Protect your family - buy gold.

[screembloodymurder]

TOKYO (AFX) - With the US trade deficit at a record high and global interest rates rising, East Asian economies need to be prepared for a possible sharp slump in the value of the dollar, the Asian Development Bank warned here.

http://www.forbes.com/business/feeds/afx/2006/03/28/afx2625991.html

[Squatch]

1. Better yet, buy (or sell) options on gold.

Bigger upside potential.

[stop the bleeding]

21. options are the way

if you can set up trades to cut your risk down

[Doctor_J]

39. Would a gold mutual fund do it?

I don't know enough about trading commodities to do it myself. I'd like to get into gold, but let a fund manager take care of the risk for me.

[Sgent]

58. Not really

Precious metal mutual funds invest in companies that mine and mint metals -- not the assets themselves. This isn't always bad, but realize that a companies success can have many influences -- of which the price of gold is only one.

I disagree with options (assuming you are buying gold for saftey), as they are much riskier than buying gold bullion / coins outright.

If I was buying for protection against systematic collapse, the only reasonable option is Canadain, US, or S. African gold coins, locked up in a saftey deposit box or house safe.

[Cassandra]

2. I can hardly keep up...

repricing my line.

[fasttense]

3. I ain't got no money so how am I suppose to buy gold?

No really, I have a few thousand that I took out of the stock market at a loss. I'm not about to risk more of my money. Is there something I could buy to prepare for the coming depression that could be used instead of the hyper-inflated dollar?

Someone on another thread said to start collecting nickels for the metal. Do you have any other suggestions?

[Squatch]

7. Sell it short or buy on margin.

[IndyOp]

10. Buy on margin? What about buying actual objects...

What is buying on margin? And does it make any sense to buy gold rings, necklaces, etcetera -- could those be sold when the economy has crashed?

[Squatch]

11. Margin is credit extended on equity

When you buy necklaces, they are marked up considerably from their raw material value.

Therefore, buy gold on the commodities market where you will pay mkt+commission. Or, like I said options on commodities are a great way to go.

[pitohui]

48. buying on margin is buying on credit

as far as buying gold jewelry, you missed the boat, should have bought it sometime during the last 23 years when the price of gold was in the toilet

everybody has gold even if they don't have a pot to piss in, they have a gold chain or a wedding band or grandma's diamond engagement ring, take it to a jeweler's sometime and find out for yourself just how much it (isn't) worth

gold jewelry is a classic case of the consumer buys retail and sells wholesale (or often below wholesale) and then wonders why he gets hosed

[Cassandra]

60. Unless you actually made the jewelry...

in which case the numbers are better. When I buy gold castings I pay 18% over fine gold for 14KT and 26% over for 18KT (plus labor per piece). And I lose a bit in polishing. When I melt pieces down, I go to a refiner (not one of the ones who advertise for street traffic) and get 97 1/2 % back, minus a $50 fee (so it pays to melt in bulk). This is way better than melting platinum, where you get back only about 67%, probably due to high energy costs in melting it.
Much of my line was made when gold was around $260.

[Jack_DeLeon]

28. Well if you are keeping nickels, how about copper...

All pennies dated '81 and earlier are copper.

Half the pennies made in '82 are copper, the other half are the ones that are still made today which is zinc coated with copper.

[pitohui]

47. depends on if you expect hyperinflation or deflation

i don't expect either

but if you expect hyper-inflation, w. a few thousand dollars for a down payment you can buy a house with a conventional 30 yr loan, you then pay off the house with steadily more worthless dollars and end up w. a valuable piece of real property

many people did this in the 70s, inflation was never truly "hyper" but it did hit double digits, buy a house for $40,000 in 1975, pay next to nothing on the note, and now the house is worth $150,000 plus you've been living in it all these years instead of paying rent

that's the route to go if you believe in inflation and have only a few thousand dollars -- invest in debt, inflation rewards the debtor

if you expect deflation, since it's only a few thousand dollars, it's perfectly safe in any FDIC insured bank, and a CD would be perfectly safe, although you couldn't expect to make money, you could only expect to hold on to what you had

in a deflationary scenario, assuming your wages also deflated, you would unfortunately lose a heavily margined home, sorry

there is no situation in which it is smart for a person w. only a few thousand dollars to spend to buy gold

[NVMojo]

4. this is a huge story and the banks don't want you to know ...

[swag]

5. Since the early 1800s, gold has basically kept up with inflation.

A dollar investment in gold way back in January of 1802 would have grown to just $1.62 (adjusted for inflation) by the end of 2005. Contrast that with the growth of other investment types: T-bills would have grown to be worth $293, bonds to $1,083, and a dollar investment in stocks would have grown to be worth a staggering $666,180. Not a thousand times better than gold. Not 10,000 times better than gold. But more than 400,000 times better than gold! So much for the claim that investment quality gold has actually outperformed stocks.

source: Prof. Jeremy Siegel, Wharton School

[Neil Lisst]

9. Was that Enron stock?

Name a stock that has been around since 1802.

The Wharton professor's example is contrived. NOW is what matters, not some imaginary race built around paper that doesn't exist.

I'm not an advocate of buying precious metals, but gold looks better than the stock market right now. The stock market is full of air right now, way overvalued.

[swag]

16. Bank of New York (ticker BK) was listed in 1792.

Siegel's study revolved around studying the returns on broad baskets of public stocks tradeable through the history of the US stock market. His data are here for a price, but similar data can be found from public sources at no cost: http://www.jeremysiegel.com/index.cfm/fuseaction/Resources.ListResources/type/data.cfm
You can also browse his data in his books at libraries or in bookstores.

I would love to hear on what basis you think his studies are "contrived." Even bearish colleagues such as Robert Shiller use Siegel's data.

The stock market is priced at about 17 times earnings right now. A little above the historical average of 15.68 since 1935, and exactly at the average P/E since 1960. I would be very curious to hear on what basis you say the U.S. stock market is "way overvalued" right now.

I would also be very interested in hearing on what basis you think gold looks better than stocks right now, with gold at a 25 year high today.

Do what you want with your money. I certainly won't be buying any gold today.

[Neil Lisst]

23. I won't be buying any gold either, but it's still a sound hedge.

at times, and I think this is one of those times.

As for stocks, my point is they can go bust. If they were risk free their return would not be there. It's great to talk in hypotheticals, but supposing that a person could buy the right stock and keep it 200 years is the stuff of serendipity and made for TV movies.

Why do I think the market is overvalued? Because I've been around a long time, and I know an overvalued market when I see it. It's floating on a sea of debt, public and private, domestic and foreign.

Let me be clear that I don't favor the average investor buying gold.

[swag]

27. Well we disagree.

I think the best thing gold can hedge against at this point is long-term gains in your portfolio.

As for stocks, my point is they can go bust. If they were riskfree their return would not be there. It's great to talk in hypotheticals, but supposing that a person could buy the right stock and keep it 200 years is the stuff of serendipity and made for TV movies.

That's why you buy an index mutual fund or a broadly diversified basket of stocks. People who bought and held an S&P 500 index fund and reinvested all capital gains and dividends in the fund over the past decade doubled their money, in spite of the big crash. I know, I was invested in a broad market index fund during that period, held, and reinvested. Don't take my portfolio's word for it, ask J. Bradford Delong, Berkeley economist who recently published his findings.

Why do I think the market is overvalued? Because I've been around a long time, and I know an overvalued market when I see it. It's floating on a sea of debt, public and private, domestic and foreign.

US corporations are so awash in cash that stock buybacks increased 69% last year, and dividends payouts to shareholders increased by about 6% last year.

Granted, US Government debt, the trade deficit, and other global imbalances do pose serious risks, and market and political forces may not be successful in engineering a soft landing, but even economic Armageddonists like Steve Roach are seeming a bit more sanguine these days about the pressures of these risks being relieved by global market and political forces. People like Ed "Y2K" Yardeni are downright giddy these days. And if we do see a bumpy landing or even a hard one, I'd rather have a share on part of a company's future earnings or a claim to its assets than a piece of metal whose value depends solely upon the collective agreement of market participants.

Obviously you and most others here disagree. Good luck.

[Neil Lisst]

38. You will agree, will you not, that there are many, many successful

business people and investors in the US have have made millions never once investing in publicly traded stocks, or bonds, or T bills, or any other paper investment?

Most entrepreneurs make their money in the business they create, and unless they take it public, they don't have wealth invested in the stock market. They buy real estate, they buy precious metals, they buy things they see and feel, things that have some intrinsic value.

The stock market attracts one kind of investor, but not the only kind.

[swag]

41. Sure.

[NVMojo]

56. silver took a big jump today too ...

[Art_from_Ark]

44. And if someone from 1802 put away 200 half cents,

or 100 large cents, or 20 5c coins, or 10 dimes, or 4 quarters, or 2 halves, or any combination thereof of US coins from the era equalling $1.00, in literally "mint" condition, they would be worth a king's ransom today.

[swag]

49. Sounds like a plan. Which king should we kidnap?

[DUHandle]

6. Palladium took a dump

Right after Ford bought tons of the metal, new mines opened up in the former Soviet Union.

It might still be a hedge

[flobee1]

8. Euro's ?

n/t

[Gabi Hayes]

12. Roulette?

I hit five in a row, riding the red

won a HUNDRED bucks!

[DUHandle]

26. Another rare metal

like platinum or gold.

It was used in old school versions of catalytic converters.

GM bought future and Ford bought a lot of metal. They took a loss on it one year.

[squarepants]

18. I've thought and still thinking

about buying gold as a hedge. However, gold may not even help. 1. Gold was confiscated at one time, so it didn't do anybody any good at that time anyway, and it could happen again. 2. In the event of depression, I think people are going to be a bit more worried about food and water and alcohol, rather than a piece of shiny metal, and 3. gold would have to be widely accepted as currency (yes i know it's currency now, but I mean on a scale that "paper" money is accepted now). You'd want to be able to go into a store and have your gold accepted to "buy" what you needed. As it stands, some people know what Gold is worth and would know the coin you set in front of them, but there are some people who wouldn't know what the coin was or what it meant. 4. If one is thinking of using gold for bartering, again, people are going to be more concerned with food, water and alcohol. Heehee, might be good to stock up on alcohol for bartering purposes.

[Art_from_Ark]

43. Actually, it has always been legal to hold gold in coin form

with a few exceptions of foreign gold coins. Treasury Secretary Morgenthau added a little clause to the Gold Reserve Act of 1934 that allowed collectors and others to keep an indefinite amount of gold coins (with limits placed on the number of coins of the same date that could be held). Of course, since it was the Depression, most people ended up turning their coins in for face value. Those who held, though, were rewarded a little later when the official gold price was bumped up from $20.67/oz to $35.00/oz.

[pitohui]

50. alcohol for barter

my friend, i don't want to advise anyone to break the law

but if you think society will come to such a state, your best investment is knowledge

knowing how to distill liquor might be a far, far better thing than just having a few bottles of jack put away, knowledge is portable, in time of chaos and dislocation, your truckload of booze might not be so portable

during katrina there was no almost no gas to be had for hundreds of miles, we had to abandon our larger vehicle loaded w. possessions and continue onward w. only our most fuel efficient vehicle

don't assume you will be the one who gets much use out of a large wine cellar or stock pile of anything large and heavy, be it gold, be it cases of jack

knowledge is the great thing, i do believe that

and please it is time once again to remind people of this -- there is NO reason to ever do without sterilized water

http://solarcooking.org/sbcdes.htm

[Bluebear]

13. OK, please indulge a guy who is stoopid on this subject.

What do you do with said gold? Hide it under your mattress? Put it in your safety deposit box? How does it protect your family?

Told ya I was stoopid on the subject, I just have no concept of how this works.

[Squatch]

14. If you trade in gold futures or options, you may never have to

actually take delivery of the gold. Your just trading on price movements.

[KoKo]

15. ummmhmmmm.......just trade on price movements....and figure you

will end up a winner. Are you selling a book....or just going to eventually link to a website. Perhaps there's a commission in there? :eyes:

[Squatch]

19. I don't follow.

Whatchoo talkin 'bout, Willis?

[KoKo]

34. I figured you wouldn't...since your "Subject Line" didn't agree with the

Forbes post which said nothing about buying "Gold."

[stop the bleeding]

24. I follow ya!

you trade on the prospect that said commodity is going to trade a certain way, it is almost like placing bets on the fact that other bets will happen.

[MazeRat7]

35. Yes it is legal betting. You bet it will go up or down by a certain date.

In the case of options, that is exactly what you are doing. If you are lucky (some say smart), the value payed for your Call or Put options increases before they come due (which is the 3rd Friday of every month). You then trade the options and collect the difference in what you paid vs what they are now worth (called being in the money) Again... if you correctly predicted the price movement over time relationship. You can actually choose to exercise those options (and hence buy the underlying commidity at the guarenteed option price) and then you own it out right and have to take delivery....but only about 10% of all options are ever exercised in that manner.

As a side note. If you did't predict correctly...it can be painful.

MZr7

edit: Typo and clarification

[librechik]

17. buy currency coins. hide em under the bed. tell no one.

it's just for an emergency. pretend you are a survivalist.

If I take a coin to a coinbuyer I get daily cash value in minutes with no paperwork to mess with.Gold coins have gone up in value quite a bit--more than a savings account for sure. If I had a thousand dollars to save or invest, a couple of Eagles or Roos in a sock sounds perfect to me.

[Bluebear]

20. That makes sense to me.

Thanks!

[pitohui]

51. a couple of eagles indeed

i have never been glad i purchased gold but here is a little story

after a couple of decades of getting sick and tired of my gold doing nothing, i finally had one of my eagles set as a pendant

i'm prob. the entire reason you are seeing the bump in price of gold that we're seeing today

not that i'm going to take my pendant apart and actually sell it, even w. the gains we're seeing now, the opportunity of holding the gold all these years and beers has been ridiculous

[Art_from_Ark]

52. Just make sure to keep the coins in perfect condition

Common bullion coins (and collector coins, for that matter) can lose quite a bit of value if they are "mishandled" by throwing them unprotected into a sock or whatever

[librechik]

61. not really, since the trade is for face value as currency

but of course keep any valued collection in pristine order. I was kidding about the sock.

And I suggest anyone thinking about keeping quantities of coins at home to watch a fine old movie, "Rolling Thunder."

It will give you nightmares for years.

[Jack_DeLeon]

30. This is how it works...

You buy gold, or silver, or some other precious metals. You hold on to them. If the dollar takes a dump and/or there is a large ammount of inflation then you can sell the gold and buy more dollars with it to do business with. Alternately you could sell the gold to buy a different currency, Euros for example.

If the situation was so bad however that most all paper money was worthless you could atleast engage in commerce by batering with your precious metals.

Obviously it is easier to barter for the normal day to day necessities with coins made of said metals than with bulky bars. That is why many people like rounds.

[KoKo]

31. OFGS! Peddle your wares on a Yahoo Site...this is disgusting! n/t

[Jack_DeLeon]

36. ¿QUE?

what the hell is your problem?

[VOX]

22. I'll stash gold ingots under the bed with my tuna fish and duct tape.

And my plastic sheeting... :scared:

God, I love BushWorld!!!! :grr:

[screembloodymurder]

25. You will need them all

when the war with Iran starts.

[Bluebear]

45. DON'T eat the ingots!

Please!

[TrogL]

29. All Gold Bugs should be put up against the wall and shot

(formatting)

The economy sucks.

Buy gold

The economy's going great guns.

Buy gold

Oil's at an all-time high.

Buy gold

Oil's at an all-time low.

Buy gold

The sky is falling.

Buy gold

The government just declared a 4 billion surplus.

Buy gold

[KoKo]

32. Theres much positive to be said about having STANDARDS...right now

we have "helicopter money." But for someone to come on here and put a post out where the SUBJECT LINE doesn't AGREE with the ARTICLE...does make one wonder if it's a "Yahoo Finance Chat Room" Person trying to "peddle their wares" here on DU and getting a commission.

Gold Coins from reputable sources might be good to keep...just in case but "Buying on MARGIN in SPECULATION...hardly is good info for sound advice.

Buying on margin means "borrowing" to Bet on SPECULATION.

Buy CD's since our intrest rates are going up. Or Series "I" Savings Bonds would be better advice....Sheesh. Got folks crawling all over DU today pitching their wares....from Sabato to Gold Bugs who advice folks to hock themselves against the coming Calamity.

There are many Bears and Gold Bugs who have written good articles about our "fake money" situation here in America but the advice from OP seems to be in the Larry Kudlow/Kramer MARKET HYPE.....HYPE.....HYPE category.

I think that we all need to be wary of "advice" given in such an hysterical fashion where the Forbes :puke: link doesn't say anything about us needing to RUSH TO BUY GOLD FUTURES...on MARGIN...SHEESH!!! Give me a Break!!!

[Art_from_Ark]

55. Anyone who's selling any investment says the same thing

Should they all be shot, too?

[MazeRat7]

33. Gold is not for me. Not when its at multi-year highs....

Here is an article from Reuters:

Precious Metals Settle at Multiyear Highs

The thing I try to avoid in the markets is the "herd" mentality. I've been burned more than once running with the pack and buying a commodity at "all time highs" because "it was sure to go higher". About the only way I would consider getting into precious metals right now would be via Exchange Traded Funds (ETF's) or possibly Options.

MZr7

[kineneb]

37. and for the poor who have access to land

Buy seeds to grow your own food. I don't have the assets to buy gold, but I am going to build a green house from recycled materals in the back yard. Then I will be able to extend the shorter growing season here. Also am digging up more spots for plants (really rocky dirt, so digging requires a pick).

[flvegan]

40. Doesn't gold back our dollar?

If so...no thanks.

[Art_from_Ark]

53. No gold backing of the dollar since 1971

when Nixon eliminated the last vestiges of the gold standard (and removed the last bit of silver from our money, too).

[Lostnote06]

42. BUY TULIPS!!!!

[pitohui]

46. protect your family -- buy at a 25 yr high and sell low?

my family doesn't have money to throw away on gold bug fever

precious metals, the investment of the naive and the scared

"investments" bought out of fear end in regret

but people never learn, i suppose, so they've got to do it all over again, i guess it has been long enough that the naive or young investor is unaware that the gold bugs of the 80s all went through some very public, very embarrassing bankruptcies

[Art_from_Ark]

54. Any risky investment for the masses

is an investment for the naive

[Warren DeMontague]

57. Yeah, but when the Chinese start mining the asteroid belt, you're gonna be

fucked.

[NNN0LHI]

59. The Hunt brothers already got all my money when they told me to buy silver

http://www.buyandhold.com/bh/en/education/history/2000/hunt_bros.html

The Hunt Brothers and the Silver Bubble

Brian Trumbore

President/Editor, StocksandNews.com

In 1973, the Hunt family of Texas, possibly the richest family in America at the time, decided to buy precious metals as a hedge against inflation. Gold could not be held by private citizens at that time, so the Hunts began to buy silver in enormous quantity.

In 1979 the sons of patriarch H.L. Hunt, Nelson Bunker and William Herbert, together with some wealthy Arabs, formed a silver pool. In a short period of time they had amassed more than 200 million ounces of silver, equivalent to half the world's deliverable supply.

When the Hunt's had begun accumulating silver back in 1973 the price was in the $1.95 / ounce range. Early in '79, the price was about $5. Late '79 / early '80 the price was in the $50's, peaking at $54.

Once the silver market was cornered, outsiders joined the chase but a combination of changed trading rules on the New York Metals Market (COMEX) and the intervention of the Federal Reserve put an end to the game. The price began to slide, culminating in a 50% one-day decline on March 27, 1980 as the price plummeted from $21.62 to $10.80.


Edit: I jumped out a window on March 27, 1980 at the close of trading that day. Luckily I was living in a one-story house at the time. Only fell about three feet. :-)