Any precious metal investors around here? - Page 4

 

Especially with precious metals and their constant fluctuation, you are always going to be playing the guessing game. When I bought my sister and myself a single maple leaf a piece, my mom insisted on me buying it on a day that aligned with Lakshmi Puja (we're Indian, and Lakshmi is the Goddess of Wealth and my mother is very devout) because she felt it would be lucky and auspicious. I waited for that day and picked them up then to keep her happy. The funny thing was, if I had just walked out the door the day I decided to pick them up (2 weeks prior), or had bought them anytime the week after, gold would have been cheaper on both days, I ended up buying both coins right on top of a gold spike that gold hasn't gone back to since. Now in our case, since neither of us is looking at the coins as an investment, neither of us is concerned by that, but I know other people who play the game and are disappointed when they miss opportunities to sell high and buy low. If you want to wait to see if you can cut lower losses or make a profit, by all means do so, but it is a gamble, and on the flip side, you might actually see the prices plummet more before you see them come back up.
 

I never actually thought of investing in utilities. Thanks for mentioning it!

The interesting subtext to this conversation was part of the OP's vague reference to the goings on in Europe and more broadly governments in general. I agree with Erik I think inflation is around the corner. Ramico's POV resonates even more though, there is a bad moon on the rise. There was a book that came out in 1997 titled the Fourth Turning by William Strauss and Neil Howe. The gist of it was history works in cycles rather than in some linear fashion.

 

This is an excerpt from an article I read by James Quinn today. He's referenced this book, and Stauss and Howe's thesis at least 3 times in previous articles he's written.

 

The Fourth Revolution

 

The Turnings of history are like the seasons of nature. Seasons cannot be rearranged, seasons cannot be avoided, but humans and nations can prepare for the challenges presented by each season. Winter has descended upon our nation. 

 

We are still in the early stages of this Fourth Turning and the mood of the country continues to darken like the sky before an approaching blizzard. Generational theory does not predict the specific events that will happen during a Turning. The events, personalities, and policies that become the chapters in history books are not what drive a Turning, it is how each generation reacts to the events, personalities and policies. Someone who is 60 years old will react differently to an event than they would have reacted at 20 years old. The issues that are driving this Fourth Turning (un-payable entitlement obligations, Wall Street greed & power, globalization gutting the middle class, increasing government control, wealth distribution) were all known and understood in 1997. It took the spark of a housing market collapse and the generations being in proper alignment to catalyze the mood of the country. 

 

From what I can tell banks are technically insolvent; state and local governments are broke; too many people are out of work; were at war in the ME; and those things are just the tip of the iceberg. For far to many what's going on is more personal and vexing, Fasten your seatbelts folks 2011 is going to be a bumpy ride.

I think I might just invest in a stock or two. It seems interesting.

I was thinking of doing this a couple years back, but never got around to it. Maybe I should look into it again although my knowledge in economics is fairly limited. 

Your welcome Alex. I dont know if that seemed like a jumble of words because you were only trying to make sense of the excerpt, or you clicked the link and read the whole article and just couldnt make sense of it. For some reason Quinn keeps coming back to this book as a reference point.The first time I saw Quinn reference  Strauss & Howes book was in his piece titled,, American Pie back in 2009. It's an interesting piece for two reasons. One being this whole idea of history being cyclical and an introduction to the thesis in Strauss and Howes book; and two the way he juxtaposed talking about that thesis with Dom Mcleans song American Pie, and how that song sort of captured the mood of the country as it moved from a first turning to a second. As you go through the article he references the mood captured in the music of various artists of their time. The music he references as we move through the third turning (the unraveling) to the Fourrth (crisis) is Matchbox 20's, How Far We've Come, Green Day's, Know Your Enemy, Muse, The Uprising; and I'll throw in one from the unraveling...

 

We got a thousand points of light
For the homeless man
We got a kinder, gentler,
Machine gun hand
We got department stores
and toilet paper
Got styrofoam boxes
for the ozone layer
Got a man of the people,
says keep hope alive
Got fuel to burn,
got roads to drive.

 

Keep on rockin in the free world.
 

I don't think 2011-2012 will be anything but bumpy. The crisis of 2008 was thanks mostly to subprime lending, which is 25% of the market. Coming up later this year is the reset of Alt-A and Option-ARM mortgages. Not speculation, these dates are written into contracts. When those melt down, they're going to affect prime loans. Also, a bunch of corporate bonds are going to roll over. Again, this is going to happen, under contract. I don't know how this is going to turn out, but don't see a happy ending in the short term.

Also, there's the spectre of inflation. The Fed has really dramatically increased the money supply since 2008, but prices have been mostly flat. My guess is that they're going to use this to deflate the bubble. The pickle most state governments are in is that they have pension obligations they can't meet with current revenues. Legally, it's almost impossible to cancel this debt. There are a few propositions about allowing states to go bankrupt. That would open the gates of hell. So would a federal bailout of the states. The only reasonable option (that I see) is letting the currency inflate. If you have a pension guaranteeing $1,000 a month, the sneaky way of reducing that would be to leave it at $1,000, but allowing enough inflation to make that $1,000 worth around $300. Inflation would balance the budget without causing a legal headache. Which is why I think the money supply has dramatically increased and which is why we're entering the second round of "quantitative easing," or inflation.

Inflation has its drawbacks, but I'm really looking forward to it. My biggest obligation is student loans. Inflation could make them a whole lot cheaper. Also, we own rental properties. Inflation will drive up rents but leave the mortgages where they're at. Inflation will also drive my salary. There are drawbacks to inflation, of course, but it's the most convenient way to deflate the bubble and get rid of a bunch of expensive obligations.

I think I'm set up to deal with this. We're planning to buy 5-7 more rental units this year. Also made a significant career step yesterday with a new job () which should pay off well in a couple of years. I think I'm lined up on the right side of the looming inflation.

Congratulations on your job Eric. Unfortunately I'm not as optimistic as you. Subprime was just the trigger for the stuff that happened in 2008. The financial crisis that started as a result of subprime lending was global in scope. It damn near melted down the whole ball of wax and the losses were greater than the loans that went bad. The fix was governments had to bail out and prop up banks all over the world. But to Alex's point social order is breaking down all over Europe and people are taking to the streets. Now you can opinine on the causes of the unrest over there and why they are having issues, as socialism gone awry or whatever, entitlements etc. But the bottom line is people are mad as hell and they are taking to the streets.

 

And we are facing the same sorts of issues. You cant just take a guys $1000 pension and turn it into $300 that's a tax, and that guy is going to get pretty riled up  People are already hurting in this country. Real unemployment is much higher than the reported number. People are losing their homes, record numbers of people are on food stamps and getting their daily bread from food banks; and the powers that be are hard at work in their role as central planners making sure the top 1% get theirs and the rest of us fend for ourselves. People are organizing in response to that threat against their way of life, that's what the tea party is. Is it really a big stretch to think that the mood of that bunch wont get a little more surly.

 

Just my 2 cents, but if their is any merit to the cyclical nature of history as posited by Strauss and Howe we are nearing a time of great unrest, a fourth turning.

I work in a gold extraction project and get paid. does that count as investment or is it too much work? 

 

 

 

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