patrick.net

What about gold and platinum coins/bars?

Speculative, ain't we? Some folks like investing in items that pay a return. Why are you trying to inflate another bubble? Just for that, I'm going to try to bid up the price of sushi.

Not having a mortgage is the equivilent of investing that money at about 8% very safely, so I’m happy.

Yep, like having your very own form of rent control.

Speculative, ain’t we? Some folks like investing in items that pay a return.

I like investing in items that pay good *total* return.

I factored in an intuitive risk premium which is why I was conservative. I am definitely NOT a gambler or speculator. I currently make my living lending through commercial trust deeds. Some of the long time posters like DinOR know my activities in a little more detail since the subject has come up. I used to try to represent the investor's point of view on the threads where we talked about the roles of the servicers and what they can and can't do, and how mortgage pools work.

Buying gold and PMs when the Fed & Con-gress are trying to debase the USD like mad is "speculative"? Since when?

I agree that putting 100% of your savings/investment money into PMs is risky --as any undiversified investment is-- but having a small % as an inflation hedge hardly reflects a casino mindset. There are also plenty of other inflation-hedging plays out there: foreign currencies, oil/gas/commodity ETFs, etc.

I like buying into something with a tangible income stream where I can compare the rates of return and determine whether it is actually more than banking it. That's what I mean by everyone having access to cash sucks because you are then looking at a proposal where you get to invest money which should be called a subsidy since the return is so poor. Some of these deals look so ridiculous you have to put hundreds of thousands into them to just break even on a monthly basis. I then would say, why the hell would I do that, the response, "I know what you're saying but that's what these buildings are selling for." My biggest asset is that I have the discipline to say, thanks but no thanks, at leas the banks will pay me a real return.

least

The information I got from this site led me to buy gold when I did because I knew that was happening. Remember, gold had been very stable up until then, it was definitely a perceived risk. Very few things react logically in the marketplace, speculators and interests constantly throw it off kilter.

RE: Foreign currencies

I have a feeling that other countries will too run into "issues" like ours and have to debase their currencies like crazy.

Of course, some currencies are safer than others.

Not investment advice.

That's my fear with gold now, is that it has surpassed the real decline in dollar valuation but it seems unstoppable probably because of these legitimate future concerns. Logically, an ounce of gold should always buy the same thing, now it buys a lot of the same thing. Real wealth has been created by gold ownership over the last few years. That welath is further amplified if you want to buy a house which is decreasing in price as your gold is increasing in dollar value. It's a nice position to be in, then again, houses are dropping much faster than the inflation tax on your saved dollars so it's kind of hard to screw up right now. All these sideline buyers IMO are doing exactly the right thing, nothing!

People make a recurring mistake which is they feel they always need to be doing something. Sometimes doing nothing is a very logical decision.

Again, nobody should be married to his gold. Eventually, gold WILL become overpriced and a spectacular decline in gold price is in the future. For now, it looks interesting.

I swear to jump headfirst into the next financial orgy.

Disclaimer: I have position in gold and GLD.

Not investment advice

No offense intended, I just think buying a PM merely on the hope of price appreciation is a but speculative to ME.

Yes, the US gov looks like it is trying to devalue the dollar, but that fact is well known and may already be priced into today's gold. There is still a reasonable chance that gold and other PMs may fall in price.

I have paid off real estate that I think protects me against deflation or inflation. I am assuming we will get deflation in house prices, which is making my money in the bank more valuable to buy more real estate in the future. In the mean time, I am putting up with 3.5% to 6% returns (6% were long term CDs bought a couple years back). If we get rampant inflation that hits even house prices, I lose, and you PM folks win.

No offense intended, I just think buying a PM merely on the hope of price appreciation is a but speculative to ME.

Why is speculation bad? Success is mostly about making the right decisions by taking calculated risks.

Real estate is one of the best investments most of the times. It just happens that these few years are the exceptions.

Not investment advice

> * No one creates land (except perhaps in Holland).

It would not be hard to turn Richardson Bay in Marin in to a subdivision since at high tide it is only a few feet deep.

I couldn't find a map quickly right now....but present-day SF bay is only about 50% of the size it was pre-Anglo. People have been filling it in and "claiming new land" for a long time. "North Beach", now inland, once really was a beach in the 1800's. ;) The Marina district was an inlet that got filled with debris from the 1906 earthquake.

That's a difference in definition. To me speculation isn't a calculated risk, that's what makes it speculation. Buying a stock based on a trend is speculation. Buying a business with an income stream is a calculated risk.

Just for that, I’m going to try to bid up the price of sushi.

Be careful....I understand Peter P is dangerous when "cornered". :)

The problem of "doing something stupid with lots of people" is that the smart people bail early. I'm not certain that I qualify as "smart" but bailing out of Cambrian Park SJ in May 2006 is starting to look that way. I figure AU is already fairly pricey and that other precious metals like AG won't be as much of a hedge. The industrial use of AG is declining and there's still lots of AG in the ground around here just waiting for the price to get a little higher. What do you guys know about PT? As the world turns to more cat cons in cars and trucks, wouldn't investing in PT be both a precious metals hedge and a "green power investment"?

Peter P,

Oh, I suppose speculation isn' "bad,' I just prefer to create wealth than merely hoard it.

Fixing up or building a home up for rent adds wealth that did not exist before, Arbatrage and speculation just reallocate wealth that already existed.

Isn't a large part of SF built on reclaimed bay land? I thought that was part of why the 1906 earthquake was so bad because it shook up the looser fill material.

DennisN Says:
February 27th, 2008 at 2:54 pm
"Be careful….I understand Peter P is dangerous when “cornered”. "

Nice guy, just don't cut in front of him at the sushi bar.

I just prefer to create wealth than merely hoard it.

Huh?

Arbitrage and speculation just reallocate wealth that already existed.

Well, if it creates wealth for me, that is good enough. :)

Randy H will spin in his rental house if he hears this: human society is a ZERO-SUM game.

DennisN

Good point on the PT. But do hydrogen/electric/fuel cell cars need catalytic converters? Tesla types and plug-in may be one invention away from mass acceptance.

human society is a ZERO-SUM game.

If that were true we would still be merely allocating caves and hunting/gathering lands. Societies has obviously created vast wealth where none was before.

I said this once before but I went and saw some artifacts from King Tut in LA and concluded that the equivilent of most of these treasures were attainable to most people. The rise of mass production, innovations, and our modern forms of government have proved that entire societies can advance. It doesn't have to be the case that one person has to get poorer for another person to get richer.
A celebrity marriage and divorce is a zero sum game.

I'm telling you guys, the plug in electric and or hybrid models are about to totally disrupt how we look and think about cars. The Tesla concept is just a pricier version of the Aptera.

Well, it all depends upon the meaning of wealth.

It is arguable that wealth represents the ability for one to impose his will on others. If you disagree, I urge you to think again.

As a society, we can improve our technology but we cannot alter the power relationship.

If you adopt this power hierarchical definition of wealth, it is not difficult to see the "zero sum game" within our society. But if you do, it is very easy to become a misanthropist.

I realized the country is at 35% real unemployment now.

Every household had 2 incomes + the home earning a 3rd income. Home is now 'not earning money' so we go from 5% to 35% unemployment. Basic Math.

And most homes had higher incomes than the owners.

Heck my house even had a better paint job than the owner.

Plug-in hybrids have a gas engine so yes they will still need a cat con. The big push for cat cons will be in countries that currently don't require them but are rapidly expanding their private transport system, e.g. India and China.

RE: cat con

Rhodium is now at $9000/oz. It was $450/oz in late 2003.

And now that I looked I see that Krugerrands are a rip-off: market price but you only get 1 oz of 91.6% AU. I know pure gold is too soft to handle but couldn't they bump the weight of the coin to reflect 1 oz pure AU?

www.bulliondirect.com/catalog/showProductDetail.do?id=175433586&gclid=CNShuenD5ZECFRM8awodRiwAeg

http://en.wikipedia.org/wiki/Krugerrand

Since the Krugerrand is minted from gold alloy that is 91.67 percent pure (22 karats), the actual weight of a "one ounce" coin is 1.0909 troy ounces (33.93 g), to provide one troy ounce of pure gold.

@ Dennis-

That is what a gold eagle is made up of. The weight is slightly more than 1oz so that there can be a full oz of gold without being too soft. Also, I believe the buffalo is in that camp or better.

"Every household had 2 incomes + the home earning a 3rd income. Home is now ‘not earning money’ so we go from 5% to 35% unemployment. Basic Math."

I like that. Yes, the unemployment of homes must be addressed!

Just think... if we could get all homes working again, and in fact BOOST their incomes....once prices got high enough, say 20X incomes of their residents, even with a modest 5% growth rate, everybody in the whole country could just quit their jobs, and and live off HELOCs from their ever expanding equity. Nobody would ever have to work again, because our homes are working for us!

It's just basic math!

@ Malcolm-

Just like 60 is the new 40 or whatever, the millionare is the new thousandare!

OK I feel better about Krugerrands now.

And to round out the cat con discussion:
http://en.wikipedia.org/wiki/Palladium_as_an_investment

Palladium prices recently rose to about $375 per troy ounce, which is still historically low.

Recent years' palladium surplus condition was caused by the Russian government selling off government stockpiles built up during the Soviet Era, at a pace of about 1.6 to 2 million ounces a year. The amount and status of this stockpile is kept as a state secret. The Russian stockpile sales over the years have been absorbed by strong investment demand from speculators who believe that once the Russian stockpile is exhausted, the palladium price should spike up significantly.

I love natural resources as an investment. :)

Still looking into blue gold...

Hey Mark,

We don't even need that. Let's just increase those rebate checks coming this spring to say 100k and then send them out every few months or so. Prosperity for everyone!!!

Paul Says:
February 27th, 2008 at 3:48 pm
@ Malcolm-
"Just like 60 is the new 40 or whatever, the millionare is the new thousandare!"

That's how I look at it, that's why I don't pat myself on the back. Everyone who had a decent house from before 99 had at least 300K in equity in the desireable parts of CA.

Remember in the German Weimar Republic everyone was a Trillionare but of course that didn't mean much at the end!

http://www.nowandfutures.com/us_weimar.html

DennisN Says:
February 27th, 2008 at 3:30 pm
"Plug-in hybrids have a gas engine so yes they will still need a cat con."

I wonder if the Aptera does. It's gas motor is just a small efficient generator which only charges the batteries. I suppose it probably does.