Gold - Feb 10, 2006 to Jan 18, 2007

[Laidback Al]

Re: GLD A Way to Buy Gold in The Stock Market

Replying to my own (flippant) comments:

Perhaps stuffing your mattress with your "store of value" is the way to go. The question is: Do you want to sleep on soft wads of paper money or a hard mattress of gold bricks?

GaudiaRay: Some percentage must be given to the risk of the bank closure. Some percentage must be given to the risk that the dollar will inflate.


GR you are right. Each of us has to decide about how to apportion our assets for our own best interest. Some want to maximize return, others want to preserve capital. Hoarding of capital (cash or gold) in mattress ensures capital preservation (even considering loss of buying power through inflation). Actively participating in the market provides an opportunity to maximize gain providing (1) you choose correctly and (2) markets stay open long enough to capture your gain.

The question for me, and possibly others as well, is how should one balance capital preservation while maximizing a gain or an income stream. There is literally no economic market history to guide us if a pandemic strikes.

[StL Bill]

Timing....

I believe in PUTS to get rich, because you can do it quickly...in a matter of days perhaps..... But, then you have a pile of money still sitting in financial organizations and instruments somewhere. So it's back to what do I do then to preserve it and how much time will there be to do it.....

I read recently in another post eslewhere about someone trying to get thousands of $ in cash for fundraiser where they would need small bills. Had to wait all day to get it and had to sign papers and get fingerprinted. I'm going to investigate how my bank would respond to a wire transfer of thousands of $ and the process they would require of me to get it....timing...I'm guessing the bastards will float my wire for 2-3 days and then require the process above and it would take a day or two because it would have been forgotten that I wanted to do this and it was supposed to be understood that I would do so...etc.

What is going to happen to my 403b funds that are sitting in money markets. They're not supposed to go down...but I fear they could be lost altogether..... it is not a simple matter to get that money OUT and into cash even if I wanted to take the hit with Uncle Sam. Will that money be there 2 years or 5 years into the future????? I REALLY need to know the answer to this...

Real Estate....right in F1... I've stated before that my strategy is ride gold up and then play the puts and then buy real estate as my three responses to phase 1-3 respectively...... But how do I ensure that the hundreds of thousands I might make in puts is available for realestate....some 12-48 months later?

In response to GR's request to run the numbers on Abercrombe.... I did Federated Dept. stores.... and the numbers are......turns out for these calculations it doesn't matter..................they all work (interestingly) almost identically.... 8-11 times your investment! Buy in at a strike price 20% below current market....expect to sell at 40% current market and make approx. 8-10 times your investment.....BUT(now you see the glint in GRs eyes.....see it).....if you can sell half your contracts that way...the other half you might wait for a 60% decline from market and make 20x your investment...and if it went to 80% decline you could make....well you see...
Gold cannot match that kind of leverage I don't believe.
But it would be timing...........

And you'd still have the (at othertimes) glorious problem of what to do with your money....

[sharon sanders]

Re: GLD A Way to Buy Gold in The Stock Market

GR you are right. Each of us has to decide about how to apportion our assets for our own best interest. Some want to maximize return, others want to preserve capital. Hoarding of capital (cash or gold) in mattress ensures capital preservation (even considering loss of buying power through inflation). Actively participating in the market provides an opportunity to maximize gain providing (1) you choose correctly and (2) markets stay open long enough to capture your gain.

The question for me, and possibly others as well, is how should one balance capital preservation while maximizing a gain or an income stream. There is literally no economic market history to guide us if a pandemic strikes.

OK Al, ...Admit it. You are an economist! You hit the nail on the head. I have been saying that the FIRST order of business is to establish a constant cash flow throughout the pandemic. For most, this is a job. People need to evaluate their skill set to determine what possible jobs they can perform under these circumstances. For persons whose income is generated by assets, I like 2 year treasury notes, CDs, cash. Again, for LIQUIDITY.

Yes, the trade off is preservation of capital vs. maximizing gain. I vote for preservation of capital. There is no precendent for this kind of economic shock to the world economic systems in modern times. The answers are unknown:
Which countries will operate an efficient economic system? For sure?
Which countries will flood the market with currency?
Which countries will flood the markets with their gold reserves? Silver?
Which countries will have a civil war as a result of the pandemic?
Which countries will invade their neighbors?
How will the oil, natural gas, and coal flow continue uninterrupted to the world markets?
Which markets will close, and when?
When will they reopen?

There are many more questions. But I would "play it safe" and conservative.

[StL Bill]

Help....no more platitudes....er, sorry

There are many more questions. But I would "play it safe" and conservative.

...I got carried away....

How do you play it safe? What can I do with my 403b? Is it safe in Money Market funds, is it safe if treasury funds.

I am at a stage of life and acquisition where my first order of business is NOT an income stream. I need to pay my few bills and taxes.... But I'll need my retirement funds someday...I could wait 2 years, but it's got to be there then.

How? I could take some out and pay the 'price', but where would I put it? In a bank with FDIC.... I don't understand if that is safe.

In AI's proverbial mattress? I think that is as safe as any without other disasters like fire or marauders, but having thousands upon thousands of $ in cash doesn't seem to be prudent.

Assumption bounding:
The pandemic is 1918 bad and huge economic distruptions occur over the short term of the pandemic....18-24 months....depression-like scenario follows for another 24-36 months.....

Is any of my 403b money still there....anytime across the 18-60 months?

I've asked. You haven't answered. I don't expect you to know. Help me understand how to find out. I don't know how to evaluate financial systems nor understand their responsibility to me.

Ask the investment companies, I guess.... but, I suspect that is like calling your local bank. If you get through to a person, it's a low level employee without knowledge...and I suspect even the bank president if you got there would not know whatever you wished to ask....like..."under what circumstances associated with pandemic-induced economic disruption would cause the bank to close...and what would make it reopen....and when would my funds be available to withdraw thereafter"...... they'd look at you like you were cracked and would have no answer....

Am I sounding sufficiently desperate?

[Binkerbear]

Re: GLD A Way to Buy Gold in The Stock Market

I do have to agree with you there. 4% is a terrible return on capital, especially for something that isn't even FDIC insured. And as you note, if banks and brokerages slow down or shut down, you won't even has access to to your funds. Perhaps stuffing your mattress with your "store of value" is the way to go. The question is: Do you want to sleep on soft wads of paper money or a hard mattress of gold bricks?

I know that I would sleep like a rock on those kind of bricks.
Seriously, I think 50 -50 is a great mix. Sometimes, I think it should be 60 -40 gold and sometimes I think 60 -40 cash. So I don't worry about it and just go for 50/50.

[Binkerbear]

Re: GLD A Way to Buy Gold in The Stock Market

Bill, I think I remember hearing that either Vanguard or Fidelity (maybe both) had all sorts of underground and off-site "bunker" type arrangements to weather any storm for Y2K. With the situation today, I can only guess that these fortresses are being further strengthened.

Further, as I understand it, short-term treasuries (T-Bill) mm funds are as safe as you can get.

[Laidback Al]

Re: Help....no more platitudes....er, sorry

...Am I sounding sufficiently desperate?

... There is no precendent for this kind of economic shock to the world economic systems in modern times. The answers are unknown:
Which countries will operate an efficient economic system? For sure?
Which countries will flood the market with currency?
Which countries will flood the markets with their gold reserves? Silver?
Which countries will have a civil war as a result of the pandemic?
Which countries will invade their neighbors?
How will the oil, natural gas, and coal flow continue uninterrupted to the world markets?
Which markets will close, and when?
When will they reopen?

Ahhh. It is easy to ask the hard questions. But it is hard to find the easy answers.

OK Al, ...Admit it. You are an economist! ...

N0, but I am thinking of becoming a buddhist monk.

StL Bill raises an important point in his posts, timely accessibility to one's investments. If market's continue to operate as they do now, each of us can make instantaneous investment choices and act on them. If markets slow down or shut down you will have to get in line to execute your trades unless you have already mapped out a totally hands-off approach with puts, stop loss, etc. But market conditions change and I would think you would want some flexibility in your investment strategy which means real time access if you are maximizing gain.

Preservation of capital would be a different story.

[sharon sanders]

What a waste!

N0, but I am thinking of becoming a buddhist monk.

What will you do with all this sane financial knowledge since you will take a vow of poverty?

[GaudiaRay]

Re: Help....no more platitudes....er, sorry

...I got carried away....

How do you play it safe? What can I do with my 403b? Is it safe in Money Market funds, is it safe if treasury funds.

I am at a stage of life and acquisition where my first order of business is NOT an income stream. I need to pay my few bills and taxes.... But I'll need my retirement funds someday...I could wait 2 years, but it's got to be there then.

How? I could take some out and pay the 'price', but where would I put it? In a bank with FDIC.... I don't understand if that is safe.

In AI's proverbial mattress? I think that is as safe as any without other disasters like fire or marauders, but having thousands upon thousands of $ in cash doesn't seem to be prudent.

Assumption bounding:
The pandemic is 1918 bad and huge economic distruptions occur over the short term of the pandemic....18-24 months....depression-like scenario follows for another 24-36 months.....

Is any of my 403b money still there....anytime across the 18-60 months?

I've asked. You haven't answered. I don't expect you to know. Help me understand how to find out. I don't know how to evaluate financial systems nor understand their responsibility to me.

Ask the investment companies, I guess.... but, I suspect that is like calling your local bank. If you get through to a person, it's a low level employee without knowledge...and I suspect even the bank president if you got there would not know whatever you wished to ask....like..."under what circumstances associated with pandemic-induced economic disruption would cause the bank to close...and what would make it reopen....and when would my funds be available to withdraw thereafter"...... they'd look at you like you were cracked and would have no answer....

Am I sounding sufficiently desperate?

Stl Bill, you're no dummy and we all understand what you seek, a way to assure that your retirement capital is preserved in the face of this event.
Yet you are a dummy (a nice one, at that).

Let's turn the question back to you:
a. List for us 3 different scenarios in terms of virulence of the pandemic and the consequences of each of those scenarios. I await that list.
b. List the responsible economic actions to take in the face of each of these different scenarios.
c. For those scenarios (or the one), what will be the true steps that can be taken to liquidate the 403B? How much time? Will the people be present and available to do so? What are the risks involved when you reach a trigger point(s) in the scenario(s) where you have decided above, now, that should same arise, you will act to liquidate?

d. How close to the "line" do you want to get before you take action?

e. You're a speculator extraordinaire, and I sense that's because you have plenty of equity (as you term plenty) to "gamble" at the edge, as you seek reward, in this case expansion of your capital base.

This gets very tricky because the economic environment in the scenario you decide requires, not just suggests, but requires, liquidation. This is where you turn on your thinking cap and get tough.

What you're doing and it's admirable, is attempting to employ a scalpel to cut a steak off a side of beef. Most will use a cleaver at the time of the pandemic. Therefore, you must be fully girded in terms of a plan to act or else you will hold a second re-evaluation and attempt to avoid the consequence you are already very disquieted by.

[GaudiaRay]

Re: GLD A Way to Buy Gold in The Stock Market

My posting today over at CurEvents in the Dungeon...shared with you....

For those who are economically as dumb as dirt, gold will now leave you where you belong. Sadly, in acknowledgement of his poor choice, AlephNull removed his delightful quote lifted from my postings.

Gold will now burn down your economic house and hopefully you will be sleeping at the time. If you think I want this, you're insane. If you think that the reality of bird flu is now stabbing people in the economic heart, you're correct. The first noticeable prick into the first world consciousness just took place.

Ah, but why would I wish to wake up those who Darwin has selected for the great adventure? I don't. Come 600, you're on your own. Hopefully you have economic property insurance... I doubt that. And so, maybe now is the time for you to acquire your own body bag, so you will be less of an annoyance when your economic house is consumed in this hellish fire called pandemia.

[Mellie]

Re: Help....no more platitudes....er, sorry

...I got carried away....

How do you play it safe? What can I do with my 403b? Is it safe in Money Market funds, is it safe if treasury funds.

I am at a stage of life and acquisition where my first order of business is NOT an income stream. I need to pay my few bills and taxes.... But I'll need my retirement funds someday...I could wait 2 years, but it's got to be there then.

How? I could take some out and pay the 'price', but where would I put it? In a bank with FDIC.... I don't understand if that is safe.

In AI's proverbial mattress? I think that is as safe as any without other disasters like fire or marauders, but having thousands upon thousands of $ in cash doesn't seem to be prudent.

Assumption bounding:
The pandemic is 1918 bad and huge economic distruptions occur over the short term of the pandemic....18-24 months....depression-like scenario follows for another 24-36 months.....

Is any of my 403b money still there....anytime across the 18-60 months?

I've asked. You haven't answered. I don't expect you to know. Help me understand how to find out. I don't know how to evaluate financial systems nor understand their responsibility to me.

Ask the investment companies, I guess.... but, I suspect that is like calling your local bank. If you get through to a person, it's a low level employee without knowledge...and I suspect even the bank president if you got there would not know whatever you wished to ask....like..."under what circumstances associated with pandemic-induced economic disruption would cause the bank to close...and what would make it reopen....and when would my funds be available to withdraw thereafter"...... they'd look at you like you were cracked and would have no answer....

Am I sounding sufficiently desperate?

I'm not concerned about return so much as I am about not loosing what we've worked hard for.
So I'm exploring every account from stock investments to retirement, to TSAs and we're talking with the managers, and probably will again as new ideas come to us.

Started with the largest investments we have the most control over first. Categories of possible pandemic are mild, medium, severe: What happens if you leave the investment where it is? Is the investment company/manager aware of bird flu? Will they take money out of the action if the situation gets severe? When, how do they know? If they don't have plans or won't make plans, that means you've got to think of other options/alternatives and start acting on them now if you think things are likely to get severe fairly soon. (I do. My family does.)

We looked into options with our TSA. On one of our TSAs you can pull $$ out of growth stocks and put it in value or most conservatively, you can hold it within the TSA for a minimum of 90 days or longer as one option, garnering a very small return on your money as the loan it out. I don't know what happens if the company they loaned it to goes belly up, along with a lot of other companies. Say they loan out $$ to a company that fails and can't get it back. Oh well... ? An investment company is not a bank with FDIC coverage to $100,000.

Even a bank with FDIC... someone told me they have 30 yr to pay you back the insured amount up to $100,000. What if that money in that timeframe doesn't fit your financial needs in retirement?

I guess for completeness sake, I should find out what the penalty is (plus taxes) for withdrawing retirement $$ early and for withdrawing TSA $$ early. I like knowing options for various scenarios so we can make well-informed choices. I'm like GR, I like a flow chart: if this do that; if the other, do that and then that. (I also like a little scientific experimenting, like with the bank and small bills for the fund raiser... So many people would rather continue to believe in their preconceived idea of reality instead of looking as honestly as they can for what really lives in a moment.)

Anyway, the big issue for me is that, regarding things financial, it's not so much what I know I know, or what I know I don't know that's the problem, but what I don't know that I don't know. In wildland firefighting there's a saying about experience: the lesson and the test are often simultaneous. I can see that in terms of finances and pandemic. (BTW, here are some very good, often amusing firefighter "quotes to live by" that also apply to pandemics: http://www.wildlandfire.com/docs/quotes.htm )

My inclination right now is not to remove $$ from retirement accounts, TSAs, just have it invested in the most conservative option or, in the case of sidelining the TSA $$ for a time, do that. But it is good to plan for what we'll do if things get worse... and set trigger points for recognizing "worse" so it doesn't creep up on us. At that time, a list of steps with alternatives is an excellent plan. Under stress that threatens life and livelihood, people DO NOT think straight or engage their reasoning brain very soon. Some don't ever do it. I like thinking and planning and feeling things out. Wildland firefighters have contingency plans and set trigger points all the time. The more you can anticipate what could be and exlore options, including the worst case scenario, and plan, the more likely you are to keep your wits about you regardless of what comes to pass.

Of course, I'm preaching to the choir, but in the process of writing this, I've added a few more things to follow through on tomorrow as I continue trying to sort out my financial preps.

[GaudiaRay]

Re: Help....no more platitudes....er, sorry

Mellie, your post is very well stated. In this case too, the lesson will be the experience itself. The test will be in the application of the plans we put in place.

I'm focusing on the most extreme case as in all the others, my current reality...going business...will continue to generate income and I won't be reinventing the wheel. It is the extreme case which continues to haunt me.

What is clear is that there is a window of time (yet to be determined) in which action must be taken in advance of the next level of intensity of pandemia. The question of whether or not to exercise the pre-decided plan must also have a specific time window to be answered either yes or no, with a full acceptance of consequences for the decision. (Follow through on each of the follow-on steps must also be a MUST, as the decision is a decision and the outcome will be the outcome....and this demands an intensity of pre-thought for which many of us are well qualified...StlBill, Mellie, Fl1 and I all earn our livings via this method of thought. So, this should be a piece of cake.)

Possibly the mod's here can quickly cobble together a website hosting a spreadsheet which we can all manipulate and add to, similar to a fluwikie modification?

[Goju]

Re: GLD A Way to Buy Gold in The Stock Market

I reached a trigger point last week with all of the gov admitting to H5N1 AND Dr. Niman's press release detailing where H5N1 will get its next set of ingredients from.
Tues. AM i am moving most of my IRA and 401k into 2-3 year treasuries.

If anyone thinks otherwise... please tell me now. I thought about gold, but came out thinking it is too spec for me. I want the safest thing short of all that cash in my mattress or a ton of gold coin burried in my backyard.

[Mellie]

Re: GLD A Way to Buy Gold in The Stock Market

I don't know how what 2-3 yr treasuries are exactly or how they work. Is this what you mean? http://www.investopedia.com/terms/t/treasurybill.asp

So they are bonds backed by the US Govt that mature in 2-3 years? Why did you decide on that time frame?

Can you invest in those within your IRA and 401K, thereby not incurring an early withdrawl penalty?

(Thanks Florida1 for that explanatory website. I'm using it a lot.)

[Goju]

Re: GLD A Way to Buy Gold in The Stock Market

look here

http://www.publicdebt.treas.gov/

I believe that the pandemic will pass by 2009. I assume it will hit this year... run its course for 12-18 months... a little time for the cards to sort out, then start investing in the markets again.

So, a 2-3 year t note would guarentee saftey of capital - provided the US gov doesn't collapse and give some interest on the money. Safer than stocks and spec gold.

If the US does financially collapse, i think cash in your mattress is the only way to go.

I am no financial wiz but this seems to make sense?