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Old 12-05-2012, 05:03 PM   #41
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I prefer shotgun shells.
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Old 12-05-2012, 05:22 PM   #42
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When I got my career job I was trained by a 62 yo WW2 veteran that had been selling pharma for 20+ years. He was such a character and some of his stories were unreal....both positive and negative concerning his time in the Pacific region as a Marine.
Anyway....he was so positive on gold. He bugged me to buy gold, all else is gambling, period. But as a young buck I did not follow his suggestion - if I remember correctly gold was $310 per oz at that time. I went for company stock and other stocks. I have always been a buy and hold person - so the gold would have done well for me as well(if I held this long B-) ). As for all investments......when you buy is important, when you sell is also very important. Some folks have the gold in their homes....that would be a worry for me big time for both theft and re-sale.
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Old 12-05-2012, 05:30 PM   #43
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Also want to add. With all the advertisements you see on TV to buy gold recently....that to me is a sell sign. Sorry if this has been previously said in the thread.
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Old 12-05-2012, 06:16 PM   #44
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I am not brave enough to buy only gold, but I do have money in Permanent Portfolio (PRPFX), which allegedly has 25% in gold. Some prefer a roll your own approach, and you can find threads that discuss this. There are good arguments, but I'm one lazy dude .
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Old 12-05-2012, 06:40 PM   #45
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A snip from an article on gold, published today on Morningstar:

"Warren Buffett famously mused on gold: “[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

While I/DW do not have any gold holdings for investment purposes, I sort of go with what Mr. Buffett said.

Here's the entire article:
What Is Gold's Role?
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Old 12-05-2012, 07:14 PM   #46
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When I got my career job I was trained by a 62 yo WW2 veteran that had been selling pharma for 20+ years. He was such a character and some of his stories were unreal....both positive and negative concerning his time in the Pacific region as a Marine.
Anyway....he was so positive on gold. He bugged me to buy gold, all else is gambling, period. But as a young buck I did not follow his suggestion - if I remember correctly gold was $310 per oz at that time. I went for company stock and other stocks. I have always been a buy and hold person - so the gold would have done well for me as well(if I held this long B-) ). As for all investments......when you buy is important, when you sell is also very important. Some folks have the gold in their homes....that would be a worry for me big time for both theft and re-sale.
You were probably wise to pass regarding his gold advice. Based on his age and service in WWII, this must have happened no later than 1989, and that matches what you remember about the price of gold (see the blue line below).


If gold went from $310/oz at that time to today's approx $1700, that's a gain of 550%

Most other typical conservative and less volatile investments would have done much better for you (and for him). Examples: (from Jan or Feb 1989 to today, dividends reinvested)

Vanguard Wellington Fund: 871%
Vanguard Wellesley Income Fund: 831%
Vanguard STAR Fund: 737%

And if you'd just put the dough in the VGD 500 Index fund: 778%

I wonder if he reinvested all the dividends the gold coins paid out?
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Old 12-06-2012, 04:30 AM   #47
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All the bad things mentioned here (and elsewhere) about gold are true. Having said that, gold is the only "money" that was recognized 4000 years ago which is still recognized as money today (silver is not quite as universal). FWIW, my guess is that gold will still be "money" long after the yen, dollar, and pound sterling are ancient memories. Whether gold as once-and-future money is a psychological phenomenon, I do not know. I suspect that it is simply a universal tradition, backed up by the fact that gold can't be created by governments and it is almost universally recognized. I can tell the difference between 10, 14, and 18 carat gold jewelry just by its appearance (color).

I don't know that this argues for holding gold (physically or paper or stock) but it suggests (to me) that having some of the stuff might be a good idea over the long run. Whether one wants to own it or not, gold is virtually universally recognized as a store of value (volatile, perhaps, but so are dollars and yen, etc.).

A statement I heard years ago (attributed to someone from even farther back) says that an ounce of gold will always buy a man's suit of clothes. Of course, sometimes that suit is wool and sometimes it is silk.

As far as investing in gold, now gold seems less attractive than it did when it was $300. The few ounces I have are not burning a hole in my pocket and have easily kept my total portfolio's value positive through all the ups and downs of this century. Naturally, YMMV.
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Old 12-27-2012, 06:01 PM   #48
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bumping because of the fiscal cliff discussions.

Also, because of this... Savings accounts in US banks... (note the scale in trillions)


Now, if the growth of the accounts was a direct reflection of the dollars held on the sidelines, (which the media constantly reminds us of) by itself, these dollars might not be worrisome. (Money going to safe havens in times of stress). That alone would speak to an economy that was waiting a recovery.

Here's a point that might be worth keeping in mind, as we begin 2013. Understanding bank repurchase agreements, and re-hypothecation in the face of the Bear Stearns and Lehman situations is a grey area that doesn't get much attention. This ties in with the status of the housing market, and the fact that there has been little legislation to provide meaningful regulation to the banks. I would guess that this risk factor is the reason for Bernancke's decision to continue the borrowing into next year... and not to extend any stimulus.

The question that arises, is where does the bank recovery come from, since an increase in fees and penalties alone cannot account for the return to solvency?

That this is in the background leads me to believe that there will be some settlement of the fiscal cliff, before there is any cause for bank withdrawals.
Posted in the Gold thread, as gold is the alternative.

Just something to keep in mind.
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Old 12-27-2012, 08:54 PM   #49
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I have a kilo of physical gold. I see it as a store of value. I feel comfortable with the view that an ounce of gold has the same buying power it did centuries ago ( the often quoted roman tunic vs Italian suit ).

I consider that the value of gold doesn't change. It is the value of the fiat currency that it is denominated in ( currentlyUS$ ) that changes. As the dollar gets weaker via inflation, it takes more to buy an ounce.

Even before the more recent QE, the US$ has devalued by approx 90% over the last century. That will only get worse as the dollars from QE filter into the wider economy. So gold hasn't 'gone up'. The dollar is becoming ever more worthless. Once non Americans lose faith in it, it won't be used globally. It will be just paper.

In my view, I am taking some of my 'money', and converting it from paper into something that has held its value for centuries. And so are some of the worlds central banks, especially China. If they consider gold worth something, so do I.

Historically, gold is money. Paper used to be a promise to hand over the gold if required in the future. Then it became just an IOU. An IOU is only good if you believe the other person can make good. Most non Americans realise that America can't make good. The numbers are too big, and dollar is becoming worthless. Just my two (non US) 2 cents
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Old 12-28-2012, 10:45 AM   #50
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Historically, gold is money. Paper used to be a promise to hand over the gold if required in the future. Then it became just an IOU. An IOU is only good if you believe the other person can make good. Most non Americans realise that America can't make good. The numbers are too big, and dollar is becoming worthless. Just my two (non US) 2 cents
Cowrie shells used to be used as money, too. Got some lying around just in case?
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Old 12-28-2012, 04:01 PM   #51
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It's pretty obvious that this is is not entirely true.

You could buy gold for like $300/oz around the year 2000. Today it costs over five times that. The purchasing power of the dollar has not been reduced by 80% in that time.

The double cheeseburger that was on the dollar menu in 2000 has crept up to about $1.30, but it isn't $5. A car that was $20k in 2000 might be $30k today, but it isn't $100k.

Pure speculation plays a huge part in gold's fluctuations in value. In the last decade speculation has played a larger role in it's value than inflation has, IMO.

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I consider that the value of gold doesn't change. It is the value of the fiat currency that it is denominated in ( currentlyUS$ ) that changes. As the dollar gets weaker via inflation, it takes more to buy an ounce.
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Old 12-28-2012, 05:38 PM   #52
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Warren Buffett on Gold

He prefers to invest in income producing assets.

Here's What Warren Buffett Says About Gold and Commodities (NYSE:BRK.A, NYSE:BRK.B, NYSE:XOM, NYSEBA, NYSEBC, NYSE:GLD, NYSE:XLE, NYSE:USO) | Wall St. Cheat Sheet

I think Gold and Silver might be better viewed as insurance and a kind of emergency liquidity store. But there could be circumstances where no one would want the gold any more than the paper money.

If you were starving you would not trade your can of beans for a brick of gold for example.

I think its difficult to store value for the future in any secure way. There is risk in everything.

I have a little silver myself, but it is a small part of my NW.
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Old 12-28-2012, 06:09 PM   #53
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It's pretty obvious that this is is not entirely true.

You could buy gold for like $300/oz around the year 2000. Today it costs over five times that. The purchasing power of the dollar has not been reduced by 80% in that time.

The double cheeseburger that was on the dollar menu in 2000 has crept up to about $1.30, but it isn't $5. A car that was $20k in 2000 might be $30k today, but it isn't $100k.

Pure speculation plays a huge part in gold's fluctuations in value. In the last decade speculation has played a larger role in it's value than inflation has, IMO.
I agree to a point. But I also think that true inflation has been kept out of the general economy and funnelled into other 'bubbles'. Cheap debt for property for example, or the current bond bubble. Once a country like China decides is doesn't want to hold so much US debt, the flood of dollars into the economy will show the true level of inflation. It's all conjecture, but for me, it's worth having 5% of my net worth in gold. Just incase I'm right. If I'm wrong, it's still shiny
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Old 12-28-2012, 06:30 PM   #54
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Warren Buffett on Gold

He prefers to invest in income producing assets.

Here's What Warren Buffett Says About Gold and Commodities (NYSE:BRK.A, NYSE:BRK.B, NYSE:XOM, NYSEBA, NYSEBC, NYSE:GLD, NYSE:XLE, NYSE:USO) | Wall St. Cheat Sheet

I think Gold and Silver might be better viewed as insurance and a kind of emergency liquidity store. But there could be circumstances where no one would want the gold any more than the paper money.

If you were starving you would not trade your can of beans for a brick of gold for example.

I think its difficult to store value for the future in any secure way. There is risk in everything.

I have a little silver myself, but it is a small part of my NW.
Re: gold as emergency liquidity... yes, and possibly more...
Situations change...what was right in 2011, may not play as well in January 2013.
Understanding the consist of bank assets and the effect of deleveraging might even affect Warren Buffet's view today.

This article explains the dangers inherent in re-hypothecation. MF Global and the great Wall St re-hypothecation scandal
Hopefully none of this will come to pass and it will be unnecessary to even consider the possibility of a need for liquidity... (again, the goal of the Bernancke plan) but understanding the underlying repo and hypothecation could give a leg up on any major market move. MF Global offered some insight on the potential problems.
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Old 12-28-2012, 06:32 PM   #55
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In 2001, gold was $275 per ounce, and I was buying/selling silver bullion, which at the time was spot priced at something like $4 per ounce. I remember thinking "hell no, no way I'm paying $275 for a one ounce gold coin!" lol

Oh well............
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Old 12-28-2012, 08:03 PM   #56
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I think Gold and Silver might be better viewed as insurance and a kind of emergency liquidity store. But there could be circumstances where no one would want the gold any more than the paper money.

If you were starving you would not trade your can of beans for a brick of gold for example.

I think its difficult to store value for the future in any secure way. There is risk in everything.

I have a little silver myself, but it is a small part of my NW.
In most of the circumstances people mention wanting to have gold for, I would rather have a cache of shotshells and MREs. Guess what I have instead of gold?
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Old 01-14-2013, 06:55 PM   #57
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A visual on who owns and where the world's gold is:

Gold - Visualized in Bullion Bars
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Old 01-14-2013, 07:52 PM   #58
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I recently attended a presentation by a financial planner. He passsed around this bar of gold worth $58,000.

I set it down on one of those 5" sq. cocktail napkins (to give a sense of scale), to take this photo...


omni
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File Type: jpg gold bar.jpg (4.3 KB, 120 views)
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Old 01-14-2013, 07:54 PM   #59
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I recently attended a presentation by a financial planner. He passsed around this bar of gold worth $58,000.
Let me guess - it was his, not his clients...
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Old 01-14-2013, 07:57 PM   #60
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Let me guess - it was his, not his clients...
Yes, you guessed correctly!

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