Scott Burns recommends lead

[Tailgate]

This is a great answer from one of my favorite money guys... From his column in today's Dallas Morning News

My husband is convinced there is going to be a total devaluation of the dollar. His solution is to turn a large portion of his 401(k) into a gold-backed vehicle. What would be the best way to do this? He doesn’t want a mutual fund that invests in gold, but rather the gold itself stored in some manner. He has been reading Peter Schiff online for his info. I am very concerned that this is not safe. Your comments would be much appreciated.

S.C., San Antonio

If you really get into the financial collapse thing, your husband should buy lead, not gold. The lead should be in the form of bullets, preferably of a large caliber. I am told that when these lead bullets are inserted into a good handgun, the lead can be turned into gold very quickly. This does not require converting a 401(k), or any other form of investment, into gold.

If you’re going to bet on gold, the best way to hold it is in the form of gold coins that you store in a secure place in your house because if there is a collapse, our financial institutions won’t be doing business as usual.

In the meantime, our first duty is to take part in the world “as is, where is.” That means participating in the system of saving and investing that we have, trying to make it better, and hoping that our collective wisdom exceeds our collective stupidity. Yes, it’s looking like it will be a really close call.

 

[haha]

This is a great answer from one of my favorite money guys... From his column in today's Dallas Morning News

My husband is convinced there is going to be a total devaluation of the dollar. His solution is to turn a large portion of his 401(k) into a gold-backed vehicle. What would be the best way to do this? He doesn’t want a mutual fund that invests in gold, but rather the gold itself stored in some manner. He has been reading Peter Schiff online for his info. I am very concerned that this is not safe. Your comments would be much appreciated.

S.C., San Antonio

If you really get into the financial collapse thing, your husband should buy lead, not gold. The lead should be in the form of bullets, preferably of a large caliber. I am told that when these lead bullets are inserted into a good handgun, the lead can be turned into gold very quickly. This does not require converting a 401(k), or any other form of investment, into gold.

If you’re going to bet on gold, the best way to hold it is in the form of gold coins that you store in a secure place in your house because if there is a collapse, our financial institutions won’t be doing business as usual.

In the meantime, our first duty is to take part in the world “as is, where is.” That means participating in the system of saving and investing that we have, trying to make it better, and hoping that our collective wisdom exceeds our collective stupidity. Yes, it’s looking like it will be a really close call.

Interesting, and will likely help this person stay out of harm's way. Still, I strongly disagree with all the bs about "our first duty is". First, what does he know about anyone else's life situation, and what that person's duty may be taken to be? And this part is the worst :"That means participating in the system of saving and investing that we have, trying to make it better, and hoping that our collective wisdom exceeds our collective stupidity." I accept no obligation to make myself stupid, just because it seems to be the social trend at any given time. In fact I would say that we have a genetic and social debt ow3ed to those who came before us and to our descendants to stay as clearheaded and autonomous as we can.

Scott Burns made a successful career telling others what to do. Big deal, this attests to his persuasive powers, not to his intelligence. Right or wrong, he still gets paid.

Ha

 

[Turn_the_Page]

I really like Burns, but I find his columns lately not up to his usual standards. He seems more like the grumpy old uncle or something. Overall, his work is excellent and I really value his ability to cut through the bull.

Diversification into gold or some other tangible asset has it's merits. It's the liquidity challenge that can be a hurdle, plus you've got to keep it somewhere. Personally, I'd probably buy real estate before I'd buy gold, if I was worried about this.

On the other hand, stocking up on guns and ammo, which you could then sell to all the Mad Maxs might be a real hedge.

 

[frayne]

The only problem I see is you can't eat gold or lead.

 

[Mulligan]

The only problem I see is you can't eat gold or lead.

But in a Mad Max world you could use the lead to keep your food or to "acquire" it from someone else.


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[eta2020]

But in a Mad Max world you could use the lead to keep your food or to "acquire" it from someone else.


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Yea preparing for Mad Max world you should invest your money in building muscle and some high quality weapons will help too.

 

[Mulligan]

Yea preparing for Mad Max world you should invest your money in building muscle and some high quality weapons will help too.

Well its all about the high quality weapons then. The muscle mass cant be built up anymore because the old body is starting to breakdown...


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[Texas Proud]

The problem I see with this bullet or even gold thinking is that the chance of it happening is just way to slim....


Take the Mad Max option.... the only way the US is going there is a nuclear war.... I am in the blast zone... my chance of survival is pretty low... also, there are many other people who are MUCH better at being Mad Max leader than me... nope, I will not survive if we get here.... so why prepare for it


Now, let's just say that the dollar crashes (which is the opposite of what it is doing).... who cares.... many countries have gone through major currency devaluation and the vast majority of people have survived.... heck, probably the worst country you can live in today is North Korea and they seem to continue to live....

And what is the chance of the US crashing and the rest of the world not I would place it so close to zero that it is not an issue... so if the whole world crashes... then how is the dollar going to crash IMO, it would take many many years (decades) for this to happen...

 

[Mulligan]

I agree. I give no real thought to that scenario. I MAY possibly be able to defend my food supply in my house if I had one. But I doubt I would be very good at pillaging and armed robbery.


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[mickeyd]

buy lead, not gold. The lead should be in the form of bullets,
preferably of a large caliber.

I have read this someplace else in the past (don't recall where) and recall it as very clever. And very true.

 

[Running_Man]

The implication that Scott Burns is making is that it will be better to be a criminal than invest in gold. Certainly the behavior he is advocating is criminal using bullets to take someone else's possession as a survival tactic. Now when in history has a single individual been able to use a store of bullets as a response to currency devaluation? Now compare that in times to when an investment in Gold may have been proven useful in times of currency devaluation.

Note that the original request mentioned that her husband wanted to invest a PORTION of their investments in actual gold. She does say large but I would argue that a 25% investment in gold to invest as Harry Browne says is not only not dangerous but a prudent proven way to maintain the value of a portfolio, in fact it is one of the few proposed by anyone over any length of time that has existed unchanged in it's actual investment choices that has proven to be stable. Scott Burns originally insisted 75 percent of a portfolio invested in the S&P500 had all the international exposure one needed and would fund any retirement through at least 30 years, then changed his investment advice when that proved not to be true. Bernstein went from a heavy stock exposure to recommending gobs of cash to protect a portfolio.

I do not subscribe to Peter Schiff's view on the imminent devaluation of the dollar but that collapse would certainly not necessarily lead to an economic or systematic collapse. Certainly planning for a devaluation of the dollar cannot be a lunatic thing since the IMF has already a backup plan in place for a global currency if the dollar would lose it's reserve status and would be subject to a large devaluation. If the IMF has a plan in case of a dollar devaluation, how can such a thought be met with the solutions of robbing your neighbor at gunpoint as a superior idea? China has pushed that a new global currency replace the dollar in the past year, the idea this is something that would lead to a global collapse is as entertaining as the notion in 2007 that if housing prices collapsed we would all be living under bridges, a position advocated on these very boards in 2007, governments respond to mitigate damages, but there are still ways for an individual to mitigate government solutions for these damages without a backup plan being armed robbery.

 

[samclem]

The implication that Scott Burns is making is that it will be better to be a criminal than invest in gold . . . there are still ways for an individual to mitigate government solutions for these damages without a backup plan being armed robbery.

I'm pretty sure Burns was being facetious, that would certainly be consistent with the tone of his comment.
Gold as a hedge--maybe. I'd be a bigger believer if someone could explain why it has value--other than "because people think it does". In that respect, it's just as much a "fiat currency" as paper. Can't make more of it? That doesn't mean much if people stop believing in its mystical power. And getting enough physical gold to really make a difference in the case of a severe dollar devaluation (even if gold maintains its following) is quite expensive in terms of opportunity cost.
OTOH, the investment in ammunition needed to provide a meaningful improvement in one's situation in the (very remote) possibility of a breakdown in public order is small.

 

[mickeyd]

Certainly the behavior he is advocating is criminal using bullets to take
someone else's possession

I take it as using the lead (bullet) to protect you and yours. No criminal activity there.

 

[haha]

I take it as using the lead (bullet) to protect you and yours. No criminal activity there.

Depends on who you are, who you shoot, and who your local officials, police, prosecutors, and judges.

People love to spend time discussing fantasies. Tiny houses, Mad Max, having a cow and goats and living off the grid. Almost any of this takes a huge amount of time and usually resources, assumes skills and attitudes that few ex-accountants have.

The whole idea of meticulously planning many years of a retired life is just a fantasy. One of my sons makes a great deal of money, but spends very handsomely too. I clearly failed to teach the lbym to him, I thought my example would suffice. However, growing up in a financially careful family can work just the opposite direction, by encouraging the children to cut loose when Pop is no longer in control. We are close, sometimes I get the urge to try to belatedly clue him in. But then I think, all that will do is make the settlement in any possible divorce worse, and make Elizabeth Warren and her band of thieves happy. Why bother?

At least pleasure you have had, you have had. It cannot get away from you, except by brain injury or dementia

Que será, será, a 50s song by Doris Day expresses reality pretty well.

Ha

 

[MRG]

I take it as using the lead (bullet) to protect you and yours. No criminal activity there.

Agreed, have several hundred pounds of the precious metal. It keeps getting more expensive every year.

 

[unno2002]

Review the facts available to you, decide on what scenarios you need to prepare for, and act accordingly.

I opine that if we have the broad and deep collapse that some discuss, any "paper" assets, including a "gold backed vehicle" inside an account, have the potential to go to zero value. In such a scenario physical assets that provide your "life support", or that you can barter to others, would be of value.

[FONT=&quot]Jack Spirko, a podcaster on preparedness, speaks on how preparedness is also a retirement plan.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]http://www.thesurvivalpodcast.com/episode-278-preparedness-as-a-retirement-plan[/FONT]

 

[HFWR]

Those of us of relatively modest means would have to give up not only any chance for retirement, but likely exhaust most or all savings to buy gold, guns, and a compound. That's okay if that's how you want to spend the rest of your days, but for what I consider to be a relatively low probability event, i.e. Mad Max, I think I'll pass.

 

[timo2]

Well its all about the high quality weapons then. The muscle mass cant be built up anymore because the old body is starting to breakdown...
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The problem is there is always someone with a bigger weapon.

I'm taking the approach I developed in choosing seating in the cubicle jungle....the nice window seats are always coveted by others, the 'storage room B's' are uninhabitable, so a nice mediocre but livable situation suffices quite nicely, and the predators don't come by that much.

 

[Koolau]

Once again, we have the usual straw-man argument: Either the economy is relative okay or else it's back to the stone age of dog-eat-dog with nothing in between. Collapse of the dollar would be traumatic (especially to dollar-denominated investment holders) but it would not necessarily bring on the apocalypse. I'm surprised Scott Burns would fall for the usual trap as so many others have done over the years when they argue against gold investments. There are so many middle-ground scenarios that are more likely. In some of these scenarios, owning gold just might make sense. So would investing in other currancies in some situations.

If Burns wants to argue against a particular investment (such as, in this case, gold) he should be a bit less glib and dismissive. Someone had a question that was important to them and Scott more or less called them an idiot (IMHO). That's not very helpful. YMMV as always.

 

[Fermion]

Writer devolves into fantasy where guns rule, gold is worthless, and disputes are settled in the Thunderdome.

Contrast that with reality. My wife's grandparents would not have been able to escape Latvia to western Europe after WWII if they had not had quite a bit of gold and silver to bribe various Russian border guards. Guns were useless and would have likely gotten them killed (and then me without a wife).

So I can on one hand believe in Mad Max, or I can believe in history.

That being said, I don't own gold because I am a gambler and I am betting we avoid hyperinflation and/or outside invasion.