows on each major move up or down. Until that trend is broken HARD, the trend is UP. The long term trend on the dollar is of course just the opposite, DOWN. Go with the trend until is it broken. All the king's horses and all of Bush's men, can't put the U.S. dollar back together again.
A cautionary note: even in the gold bull market of 1974-1980, gold have many massive ups and downs. As I recall, the first move to $200 after it was allowed to float was met with a crash back to $100. Such volatility should be expected. It's very possible gold could go to $500 and fall back to $330, and it still not be the end of the run. It's anyone's guess in the end.
I think that some of the folks here are still holding out some hope that our debt/inflation problem might still be staved off. This is truly a fantastically optimistic hope. It might be better to hope we discover the worlds largest gold deposit in a salt dome all in one pure huge ball. The U.S. Federal deficit is not this little debt clock http://www.toptips.com/debtclock.html Going up millions per minute, it is 8 to 10 times this amount, it is at least as large as ALL the wealth of the U.S.
Here are a few more stats on the trade and budget deficits for this thread,
For the dollar to remain stable in the face of the still growing current account deficit, enormous foreign capital inflows into the US are a necessity. At the moment foreigners have to invest about six hundred and fifty billion dollars a year in the US just to keep the dollar where it is. To finance the current account deficit the United States needs to attract more than eighty percent of the world’s net export capital. Think about it, eighty percent of net capital being invested in the world has to be invested in the United States, or else the dollar will fall, the US current account deficit could reach one trillion dollars in the next three to four years. So, if the present current account deficit requires eighty percent of the world’s net export capital, then a trillion dollar deficit will require one hundred and twenty-five percent of the current available net export capital, which is obviously impossible.
Baby Boomers are heading for retirement. At the moment there are five workers for each retiree, but as the Baby Boomers retire that ratio will change so that eventually there will be only one worker for each retiree. Retirees need pensions and health care and the government will ultimately have to step in to cover these costs. That means a growing budget deficit, and that’s without considering an expansion of the War on Terrorism.
On the issue of central banks, Asian central banks collectively hold almost two trillion dollars in foreign exchange reserves. Most of that is held in US dollars. Only about 1.3% of it is held in gold (1,930 tonnes). If gold should be used to diversify these reserve portfolios if only because there are so few alternatives to the dollar as a reserve asset. If both China and Japan were to adopt the fifteen percent rule of the European Central Bank they would have to buy 17,000 tonnes of gold. To put this in perspective, Europe collectively owns about 12,200 tonnes of gold and the United States has 8,410 tonnes of gold.
So here is the question I have asked before, HOW long will these other countries continue to buy our worthless paper and what happens when they STOP. The trade deficit alone is getting very close to sucking the well dry.
Goldsaint, you better be careful about tossing facts around here, that might get you in trouble
We got ourselves here by inflating and allowing stupidly easy credit following the collapse of the Nasdaq and after 9-11. Rather than take our lumps in a normal recessionary business environment, the FED decided to push the debt game further along. The net effect will probably be another 4 terms for Bush, but he11 to pay for all of us for allowing it to happen. Bush will walk away rich as will all his cronies. The American public, and those yet born, will be paying for this SUV/mortgage "party-extension" for decades to come.
<< I think that some of the folks here are still holding out some hope that our debt/inflation problem might still be staved off. This is truly a fantastically optimistic hope. It might be better to hope we discover the worlds largest gold deposit in a salt dome all in one pure huge ball. The U.S. Federal deficit is not this little debt clock http://www.toptips.com/debtclock.html. Going up millions per minute, it is 8 to 10 times this amount, it is at least as large as ALL the wealth of the U.S.
Here are a few more stats on the trade and budget deficits for this thread,
For the dollar to remain stable in the face of the still growing current account deficit, enormous foreign capital inflows into the US are a necessity. At the moment foreigners have to invest about six hundred and fifty billion dollars a year in the US just to keep the dollar where it is. To finance the current account deficit the United States needs to attract more than eighty percent of the world’s net export capital. Think about it, eighty percent of net capital being invested in the world has to be invested in the United States, or else the dollar will fall, the US current account deficit could reach one trillion dollars in the next three to four years. So, if the present current account deficit requires eighty percent of the world’s net export capital, then a trillion dollar deficit will require one hundred and twenty-five percent of the current available net export capital, which is obviously impossible.
Baby Boomers are heading for retirement. At the moment there are five workers for each retiree, but as the Baby Boomers retire that ratio will change so that eventually there will be only one worker for each retiree. Retirees need pensions and health care and the government will ultimately have to step in to cover these costs. That means a growing budget deficit, and that’s without considering an expansion of the War on Terrorism.
On the issue of central banks, Asian central banks collectively hold almost two trillion dollars in foreign exchange reserves. Most of that is held in US dollars. Only about 1.3% of it is held in gold (1,930 tonnes). If gold should be used to diversify these reserve portfolios if only because there are so few alternatives to the dollar as a reserve asset. If both China and Japan were to adopt the fifteen percent rule of the European Central Bank they would have to buy 17,000 tonnes of gold. To put this in perspective, Europe collectively owns about 12,200 tonnes of gold and the United States has 8,410 tonnes of gold.
So here is the question I have asked before, HOW long will these other countries continue to buy our worthless paper and what happens when they STOP. The trade deficit alone is getting very close to sucking the well dry. >>
Hello my fellow pro/con gold friends. I saw this, and felt like I should respond. To be honest with you, I'm not sure what all the fuss about gold is. This topic comes up again and again here, and everyone here knows I'm against it, and is probably tired of reading my same old posts. Economic "experts" have been predicting an economic collapse for probably the last 50 years. It hasn't happened yet. There are even several books out there predicting an economic collapse. Furthermore, I have read some of the referenced articles about the debt problem, and how some billionaires in the U.S. and other countries are buying gold as a means of protecting their wealth.
I have tried to have an open mind in these discussions, and have read several of the posts and the references. I just don't see any real purpose for gold anymore. All of the arguments that I quoted above are based on these assumptions, which I do not think are correct:
1. The trade and budget deficits will make U.S. currency worthless, and will make gold the means of preserving wealth and value. Do we have trade deficit and national debt problems? Absolutely. Is gold the answer? No. The U.S., from the government's perspective, realizes that gold is not that important. Thus, who cares if Europe, etc. has more gold reserves? What real difference does it make?
2. The "baby boomers" are going to retire, causing a huge problem in social security, etc. I'm sorry, but this is just plain stupid. I've heard this many times before, and it makes no sense. There are plenty of new workers to take their place, as has happened since our country was founded 228 years ago. What makes anyone think everything (pensions, social security, etc.) will come crashing down just because a few "baby boomers" retire? With the world's overpopulation (including U.S., which is not only keeping up with population, but increasing every year for 228 years straight), the last thing we have to worry about is NOT having enough human bodies to take over the economic engines. If you save just $100 per month (pizza and cable money) in a good growth stock mutual fund from age 25 to age 70, you will easily be a millionaire at retirement. So, all of this is a mute point anyway when you have a huge nest age to take care of you and your family (a huge nest egg gives you options, and, furthermore, when you are debt-free including the house, you don't worry as much when 9/11 happens).
3. Gold is an accepted medium of exchange. This was true in ancient civilizations, but I don't think is true anymore. We live in an electronic age, where transactions are mostly done with computers. First of all, when an economy fails, people trade goods and services for other goods and services. They need basic things like food, shelter, and clothing. Gold is rarely used, and does not keep you warm or fill your stomach. Historical examples include Russia (after the Soviet Union collapsed and the "cold war" ended) and Iraq (after Desert Storm, Iraqi Freedom, etc.). Not only is it not used as an accepted form of exchange, but it has a horrible track record as an investment (not even keeping up with the rate of inflation over the past 50 years).
Okay, I'm sure this topic will be discussed to death, and many folks will disagree with me, so go for it.
DD, once and for all would you please stop saying gold has a poor 50 year investment record! It doesn't. It went from $20/oz in 1930 to $895/0z. in 1980. I consider that a great track record. Most companies that were around in 1930 went out of business by 1980. And those companies that failed are removed from the DOW so as not to skew the numbers too far downward.
I can pick a very bad 35 years for stocks too. How about from the peak of 1929 to the top in 1966? Stocks gained nothing over this period based on the DOW average, and that's after tossing out the losers along the way. Any 20-50 year period in any medium will not be always be a winnner, esp. stocks. The next 20 years for stocks will be a down cycle. In 2020 you can tell us again how stocks bankrupted you because they didn't follow the rules of 1982-2004. We'll welcome to the business world of spin and deception my friend.
Your not serious about there being enough people down the road to fund mine and your retirement? Go ask Nick Smith (R) from Michigan (or is it WI?). Every year, he helps to initate a soc security funding bill to get some money in the bank to start growing to fund SS for our retirements. He did a great bit on CNN last month showing SS going bust in the 2012-2017 era. The inflows don't cover the outflows. It's simple math. He gets it, Bob Rubin gets, a lot of people get it. The birth rate following WW2 has not been duplicated since. Families of 4-8 were common. We will never have those demographics again. But unfortunately as we boomers retire, there aren't enough gen-xers and the like to cover our retirements....not at the current entitlement rates. European countries like Germany, France, and Italy already have this problem. Too many old people to take care of. They have solved it for now with SS tax rates of 30-40%. We are still only at a 14-15% SS tax rate. It will have to go higher to fund the account. The only other option is to cut or extend out entitlements to age 70 for example.
Please write Rep Nick Smith (R) and ask him for smoe information you can read up on. It will make things clearer to you. Since Mr. Smith is a republican I figured that would have more weight than if I chose a libby dem And Mr. Smith has also stated that he brings up legislation each year to properly fund SS for the future, and each year, his fellow congressman shoot it down. He's not deterred though.
SS is a real problem as is medicare funding down the road. Equities or burying one's head in the sand won't solve the problem for us in the next decade. We either have to cut or tax, no other option. I vote for cutting most govt programs 10% a year until we reign this thing in. If the govt ends up at 1/2 its current size it will be a good thing.
Gee, TDN, that scares me too! 4 more terms - yikes! Maybe this is a forshadowing of more Bush's in the white house? (Jeb, Jenna, Barbara, who else is out there?). Damn, Jeb in 2008-2016, that would about fully bankrupt the country. There'd be nothing left.
DD, I would like you to know that I am only directing this to you since you are the brave one here taking the other side. I am sure there are many here in your camp that are just not posting. To clear a few of these items up that you have posted, let me offer this, which I hope will help. True believers in buying Gold, do so to protect their other assets will never sell their Gold for dollars until the end of the Game. It is not an investment. It is a way to store value against other commodities that are being artificially created buy entities trying to meet the responsibilities of their economies. You are absolutely correct in that you can’t eat, wear, or drive, Gold. On the other hand you cannot eat, wear, or drive a stock certificate, or a Federal Reserve note. All paper assets are commodities also that are worthless on their face to Humans until such time that they are converted into Food, shelter, transportation etc. Thousands of years ago people picked Gold as an exchange because politicians could not make all they wanted to fight wars, and pay people off. Those days are over. There is no possible way to go back to World wide Gold coins that are exchanged for goods and services. There is just not enough Gold and there are to many People. What I think you are missing here is the END of the printing paper money game. Through out history as governments printed too much paper to cover their obligations the money systems collapsed and new better money was issued. The problem with this is the same amount of pieces of paper are not issued. So at the end of a World wide printing spree all the countries that went crazy handing out Trillions of dollars or other currencies to people, that did not work for it, must call in all the old Trillions and issues the “New Adjusted Money” Someday our politicians will tell us, we made some terrible mistakes giving away, and printing all this paper, and now we must cancel all these programs come up with balanced budgets. Everyone will have to turn over all their green Federal Reserve pieces of paper for the new Blue Treasury pieces of paper, but the bad news here is that you get one new Blue bill for every ten old bills. There are only two absolutes in the way this has always worked through out history. One is that the politicians always find someone else to blame, and two is that this creates chaos among those getting money in the mail. On the other side of this, over the last several hundred years people have figured out that different assets react different to this situation. Gold, Silver, paid for real estate, coin collections, art, and many other things DO NOT need to be exchanged at the lesser ten to one exchange. These assets are a better store of value in times where governments get out of control with their printing presses. If the U.S. government printed an additional 20% more paper money between now and Xmas and Gold soared to $1,500 an ounce, would Gold investors sell their Gold? NO
RR, In 1992 I was Texas Republican State campaign chairman for Pat Buchanan. During that race Buchanan and Perot begged the voters to send them to Washington to start working on the coming Train Wreck. They wanted to cut the size of Governments by half, cut out many of the programs existing at that time, take Nafta off the table. Obviously this would have been a tough job even 14 years ago. Very few cared, most just want more money printed, and the Money Train to keep bring the checks. There are a few personality differences in Bush and Kerry but in the end they are stuck with the game that was produced decades before either will be President in 2005, and little they do will change the outcome. At this point in time the only thing that can be done is on an individual basis. There will be a survival of the financially fit. Those that learn, and do the work, will protect their assets and families, those that don’t will suffer, but is this not how things always work?
The real problem with this thread is that many seem to assume that the currency is or will be worthless tripe. While this may ultimately be the outcome for all curr- ency the process may take decades or centuries. Even gold standards have eroded and gold coins have been debased. It is the action of government which acts as an insidious tax on money itself and is paid by all who have more of it than they need.
If the currency were to collapse so too would the economy and gold would have no value in a place with no food and nothing to buy. Yes, gold is a commodity now and will increase in times of inflation. Since this train wreck coming is likely to manifest it- self as inflation it makes gold an attractive investment and is the reason it's increasing in value along with other currencies. There are no sure things though and there's no certainty that much of the damage to the dollar can be forestalled, delayed, or avoided altogether. There's no clear indication how severe this damage will be or even whether gold will provide adequate protection in an era when it is no longer used as a basis for money. If there's a halving of the value of money, does it necessarily follow that the best metal for use as jewelry will double?
There's plenty of gold to back currency, but there is no longer much support to do it. Gold occasionally caused financial panics in the past and this is no longer tolerable. A currency which can be regulated is needed in the modern age and politicians who think what's good for the country first and reelection second. Ah, but there's the rub. With the electorate getting their monthly message they keep voting for the masseur.
We are already beginning to see the endgame of the financial devastation of free trade in upstate New York.
For example in Binghampton, NY homes that formerly sold for over $150,000 and $200,000 are going begging at under $100,000 and are not selling at all.
Why? No jobs. The job loss has devastated the local economy. There are only so many WalMart jobs to go around and unfortunately do not pay enough to maintain a fully paid for home even when holding down two jobs for each parent. So the home has to go on the market since the real estate taxes are just too high to avoid foreclosure.
The coming wreck train of state and county government budgets and solvency can be seen in the bloated budgets for medicaid. Too many uninsured people are now resorting to medicaid since there is no longer any health insurance. etc. You have no idea how the upstate New York region is rapidly becoming the new Appalachia of the United States!
As far as gold. The countries selling us oil have been making louder and louder noises about not wanting to sell their oil to us for US dollars. They want something else!!!!!!!!!!! They have mentioned GOLD! They have already strongly hinted in private circles that they want a different currency that is backed by gold since they fear that the US dollar will continue to depreciate.
My friends. The endgame is not the destruction of the United States Dollar. It will be the financial humiliation of the United States, in which we will be relegated to be a second rate economic power with the US dollar no longer having the purchasing power we once enjoyed. Just look that the history of Great Britian in the first decade of the 20th century in which they lost the worlds top stock exchange (The London Exchange) to the United States (the New York Stock Exchange).
Even the weak Canadian Dollar is approaching the unthinkable level of PARITY with the US dollar once again!!!
One partial answer in the US, is a rapid ascent of retirement age to age 72 before full social security can be collected. early and partial social security can still begin at age 65 on its way to 66 and 67.
Wow, real estate lost that much up there? But the average walking eggplant thinks it can't happen and you're showing not only can it happen, but it has happened.
Thanks for the informative post. You would think it would be a wake up call, but probably only to the people in Upstate.
Not enough workers in the U.S. to support the future retiring Baby Boomers?
Not a problem! Easy solution--- Legalize all of the illegal aliens currently in our country and put them on the tax rolls. Then we will have 7 or 8 workers per retiree!
JUST KIDDING of course. Funding of future retirement benefits, our budget and trade deficits, and apparent financial path our country is stuck on are very serious and do not have any 'easy' answers'.
I have always been a believer in the wisdom of holding some material assets such as gold and silver. I am not a financial guru, nor have an extensive knowledge of world history. However, it seems to me that throughout history, most powers or empires have had a crisis of monetary policy..... even in ancient times, didn't they 'debase' some of their coinage? What makes us think that the U.S. is exempt from this.... are we just 'smarter', or are we just in 'different times' so that sort of thing won't happen again?
Speaking of being 'in different times'..... one of my co-workers, a younger fellow, was fervently insistent in 1999 that the bull stock market would never fall, since we were in 'different times' and the demand was just too much and technology had just improved so much. He bragged about how he was putting 100% of his 401k money into small/micro stocks; he would argue for hours about how this was a cannot lose proposition. I haven't heard much from him recently about his investments....... One good thing about it, he does have quite a bit of time until he will be retirement age.
The point.... we may strongly believe that something will never happen. But history shows that the unexpected..... does happen. The ones that plan ahead, and diversify, tend to come out better than those who take one approach, or just ignore it all thinking that the status quo will continue.
Will putting some assets into gold and silver be a waste? Perhaps..... but then I spend quite a bit on insurance every year that has no return either.
<< <i>For example in Binghampton, NY homes that formerly sold for over $150,000 and $200,000 are going begging at under $100,000 and are not selling at all. >>
Everyone already knew that you can't go home again even when it's in Walking Distance.
There will always be a cyclical nature to the economy and all the affairs of nature. To some extent the withering away and renewal of various segments and areas is actually benefi- cial.
Those who believe there is some garauntee or insurance may be in for a rude awakening. Diversification and planning ahead are and will remain everyones' best defense against any sort of storm which may appear as well as for those which don't.
House Values aren't worth much till their sold except to cost more in taxs and if you do sell in most cases you go right back into the market for a higher priced home so it's kind of a losing game and if the market falls you stuck in the house housing should be what your happy with not a investment in most cases don't get me wrong a good home is worth allot but at some point you need to invest in something else to be on the safe side
Let me respond to Roadrunner's comments. I'll start by saying that I am well informed when it comes to news, politics, and financial matters. I read The Washington Post every day, watch CBS News every day, and read MSN.com on the internet. Yes, these are liberal biased, but I also listen to and read some conservative sources (Fox News, Rush Limbaugh, etc.) I nearly always disagree with, just to make sure I am being unbiased. If other people with differing opinions here attack me by saying I am uninformed must mean I am right on track. In fact, I probably spend way too much time keeping up with the news and other things.
Most financial experts I have listened to on the radio and whose books I've read and whose web sites I've surfed (Dave Ramsey, Suze Orman, John Bogle, to name a few) agree that the way to build wealth is to slowly save money over time by investing every month into good growth stock mutual funds and paid-for real estate. If you let dollar-cost averaging and the compounding effect do their jobs, it is very easy to build wealth. If you try to get rich quick through things like lottery tickets, gambling, precious metals, highly-leveraged real estate, junk bonds, put/call options on stocks, individual stocks, currency trading, etc., you will likely lose your money. You just can't get rich quick. There is no other way to say this. You have to slow-cook your investments over time to build wealth. Microwaving your investments will likely result in them being destroyed.
As far as the stock market results are concerned, it is indeed a fact that the stock market, as a whole, has averaged around 12% per year since its inception. It is also a fact that gold has averaged around 3% per year over the last 50 years. This is not speculation, it is history and simple math. In my opinion, you run a much greater risk of not building wealth and keeping up with inflation than losing value due to currency fluctuations (due to national debt, trade deficit, etc.). In other words, with gold, you run the risk of not building wealth (due to the compound interest effect) and losing value because of inflation. There is no reason to believe this trend will not continue in the future. People have been predicting an economic meltdown for many years, and there are a few books out there (yes, I have read some of them) predicting this. To be honest with everyone out there in this forum, I have been hearing this for years and years, and I'm getting sick of listening to it.
I have met several self-made millionaires. Here is how they got there: (1) good growth stock mutual funds, (2) paid-for real estate, and/or (3) starting their own business. No one I've talked to got rich off of precious metals. In fact, those I have spoken to about precious metals have ALL said they were sorry they did it because they LOST money (doesn't matter if its actual metal, mining companies, or whatever). I am one of those folks who lost money on this, but, fortunately, I quit and cut my losses.
As far as the social security system is concerned, I don't even assume I will get ANYTHING from this broken system when I retire, so I really don't care about the baby-boom argument. It is irrelevant, IMO. Pensions are something used many years ago (not usually done today) that YOU YOURSELF invested in for YOURSELF. This has nothing to do with baby-boomers. Pensions have now been replaced with IRAs and 401k's/403b's to give YOURSELF more control over your OWN retirement.
I am not for taking chances like starting a business or investing in a property. You just need to be wise in how you invest your money because it is YOUR life and YOUR retirement.
We were wasting brain cells on this a year ago. The only thing important in the gold and silver debate is where the price stands right now. It did not go down, as these same folks who talk against it said it would, if you look at the long term track from a year ago. And where it is today is exactly opposite from where they said it would go, which was down, way down. Never fight a steady or rising market. It does not matter one whit why it is going up, only that it is staying steady or going up. Conversely, it does not matter why it is going down, if it is in a long term down trend. But the facts in this case are that Gold and Silver are in a long term uptrend. Facts are facts. Get over it.
In an insane society, a sane person will appear to be insane.
The term expert implies someone that knows what will happen in a given space of time. Things are so confusing now, and the changes coming so drastic, there are no experts.
In addition to that every single person on the planet has different goals, assets, liabiltites, responsibilities, are different ages etc. The variables for each person are just to great for anyone but ones self to be an expert on any persons financial planning.
All of that being said there are some basic things that people in the U.S. might look and take the appropriate action.
Some of these basic rules may not make one rich but on the other hand they will not hurt to bad if things turn out different.
First, be logical contrarian, and stay very diversified. A logical contrarian looks at a particular stock everyone is buying, (Goggle) and asks why, and puts his money in to paying off his house.
Second, live below your means and eliminate debt. This would not appear to be a wise thing to do if you believe you can pay off a big mortgage with cheap paper later, but in the case of stagflation prices will rise and incomes will rise much less, so will you have lots of cheap paper?
Third, study your personal situation and stay short term. Don’t buy 5 year C.D.’s when the interest rates get to 4% they most likely will go to double that.
Forth, if possible find a safe place to live, a gated retirement area, a small town, a more rural protected area. Most of the folks that will become desperate if they stop getting checks in the mail live in big cities.
Fifth, my personal opinion is that this coming crises looks like back to the past, simpler times, less greed, slower moving prices, lower standards of living. So become a smart buyer, think like your Grandparents did. Do I really need this, could my money be better-spent buying assets or paying down debt?
ARCO said: Lets talk GOLD! Is gold a better hedge than real estate? I would like the gold "experts" opinions.
I bought a house in San Diego 15 yr ago. It has more than tripled in price.
At this point I'd say yes, gold is a better hedge. It has only appreciated 63% since it's last rock bottom at around $260/0z. Housing as a rule has doubled, and in your case tripled (300%). Housing is coming near the end of its cycle. It is far less liquid than gold. Gold has been in a strong overall up trend for 3 years. I get very antsy when something triples in such a short period. And the only reason that has happened is because the FED liquified the economy to allow everyone to continue to inflate housing values.
Most financial experts I have listened to on the radio and whose books I've read and whose web sites I've surfed (Dave Ramsey, Suze Orman, John Bogle, to name a few) agree that the way to build wealth is to slowly save money over time by investing every month into good growth stock mutual funds and paid-for real estate. If you let dollar-cost averaging and the compounding effect do their jobs, it is very easy to build wealth.
Let's not forget that this game that has helped stocks over the past 70 years has been brought to us via inflation, constant money supply increases (asset bubbling) and speculation. You can "say" that stocks as a rule average 12% per year but that's a fantasy, and was probably only achieved by a very select group of investors over the years. Similar to the 13% gains that were achieved by Pittman or other luminaries who bought in the 1940's and 1950's. That 12% annual stock gain was based on an environment based on fiat currency inflation with the backing of a growing industrial giant. Those conditions are no longer in effect, and certainly won't be re-established in the foreseeable future. 12% per year comes out to be a doubling of your $$ every 6 years. This means that since 1930 a single dollar would multiply to over $2000 by 2002. It's just not believable. Show me all the graphs and charts you like....but they all have their assumptions and loop-holes. Much of that 12% per year has been gained since the 1960's as we became the great society (over the past 35 years). The toys we played with in the 1960's, if kept intact, are all worth small fortunes today. This is all asset bubbling. It has also lead to the stock market growing from 300 to 10,000. The "psuedo-growth" of the last 30 years was from asset bubbling. Stocks are in that same group. Lots of printed cash, chasing few tangible assets or worthwhile companies. One cannot expect the past 35 years to repeat itself again. Our nation went through that massive growth stage once and that's all there is for now. China is next in line. The "slow-cooking" of one's investment over time was brought to you by the FED and asset bubbles....35 years of them....plus the growing of our economy into a superpower. Actually, you can pinpoint the orig start date of the asset bubble society to 1913 and the creation of the Federal Reserve System.
There is no reason to believe this trend will not continue in the future. People have been predicting an economic meltdown for many years, and there are a few books out there (yes, I have read some of them) predicting this. To be honest with everyone out there in this forum, I have been hearing this for years and years, and I'm getting sick of listening to it.
There is every reason to believe the trend will not continue. 12% per year on average, forever? Get real. The next 10-15 years will be a downer for stocks as a rule. The 20 years following should be excellent. But since I'll be long gone by then, I think I'll stick to what is going to work for the next 15 years first. I do not consider any of the names on your panel (Suze Orman, come on) as hard asset, tangible experts by any means. These guys are financial planners and as a rule generalists. How many people were burned by CFP's 3 years ago as stocks sank? I'm sure what Suze doesn't know about currency trading, gold specs, deriviatives, etc, could fill a book. Talk to Jim Sinclair or Harry Schultz, both have gotten rich off precious metals. Jim Sinclair is always happy to correspond with interested parties. For what it's worth, most of the really bullish gold bugs from 1980 left the gold market for 2 decades as the gold carry game and a strong bond foretold a long cold winter for gold. You were right to quit and cut your losses as the gold game did not reverse until 2001. That's 21 years of strong equities and manipulated PM's. Long enough that most everyone believes gold is dead and of no value....exactly what the paper printers want you to believe.
As far as the social security system is concerned, I don't even assume I will get ANYTHING from this broken system when I retire, so I really don't care about the baby-boom argument.
Me neither. I expect nothing also. We're on our own from here. Pension funds will go insolvent too so don't count on those either. 401K's will turn out to be a sore spot over the next 10 years as all the easy money has already been taken out by the traders. The boomers will be holding much devalued 401k's in the next 10 years unless they shift to reverse stock funds, or gas, oil, real estate, and PM stocks. Long term growth funds will get hammered. Housing is ripe for a nice down cycle. It was just another asset area inflated by too many new dollars chasing whatever looked good. REal wealth or growth was not created....that comes from growing quality jobs, manufacturing, and selling products & services...not speculating on our homes and stock funds.
Eagle7, you're point is well taken. Gold has not only been on an uptrend for a year, but actually 3 years. Go back to 2001, the trend is decidedly up. Higher highs and higher lows, everytime. The trend is upwards. Until that is broken, you can't disparage gold in relation to the US dollar. Gold stocks are up 300% on average in this time period but Wallstreet will not mention it. Gold is up over 60% but that is never focused on either. You don't have to get rich on it, but just protect one's assets until the stock regression is fully complete. And that could be 1 year or 5 years or 10 years from now. The stock down cycle from 1966 to 1982 lasted 16 years. If those were one's retirement years, you took it in the shorts.
Wallstreeters are counting on all of us to hold for the long term from here, and continue getting that "12% per year" that is always just around the next corner. They couldn't make a living without us. Forget the 12%, a solid 3-5% would look pretty darn good for the next 3 years....though with inflation at 3-5%, you are just breaking even.
Comments
It's about 2000 tons/year.
120,000 metric tons of gold has been mined over the ages.”
RR , These numbers of current production seem high to me. At 2,000 tons per year that would mean 48 new tons were added from 1980 to the end of 2004. 48 tons is a large part of the total of 120. I wonder if these production numbers include recycling?
At any rate even at 1.7 percent increase in supply, and this being a Worldwide total we would also need to know the total amount of the increase in printed paper money supply Worldwide. This will be a much harder number to come by. We always have a tendency to look at these numbers through the eyes of an American, but how much new currency has Russia pumped out the last 24 years. How much new paper in England, or Japan trying to come out of its deep recessionary period, has been printed in these 24 years?
Personally I think the worst is ahead. I don’t think any of the World governments have even begun to print the Money need to meet their up coming debt repayment needs, and year by year for at least the next ten years the World presses will be running at full tilt.
Sliderider,
You are correct this can work either way, and what RR and I both see is not just large bouts of inflation coming but Stag-flation where prices of commodities and finished goods increase in price, but wages, rents, and corporate profits do not keep pace.
Lucky for us that all this paper is FEDERAL RESERVE, and no longer says “Backed by the good faith and credit of the U.S. government”
<< <i>One last interesting observation here. We are long past the time where American citizens could buy the debt that we continually produce to pay for our overindulgent policies. In the 60’s and early 70’s we allowed the Japanese to move in and sell their cheap products as long as they agreed to buy our debt. Later as they had their own problems to deal with, we made deals with the Arabs, in particular the Saudi’s, then we allowed Korea, and other Eastern nations to come in, and now China. During many of the past decades we were the largest of the debtor Nation but now what happens during the next decade when we have a debtor World. Who will buy the debt of the U.S., England, Japan, Russia, and the East Block group? It is easy to see that we have lost a great deal of our American on shore manufacturing over the last several decades as we have allowed cheap products to come to our shores, this is evident in our continually growing trade deficit. If the Arabs, or the Chinese begin to refuse to take our worthless paper in trade for their hard goods, what products will we have left to trade for oil, clothing etc.?
Lucky for us that all this paper is FEDERAL RESERVE, and no longer says “Backed by the good faith and credit of the U.S. government” >>
The problem all started when the Federal Reserve Act was passed. The Federal Reserve is a private organization, not a government agency like most believe it to be. If it was a government agency there would be no national debt. How can you owe a debt to yourself?? The reason gold ownership was made illegal by Roosevelt was that after some 20 years of borrowing money from the Federal Reserve, the United States owed more debt payable in gold than there was gold in the entire world. The bankers at the Fed foreclosed on the debt and have literally owned the country ever since. Think you own the car you drive, the house you live in, or anything else that you think is 'yours'?? Guess again. When we went on Federal Reserve notes and stopped using gold and silver, our ability to actually pay for anything went away. All you can do is transfer debt from one person to another when you pass an FRN. Even if you make a purchase from someone who agrees to take gold or silver, that doesn't eliminate the past transactions involving those items and the gold or silver was likely bought with FRNs as well. We are a nation of tenants just as Jefferson feared we would become if we allowed the bankers too much free reign over the affairs of the government.
The thing to remember is:
Gold was 33 dollars an ounce 40 years back. Now it is $ 413.....
It is not 40, not 50 but $ 413.
With gold so much in abundance as some people say the cost / ounce should have reduced, isn't it.
<< <i>A vote for Bush is a vote to lower taxes. ; >>
Get real. That's like having your credit cards maxed out, and getting a notice in the mail that says you can skip this month's payment, and thinking that your debt has gone down. A vote for Bush is a vote for huge deficits that we will be paying off for many years to come. (Not to mention military adventures that have nothing to do with terrorism, cost billions of dollars and hundreds of lives.)
Once again, we need the Democrats to come in and clean up the Republican messes.
<< <i>Really great thread. members are so educated. THE most important policy we need right now is to reduce government spending and lower taxes. Go ahead call, write, fax, e-mail your state and federal law makers. Demand it from them. A vote for Bush is a vote to lower taxes.
You have 2 choices: right wing socialism, or left wing socialism.
And guess what, they aren't even choices up to you.
If voting could actually make real change then voting would be made illegal.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>
<< <i>A vote for Bush is a vote to lower taxes. ; >>
Get real. That's like having your credit cards maxed out, and getting a notice in the mail that says you can skip this month's payment, and thinking that your debt has gone down. A vote for Bush is a vote for huge deficits that we will be paying off for many years to come. (Not to mention military adventures that have nothing to do with terrorism, cost billions of dollars and hundreds of lives.)
Once again, we need the Democrats to come in and clean up the Republican messes. >>
yea baby, i am REAL. I was able to purchase more coins these past 4 years, than the 8 years under Clinton. Do you understand? Truth- Democrats won't make you wealthy, Republicans won't make you wealthy, but one of them will enable you to prosper, and be safer.
<< <i>Aluminum is up to about 91c per pound. >>
I better get out there and start picking up all those cans off the ground. The scrap yards should be paying well for them.
<< <i>
<< <i>Aluminum is up to about 91c per pound. >>
I better get out there and start picking up all those cans off the ground. The scrap yards should be paying well for them. >>
You laugh but once I was in a taxi traveling on 2nd ave and about 50th street in NYC ( somewhere around there, there's a place called Dustins I used to frequent), and I saw an old woman picking cans out of garbage cans. I felt so bad for her that I jumped out of the cab at a red light ( not a good idea before paying the fare), and offered her a 50 dollar bill.
She looked at me and said, "Thanks sonny boy, but I probably make more than you do, so save your money"
!!!!!!!!!!
Now fast forward to Hurricane Charley which blew down the vast majority of swimming pool enclosures in our area. I saw pick ups and even rented U-haul trucks ( the big ones) picking up "debris" all over the place for a couple of weeks. I wondered how many pounds would fit into those trucks.......and how much it was all worth.
Meanwhile, I believe gold is up again today.
Glad I have a few hundred pieces ( mostly bought between 268 and 380) All generic 20 Libs, raw and was too lazy to dispose of them earlier.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
You are correct, I will have to change the title of the thread, again.
Gold and Silver are going higher in the future and so are all commodities................
No matter whom you vote for.
Goldbugs will get a double bonus by voting for Bush.... with his tax cuts.
al h.
<< <i>............ready for a bold statement?????????? if we balance the federal budget
al h.
If took a crap and fell overboard!
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
$435 or $405?
In short, I think we will see $405 before $435. Frankly, that's always the safer bet--getting to a level that you have been to recently rather than one you have not seen in years.
what he thought was the reason his customers were buying more
gold coins now. He told me the biggest reason they are buying his
libs and saints is the worry over terrorist threats.
My website
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>Gold is not going to stop terrorist threats...but bullets will!!!!! >>
You need to train entire families in bazooka and kalashnikovs to stop the terrorists. One smith and wesson
pistol isn't going to stop them.
John Maben
Pegasus Coin and Jewelry (Brick and Mortar)
ANA LM, PNG, APMD, FUN, Etc
800-381-2646
John Maben
Pegasus Coin and Jewelry (Brick and Mortar)
ANA LM, PNG, APMD, FUN, Etc
800-381-2646
Experience the World through Numismatics...it's more than you can imagine.
However, the latest economist I've read suggested that the Fed will pause after it raises interest rates another .25% on Nov. 10th (its next scheduled meeting), in which case, bonds might rally and therefore depress interest rates and the dollar, which would tend to increase the price of gold.
Check out the Southern Gold Society
Not likely at any time in the next 4-8 years as this won't get anyone re-elected. Selling social programs to constituents and special interests is what moves the electorate. Who will be the first senior citizen to step up and vote to have their Soc Sec cut? You can write a long list. To balance our budget we need gold around $1650/oz right now. Or in other words, we'd have to make massive cuts in govt programs across the board to the tune of 30-60%. That's not going to happen. Or raise taxes 30%? That's not going to happen either. No, nothing will change until we our bankrupt and have no choice in the matter. Until then, live as high off the hog as you can because there won't be a 2nd chance for many years. Mr. Early, sell some of those $20's and lock in some profit. Gold will eventually reverse.
I concur with John Maben and Laura. $435 is more likely right now.
The commercial interest in gold (gold banks, US govt, and the JPM's and Goldmans) are the ones keeping gold down. They so don't want to see it break over $435 where it's going to cost them billions and billions of dollars from hedges and spoil their paper games. I read an article yesterday where the normal derivatives on commodity markets runs about 3x the physical trading. In gold, the derivative action is 33x the physical trading. Hence = manipulation. Goldman, JPM and the boys will be selling short like crazy to keep the lid down. But I think their goose is cooked. They failed to kill gold on the last push down to just under $380 and its back again stronger than ever...and we aren't even close to the number of long contracts we had back in April. The trend in gold has been decidedly up on average since 2001.
Gold should make a new high, and oil is helping it out too. But as always, it will get hammerred back down too, but it should close above $400 after the smoke clears. Next time around the new low may be $435. We keep seeing higher highs and higher lows on each major move up or down. Until that trend is broken HARD, the trend is UP. The long term trend on the dollar is of course just the opposite, DOWN. Go with the trend until is it broken. All the king's horses and all of Bush's men, can't put the U.S. dollar back together again.
A cautionary note: even in the gold bull market of 1974-1980, gold have many massive ups and downs. As I recall, the first move to $200 after it was allowed to float was met with a crash back to $100. Such volatility should be expected. It's very possible gold could go to $500 and fall back to $330, and it still not be the end of the run. It's anyone's guess in the end.
roadrunner
The U.S. Federal deficit is not this little debt clock http://www.toptips.com/debtclock.html
Going up millions per minute, it is 8 to 10 times this amount, it is at least as large as ALL the wealth of the U.S.
Here are a few more stats on the trade and budget deficits for this thread,
For the dollar to remain stable in the face of the still growing current account deficit, enormous foreign capital inflows into the US are a necessity. At the moment foreigners have to invest about six hundred and fifty billion dollars a year in the US just to keep the dollar where it is.
To finance the current account deficit the United States needs to attract more than eighty percent of the world’s net export capital. Think about it, eighty percent of net capital being invested in the world has to be invested in the United States, or else the dollar will fall, the US current account deficit could reach one trillion dollars in the next three to four years. So, if the present current account deficit requires eighty percent of the world’s net export capital, then a trillion dollar deficit will require one hundred and twenty-five percent of the current available net export capital, which is obviously impossible.
Baby Boomers are heading for retirement. At the moment there are five workers for each retiree, but as the Baby Boomers retire that ratio will change so that eventually there will be only one worker for each retiree. Retirees need pensions and health care and the government will ultimately have to step in to cover these costs. That means a growing budget deficit, and that’s without considering an expansion of the War on Terrorism.
On the issue of central banks, Asian central banks collectively hold almost two trillion dollars in foreign exchange reserves. Most of that is held in US dollars. Only about 1.3% of it is held in gold (1,930 tonnes).
If gold should be used to diversify these reserve portfolios if only because there are so few alternatives to the dollar as a reserve asset. If both China and Japan were to adopt the fifteen percent rule of the European Central Bank they would have to buy 17,000 tonnes of gold. To put this in perspective, Europe collectively owns about 12,200 tonnes of gold and the United States has 8,410 tonnes of gold.
So here is the question I have asked before, HOW long will these other countries continue to buy our worthless paper and what happens when they STOP. The trade deficit alone is getting very close to sucking the well dry.
We got ourselves here by inflating and allowing stupidly easy credit following the collapse of the Nasdaq and after 9-11. Rather than take our lumps in a normal recessionary business environment, the FED decided to push the debt game further along. The net effect will probably be another 4 terms for Bush, but he11 to pay for all of us for allowing it to happen. Bush will walk away rich as will all his cronies. The American public, and those yet born, will be paying for this SUV/mortgage "party-extension" for decades to come.
roadrunner
Here are a few more stats on the trade and budget deficits for this thread,
For the dollar to remain stable in the face of the still growing current account deficit, enormous foreign capital inflows into the US are a necessity. At the moment foreigners have to invest about six hundred and fifty billion dollars a year in the US just to keep the dollar where it is. To finance the current account deficit the United States needs to attract more than eighty percent of the world’s net export capital. Think about it, eighty percent of net capital being invested in the world has to be invested in the United States, or else the dollar will fall, the US current account deficit could reach one trillion dollars in the next three to four years. So, if the present current account deficit requires eighty percent of the world’s net export capital, then a trillion dollar deficit will require one hundred and twenty-five percent of the current available net export capital, which is obviously impossible.
Baby Boomers are heading for retirement. At the moment there are five workers for each retiree, but as the Baby Boomers retire that ratio will change so that eventually there will be only one worker for each retiree. Retirees need pensions and health care and the government will ultimately have to step in to cover these costs. That means a growing budget deficit, and that’s without considering an expansion of the War on Terrorism.
On the issue of central banks, Asian central banks collectively hold almost two trillion dollars in foreign exchange reserves. Most of that is held in US dollars. Only about 1.3% of it is held in gold (1,930 tonnes). If gold should be used to diversify these reserve portfolios if only because there are so few alternatives to the dollar as a reserve asset. If both China and Japan were to adopt the fifteen percent rule of the European Central Bank they would have to buy 17,000 tonnes of gold. To put this in perspective, Europe collectively owns about 12,200 tonnes of gold and the United States has 8,410 tonnes of gold.
So here is the question I have asked before, HOW long will these other countries continue to buy our worthless paper and what happens when they STOP. The trade deficit alone is getting very close to sucking the well dry. >>
Hello my fellow pro/con gold friends.
I have tried to have an open mind in these discussions, and have read several of the posts and the references. I just don't see any real purpose for gold anymore. All of the arguments that I quoted above are based on these assumptions, which I do not think are correct:
1. The trade and budget deficits will make U.S. currency worthless, and will make gold the means of preserving wealth and value. Do we have trade deficit and national debt problems? Absolutely. Is gold the answer? No. The U.S., from the government's perspective, realizes that gold is not that important. Thus, who cares if Europe, etc. has more gold reserves? What real difference does it make?
2. The "baby boomers" are going to retire, causing a huge problem in social security, etc. I'm sorry, but this is just plain stupid. I've heard this many times before, and it makes no sense. There are plenty of new workers to take their place, as has happened since our country was founded 228 years ago. What makes anyone think everything (pensions, social security, etc.) will come crashing down just because a few "baby boomers" retire? With the world's overpopulation (including U.S., which is not only keeping up with population, but increasing every year for 228 years straight), the last thing we have to worry about is NOT having enough human bodies to take over the economic engines. If you save just $100 per month (pizza and cable money) in a good growth stock mutual fund from age 25 to age 70, you will easily be a millionaire at retirement. So, all of this is a mute point anyway when you have a huge nest age to take care of you and your family (a huge nest egg gives you options, and, furthermore, when you are debt-free including the house, you don't worry as much when 9/11 happens).
3. Gold is an accepted medium of exchange. This was true in ancient civilizations, but I don't think is true anymore. We live in an electronic age, where transactions are mostly done with computers. First of all, when an economy fails, people trade goods and services for other goods and services. They need basic things like food, shelter, and clothing. Gold is rarely used, and does not keep you warm or fill your stomach. Historical examples include Russia (after the Soviet Union collapsed and the "cold war" ended) and Iraq (after Desert Storm, Iraqi Freedom, etc.). Not only is it not used as an accepted form of exchange, but it has a horrible track record as an investment (not even keeping up with the rate of inflation over the past 50 years).
Okay, I'm sure this topic will be discussed to death, and many folks will disagree with me, so go for it.
Check out a Vanguard Roth IRA.
And those companies that failed are removed from the DOW so as not to skew the numbers too far downward.
I can pick a very bad 35 years for stocks too. How about from the peak of 1929 to the top in 1966? Stocks gained nothing over this period based on the DOW average, and that's after tossing out the losers along the way. Any 20-50 year period in any medium will not be always be a winnner, esp. stocks. The next 20 years for stocks will be a down cycle. In 2020 you can tell us again how stocks bankrupted you because they didn't follow the rules of 1982-2004.
We'll welcome to the business world of spin and deception my friend.
Your not serious about there being enough people down the road to fund mine and your retirement? Go ask Nick Smith (R) from Michigan
(or is it WI?). Every year, he helps to initate a soc security funding bill to get some money in the bank to start growing to fund SS for our retirements. He did a great bit on CNN last month showing SS going bust in the 2012-2017 era. The inflows don't cover the outflows. It's simple math. He gets it, Bob Rubin gets, a lot of people get it. The birth rate following WW2 has not been duplicated since. Families of 4-8 were common. We will never have those demographics again. But unfortunately as we boomers retire, there aren't enough gen-xers and the like to cover our retirements....not at the current entitlement rates. European countries like Germany, France, and Italy already have this problem. Too many old people to take care of. They have solved it for now with SS tax rates of 30-40%. We are still only at a 14-15% SS tax rate. It will have to go higher to fund the account. The only other option is to cut or extend out entitlements to age 70 for example.
Please write Rep Nick Smith (R) and ask him for smoe information you can read up on. It will make things clearer to you. Since Mr. Smith is a republican I figured that would have more weight than if I chose a libby dem
SS is a real problem as is medicare funding down the road. Equities or burying one's head in the sand won't solve the problem for us in the next decade. We either have to cut or tax, no other option. I vote for cutting most govt programs 10% a year until we reign this thing in. If the govt ends up at 1/2 its current size it will be a good thing.
roadrunner
Now you're scaring me!
Barbara, who else is out there?). Damn, Jeb in 2008-2016, that would about fully bankrupt the country. There'd be nothing left.
roadrunner
I would like you to know that I am only directing this to you since you are the brave one here taking the other side. I am sure there are many here in your camp that are just not posting.
To clear a few of these items up that you have posted, let me offer this, which I hope will help.
True believers in buying Gold, do so to protect their other assets will never sell their Gold for dollars until the end of the Game. It is not an investment. It is a way to store value against other commodities that are being artificially created buy entities trying to meet the responsibilities of their economies.
You are absolutely correct in that you can’t eat, wear, or drive, Gold. On the other hand you cannot eat, wear, or drive a stock certificate, or a Federal Reserve note.
All paper assets are commodities also that are worthless on their face to Humans until such time that they are converted into Food, shelter, transportation etc.
Thousands of years ago people picked Gold as an exchange because politicians could not make all they wanted to fight wars, and pay people off. Those days are over. There is no possible way to go back to World wide Gold coins that are exchanged for goods and services. There is just not enough Gold and there are to many People.
What I think you are missing here is the END of the printing paper money game.
Through out history as governments printed too much paper to cover their obligations the money systems collapsed and new better money was issued. The problem with this is the same amount of pieces of paper are not issued. So at the end of a World wide printing spree all the countries that went crazy handing out Trillions of dollars or other currencies to people, that did not work for it, must call in all the old Trillions and issues the “New Adjusted Money”
Someday our politicians will tell us, we made some terrible mistakes giving away, and printing all this paper, and now we must cancel all these programs come up with balanced budgets. Everyone will have to turn over all their green Federal Reserve pieces of paper for the new Blue Treasury pieces of paper, but the bad news here is that you get one new Blue bill for every ten old bills.
There are only two absolutes in the way this has always worked through out history. One is that the politicians always find someone else to blame, and two is that this creates chaos among those getting money in the mail.
On the other side of this, over the last several hundred years people have figured out that different assets react different to this situation. Gold, Silver, paid for real estate, coin collections, art, and many other things DO NOT need to be exchanged at the lesser ten to one exchange. These assets are a better store of value in times where governments get out of control with their printing presses.
If the U.S. government printed an additional 20% more paper money between now and Xmas and Gold soared to $1,500 an ounce, would Gold investors sell their Gold? NO
RR,
In 1992 I was Texas Republican State campaign chairman for Pat Buchanan.
During that race Buchanan and Perot begged the voters to send them to Washington to start working on the coming Train Wreck. They wanted to cut the size of Governments by half, cut out many of the programs existing at that time, take Nafta off the table. Obviously this would have been a tough job even 14 years ago. Very few cared, most just want more money printed, and the Money Train to keep bring the checks.
There are a few personality differences in Bush and Kerry but in the end they are stuck with the game that was produced decades before either will be President in 2005, and little they do will change the outcome.
At this point in time the only thing that can be done is on an individual basis. There will be a survival of the financially fit. Those that learn, and do the work, will protect their assets and families, those that don’t will suffer, but is this not how things always work?
is or will be worthless tripe. While this may ultimately be the outcome for all curr-
ency the process may take decades or centuries. Even gold standards have eroded
and gold coins have been debased. It is the action of government which acts as an
insidious tax on money itself and is paid by all who have more of it than they need.
If the currency were to collapse so too would the economy and gold would have no
value in a place with no food and nothing to buy. Yes, gold is a commodity now and
will increase in times of inflation. Since this train wreck coming is likely to manifest it-
self as inflation it makes gold an attractive investment and is the reason it's increasing
in value along with other currencies. There are no sure things though and there's no
certainty that much of the damage to the dollar can be forestalled, delayed, or avoided
altogether. There's no clear indication how severe this damage will be or even whether
gold will provide adequate protection in an era when it is no longer used as a basis for
money. If there's a halving of the value of money, does it necessarily follow that the
best metal for use as jewelry will double?
There's plenty of gold to back currency, but there is no longer much support to do it.
Gold occasionally caused financial panics in the past and this is no longer tolerable. A
currency which can be regulated is needed in the modern age and politicians who think
what's good for the country first and reelection second. Ah, but there's the rub. With
the electorate getting their monthly message they keep voting for the masseur.
For example in Binghampton, NY homes that formerly sold for over $150,000 and $200,000 are going begging at under $100,000 and are not selling at all.
Why? No jobs. The job loss has devastated the local economy. There are only so many WalMart jobs to go around and unfortunately do not pay enough to maintain a fully paid for home even when holding down two jobs for each parent. So the home has to go on the market since the real estate taxes are just too high to avoid foreclosure.
The coming wreck train of state and county government budgets and solvency can be seen in the bloated budgets for medicaid. Too many uninsured people are now resorting to medicaid since there is no longer any health insurance. etc. You have no idea how the upstate New York region is rapidly becoming the new Appalachia of the United States!
As far as gold. The countries selling us oil have been making louder and louder noises about not wanting to sell their oil to us for US dollars. They want something else!!!!!!!!!!! They have mentioned GOLD! They have already strongly hinted in private circles that they want a different currency that is backed by gold since they fear that the US dollar will continue to depreciate.
My friends. The endgame is not the destruction of the United States Dollar. It will be the financial humiliation of the United States, in which we will be relegated to be a second rate economic power with the US dollar no longer having the purchasing power we once enjoyed. Just look that the history of Great Britian in the first decade of the 20th century in which they lost the worlds top stock exchange (The London Exchange) to the United States (the New York Stock Exchange).
Even the weak Canadian Dollar is approaching the unthinkable level of PARITY with the US dollar once again!!!
One partial answer in the US, is a rapid ascent of retirement age to age 72 before full social security can be collected. early and partial social security can still begin at age 65 on its way to 66 and 67.
Wow, real estate lost that much up there? But the average walking eggplant thinks it can't happen and you're showing not only can it happen, but it has happened.
Thanks for the informative post. You would think it would be a wake up call, but probably only to the people in Upstate.
Rgrds
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Not a problem! Easy solution--- Legalize all of the illegal aliens currently in our country and put them on the tax rolls. Then we will have 7 or 8 workers per retiree!
JUST KIDDING of course. Funding of future retirement benefits, our budget and trade deficits, and apparent financial path our country is stuck on are very serious and do not have any 'easy' answers'.
I have always been a believer in the wisdom of holding some material assets such as gold and silver. I am not a financial guru, nor have an extensive knowledge of world history. However, it seems to me that throughout history, most powers or empires have had a crisis of monetary policy..... even in ancient times, didn't they 'debase' some of their coinage? What makes us think that the U.S. is exempt from this.... are we just 'smarter', or are we just in 'different times' so that sort of thing won't happen again?
Speaking of being 'in different times'..... one of my co-workers, a younger fellow, was fervently insistent in 1999 that the bull stock market would never fall, since we were in 'different times' and the demand was just too much and technology had just improved so much. He bragged about how he was putting 100% of his 401k money into small/micro stocks; he would argue for hours about how this was a cannot lose proposition. I haven't heard much from him recently about his investments....... One good thing about it, he does have quite a bit of time until he will be retirement age.
The point.... we may strongly believe that something will never happen. But history shows that the unexpected..... does happen. The ones that plan ahead, and diversify, tend to come out better than those who take one approach, or just ignore it all thinking that the status quo will continue.
Will putting some assets into gold and silver be a waste? Perhaps..... but then I spend quite a bit on insurance every year that has no return either.
<< <i>For example in Binghampton, NY homes that formerly sold for over $150,000 and $200,000 are going begging at under $100,000 and are not selling at all.
>>
Everyone already knew that you can't go home again even when it's in Walking Distance.
There will always be a cyclical nature to the economy and all the affairs of nature. To some
extent the withering away and renewal of various segments and areas is actually benefi-
cial.
Those who believe there is some garauntee or insurance may be in for a rude awakening.
Diversification and planning ahead are and will remain everyones' best defense against any
sort of storm which may appear as well as for those which don't.
I bought a house in San Diego 15 yr ago. It has more than tripled in price.
The end.....
and if the market falls you stuck in the house
housing should be what your happy with not a investment in most cases
don't get me wrong a good home is worth allot but at some point you need to invest in something else to
be on the safe side
Most financial experts I have listened to on the radio and whose books I've read and whose web sites I've surfed (Dave Ramsey, Suze Orman, John Bogle, to name a few) agree that the way to build wealth is to slowly save money over time by investing every month into good growth stock mutual funds and paid-for real estate. If you let dollar-cost averaging and the compounding effect do their jobs, it is very easy to build wealth. If you try to get rich quick through things like lottery tickets, gambling, precious metals, highly-leveraged real estate, junk bonds, put/call options on stocks, individual stocks, currency trading, etc., you will likely lose your money. You just can't get rich quick. There is no other way to say this. You have to slow-cook your investments over time to build wealth. Microwaving your investments will likely result in them being destroyed.
As far as the stock market results are concerned, it is indeed a fact that the stock market, as a whole, has averaged around 12% per year since its inception. It is also a fact that gold has averaged around 3% per year over the last 50 years. This is not speculation, it is history and simple math. In my opinion, you run a much greater risk of not building wealth and keeping up with inflation than losing value due to currency fluctuations (due to national debt, trade deficit, etc.). In other words, with gold, you run the risk of not building wealth (due to the compound interest effect) and losing value because of inflation. There is no reason to believe this trend will not continue in the future. People have been predicting an economic meltdown for many years, and there are a few books out there (yes, I have read some of them) predicting this. To be honest with everyone out there in this forum, I have been hearing this for years and years, and I'm getting sick of listening to it.
I have met several self-made millionaires. Here is how they got there: (1) good growth stock mutual funds, (2) paid-for real estate, and/or (3) starting their own business. No one I've talked to got rich off of precious metals. In fact, those I have spoken to about precious metals have ALL said they were sorry they did it because they LOST money (doesn't matter if its actual metal, mining companies, or whatever). I am one of those folks who lost money on this, but, fortunately, I quit and cut my losses.
As far as the social security system is concerned, I don't even assume I will get ANYTHING from this broken system when I retire, so I really don't care about the baby-boom argument. It is irrelevant, IMO. Pensions are something used many years ago (not usually done today) that YOU YOURSELF invested in for YOURSELF. This has nothing to do with baby-boomers. Pensions have now been replaced with IRAs and 401k's/403b's to give YOURSELF more control over your OWN retirement.
I am not for taking chances like starting a business or investing in a property. You just need to be wise in how you invest your money because it is YOUR life and YOUR retirement.
Check out a Vanguard Roth IRA.
The term expert implies someone that knows what will happen in a given space of time.
Things are so confusing now, and the changes coming so drastic, there are no experts.
In addition to that every single person on the planet has different goals, assets, liabiltites, responsibilities, are different ages etc. The variables for each person are just to great for anyone but ones self to be an expert on any persons financial planning.
All of that being said there are some basic things that people in the U.S. might look and take the appropriate action.
Some of these basic rules may not make one rich but on the other hand they will not hurt to bad if things turn out different.
First, be logical contrarian, and stay very diversified. A logical contrarian looks at a particular stock everyone is buying, (Goggle) and asks why, and puts his money in to paying off his house.
Second, live below your means and eliminate debt. This would not appear to be a wise thing to do if you believe you can pay off a big mortgage with cheap paper later, but in the case of stagflation prices will rise and incomes will rise much less, so will you have lots of cheap paper?
Third, study your personal situation and stay short term. Don’t buy 5 year C.D.’s when the interest rates get to 4% they most likely will go to double that.
Forth, if possible find a safe place to live, a gated retirement area, a small town, a more rural protected area. Most of the folks that will become desperate if they stop getting checks in the mail live in big cities.
Fifth, my personal opinion is that this coming crises looks like back to the past,
simpler times, less greed, slower moving prices, lower standards of living. So become a smart buyer, think like your Grandparents did. Do I really need this, could my money be better-spent buying assets or paying down debt?
I bought a house in San Diego 15 yr ago. It has more than tripled in price.
At this point I'd say yes, gold is a better hedge. It has only appreciated 63% since it's last rock bottom at around $260/0z. Housing as a rule has doubled, and in your case tripled (300%).
Housing is coming near the end of its cycle. It is far less liquid than gold. Gold has been in a strong overall up trend for 3 years.
I get very antsy when something triples in such a short period. And the only reason that has happened is because the FED liquified the economy to allow everyone to continue to inflate housing values.
Most financial experts I have listened to on the radio and whose books I've read and whose web sites I've surfed (Dave Ramsey, Suze Orman, John Bogle, to name a few) agree that the way to build wealth is to slowly save money over time by investing every month into good growth stock mutual funds and paid-for real estate. If you let dollar-cost averaging and the compounding effect do their jobs, it is very easy to build wealth.
Let's not forget that this game that has helped stocks over the past 70 years has been brought to us via inflation, constant money supply increases (asset bubbling) and speculation. You can "say" that stocks as a rule average 12% per year but that's a fantasy, and was probably only achieved by a very select group of investors over the years. Similar to the 13% gains that were achieved by Pittman or other luminaries who bought in the 1940's and 1950's. That 12% annual stock gain was based on an environment based on fiat currency inflation with the backing of a growing industrial giant. Those conditions are no longer in effect, and certainly won't be re-established in the foreseeable future. 12% per year comes out to be a doubling of your $$ every 6 years. This means that since 1930 a single dollar would multiply to over $2000 by 2002. It's just not believable. Show me all the graphs and charts you like....but they all have their assumptions and loop-holes. Much of that 12% per year has been gained since the 1960's as we became the great society (over the past 35 years). The toys we played with in the 1960's, if kept intact, are all worth small fortunes today. This is all asset bubbling. It has also lead to the stock market growing from 300 to 10,000. The "psuedo-growth" of the last 30 years was from asset bubbling. Stocks are in that same group. Lots of printed cash, chasing few tangible assets or worthwhile companies. One cannot expect the past 35 years to repeat itself again. Our nation went through that massive growth stage once and that's all there is for now. China is next in line. The "slow-cooking" of one's investment over time was brought to you by the FED and asset bubbles....35 years of them....plus the growing of our economy into a superpower. Actually, you can pinpoint the orig start date of the asset bubble society to 1913 and the creation of the Federal Reserve System.
There is no reason to believe this trend will not continue in the future. People have been predicting an economic meltdown for many years, and there are a few books out there (yes, I have read some of them) predicting this. To be honest with everyone out there in this forum, I have been hearing this for years and years, and I'm getting sick of listening to it.
There is every reason to believe the trend will not continue. 12% per year on average, forever? Get real. The next 10-15 years will be a downer for stocks as a rule. The 20 years following should be excellent. But since I'll be long gone by then, I think I'll stick to what is going to work for the next 15 years first. I do not consider any of the names on your panel (Suze Orman, come on) as hard asset, tangible experts by any means. These guys are financial planners and as a rule generalists. How many people were burned by CFP's 3 years ago as stocks sank? I'm sure what Suze doesn't know about currency trading, gold specs, deriviatives, etc, could fill a book.
Talk to Jim Sinclair or Harry Schultz, both have gotten rich off precious metals. Jim Sinclair is always happy to correspond with interested parties. For what it's worth, most of the really bullish gold bugs from 1980 left the gold market for 2 decades as the gold carry game and a strong bond foretold a long cold winter for gold. You were right to quit and cut your losses as the gold game did not reverse until 2001. That's 21 years of strong equities and manipulated PM's. Long enough that most everyone believes gold is dead and of no value....exactly what the paper printers want you to believe.
As far as the social security system is concerned, I don't even assume I will get ANYTHING from this broken system when I retire, so I really don't care about the baby-boom argument.
Me neither. I expect nothing also. We're on our own from here.
Pension funds will go insolvent too so don't count on those either.
401K's will turn out to be a sore spot over the next 10 years as all the easy money has already been taken out by the traders. The boomers will be holding much devalued 401k's in the next 10 years unless they shift to reverse stock funds, or gas, oil, real estate, and PM stocks. Long term growth funds will get hammered. Housing is ripe for a nice down cycle. It was just another asset area inflated by too many new dollars chasing whatever looked good. REal wealth or growth was not created....that comes from growing quality jobs, manufacturing, and selling products & services...not speculating on our homes and stock funds.
roadrunner
Wallstreeters are counting on all of us to hold for the long term from here, and continue getting that "12% per year" that is always just around the next corner. They couldn't make a living without us.
Forget the 12%, a solid 3-5% would look pretty darn good for the next 3 years....though with inflation at 3-5%, you are just breaking even.
roadrunner