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Old 11-23-2009, 09:23 PM   #41
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All workers and retiree's might want to read this. The US could be in serious trouble (which I think we already are ) A real good read. Gold may just be something to buy.
The 'Real' Jobless Rate: 17.5% of Workers are Unemployed - Economy * US * News * Story - CNBC.com
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Old 11-23-2009, 09:30 PM   #42
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That's it, I'm staking out my spot under the local overpass this weekend.
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Old 11-23-2009, 09:33 PM   #43
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This isn't anything new.
The 'Real' jobless rate has always been higher than the reported rate.
The US has been in trouble for the better part of a decade.
Yet I don't think it is so bad that you should abondon diversification and buy a bunch of gold.
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Old 11-23-2009, 11:41 PM   #44
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How do you interpret what the gold price is 'telling you' though?
Is it telling you that it is going to crash soon as it is at a decade long high (or multi year, or something of that sort)?
Or is it telling you that you should buy a bunch of it because it is still only at half of what it went for in the 70's (inflation adjusted)?
well with nations back in a buying mode (after years of selling) it seems to be saying something about the worlds desire to hold US dollars (or maybe any fiat currancy) or dollar denominated loans.

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The only thing gold is telling us is that people love to chase the latest, greatest, can't miss, investment of a lifetime.
o really, do u know actually know alot of people buying gold? i dont. so i dont think it is to the point of "the latest, greatest,..."

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Yet I don't think it is so bad that you should abondon diversification and buy a bunch of gold.
you dont have to "abondon diversification" to "buy a bunch of gold", just adjust your asset allocation
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Old 11-24-2009, 12:10 AM   #45
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you dont have to "abondon diversification" to "buy a bunch of gold", just adjust your asset allocation

You never know what some folks will do.

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Originally posted by ultimo I've had a large percentage of my savings in gold and gold funds since 2001, and the rest in foreign currencies.
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Old 11-24-2009, 12:34 AM   #46
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I have been listening to predictions of financial doomsday since I was a child in the 1970s.

Since then I have lived through:

- the 1987 sharemarket crash (the local market fell by more than 50% and ushered in a recesssion which lasted 5 years)

- the Asian crisis (which saw local property prices fall by more than 60% over a six year period)

- SARS (when people were making comparisons with the Spanish Influenza outbreak)

In other countries people could probably add the tech boom and bust.

My PC survived the millenium bug with no noticable effects.

I'm sure the world economy will continue to experience booms and busts in the future as it has since recorded history began. How long and how deep the current recession will go - I have no idea. Parts of the world are running unsustainable deficits, are heavily indebted and are likely to face rising taxes, rising inflation and falling currencies. A number of other countires are doing much better by many measures. While decoupling is probably not a reality, the degree of correlation between economies appears to be less strong than it once was.

The best protection through all of these economic cycles has been enough cash flow from employment and investments to meet my consumption needs, to meet my debt repayment obligations and to take advantage of attractively priced assets when they become available. So long as I am not forced to be a seller of assets in bad times, I will do ok.

During each of the bull and bear markets there has been a steady stream of predictions - both bullish and bearish. The more extreme to market movement the more extreme the predictions. These days I manage to ignore most of them. I particularly try to filter out predictions which are essentially statements that recent trends will continue or that we are experiencing a bubble.

I try to just focus on accumulating assets which produce cash flow - mostly property and equities which have the potential to grow over time. I keep a small proportion of assets in bonds and commodities - largely for the diversification benefit. (As an aside, I freely admit that not buying gold was a bad call - congratulations to those who got it right.)

I'm sure the value of my investments will fluctuate - both up and down. While nothing is certain except, death, taxes and volatility, I am more confident and sleep better with a portfolio of assets which is diversified and which generates cash flow than I would be if I had a large proportion of my money in an asset class that produced no cash flow and had limited practical uses.
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Old 11-24-2009, 02:55 AM   #47
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Very well said JDW_Fire.

Here is an interesting commentary on hedge fund manager Paul Tudor Jones and his current outlook on gold as well as other asset classes. He is definitely not a traditional gold bug but has turned bullish on the metal even at current prices. Towards the bottom of the link is Jones' latest hedge fund letter and at the end of it is his outlook on gold. If nothing else an interesting macroeconomic viewpoint from someone managing an $11B fund.

Paul Tudor Jones Favors Gold & Curve Flatteners (Investor Letter) ~ market folly
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Old 11-24-2009, 06:01 AM   #48
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What gold is telling us is that there's no faith in dollar strength and that it's likely to go lower. People (and central banks) don't hedge like this without a reason.

By the way, for all those who've participated in this discussion (and thanks to all!), I did find the Societe Generale Report:

Societe Generale - How to Prepare Yourself for a Global Economic Collapse | The Economic Populist
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Old 11-24-2009, 06:24 AM   #49
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Yet I don't think it is so bad that you should abondon diversification and buy a bunch of gold.
What's funny is that for as long as I've owned gold it has never been a good time to buy gold, at least according to everyone else.

I bought it at 287-296 per ounce. This was back in the days of fiber optics and pets.com and all those things.

Was that a good time to abandon diversification? Isn't diversification for people who aren't willing or able to stake out a clear position on something? Isn't it for financial advisors who want to cover their backsides?

Today gold is at 1160+. Is it a good time to buy? How high can it go? Who can know? A lot of very smart investors are coming in right now and buying "a bunch of gold." Is the U.S. going to default on its debt? Is the dollar going to fall off the cliff? A lot of big money, including central banks around the world, are starting to think so.

To not buy gold you'd have to make a case that the dollar's going higher, and with Bernanke himself saying that interest rates will stay low, you've got a pretty iron-clad case for a low dollar.

Meanwhile countries like Australia are raising interest rates. So where do the investment dollars go? To Australia, for one. Currencies respond to supply and demand like everything else.

How long will this last? That's a tough question. The day Bernanke hints that rates will go up is the day I sell half my gold.

Is the U.S. like Japan during the "lost decade" (which was much longer than a decade?)? A lot of parallels being drawn. In which case you can project that the U.S. will lag other countries on interest rates and the dollar will depreciate further.
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Old 11-24-2009, 06:29 AM   #50
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A lot of very smart investors are coming in right now and buying "a bunch of gold."
Only time will tell if those who are buying gold at these prices are "very smart investors". They very well may be - but there is no way anyone can know until the 'uncertain future' becomes the 'it was obvious' past.
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Old 11-24-2009, 06:29 AM   #51
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I have been listening to predictions of financial doomsday since I was a child in the 1970s.
I was a child in the 60's, and looking for a job in the 70's, right when unemployment reached this terrible high and interest rates were in the mid-teens. I don't know how much of a child you were at this time, but I was 22 and my future was at stake, and we haven't come near anything like that since... until now.
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Old 11-24-2009, 06:36 AM   #52
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I think only time will tell if those who are buying gold at these prices are "very smart investors".
Jim Rogers, Paul Tudor Jones, Peter Schiff, Marc Faber, David Einhorn, John Paulson, etc..etc..including Buffett and Bill Gates... yep, they might be proven wrong... but they're certainly not your everyday "gold bugs"!
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Old 11-24-2009, 06:58 AM   #53
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"The only thing gold is telling us is that people love to chase the latest, greatest, can't miss, investment of a lifetime."
I'd say we're not nearly there yet.

I don't want to get caught up in a bubble. In my first post here I said I'm thinking about selling my gold. I'm not banking on yet another frenzy...

If I were 40 I'd hold onto my gold for at least another four years. But I'm 53, I already put in 9 years with gold, I've done very well, I want to sleep at night and I want to retire in two years.

I'd be happy to sell my gold in the next couple of months still knowing it will go higher only because I want the certainty of a number I can plan around.

53 hit me like a sledge hammer... maybe it's a different age for others. This is the year I think I'm willing to give up gains (and risk) for a knowable future, even if it means leaving money on the table.
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Old 11-24-2009, 07:18 AM   #54
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Samclem:
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You never know what some folks will do.
or did
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Old 11-24-2009, 07:35 AM   #55
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Samclem, I get the feeling that what you're saying is that what I did was wrong--to put all my eggs in one basket--but the proof is on the table, at least for me. No, I didn't diversify. Yes, I did put my money where my instincts were. Yes, I was right. But that was an easy exercise (and I was also quite astute at that time, much to my eternal gratitude). It was an easy call back then (I'm talking 2001!). It's much more difficult now, largely because of fiscal policy and FED intervention...
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Old 11-24-2009, 08:31 AM   #56
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Samclem, I get the feeling that what you're saying is that what I did was wrong--to put all my eggs in one basket--but the proof is on the table, at least for me. No, I didn't diversify. Yes, I did put my money where my instincts were. Yes, I was right.
I think what Sam and others might be saying is what you did is only a good move if your instincts are correct. Most of us are not as gutsy (pun intended), don’t have your clear 2001 insight and choose to hedge our financial future by diversifying.

Assuming you sell before gold prices decline significantly (not saying they will), you can probably lay claim to being smarter than the rest of us in the room. Had your instincts been wrong, you probably wouldn't be posting here - or if you were, you might be telling a story similar to this one.

I don't think my instincts or my intellect can know which investment will be "the one", so I choose to take what I believe to be a more conservative course and diversify. I see no reason to add to the risk of becoming a “lost it all in the market” statistic.

Congratulations on picking the right number on the roulette wheel.

I think your idea of selling soon is an excellent one.
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Old 11-24-2009, 09:09 AM   #57
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Isn't diversification for people who aren't willing or able to stake out a clear position on something? Isn't it for financial advisors who want to cover their backsides?
Yes, diversification is for people who don't know what the future will look like, and who understand their level of uncertainty and what that uncertainty could mean to their portfolio.

Did you own only gold, or did you own other stuff (i.e diversify) at the same time (you mentioned foreign stocks)? Why would anyone own anything else if gold is the the ticket?

Keep spinning the wheel and doubling down. I don't need to hit a home run, I need to keep hitting singles reliably.

It's a common fallacy to believe that a good result is proof that the decision that produced it was also a good one.

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So you have already made up your mind and want our approval. Good luck!
Seems so.
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Old 11-24-2009, 09:20 AM   #58
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As ReWahoo said, it is wonderful that your gamble paid off.
I don't feel like taking the risk with a single asset portfolio.
More often than not, those that doe have tales of woe to tell. Although there are also some like you that hit it big. Kudos to them

I am also not saying it is a bad idea to buy ANY gold, just not to go 'all in' in gold or any other single asset class. Most if not all of the investors you listed would say the same. They may have stakes in gold, but also in many other asset classes (or at the very least, different commodities).
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Old 11-24-2009, 11:05 AM   #59
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Jim Rogers, Paul Tudor Jones, Peter Schiff, Marc Faber, David Einhorn, John Paulson, etc..etc..including Buffett and Bill Gates... yep, they might be proven wrong... but they're certainly not your everyday "gold bugs"!
Be aware that most of these current gold advocates would never suggest going 100% into precious metals, let alone any one asset class. They also work with advanced stop loss mechanisms knowing full well they could be wrong on a bet.
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Old 11-24-2009, 04:08 PM   #60
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Did you own only gold, or did you own other stuff (i.e diversify) at the same time (you mentioned foreign stocks)? Why would anyone own anything else if gold is the the ticket?
Yes, I also bought foreign currencies, mostly Aussie dollar, but not initially. I didn't diversify into things that didn't look positive against the scenario I strongly believed was unfolding: a declining stock market and U.S. dollar. I didn't put money into things that I thought would lose money in that scenario.

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It's a common fallacy to believe that a good result is proof that the decision that produced it was also a good one.
I agree that sometimes bad decisions can produce good outcomes... and sometimes good decisions can produce terrible outcomes.... but all that matters in the end is outcomes.

I believe my decisions were very good ones. I followed macro trends (a postgraduate program in economics, which I undertook purely for my own information, helped in this regard). I didn't listen to the talking heads on CNBC nor follow the herd. At that time it was clear that the stock market would eventually reach an inflection point. I wouldn't call myself lucky on that point, but my timing was fortuitous to some degree, as it always is, for everyone.

And now I'm at another decision-making point and this time with a view to retirement. I'm interested in the perspective of others who are engaged in similar planning. I've given a general summary of where I'm at, what my circumstances are, what I'm invested in and have asked others for their perspectives on asset allocation against a bearish backdrop of continued dollar depreciation, higher inflation (longer term), etc., etc. I've received some good information and advice, and for that I'm very thankful.
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