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Monday, September 27, 2010 - 9:31pmSanction this postReply
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"I don't think the world is that dumb. I think they're learning a valuable lesson from this experience and that's don't lend any more money to Americans" - Peter Schiff



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Post 1

Tuesday, September 28, 2010 - 7:45amSanction this postReply
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Thanks, John. Schiff is fearless and tells it like it is. Jim Rogers is another one.

Sam


Post 2

Tuesday, September 28, 2010 - 8:56amSanction this postReply
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John,
Thanks very much for this. Time to get my ass in gear.

By the way, I love my Schwinn Airdyne and Concept II rower. Great workout of both, you can monitor your power output and progress on both. Measurement is important for tracking fitness and for motivation. Both can display your heartrate if you have a heartrate sensor. Both are easy on your knees if you have issues as I have. I used to run a lot but can't now.

Post 3

Tuesday, September 28, 2010 - 9:16amSanction this postReply
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Hey thanks Mike and Sam, although now I can't sleep at night if the prospect of a depression is looming over our heads.

Mike thankfully I have no knee issues. I have a treadmill but that can bore me to tears. I was thinking of just popping in just some DVD cardio routine for my cardio session every week. I still have those p90x dvds and there's the Cardio-X DVD I tried once, not too high an impact but just enough to get a good heart rate going and tax the lungs sufficiently. Thankfully I have no knee issues. That bike sounds interesting.

Post 4

Tuesday, September 28, 2010 - 12:47pmSanction this postReply
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Peter Shiff's website has his current commentary:

http://www.europac.net/research_analysis/commentary_view/Peter%20Schiff

I've started on them.  I'm thinking of taking a few days off work to get my financial house in order....

A recent interview of Michael Burry has him buying gold and agricultural real estate (with water).  All the smart guys who were talking about the real estate bubble years ago are singing the same tune now: inflation, inflation, inflation.

John, again, thanks for the heads up.


Post 5

Tuesday, September 28, 2010 - 2:36pmSanction this postReply
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What are you guys thinking of doing? Gold? Foreign currency? Any gold broker recommendations?

Post 6

Tuesday, September 28, 2010 - 4:12pmSanction this postReply
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I'm not doing anything. I've got 70% of my assets in physical gold and the rest is short in stocks. The ratio has been creeping up lately due to the rise in gold but my goal is to preserve my position. Gold and stocks have been moving up in unison so my stocks have lost as my gold has increased. Stocks can often do very well in times of inflation but if the s@#t hits the fan I'll make money on the downside. In that case, I hope gold would break the pattern and continue to rise.

I think Schiff has a reasonable comment about silver coins being used as barter in an underground black market. Junk silver coins, pre 1968 (I think) dimes are pure silver would be a good investment. However, I think that most of them were melted down for bullion then and they may not be readily available now. The only problem is that any substantial amount of silver weighs a lot and is difficult to store and would exceed the contents of a standard safety deposit box. In the late 70's and 80's when I lived in Canada I had a lot of them and stored them in plastic pipes in my basement and made them to look like they were part of the normal plumbing.

Sam


Post 7

Tuesday, September 28, 2010 - 4:23pmSanction this postReply
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Pre-1965 is what you want.

Here is the data that I have:

Pre-1965 dimes contain .07234 oz.

Per-1965 quarters contain .18084 oz.

Pre-1965 halves contain .36169 oz.

1965-1970 halves contain .14792 oz.

Pre-1936 dollars contain .77344 oz.

All circulating coins after these dates contain no silver.

Here is a good page for calculations.

(Edited by Steve Wolfer on 9/28, 4:27pm)


Post 8

Tuesday, September 28, 2010 - 5:09pmSanction this postReply
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In related news: Ding! Gold reached 1300 USD today.

Post 9

Tuesday, September 28, 2010 - 5:25pmSanction this postReply
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Given that the stock market is up, and there doesn't seem to be a crisis in the middle east (unless there is something building that the public isn't seeing yet), it makes it look like the central bank reserves are starting to roll out. Inflation fed gold increase. There are probably good stats somewhere that would show those numbers. Or, it might be monetizing of the debt. I don't keep up with these things enough to say much.

Post 10

Wednesday, September 29, 2010 - 6:33pmSanction this postReply
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you can readily buy coins from dealers at 90% silver content for a fairly low % over spot price.  I purchased a nice bag of these from Liberty Coin Service recently:

http://www.libertycoinservice.com/

I recommend them.  I got that recce from Michael M here.  They are a good buy as is physical gold.  I would keep some in gold stocks, not short stocks.  There are some good buys.  Right now in Allied Nevada and Silver Wheaton (in silver) - I am now following Howard Katz' newsletter.  He is making me money so far.

http://thegoldspeculator.com/

Also considering buying some supplies that I can still use but stocking up some - have not done so yet.  Thought about buying a year's worth of the emergency food that can last 25 years (freeze dried just add water -
http://www.nitro-pak.com/products/freeze-dried-foods/food-reserve-units/year-supply-food-units/mountain-house-foods-year-s-supply-entree-s

Have not done yet but I would feel better having the supply just in case, though I doubt I would eat it normally, so I have hesitated.

Also been watching Peter's stuff - genius on economics I think - great video he had at Mises on why the crash was easy to predict.


Post 11

Wednesday, September 29, 2010 - 6:57pmSanction this postReply
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Here we go again.  This is exactly what a lot of libertarians (and a lot who weren't) went through in the late 70s under the spell of Harry Browne and his imitators.  Inflation finally peaked at eleven or twelve percent (not the several thousand that was supposed to be one hundred percent inevitable) before blowing itself off, and those who got in at the top of the market (which is really what this thread is advocating) got badly burned.  So did the people who put all they had into tech stocks in 1999 or bought a nothing-down house to flip in 2005.  On the other hand, the people who bought stocks in the late 70s made out magnificently in the next several years.

Those too young to remember the era might remember the Y2K survivalist craze, which played to the same instincts.


Post 12

Wednesday, September 29, 2010 - 8:11pmSanction this postReply
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Peter,

Here is the problem I have. All of those booms and busts that you mention did happen and they had tops and they had bottoms. But there isn't this little guy that comes out and rings a bell to tell you've reached the top or the bottom.

And the danger of massive deflationary collapse or hyper-inflation are real... but we don't know where that tipping point is, the point where Wiemar Republic, Zimbabwe or Argentina went too far and their currency was destroyed. At some point in the thirties our government went a step too far and we dropped from recession to depression. Again, no little guy with a bell. So, unless you have another approach, it seems we need to protect ourselves financially.

Emergency food is just a kind of insurance. I think it is a good idea. If not a year's worth, then enough for a few weeks in case any kind of major social unrest makes it more sensible to stay inside for a while.

Harry Browne's later financial advice was to proportion your investments between possible different outcomes and just leave it alone (apart from readjusting it to the fixed percents - no more than once a quarter): some invested for hyperinflation, some for deflation, and some for good times. Stocks, long term treasury bonds, gold and cash (short term treasuries).

Post 13

Wednesday, September 29, 2010 - 8:36pmSanction this postReply
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The classic, clear-as-a-little-bell sign that a bubble is about to burst is that amateurs start getting in beyond their means.  The current thread is evidence that this is happening.  Bernard Baruch supposedly said that he knew the time had come to get out of stocks when his shoeshine man started giving him market tips.

Browne changed his tune when his advice had failed, pretending that he'd never given bad advice in the first place.  Ravi Bhatra, the socialist Harry Browne, did the same when the depression of the 90s failed to materialize.  In both cases what made them famous is what burned a lot of their readers.


Post 14

Wednesday, September 29, 2010 - 9:00pmSanction this postReply
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Peter,

I'm not sure what you're saying makes sense. This forum certainly doesn't represent mainstream America - so the fact that we are talking a lot about gold isn't the same as every thirties shoe-shine boy buying stock.

And there is a difference between a boom that is based an unfounded belief that something will continue to go up no matter what, and that there is an intrinsic change in value that arises from the number of dollars printed. Gold can be pushed up by emotions, that is true, but it would be a mistake to say that it is like a bubble unless you can explain away our current levels of debt, printed money, etc.

As to Harry Browne, all I can say is that I read his How to Profit from the Coming Devaluation back in about 1970 or 71. Because of that little book, I bought gold at $42/oz and I bought pre-65 silver coins for about $1.25 per $1 face value. I have NO complaints at all.

Browne was always very honest and his forecasts were always based upon sound economic principles, but not always correct in timing or extent. Those are not just hard to forecast, but maybe impossible. He recognized that and came up with his Permanent Portfolio. I've always seen him as a man of high integrity.

Post 15

Thursday, September 30, 2010 - 5:47amSanction this postReply
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Peter, what would you suggest to people then that have money in a savings account? With interests rates on savings being lower than inflation, what can one do to make sure their savings aren't eaten away? I'm willing to hear what you think would be a better option.

Post 16

Thursday, September 30, 2010 - 8:47amSanction this postReply
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To Steve: You got in early.  The people who get burned are the ones who get in late.

To John: Not being a qualified broker, planner or adviser, I'd be presumptuous to give such advice.  Little though I pretend to know about investing, I'm aware that savings accounts are not the only alternative to high-risk amateur speculation  This is a strawman.  My advice is diversify with professional help.


Post 17

Thursday, September 30, 2010 - 11:08amSanction this postReply
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Peter,

Those people who got in "late" by Harry Browne standards would have paid between what, $300 to $600 per ounce? "Late" is a relative term. They would have doubled their money at this point despite getting in "late."

The argument is about whether or not current gold prices represent a bubble, or a natural high in some investment cycle, or a relationship to the number of dollars printed and/or the perceived stability of the dollar.

There are good arguments being made that gold will double in value in a few years because of the number of dollars that have been printed, but that haven't yet come out of the Central Banks reserve accounts because of the reluctance of anyone to borrow or lend at this time (primarily because of high demand for dollars - an economic/politically induced psychological factor.)

Harry Browne pointed out that no one can accurately predict whether or not an economy will drop into a massive credit crunch (deflation) as opposed to a hyperinflation at that point in time where either one is a possibility. I think that was one of the most significant things he said. If means that the price of gold could soar, or could drop like a rock at the 'tipping point.'

All the rest of the time we just see the ebb and flow of investment dollars looking for gains or safety (and the long term upward trend of gold is just reflecting the decrease in the value of the dollar). Under these more or less normal conditions Gold might stay the same or go down a ways - for now. That is, the price of gold may be high by the standards of these normal times - but there will come a time, unless the economy gets fixed by sound fiscal and monetary policies being enacted, when that tipping point is reached. At that point, and given the way things are right now, that could be as early as next week, and very likely within a few years, it will hit as an extreme movement. It will be panic driven, but reflective a real social change as well, and those who hold 1/2 gold and 1/2 long term treasury bonds will loose most of one of those investments but gain more than they lost in the other. The problem is that both are likely to bring extreme social unrest at the same time and safeguarding ones wealth will be only one of the pressing concerns.
----------------

I've been way wrong in the past - many times. And I hope that I'm wrong now. I'd kind of like to live out my life without that kind of excitement. Here's how I might be wrong. 1.) The economy has much more depth and strength than it appears and what we now see as weakness is only the sluggishness of adjusting to changes and the caution of people who waiting to make sure things don't crash before getting active again. 2.) The human capacity to correct course just before going over a cliff will show up. People will make changes in our political structure and the things will get better. 3.) All of those excess dollars will be absorbed back into the treasury and our inflation won't be worse than under Carter and with an economy burning away in a post-recession fashion, it can absorb the higher interest rates needed to pull the dollars in. 4.) The massive debt will then be systematically retired out of the revenues obtained from a healthy economy with reduced government spending.

Post 18

Thursday, September 30, 2010 - 11:29amSanction this postReply
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Peter:

With respect to your post #13. The CPI in 1981 when gold hit $830 was 87. The CPI now is 218, an increase of 2.5 times. For gold to have kept its purchasing power it would now have to be $2075. So, in my opinion it's a far cry from being a bubble. Three or four thousand might be a bubble, depending on the circumstances.

In 1981 I experienced a gold bubble first hand when I went to sell my gold at the Bank of Nova Scotia on the day it hit its peak. There was a line of people a block long in the freezing cold wanting to buy. Instead, I went to a branch office where a teller continuously dialed the head office for an hour before she could get a quote. That is the nature of a true panic.

Sam 


Post 19

Thursday, September 30, 2010 - 12:10pmSanction this postReply
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Peter:

To John: Not being a qualified broker, planner or adviser, I'd be presumptuous to give such advice. Little though I pretend to know about investing, I'm aware that savings accounts are not the only alternative to high-risk amateur speculation This is a strawman. My advice is diversify with professional help.


Strawman? I'm not trying to argue with you Peter! You imply here we are all foolish for considering investing in gold, so while you say you don't want to be presumptuous in giving investment advice because you're not a broker, apparently you feel presumptuous enough to advise against investing in gold!!!! WTF?

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