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Re: Gold as Safety
Old 12-15-2005, 07:08 AM   #41
 
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Re: Gold as Safety

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Originally Posted by brewer12345
You know, I hear this stuff from the gold bugs (especially the fundie xtian ones) and it still smells like BS.* Yes, fiat currency has value because we all agree it does.* But gold only has value because people are willing to pay something for it.* But for the most part, it is just a shiny yellow metal that isn't as attractive as some others and is less industrially useful than most.* 1oz. of gold represents whatever people are willing to pay for it, that's it.
When the price is set by hype - that is not my type.

Once the big players - says time to take profits and dumps a couple million ounces on the market you will be screwed.* Or if there* is a earthquake and a gold vein is pushed up from the core that has a good deposit - you are screwed.*

Gold is like two gun slingers - who is going to blink first.* Since we are small fries - we will get one between the eyes before we could get our gold out the door.* *It could fall $300 in seconds (a la the 1980s).* How quick can you get it to a dealer?*

You can not base your retirement goals on hype.

If you have precious metals in your retirement plans - just take it out.*

Plan for the worse, hope for the best.*
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Re: Gold as Safety
Old 12-15-2005, 08:05 AM   #42
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Re: Gold as Safety

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Paper money--or whatever--is a creation in people's minds.* ...* Ultimately, it* comes back to gold as the preferred storage medium ...
Value of anything is a creation in people's mind -- gold, paper, even food: what one culture values as food (say, nice juicy bugs), another sees as vermin.
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Re: Gold as Safety
Old 12-15-2005, 08:41 AM   #43
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Re: Gold as Safety

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Originally Posted by Nords
Geez, Greg, if you see a depreciating dollar then short the dollar-- don't chase after proxies that might reflect a depreciating currency or whose price might be complicated by a dozen other factors.

Gold hedges against the dollar, true. But in all other aspects, as an appreciating investment over the last couple decades, gold has sucked almost as badly as large-cap growth. I doubt that holders of euros or renminbi are as excited by gold as some dollar holders.

Gold is a great asset for trading. But if you're gonna trade then trade-- don't try to call it an investment.

I look forward to your investment assessment of shotgun shells and MREs...
Nords: How do you short the US$ without using another currency or group of currencies as a frame of reference? I have small position in PSAFX (?), Prudent Bear Income Fund. I have to watch it because it's in the market place. That is my primary point in this thread. With 10% in GLD type funds, it is a safe haven, a part of the portfolio that I never have to worry about--if, PERHAPS, the world gets volatile even for a few brief moments. It always bothers me that people over time ignore some fundamental facts about the world and life in general and subsequently take risks they may be oblivious to.

Right after 9/11 and in the second stage of the stock market drop, many people said "It is inevitable that those folks would strike again." (Warran Buffet said it too, I believe.) And yet the 9/11 Commision recently said that we--re: the gov't--are not doing nearly enough to protect our borders. Duh! There isn't much I can do about this. It would be foolish to carry shotgun shells and MREs around in my pockets.

10% of my portfolio in as safe a place as I can imagine protects buffers me from any sorts of panic. It means that it is then easier to make better decisions in the market place, less emotional decisions, with the other 90%. Some people might call that diversity. I suspect many here, during the tech crash of 2001, had their portfolios drop more than 10%, even with the rising bond prices. I'm happy if they didn't panic or worry.

For some time now, John Snow has been saying that the Chinese must revalue their yuan (BTW, was that an order?). This means, to my mind, that he is attempting to make the US$ worth . . . um . . . less and also increase inflation into this country. He is an official gov't spokesman to my knowledge, so this might be our policy (at least that's my guess). So, preparing for inflation might be a wise move in some way, no? Gold, historically, has been a safe haven for this too. Am I seeing Michael Jackson here?

Finally, I find it very difficult to see where most of the market participants are not playing the 'greater fool' game with most their money. Until recently with the housing price deceleration, I think alot of people have at least partially bought their houses under the assumption that at some point a greater fool than them would someday purchase it. In fact, they actually buy more house than they need on that anticipation--or a second one for investment purposes. Same with stocks and many bonds. Buying stocks with PEs of 20 seems like people expect some day to sell them to someone else at a higher price. Ditto with many bonds. Am I wrong with this type of thinking? Is it really different this time? Will there be no reversion to the mean? Please tell me why not, because as it is now, that's about the only story I hear from most media sources. Except Warren Buffet and Charlie Munger, they seem to see things differently.

BTW: You are wrong about renminbi holders, the Chinese anyway. China now allows citizens to own gold and a market has opened in Shanghai, I believe. It seems a good sized market has developed already.
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Re: Gold as Safety
Old 12-15-2005, 08:52 AM   #44
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Re: Gold as Safety

Greg,

Are you worried about the solvency of GLD type funds in the event of a total system collapse? What if there is no government to force GLD to fork over the gold (or cash) when you want to withdraw your shares?
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Re: Gold as Safety
Old 12-15-2005, 09:18 AM   #45
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Re: Gold as Safety

Instead of speculating on gold, why not just invest the money into a precious metal fund or a commodity fund such as Pimco Real return?
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Re: Gold as Safety
Old 12-15-2005, 09:44 AM   #46
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Re: Gold as Safety

Pro Funds has a fund "FDPIX" which is short the US$

Objective

Falling U.S. Dollar ProFund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the U.S. Dollar Index.

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Re: Gold as Safety
Old 12-15-2005, 09:54 AM   #47
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Re: Gold as Safety

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Originally Posted by Gonzo
Pro Funds has a fund "FDPIX" which is short the US$

Objective

Falling U.S. Dollar ProFund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the U.S. Dollar Index.

Gonzo
So the dollar value of your fund investment goes up as the USD drops vs. a basket of currencies? Sounds like you have just backed into other currencies as an investment, which I don't think Greg wants.
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Re: Gold as Safety
Old 12-15-2005, 10:12 AM   #48
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Re: Gold as Safety

Wouldn't an unhedged globally diversified (except US) very short term bond fund give a similar currency return, plus a few points of return due to the coupon yield from the bonds? Do these funds exist?
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Re: Gold as Safety
Old 12-15-2005, 10:18 AM   #49
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Re: Gold as Safety

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Originally Posted by justin
Wouldn't an unhedged globally diversified (except US) very short term bond fund give a similar currency return, plus a few points of return due to the coupon yield from the bonds?* Do these funds exist?*
Depends on the composition of the fund versus the index. In addition, there are likely to be some differences due to (I assume) Rydex' use of derivatives and the hypothetical fund's use of cash instruments.

Are there funds like this? There are several unhedged non-US bond funds out there. PIMCO runs one (PFUAX? not sure of the symbol). I own GIM, a closed end fund that holds a diversified portfolio of unhedged non-US debt with a shortish duraton (3 and change).
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Re: Gold as Safety
Old 12-15-2005, 11:04 AM   #50
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Re: Gold as Safety

Greg / Brewer -

You're probably aware of this guy, I've used him in the past to time GLD, he's fairly good at the technical. He has a letter - Professional Timing Service and also posts teaser comments - these came out yesterday:

http://www.protiming.com/index.asp/f...ndicators.main

"Caution on gold...wait for correction to maybe 485, at least a test of 500 resistance level, then onward to 580, looking for 720..."

Also, get out of the stock market and into commodities.... refreshingly bearish!
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Re: Gold as Safety
Old 12-15-2005, 11:10 AM   #51
 
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Re: Gold as Safety

Was this the same guy that said the USD was going to fall 10% this year?

I believe USD is up like 14% last time I checked.

A miss of 24% -
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Re: Gold as Safety
Old 12-15-2005, 12:56 PM   #52
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Re: Gold as Safety

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Originally Posted by ((^+^)) SG
Preferred storage medium of work

I don't know what that means.
SG: Money is basically how we store up all our labor. We work for a living and receive something in return for that work--money. We save some of this stuff and even "compound" it thru that other miracle. Then, when we retire, we unwind all that storage material--money--it is returned to the world to provide us with the goods and services that we need. We buy some property, add some value to it, then sell it for a higher price--more money for us. That's one fundamental way the world has always worked. Pre-retirement is storage mode; retirement is distribution mode. All done with money. Or beans

Adding value to something by just flipping it, kind of like during the tulip craze, can't last very long--and it bears similarities to our current RE bubble. Oh boy, free money: buy a house, hold a house, sell a house. One could call such things "bubbles in process"--in a general, vague sort of way, when people start making money without putting much effort or thought into it.
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Re: Gold as Safety
Old 12-15-2005, 02:53 PM   #53
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Re: Gold as Safety

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Originally Posted by Apocalypse . . .um . . .SOON
SG:* Money is basically how we store up all our labor.* We work for a living and receive something in return for that work--money.* We save some of this stuff and even "compound" it thru that other miracle.* Then, when we retire, we unwind all that storage material--money--it is returned to the world to provide us with the goods and services that we need.* We buy some property, add some value to it, then sell it for a higher price--more money for us.* That's one fundamental way the world has always worked.* Pre-retirement is storage mode; retirement is distribution mode.* All done with money.* Or beans

Adding value to something by just flipping it, kind of like during the tulip craze, can't last very long--and it bears similarities to our current RE bubble.* Oh boy, free money:* buy a house, hold a house, sell a house.* One could call such things "bubbles in process"--in a general, vague sort of way, when people start making money without putting much effort or thought into it.*
And you think gold is the preferred storage medium of work? Preferred by who? I would prefer to store my work's energy in things that have productivity potential. Stocks and bonds have productivity potential becuase they represent your partial owner of a company that has workers and capital and products and distribution capability. . . Property has productivity potential because you can conduct productive endeavors on the property.

You can argue that gold has productivity potential, but if its value were based on your ability to turn it into tools, jewelery or electronic circuits (its true productivity potential) it would be priced far lower than it is today.
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Re: Gold as Safety
Old 12-15-2005, 04:16 PM   #54
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Re: Gold as Safety

SG: I almost totally agree with you. We're currently 10% apart on the major issues you mentioned in your last post. Scary, huh? Historically, gold has been the preferred, default currency.

http://www.minneapolisfed.org/Resear...calc/index.cfm

--Greg
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Re: Gold as Safety
Old 12-15-2005, 10:19 PM   #55
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Re: Gold as Safety

My dad is a classic conservative investor with requisite dose of depression era "gold bug" in him. One of the few people I know who made money from precious metals in the early 80's. I can still remember about 5 bags of silver stuffed in the basement. We used to play "fun" poker with the quarters. He sold 3 of the 5 bags right at the "Hunt Brothers" peak. We used a red wagon to wheel em into the broker to sell (heavy suckers). When I think back on it, the Hunt Brothers turned it into a pretty nerve racking speculation, but it helped put me and my 3 brothers through college. I still think it is a challenging investment that doesn't win often, but I own some silver bags, gold coins and mining stocks now because DD wouldn't let me sleep if I didn't. They've done quite well. Thanks again Dad
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Re: Gold as Safety
Old 12-15-2005, 10:50 PM   #56
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Re: Gold as Safety

TargaDave,

My Dad survived the Depression and saved a bag of the old silver coins too. He left each of the kids a few gold coins. I am still trying to figure out what to do with them. I would not mind selling but I have an emotional attachment to these coins. I do not even consider them part of my portfolio. I expect to leave them to my kids as I can't figure out what else to do with them and there are not enough to do anything serious financially.
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Re: Gold as Safety
Old 12-15-2005, 10:54 PM   #57
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Re: Gold as Safety

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Originally Posted by TargaDave
My dad is a classic conservative investor with requisite dose of depression era "gold bug" in him. One of the few people I know who made money from precious metals in the early 80's. I can still remember about 5 bags of silver stuffed in the basement. We used to play "fun" poker with the quarters. He sold 3 of the 5 bags right at the "Hunt Brothers" peak. We used a red wagon to wheel em into the broker to sell (heavy suckers). When I think back on it, the Hunt Brothers turned it into a pretty nerve racking speculation, but it helped put me and my 3 brothers through college. I still think it is a challenging investment that doesn't win often, but I own some silver bags, gold coins and mining stocks now because DD wouldn't let me sleep if I didn't. They've done quite well. Thanks again Dad
My guess, Dad might say right now "The more things change, the more they stay the same." In all my little searches and quests, many of the end results come round to something my father said, and then shedding it in a new and different light. Lots of good moments, those. Thank you.

--Greg
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Re: Gold as Safety
Old 12-15-2005, 11:32 PM   #58
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Re: Gold as Safety

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Originally Posted by Apocalypse . . .um . . .SOON
SG:* I almost totally agree with you.* We're currently 10% apart on the major issues you mentioned in your last post.* Scary, huh?* . . .
Not to me, Greg. That just means you are 90% right about something.
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Re: Gold as Safety
Old 12-16-2005, 12:49 AM   #59
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Re: Gold as Safety

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Originally Posted by TargaDave
My dad is a classic conservative investor with requisite dose of depression era "gold bug" in him.* One of the few people I know who made money from precious metals in the early 80's.* I can still remember about 5 bags of silver stuffed in the basement.* We used to play "fun" poker with the quarters.* He sold 3 of the 5 bags right at the "Hunt Brothers" peak.* We used a red wagon to wheel em into the broker to sell (heavy suckers).* When I think back on it, the Hunt Brothers turned it into a pretty nerve racking speculation,* but it helped put me and my 3 brothers through college.* I still think it is a challenging investment that doesn't win often, but I own some silver bags, gold coins and mining stocks now because DD wouldn't let me sleep if I didn't.* They've done quite well.* Thanks again Dad*
My FIL was a young man during WW2. During the periods of resistance/invasion/occupation/resistance/on the run/liberation (repeat), his father liquidated whatever the family had and bought the smallest gold coins he could get his hands on. That way, he didn't constantly risk holding paper money which could become worthless almost overnight. Able to transport it in their pockets while on the run, FIL and his brothers and their father traded the gold for food and shelter for the family. Crossing national borders, no change in currency was required, gold coins "would do nicely Sir".

They family survived bar one brother. They kept the gold that was left over and had it made into a variety of everyday objects: belt buckles, buttons, tie clips etc, so it could be smuggled / carried without detection if they ever had to flee again.

Aside from probably saving most of his family from starvation, that gold has been the worst investment he ever made. At the time, there was enough left to feed, clothe and house a family of 9 for about a year, according to him. Now, it would barely pay one month rent for his house. But the impression that gold is "safety" is burned deep and he would probably never sleep if he didn't know he had it as the last resort.

He now stores his gold under a cracked floor tile in the bathroom.

No investment wisdom here, just thought you might like the story.

Cheers,

Honkie
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Re: Gold as Safety
Old 12-16-2005, 08:52 AM   #60
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Re: Gold as Safety

I've got another story like Honkie's.

My wife's family was living in Cambodia while Pol Pot was in the middle of his genocidal campaign to kill millions of people (early-mid 1970’s I believe). They were the typical third world Cambodian family under a repressive regime – no wealth, living in a tiny hut, eating bugs, bark, leaves, whatever. After being almost killed a few times, DW’s father decided maybe it would be best to move the whole family across the border into Thailand so the commies wouldn’t kill them. The father was also a soldier in the resistance army, fighting against Pol Pot’s regime. A bunch of other villagers paid my FIL in gold (gold nuggets, bars, trinkets, jewelry) to smuggle them out of Cambodia across the border into Thailand.

In that part of the world at that time, gold was the main currency of exchange. If you needed to buy ammo or weapons or pay for lodging or food for your family, gold was frequently the method of payment. Often, a gold necklace (with dozens or hundreds of links) would be expended, link by link, for small goods or services. Buying and selling was more like bartering. A particular size of gold piece or link would be offered, then the quantity of a good or service would be negotiated on. It was a true gold-based economy, barely a quarter century ago.

The Thai measure of gold is the ‘baht’. The Thai currency is also denominated in baht, although 1 gold baht equals many thousand currency bahts.

To this day, my mother in law and father in law keep a large percentage of their assets in gold – primarily pure gold jewelry. MIL has a secret hiding place for all her gold. And someone always has to guard it or she gets worried. The bag where it is hidden probably weighs 15-20 pounds, all gold. They still have the unstated mentality that anything could happen, and the gold is their insurance plan, should they need to flee the country (they live a few minutes from me in North Carolina now).

A good story, but it doesn’t make me want to buy any gold!
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