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Old 12-02-2009, 05:40 PM   #141
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The beauty of gold is...it's shortable. It was tough to short housing markets without selling a home.

I always underestimate the, ahem, irrationality of the markets, however. To paraphrase, it can go on longer than one's solvency.

My crystal ball shows: gold will start declining the middle of next year.
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Old 12-02-2009, 07:04 PM   #142
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Ah, gold! In the past 24 hours I have heard that:

1) some people are organizing gold parties in our neck of the woods
2) two new gold/silver exchange stores have just opened in our area
3) the "treasure hunters roadshow" is coming to town to buy our gold/silver coins and jewelry

I put my 30 lbs of silver to good use over thanksgiving and I ain't selling. Gone are the days when people would sell me their silver for peanuts because it was too much hassle to clean...
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Old 12-02-2009, 07:15 PM   #143
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The beauty of gold is...it's shortable. It was tough to short housing markets without selling a home.
I am *soooooo* tempted to short gold. We will look back and say "now *that* bubble was so obvious!".

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I always underestimate the, ahem, irrationality of the markets, however. To paraphrase, it can go on longer than one's solvency.
And that is the phrase that keeps me from doing it.

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My crystal ball shows: gold will start declining the middle of next year.
We should set a reminder on a calendar like T-Al does. I suspect you will be right, and I will be no richer for it

-ERD50
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Old 12-02-2009, 07:38 PM   #144
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The beauty of gold is...it's shortable. It was tough to short housing markets without selling a home.

I always underestimate the, ahem, irrationality of the markets, however. To paraphrase, it can go on longer than one's solvency.

My crystal ball shows: gold will start declining the middle of next year.
Always entertaining to observe the equal but opposite passion of the gold bears and bulls.

So, did you take a short position, are you planning to, or are you just expressing an opinion?
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Old 12-03-2009, 06:59 AM   #145
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For those interested in shorting gold, there are 3 obvious way to do it:

-short GLD
- buy DZZ
- buy puts on GLD

Another possibility is to short/buy put on GDX, a gold miner ETF.

Whether this is a good idea...
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Old 12-03-2009, 09:26 AM   #146
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My crystal ball shows: gold will start declining the middle of next year.
What does your crystal ball show gold at 10 years from now?
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Old 12-03-2009, 11:48 AM   #147
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What does your crystal ball show gold at 10 years from now?
Don't make W2R break out hers.

Your title to this thread says it all. Think about it.

Personally I'm in the "you don't need gold in your portfolio camp". I have enough complexity and diversity in my portfolio already. If I was going to add it I would NOT invest more than 5% and would rebalance religiously. Anything other then that is purely speculative and only increases your risk.

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Old 12-03-2009, 12:39 PM   #148
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So, did you take a short position, are you planning to, or are you just expressing an opinion?
I plan to buy puts on GLD or ZG. As I wrote above, it takes more time than I expect so I won't enter the position for a while yet. I'll set an alarm on my calendar, as suggested.

If I'm wrong, eh.
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Old 12-04-2009, 06:55 PM   #149
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Hi Samclem,

I do think the broad trends going forward are, in fact, knowable, and some things are a question of when, not if.
Then you shouldn't need help from any of us who freely admit that we can't see the future.
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Old 12-04-2009, 07:08 PM   #150
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Then you shouldn't need help from any of us who freely admit that we can't see the future.
I wasn't asking for future predictions.

I was asking what people would do under a rather extreme bearish scenario, not whether they actually believed the scenario would happen.

It's good to know there's such a wide range of views here. Ultimately, though, we're each responsible for our own decisions. We have to establish the assumptions we're most comfortable with. My pessimistic view makes me reluctant to invest long-term in equities, and causes me to question whether the old bull-market allocation models are appropriate going forward. A few years ago it was unthinkable to commit more than 5% of one's funds to gold, but those roaring days are over.

I began this discussion after going through the FireCalc worksheets and questioning whether the typical split amongst asset classes was a prudent way to go with the economic dynamics currently in play, and which still have a long way left to go.
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Old 12-04-2009, 07:12 PM   #151
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I plan to buy puts on GLD or ZG. As I wrote above, it takes more time than I expect so I won't enter the position for a while yet. I'll set an alarm on my calendar, as suggested.

If I'm wrong, eh.
I quit trading in options years ago--to risky. I only take long-term buy and hold positions based on macroeconomic trends.

Fees, commissions and taxes also take a big chunk out of options proceeds, as well.
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Old 12-04-2009, 07:17 PM   #152
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My crystal ball shows: gold will start declining the middle of next year.
I don't disagree with you, as that would also be a seasonally low period for gold. The declines will likely be brief, however, as central banks, fund managers, jewelers and retail investors increasingly appear to be treating pullbacks as buying opportunities.
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Old 12-04-2009, 07:23 PM   #153
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I began this discussion after going through the FireCalc worksheets and questioning whether the typical split amongst asset classes was a prudent way to go with the economic dynamics currently in play, and which still have a long way left to go.
And what did firecalc have to say? What conclusions did you draw from the scenarios you ran?

Again, many have responded to your question. Lots of diversification. Perhaps you would like to respond to that suggestion?
Others have mentioned using 'buckets'. If you are ok with some long term risk, but want to make sure you don't loose much/anything in the next year or two, take a year or two out now while prices are good, then keep that in cash (MM/short term CDs, etc). Then you are protected in the short term and can still invest some in longer term, but riskier stuff.
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Old 12-04-2009, 09:01 PM   #154
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I don't disagree with you, as that would also be a seasonally low period for gold. The declines will likely be brief, however, as central banks, fund managers, jewelers and retail investors increasingly appear to be treating pullbacks as buying opportunities.
The obvious solution is to sell your gold and buy tin-foil. The hat business is about to take off. Don't miss the opportunity to get filthy rich.
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Old 12-05-2009, 06:31 AM   #155
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The obvious solution is to sell your gold and buy tin-foil. The hat business is about to take off. Don't miss the opportunity to get filthy rich.
Actually, most commodities should do well... even aluminum.

If the global economy improves, then expect increased activity in manufacturing and infrastructure to increase demand.

If the global economy deteriorates, then expect money to move out of cash assets and into commodities.

Gold isn't even the best one to be in, but it's easy.

That said, I've already done well in gold and wish to get on with retirement planning. I appreciate all the comments I've received here about diversification in economically unstable times.
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Old 12-05-2009, 10:03 AM   #156
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No, no, Zathras,

Optimism is not to be tolerated. It is time to panic.

Give him the cool aid.

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And what did firecalc have to say? What conclusions did you draw from the scenarios you ran?

Again, many have responded to your question. Lots of diversification. Perhaps you would like to respond to that suggestion?
Others have mentioned using 'buckets'. If you are ok with some long term risk, but want to make sure you don't loose much/anything in the next year or two, take a year or two out now while prices are good, then keep that in cash (MM/short term CDs, etc). Then you are protected in the short term and can still invest some in longer term, but riskier stuff.
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Old 12-05-2009, 11:09 AM   #157
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If the global economy deteriorates, then expect money to move out of cash assets and into commodities.
This seems counterintuituve to me...

Btw, have you looked at the Harry Browne Permanent Portfolio?
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Old 12-05-2009, 11:18 AM   #158
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This seems counterintuituve to me...
Shhhhh, the trick is not to think too hard about it.

No matter what happens commodities always go up. It's a sure thing.
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Old 12-05-2009, 11:33 AM   #159
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Shhhhh, the trick is not to think too hard about it.

No matter what happens commodities always go up. It's a sure thing.
......you know why? Because they get used up, and then you need some more. Gold you can recycle.
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Old 12-05-2009, 03:42 PM   #160
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And what did firecalc have to say? What conclusions did you draw from the scenarios you ran?
The FIRECalc model is based on historical stock market, interest rate and inflation data. I believe it has a couple of weaknesses. One major flaw is that stock market indices underestimate returns because they doesn't account for dividends. The other is that, if one envisions an economic future dominated by FED fiscal policy, government stimulus spending and other interventions, skyrocketing taxes and interest rates, along with a continuing bull market in commodities, then the FIRECalc results are pretty much meaningless. That's why I came into the forum: to see what others who share my views are doing.

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Again, many have responded to your question. Lots of diversification. Perhaps you would like to respond to that suggestion?
I've responded to that several times. Namely, I'm interested in diversification that minimises exposure to things I think won't do well over the next five to 10 years. I don't want to be in stock index funds (in the long term). I'm skeptical about bonds (in the short term). Up to now I've had my money in gold and foreign currencies (and, believe me, I'm inured to jokes and jobs about gold and gold bugs... heard 'em all by now.) Diversification to me is flawed advice if it means throwing part of my money down the drain just because I'm unwilling to connect the dots and accept that the certain things are inevitable.

A lot of people here seem to think that absolutely anything could happen in the future, so one must be prepared for any scenario. I disagree. I think the basic economic parameters going forward have been established. I'm interested in diversification withiin those parameters.
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