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Don't buy gold just because it is hot
Michigan
Posts: 4,942 ✭
Gold climbed above $600 an ounce Thursday for the first time in 25 years as investors bet metals will fetch better returns than stocks and bonds.
Gold has surged more than $100, or about 20 percent, since the end of November, beating the 5 percent gain in the Standard & Poor's 500 Index.
Gold for June delivery closed up $7.20 Thursday to $599.70 an ounce on the Comex division of the New York Mercantile Exchange. Prices earlier reached $601.90, the highest since January 1981.
It's a hot commodity right now, and individual investors may be wondering whether they should own some.
There are plenty of good reasons to own gold. Like real estate and other commodities, precious metals can work as a hedge against inflation and serve as important diversifiers because they don't move in lock-step with stocks and bonds. But at its current level, gold might not be such a great buy, and the volatility of its price makes it a dangerous bet for small investors looking to turn a quick profit.
"The worst reason to buy something is because you see it in the news," said Michael Iachini, senior research analyst with the Schwab Center for Investment Research. "Don't buy it because it's hot, buy it because you think it's a good investment for your portfolio. An individual investor should not be trying to speculate on the price of gold."
Usually investors buy gold when they're worried - about inflation, the value of the dollar, the stability of the markets or geopolitical events.
But gold watchers say the recent run-up has less to do with global economic conditions than it does with simple supply and demand. Gold is highly sought throughout the world for jewelry, industrial applications and as an investment. But production slowed following a supply peak in 2001, and it may be several years before it revs up again. The other factor almost certainly driving the gold market is speculation among short-term investors. So if you do choose to buy gold, research your options carefully, and plan to own it for the long haul.
"If you're going to hold it, make it a small piece of your portfolio," Iachini said.
So, you could buy bullion or gold coins, like American Eagles, Canadian Maple Leafs and South African Krugerrands. But two relatively new exchange-traded funds, pegged to the price of bullion, offer a simple, low-cost way to get exposure without the extra hassle of storage of security. If you want pure exposure to gold, this is the way to get it.
"ETFs have made it very easy to own gold like a stock . . . literally billions of dollars have found their way to buying gold," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
More than $6.5 billion has poured into State Street's streetTracks Gold Shares ETF (GLD) since it was launched in November 2004 - the first U.S. ETF to invest directly in gold bullion. The iShares Comex Gold Trust (IAU), launched in January 2005 by Barclays Global Investors, holds another $671 million. Both are tied to the price of gold itself; they buy bars of gold and keep them in a vault, so you don't have to.
Gold isn't the only precious metal that's been on a tear lately, either.
Silver futures for May delivery rose 34 cents Thursday to $12.045 an ounce on the Comex, closing above $12 for the first time since 1983. Prices have gained 35 percent this year.
Palladium futures for June surged $15.40 to $358.05 an ounce. The metal has jumped 37 percent this year.
The other way to invest in gold, and precious metals in general, is to buy the stock of mining companies. If this involves more company-specific risk than you like, you could choose one of the actively managed mutual funds focused on this space. U.S. Global Investors Gold Shares (USERX) holds about 40 gold mining stocks; U.S. Global Investors World Precious Minerals (UNWPX) holds companies that produce not only gold, but also platinum and silver. Other no-load options with low expenses include Fidelity Select Gold (FSAGX), American Century Global Gold (BGEIX) and Vanguard Precious Metals and Mining (VGPMX).
When comparing your options, be mindful of expenses. Specialty mutual funds tend to charge higher fees, and those that invest in precious metals are no exception. In contrast, both the ETFs charge a relatively low 0.40 percent fee, but that advantage could evaporate if you make lots of trades.
One caveat about gold investing: The Internal Revenue Service defines gold as a "collectible," which makes direct investments in gold subject to a higher tax rate on long-term capital gains than the 15 percent rate applied to other types of investments. This means capital gains on ETFs holding gold - or silver for that matter - may be taxed at a maximum of 28 percent. This would not be the case for mutual funds holding gold mining stocks.
Gold has surged more than $100, or about 20 percent, since the end of November, beating the 5 percent gain in the Standard & Poor's 500 Index.
Gold for June delivery closed up $7.20 Thursday to $599.70 an ounce on the Comex division of the New York Mercantile Exchange. Prices earlier reached $601.90, the highest since January 1981.
It's a hot commodity right now, and individual investors may be wondering whether they should own some.
There are plenty of good reasons to own gold. Like real estate and other commodities, precious metals can work as a hedge against inflation and serve as important diversifiers because they don't move in lock-step with stocks and bonds. But at its current level, gold might not be such a great buy, and the volatility of its price makes it a dangerous bet for small investors looking to turn a quick profit.
"The worst reason to buy something is because you see it in the news," said Michael Iachini, senior research analyst with the Schwab Center for Investment Research. "Don't buy it because it's hot, buy it because you think it's a good investment for your portfolio. An individual investor should not be trying to speculate on the price of gold."
Usually investors buy gold when they're worried - about inflation, the value of the dollar, the stability of the markets or geopolitical events.
But gold watchers say the recent run-up has less to do with global economic conditions than it does with simple supply and demand. Gold is highly sought throughout the world for jewelry, industrial applications and as an investment. But production slowed following a supply peak in 2001, and it may be several years before it revs up again. The other factor almost certainly driving the gold market is speculation among short-term investors. So if you do choose to buy gold, research your options carefully, and plan to own it for the long haul.
"If you're going to hold it, make it a small piece of your portfolio," Iachini said.
So, you could buy bullion or gold coins, like American Eagles, Canadian Maple Leafs and South African Krugerrands. But two relatively new exchange-traded funds, pegged to the price of bullion, offer a simple, low-cost way to get exposure without the extra hassle of storage of security. If you want pure exposure to gold, this is the way to get it.
"ETFs have made it very easy to own gold like a stock . . . literally billions of dollars have found their way to buying gold," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
More than $6.5 billion has poured into State Street's streetTracks Gold Shares ETF (GLD) since it was launched in November 2004 - the first U.S. ETF to invest directly in gold bullion. The iShares Comex Gold Trust (IAU), launched in January 2005 by Barclays Global Investors, holds another $671 million. Both are tied to the price of gold itself; they buy bars of gold and keep them in a vault, so you don't have to.
Gold isn't the only precious metal that's been on a tear lately, either.
Silver futures for May delivery rose 34 cents Thursday to $12.045 an ounce on the Comex, closing above $12 for the first time since 1983. Prices have gained 35 percent this year.
Palladium futures for June surged $15.40 to $358.05 an ounce. The metal has jumped 37 percent this year.
The other way to invest in gold, and precious metals in general, is to buy the stock of mining companies. If this involves more company-specific risk than you like, you could choose one of the actively managed mutual funds focused on this space. U.S. Global Investors Gold Shares (USERX) holds about 40 gold mining stocks; U.S. Global Investors World Precious Minerals (UNWPX) holds companies that produce not only gold, but also platinum and silver. Other no-load options with low expenses include Fidelity Select Gold (FSAGX), American Century Global Gold (BGEIX) and Vanguard Precious Metals and Mining (VGPMX).
When comparing your options, be mindful of expenses. Specialty mutual funds tend to charge higher fees, and those that invest in precious metals are no exception. In contrast, both the ETFs charge a relatively low 0.40 percent fee, but that advantage could evaporate if you make lots of trades.
One caveat about gold investing: The Internal Revenue Service defines gold as a "collectible," which makes direct investments in gold subject to a higher tax rate on long-term capital gains than the 15 percent rate applied to other types of investments. This means capital gains on ETFs holding gold - or silver for that matter - may be taxed at a maximum of 28 percent. This would not be the case for mutual funds holding gold mining stocks.
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People are still talking about real estate [but less than this time last year] at social gatherings and we are already seeing the declines there. The next mania is definitely precious metals. I am really getting tired of seeing the Monex commercials every 10min on Bloomberg.
I would not be surprised to see gold at $680+ by year end, barring any global calamity then it would be even higher.
--Keith
The reason I own what I own isn't due to the LAST 25 years! It is in anticipation of the NEXT 25 years!
Raven,
I don't believe you have seen nutin yet.....
$20 Saint Gaudens Registry Set
Gold all time high adjusted for inflation, from the 80's, would be like over $2000. We are pretty far from that, silver is the same, something like $30 - $40. Plenty of room to grow.
You can own gold through the GLD symbol. It trades at about 10% of the price, currently $58.50 a share, you buy and sell it like a stock. No caring cost no inventory. Your in, put in a stop, and your set.
Silver will have the ETF also, coming soon, again no caring cost, just buy and sell or short if you want.
This is why silver is going up.
I'm a ride the wave kind of person, so if your not, you better stick with interest on your savings account.
I do think it is wise to own some precious metals, but I would not make them my primary investment. Asset classes like real estate, stocks, bonds and precious metals, seem to have 15 to 25 year boom and bust cycles, so gold may be just starting to get its stride. aficionado's numbers, if correct, really indicate how bad gold has been as an investment. Only time will tell.
BTW, awesome Indian Eagle collection!
aficionado,
With the GLD EFT, you still have holding cost. You could just as easily buy an inflation adjusted US bond with $600. So, the loss of the interest accrued on the bond is one component of holding the gold.
--Keith
I could have bought HERO below $30 but instead I bought Gold at $500. Guess I have lost money?
That hasn't happened again.....yet. The news announcers haven't really been announcing the upticks in the metal and certainly rare coins haven't gotten much by way of exposure about the market....unless you want to consider this slimey deal in Ohio exposure.
The chief gold trader of a company out west who is assembling a collection of ___________________ that does hundreds of millions of dollars in gold sales told me the other day that most of the trades as of late are from people who bought the metal in the last 15 years and have been calling to SELL not buy. That sales are actually less than what one would expect although they are "starting" to pick up.
There's almost zero interest in the dollar worldwide and confidence in the US around the world is starting to border on non-existent. You can read into this whatever you like. Then take a look at the debt of this country and give us one reason why this feeling toward us should change anytime soon.
Methinks we are in for some continued good times in the coin business, for sure and my bets would be the same on that overpriced, good for nothing metal mr battaglia.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>It hasn't even started yet. People can be like sheep. They buy headlines. >>
Lately I've been noticing more and more headlines about the price of gold.
Yesterday it was the lead story on the Yahoo Finance front page.
This is telling me that perhaps we are at or near a intermediate term
top in gold. Silver on the other hand, who knows?
<< <i>Gold all time high adjusted for inflation, from the 80's, would be like over $2000. We are pretty far from that, silver is the same, something like $30 - $40. Plenty of room to grow.
You can own gold through the GLD symbol. It trades at about 10% of the price, currently $58.50 a share, you buy and sell it like a stock. No caring cost no inventory. Your in, put in a stop, and your set.
Silver will have the ETF also, coming soon, again no caring cost, just buy and sell or short if you want.
This is why silver is going up.
I'm a ride the wave kind of person, so if your not, you better stick with interest on your savings account. >>
I am sooooooo sick of people comparing today's prices to the 1980 situation. Study a little, please. Adjusted for inflation...blah, bablah, bablah....
That was artificial in that it was a smart play by a few guys with a lot of money and the knowledge that they could buy up the physical along with the futures and have the "big boys" by the short and curlies. They did it too!! If the Fed hadn't come in to save their buddies on Wall street by illegally changing the rules of the game after the fact, the Hunts would have owned a large chunk of Wall Street along with most of the major financial institutions at that time.
I have neither the time nor desire to fully expound on my disgust with the owning of "paper" metals. That's the reason the prices have been corruptly held down all this time, moreso with silver than gold. You're being played, son, like a fiddle.
You go surf your wave, I'll stick to the bull and when the sauce hits the airscrew you'll be left with those unfortunate souls who held paper silver back then.
Honestly, with the most respect I can muster, you need to learn WTH you are talking about. I'm guessing you don't have a clue as to what really happened in 1980, nor do you know what happened to people like you with their paper.
This is now a world market and supply continues to not meet demand for a limited commodity, we are not that far from the tipping point.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
I want the physical metal in my control. Paper assets have a way of "evaporating" when the derivatives unwind.
Liberty: Parent of Science & Industry
Kip
I am sooooooo sick of people comparing today's prices to the 1980 situation. Study a little, please. Adjusted for inflation...blah, bablah, bablah....
That was artificial in that it was a smart play by a few guys with a lot of money and the knowledge that they could buy up the physical along with the futures and have the "big boys" by the short and curlies. They did it too!! If the Fed hadn't come in to save their buddies on Wall street by illegally changing the rules of the game after the fact, the Hunts would have owned a large chunk of Wall Street along with most of the major financial institutions at that time.
I have neither the time nor desire to fully expound on my disgust with the owning of "paper" metals. That's the reason the prices have been corruptly held down all this time, moreso with silver than gold. You're being played, son, like a fiddle.
You go surf your wave, I'll stick to the bull and when the sauce hits the airscrew you'll be left with those unfortunate souls who held paper silver back then.
Honestly, with the most respect I can muster, you need to learn WTH you are talking about. I'm guessing you don't have a clue as to what really happened in 1980, nor do you know what happened to people like you with their paper.
This is now a world market and supply continues to not meet demand for a limited commodity, we are not that far from the tipping point. >>
Nicely said... I would also like to add that I think hooking the boomers retirement money through an ETF to such a thinly traded industrial commodity may be like strapping a jet engine on a volkswagon... Not sure if it will happen, but I'm covering my bases just in case.
<< <i>
I am sooooooo sick of people comparing today's prices to the 1980 situation. Study a little, please. Adjusted for inflation...blah, bablah, bablah....
That was artificial in that it was a smart play by a few guys with a lot of money and the knowledge that they could buy up the physical along with the futures and have the "big boys" by the short and curlies. They did it too!! If the Fed hadn't come in to save their buddies on Wall street by illegally changing the rules of the game after the fact, the Hunts would have owned a large chunk of Wall Street along with most of the major financial institutions at that time.
This is now a world market and supply continues to not meet demand for a limited commodity, we are not that far from the tipping point. >>
The same forces that drove precious metals up in the early 80's are at work today. Look at the volume of contracts in the derivative markets and speculators that have emerged in the precious metal pits. Yes, I agree there is a "true" demand from India and Japan by their citizens, but this is not happening in Europe and the US. Just ask your neighbor when was the last time they bought some bullion gold or silver? Probably never, unless they collect coins or you have convinced them precious metals are the next "big" thing. I do believe palladium does have a good future as compared to gold or silver. JMHO.
<< <i>
<< <i>
I am sooooooo sick of people comparing today's prices to the 1980 situation. Study a little, please. Adjusted for inflation...blah, bablah, bablah....
That was artificial in that it was a smart play by a few guys with a lot of money and the knowledge that they could buy up the physical along with the futures and have the "big boys" by the short and curlies. They did it too!! If the Fed hadn't come in to save their buddies on Wall street by illegally changing the rules of the game after the fact, the Hunts would have owned a large chunk of Wall Street along with most of the major financial institutions at that time.
This is now a world market and supply continues to not meet demand for a limited commodity, we are not that far from the tipping point. >>
The same forces that drove precious metals up in the early 80's are at work today. Look at the volume of contracts in the derivative markets and speculators that have emerged in the precious metal pits. Yes, I agree there is a "true" demand from India and Japan by their citizens, but this is not happening in Europe and the US. Just ask your neighbor when was the last time they bought some bullion gold or silver? Probably never, unless they collect coins or you have convinced them precious metals are the next "big" thing. I do believe palladium does have a good future as compared to gold or silver. JMHO. >>
Some of the same forces are at work, but there are whole new equations to figure in. You failed to mention the Chinese, not only the people but the Government which has been guietly buying up physical gold for years, now the Russians have come out and said that they intend to add masive amounts to thier holdings as well. Not happening in Europe? Not from what I've read.
Silver continues to be the wild card because when it is used, it's actually used, as in used up, gone, burned away or absorbed by the body in medicines.
Are you aware of some new technologies that are soon to come on line? Huge, huge developements and without silver, it wouldn't exist. Palladium? Other than catalytic converters and industrial exaust scrubbers, I'm not aware of any new technologies involing palladium. No knocking it, just that i don't believe it has anywhere near the future of silver or gold. Feel free to educate me. I needed something new to study, so maybe I'll work on that just to get a better feel for it. From what I do know, it's a valuable metal, but it's not near as limited as far as mining goes.
I'll continue to keep my spread at 75% physical silver and 25% physical gold. Not in weight, but in current value. I'd love to have an ounce of gold for every three ounces of silver, but if I did, then I'd be converting it to silver pretty darn fast.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Yes, I did fail to mention probably the biggest buyers of gold, the Chinese. With the eventual devauling of their currency, I do not see why they would change their current plans. Gezz, I sound like an economist--something to put on the resume I guess.
Palladium, from a chemist point of view, is very interchangeable with platinum--many of the same properties. As you indicated, palladium is mostly used in catalytic converters and scrubbers. I remember reading somewhere that it is also used in fuel cell technology. Palladium is also gaining some interest from the jewelry industry. Interestly I also read that palladium is more scarce than gold but sells at a sizeable discount. The Russians are by far the largest producers of palladium.
BigBen,
Why are you so big on silver?
--Keith
<< <i>Yes, I did fail to mention probably the biggest buyers of gold, the Chinese. With the eventual devauling of their currency, I do not see why they would change their current plans. Gezz, I sound like an economist--something to put on the resume I guess.
Palladium, from a chemist point of view, is very interchangeable with platinum--many of the same properties. As you indicated, palladium is mostly used in catalytic converters and scrubbers. I remember reading somewhere that it is also used in fuel cell technology. Palladium is also gaining some interest from the jewelry industry. Interestly I also read that palladium is more scarce than gold but sells at a sizeable discount. The Russians are by far the largest producers of palladium. >>
We use it here for Hydrogen Purification. Also in electronics in some items we launch here.
Many uses in oil refining and dental and medicine
Kip
My posts viewed
since 8/1/6
<< <i>mrearlygold- thats' "BATTIPAGLIA', as in Joseph, not "BATTAGLIA", as in Paul. We wouldn't want rumors to start about what Paul might have said. Regards, John Curlis
Thank you John,
I stand corrected. He was wrong.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
The toss from the wagon at $500 and then $575 were particularly lethal as many of those have not had a window of opportunity to buy back into the market. Oh well. Stocks were hot in 1997 and 1998. If you got out then......you missed the next 2-3 yrs.
The same forces that drove precious metals up in the early 80's are at work today. Look at the volume of contracts in the derivative markets and speculators that have emerged in the precious metal pits.
Derivatives are one of the biggest changes. Back in 1980 the derivatives world was limited to futures pretty much. The entire D market might have been a couple of trillion dollars. Today? Over
$300 TRILLION compared to a total world wealth of $50 TRILLION or less. The bets/hedges far exceed the ability to pay. JPMorgan alone has $30-50 TRILLION into interest rate sensitive derivatives.
The FED met privately with these big banks back in Sept., supposedly to discuss the humongous risk with their stake in derivatives. A month later REFCO went bust. More than likely deriviatives took them down and lenders needed to be bailed out for fear of a continuing daisy chain of losses.
Sinclair has stated that each party to a derivative values it differently since there is no one way to determine value. No doubt each side values the D to their favor. And there is no oversight on the over-the-counter D's market. Money-laundering at its finest.
Wouldn't it be nice if each of us could value our house differently from the mortgage company, and take out loans based on that.
other changes since 1980:
1.Potentially 50% of the central bank gold has been sold into the
markets (15,000 tonnes). The supplies started at 30,000 tonnes.
Ultimately, this probably explains why the gold price is unchanged
over 20 years. If Diamonds were marketed by DeBeers the same way you could buy diamonds on the cheap as well. But they want to keep prices strong so they keep market available supply in check.
Selling the gold was good for price control and fiat $$ expansion in the 1990's. No one but the CBs know how much gold is really left...and they aren't about to tell. Gold that was leased or sold is still listed on the CB's books as an asset. Certainly not GAAP quality accounting! You and I would go to jail if we ran a business like that.
2. Money supply in the US has increased 4-5X since 1980. In the past, that kind of increase would be manifested in the gold price. This time it was not due to #1 above. Inflation and inflation indexes
(CPI) used to measure money supply increases. It was pretty much 1 to 1. Not so in the 1990's and beyond. We've had a 4X increase in the amount of money sloshing around to bid up housing and stocks, but nothing had gone towards PM's or commodities for 15 years. What's wrong with that picture?
roadrunner
<< <i>Don't buy gold because it's hot? That's pretty much what everyone has done at $400, $500/oz. As gold approached those barriers people backed off and jumped off the wagon "knowing" the end of the bull was at hand. It will be no different at $600, $700, $800.
The toss from the wagon at $500 and then $575 were particularly lethal as many of those have not had a window of opportunity to buy back into the market. Oh well. Stocks were hot in 1997 and 1998. If you got out then......you missed the next 2-3 yrs.
The same forces that drove precious metals up in the early 80's are at work today. Look at the volume of contracts in the derivative markets and speculators that have emerged in the precious metal pits.
Derivatives are one of the biggest changes. Back in 1980 the derivatives world was limited to futures pretty much. The entire D market might have been a couple of trillion dollars. Today? Over
$300 TRILLION compared to a total world wealth of $50 TRILLION or less. The bets/hedges far exceed the ability to pay. JPMorgan alone has $30-50 TRILLION into interest rate sensitive derivatives.
The FED met privately with these big banks back in Sept., supposedly to discuss the humongous risk with their stake in derivatives. A month later REFCO went bust. More than likely deriviatives took them down and lenders needed to be bailed out for fear of a continuing daisy chain of losses.
Sinclair has stated that each party to a derivative values it differently since there is no one way to determine value. No doubt each side values the D to their favor. And there is no oversight on the over-the-counter D's market. Money-laundering at its finest.
Wouldn't it be nice if each of us could value our house differently from the mortgage company, and take out loans based on that.
other changes since 1980:
1.Potentially 50% of the central bank gold has been sold into the
markets (15,000 tonnes). The supplies started at 30,000 tonnes.
Ultimately, this probably explains why the gold price is unchanged
over 20 years. If Diamonds were marketed by DeBeers the same way you could buy diamonds on the cheap as well. But they want to keep prices strong so they keep market available supply in check.
Selling the gold was good for price control and fiat $$ expansion in the 1990's. No one but the CBs know how much gold is really left...and they aren't about to tell. Gold that was leased or sold is still listed on the CB's books as an asset. Certainly not GAAP quality accounting! You and I would go to jail if we ran a business like that.
2. Money supply in the US has increased 4-5X since 1980. In the past, that kind of increase would be manifested in the gold price. This time it was not due to #1 above. Inflation and inflation indexes
(CPI) used to measure money supply increases. It was pretty much 1 to 1. Not so in the 1990's and beyond. We've had a 4X increase in the amount of money sloshing around to bid up housing and stocks, but nothing had gone towards PM's or commodities for 15 years. What's wrong with that picture?
roadrunner >>
Very well written roadrunner, you certainly know your stuff. The 60 trillion dollar question is, "how much gold do the central banks still hold?"
If they only had to report their sales/purchases like insiders of publicly traded companies do, we certainly could feel more confident in our own strategies.
I agree the money supply issue is of great concern, certainly bullish for gold. Fed short term rate decreases and increases in the money supply have been used to keep our economy chugging along for the last 7 years or so. The fed is running out of "magic" bullets and that is why they've metaphorically reloaded by increasing rates the last 18 months.
As I indicated earlier, if one is concerned about inflation, one could buy the inflation adjusted bonds that are available. Those bonds are obviously denominated in US dollars and pay interest and principle in US dollars. If you live in the US, you probably would receive those same US dollars when you do sell your gold.
An alternative strategy is to take out long term fixed loans and buy real estate. Inflation is your friend when repaying your fixed rate loans, assuming your future income is somewhat inflation adjusted. The problem with real estate now is the huge number of individuals holding interest only and variable rate loans. If you used those types of loans to purchase a home you really could not afford with a fixed rate loan, you are just now beginning to feel the pain. It will take a few years to correct that mess and many are going to be wiped out.
JMO
--Keith
I stand corrected. He was wrong.
I knew who you were talking about.
The guy is a real teflon man. He has made so many bad calls but continues to be paid for appearances on Fox Business shows, financial conferences here and abroad and now has someone writing an internet business column for him. He's hot and in demand.
Almost forgot, besides his bad call on gold he was on CNBC almost daily during the tech bubble pumping up tech stocks. We know how that ended.
Actually, their CEO was/is a crook from the word go. He perpetuated an accounting fraud for more than a decade [brilliant!] fooling hundreds of Ivy League educated lawyers, consultants, auditors, accountants, etc. Irony is the scam was so blatant no one noticed. Some of the smartest investors [Tom Lee] and investment banks were fooled.
Otherwise I agree with everything else you said, especially the part about Chase Morgan. When they go expect a worldwide panic, which could be a great buying opportunity for equities.
Besides the rapid growth of real income in China and India, rumors are that Arabs are buying gold also. And they may know the real story.
Our evil, stupid, treacherous, treasonable, lying, Idiot-In-Chief is gonna do a real whackaroonie job sooner than we think.
Can of WORMS
past present or future idiot? they all seem the same now days.
a two party system digging us into a hole. yay!
We now get to return to "every man for himself."
Have gold or have nothing. That has been true before but never in the US.
WE get it this time around.
It is amazing to watch how unbelievably wretched our government has become, isn't it?
My one comment concerning TIPs is that the inflation portion of them is based on the CPI. And of course you know who controls what goes into the CPI? Economist John Williams has done substantial research on the subject and is hired by many top firms to advise them on inflationary issues. If one uses CPI formulae from the 1980's or even early 1990's, you will get far higher numbers than the ones the BLS publishes. It all started back in 1983 by adding imputed rent rather than the cost of housing. And it has been adjusted continually ever since.
Who benefits from a lower CPI? The govt. and those holding contracts where future payouts are determined via the CPI.
Who loses? Retirees, pension holders, soc security recipients,
generally your everyday citizen.
roadrunner
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
Years back, while on a gold standard, "inflation" was based on money supply changes. That's the defition of inflation. Price inflation is an adjunct to that. The govt soon realized that it was to their benefit to switch the inflation tracking link to a fixed basket of goods. And later, even more beneficial to link to a "moving target" basket of goods. Especially since cheap foreign goods kept prices down while assets soared. The DOW also uses the concept of keeping the best performers and kicking out the low performers or dogs. History shows that gold, when allowed to respond to market supply and demand, will settle out where the money supply says it should. Of course how long it stays at such a level is anyone's guess. In 1980 it was only a few weeks once it reached a level where it leveled out the govt's balance sheet.
roadrunner
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member