Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-05-2016, 08:37 AM   #61
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,213
Quote:
Originally Posted by VFK57 View Post
How sure you are that high inflation is not possible here?
Not saying it is not possible in the US. In fact it is quite likely it will happen eventually. I'm just unconvinced personally that gold is your best protection here.

More generally, what I am struggling with is gold as being the best alternative for protection against certain tail risks.

In case of the Weimar republic or Russia or Zimbabwe, yes gold gives you a short term survival advantage. The advantage here is that it is portable and value dense. Note that you need to hold physical gold. And depending on the exact context, you would still lose a very large amount of the wealth. Trading 1k worth of gold for bread will not get you 1k equivalent in bread. In addition you are exposed to theft, robbery, and shakedowns.

Going down the list of some tail risks:
  • The country you live in collapses, enters hyperinflation, rest of the world is fine but rule of law prevails: Better of with international equities, bonds vs. gold.
  • Rule of law doesn't prevail: Emergency cash needed to escape the country. Here gold is useful, just like diamonds, non-perishable foods, guns and ammo. You may lose it all anyway, but its harder to disown physical items.
  • Several major countries collapse: better off having farmland in a peaceful corner vs. gold, and an emergency escape plan (like an airplane fueled up and ready to go at all times). A barrel of oil may do you more good than 5 bars of gold.
  • World ends: no need for anything.
__________________

__________________
Totoro is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-05-2016, 08:55 AM   #62
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,213
Quote:
Originally Posted by gerntz View Post
I don't see how you conclude it loses money over long term when Au was $35/oz when allowed to float around 1975. I'd rather have $1200 than $35.
I worded too strongly, you are right. Chart here with real current prices:
Gold Prices - 100 Year Historical Chart | MacroTrends

It all depends on the entry and exit point. Point is that gold swings wildly, and has little to do with inflation.

The bottom in 1970 was 200 USD. Gold is a fine investment regardless almost of the time frame.

The peak in 1980 was 2000 usd, almost ten times as much. Strong inflation in the 1980s, and down you went to below 400 USD.

Whatever inflation does, gold is not correlated with it. So if inflation is your worry, find another investment to protect against it.
__________________

__________________
Totoro is offline   Reply With Quote
Old 07-07-2016, 08:28 AM   #63
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,906
The mining company I mentioned on here whose bonds were trading at 20% of par at the beginning of this year and had a coupon of 12.5% just got bought out. The buyout includes paying off all bonds at 100%, including accrued interest.

I at one time had $100,000 face but I sold them all this spring for about 50% of par. @#$@
__________________
Fermion is offline   Reply With Quote
Old 07-07-2016, 08:56 AM   #64
Recycles dryer sheets
 
Join Date: Aug 2015
Posts: 340
Quote:
Originally Posted by Fermion View Post
The mining company I mentioned on here whose bonds were trading at 20% of par at the beginning of this year and had a coupon of 12.5% just got bought out. The buyout includes paying off all bonds at 100%, including accrued interest.

I at one time had $100,000 face but I sold them all this spring for about 50% of par. @#$@
In 2008 financial crises our investment condo lost almost 50% of it's value. Yet 8 years later it is not only regained everything but added 20%. Rent went up 45% (some people still believe that we are at 1% inflation as Government states). Currently my worst performed investment is POT, lost us over 20% but I still prefer to sit on it. Inflation may push all prices higher.
__________________
VFK57 is offline   Reply With Quote
Old 07-07-2016, 10:24 AM   #65
Full time employment: Posting here.
gcgang's Avatar
 
Join Date: Sep 2012
Posts: 928
Quote:
Originally Posted by VFK57 View Post
?.. Currently my worst performed investment is POT, lost us over 20% but I still prefer to sit on it. Inflation may push all prices higher.
And with POT, you can just smoke it and get higher.
__________________
In theory, there's no difference between theory and practice. In practice, there is. YB
gcgang is offline   Reply With Quote
Old 07-07-2016, 11:42 AM   #66
Recycles dryer sheets
 
Join Date: Aug 2015
Posts: 340
Quote:
Originally Posted by gcgang View Post
And with POT, you can just smoke it and get higher.
Good advise but I prefer hard liquor.
__________________
VFK57 is offline   Reply With Quote
Old 07-07-2016, 12:26 PM   #67
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 931
Bought some RING this morning. Currently stands up 1.37% in just a couple hours.
I think gold and gold related stocks will rise at least through the 3rd quarter, but that is just based on the 3rd quarter of election years usually being the worst for the market.
__________________
COcheesehead is offline   Reply With Quote
Old 07-09-2016, 12:43 AM   #68
Full time employment: Posting here.
 
Join Date: Oct 2012
Location: Reno
Posts: 556
It's (FSAGX) now up 106% YTD, so it's probably about time to sell 20-25%.

Quote:
Originally Posted by RobLJ View Post
I bought GLD in early '07 in DW's rollover, fearing a crash, then sold in '09 and '10 for almost an 80% profit, wanting to purchase stocks in her account.
My main account was holding cash (twice the allocation), so I placed the equivalent of DW's GLD in FSAGX (Fidelity Gold Mining fund) and eventually doubled the amount over the next two years, since the ostensible allocation was about 5% in commodities (half in PMs); the thesis was that the miners generally move 2-4x the gold price, so FSAGX was leveraged PM.
The miner fund went up for a year or two, then started sinking in 2013 and 14, about 55% down, when I took some stock gains and added another 25% position, then it sank another 17% in '15.
Now it's up almost 75% YTD, and I'm about even since 2006, if you factor in the original position in GLD. I considered putting a little more in in January, but since I was down about 1% in the total portfolio in 2015, I didn't have a lot of gains to take, other than some bonds I wanted to keep.

So the miners are uncorrelated, but a wild, wild ride. GLD or SLV are similar but not quite as exaggerated.
Take of this what you will. It's a small percentage of the portfolio, which raises the question whether it's even worth bothering.

On the other hand, right now it is a sizable percentage of the ytd portfolio gains, which is similar to my experience with biotech and health, although I overweighted them at a considerably higher weight than FSAGX but thankfully harvested gains from 2012-early 2015, to the point that the gains in shares sold are almost 2x the current position. Should the FSAGX run continue through the year, I'll probably take 20-25% off the table.
__________________
RobLJ is offline   Reply With Quote
Old 07-09-2016, 03:24 AM   #69
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,244
The small amount of physical gold (and silver) I have, I bought when it was quite low in price. Gave up some paper gains in the stock market to do so, obviously. But, back in the recent "unpleasantness", my PMs kept me more than even as my stocks plummeted. That's reason one to hold 3 to 5 percent gold. It correlates with virtually nothing on a consistent basis, BUT it often smooth portfolios when the going gets rough. Second reason to hold PMs is similar to having insurance. If you never use it, you "loose" but are happy to do so. Agree that for "normal" inflation (the only kind we on this forum have ever seen in the US) gold might or might not help. But during hyper-inflation it has always helped folks (as pointed out by others here.) It may also be good for WTSHTF. Suggest minor investment in "consumables" for the same potential (booze, flour, sugar, cooking oil, cigarettes, etc.)

Oh, by the way, in the 6 months+ since this thread opened, AU is up 30% (by my cranial calculator.) I just threw that in since it's a bad reason to invest in PMs. Of course, YMMV
__________________

__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Miners get to light up, with electricity and cigarettes. easysurfer Other topics 1 09-12-2010 02:16 PM
Strong Minded Miners in Chile haha Other topics 9 08-24-2010 11:07 PM
And gold, gold!, GOLD!!!!!!!!!!!! yakers FIRE and Money 1 05-17-2006 11:03 AM
Buying physical Gold GTM FIRE and Money 10 01-14-2005 09:26 AM

 

 
All times are GMT -6. The time now is 06:48 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.