patrick.net

Unfortunately, people who are financially smarter than me have already discovered what inflation is in store for us. Gold is already at a 25 year high. Am I not a bit too late to the party ?

I read a news last week, where some commodity Guru was saying there is no bubble in Gold. The contrarian indicator should in such situation mean, very little upside left. I think Gold will move up, but from this point onwards, the gains may not keep up with inflation.

Psychologically, gold has a huge intrinsic value.

First, it is distinguishable, unlike silver and platinum, they are not as shiny, and you cannot easily tell the difference between silver and platinum, a platinum buyer certainly doesn't want to be tricked into paying platinum price for silver. Second, gold is very inactive with most chemicals, making its appeal lasting and storage care-free. Third, it is dense, it is impossible to counterfeit a larger piece of gold just based on density alone, gold-coated lead won't work if the mass is larger.

So in terms of store of value, especially something that can be readily comprehended and embraced by the mass, it is a perfect pick.

SFWoman,

does the article mention the cost for such service? thanks.

I do see gold as first and foremost a speculative instrument. I'd like to keep a bit of it around and dump it when everybody else goes crazy over it. Ultimately, fossil fuel (and stuff made with fossil fuel like agricultural commodities, plastics, and metals) is what makes everything run.

Not advice of any sort, consult your own paid spiritualist/financial advisor before acting.

Gold is already at a 25 year high. Am I not a bit too late to the party ?

I cannot answer that. However, the dumb money has not left housing in force yet. When this happens, whatever left of the dumb money will go into another dumb asset class. Gold seems to be a good candidate.

To BA,

25-year high? Are you sure? You have to adjust the price with CPI. A dollar in 1980 is about 2.6 dollar today, adjusted for CPI published by our DOL.

"whatever left of the dumb money will go into another dumb asset class. Gold seems to be a good candidate."

Bubbleheads think alike :P

I won't hold gold long term, but I think there's still huge upside potential ahead of us. And the downside isn't that bad, when you think about how much it went for in 25 years ago.

o.t.,

Small claims courts are pretty straight forward and goes in front of a judge. The true craziness comes in with jury trials.

Ultimately, fossil fuel (and stuff made with fossil fuel like agricultural commodities, plastics, and metals) is what makes everything run.

However, this also means that governments will move heaven and earth to keep prices down. If oil goes to $300 a barrel (300% increase), our economy will likely to crash. If gold goes to $2500 an once (same 300% increase), it will just top the last peak in real term.

NOT INVESTMENT ADVICE

gold is always this alternative currency since we invented fiat money. Whenever we lose confidence in the fiat money, it roars back with full force. When the government and money printing agencies get their acts together and clean up the fiat mess, gold retreats into the background.

I personally think that Ben is not someone I trust in terms of taking care of the worth of my money.

I personally think that Ben is not someone I trust in terms of taking care of the worth of my money.

The question is: will inflation upset more voters than deflation.

Inflation = lower pay in real terms, deflation = no jobs, I think the answer is pretty clear.

Peter P,

Yup, political risk. Always scares the bejesus out of me. But what can I do? I'm essentially a third party person (true Progressive) trapped in a corrupt corporatist duopoly. Hopefully, things won't go crazy so fast that I have no time to respond. That's why I'm chosing to live my next five years out light and unencumbered.

Oh, what the hell, I'm flat broke right now (student loans = IRA), I AM the proletariat, what can the angry masses do to me?

Owneroc and Peter P,

Good points.

BTW, I think I jumped the gun on contrarian indicator. Hardly anyone is asking people to buy Gold. There is no Time article yet on "Why Gold will shine forever".

But it's so hard to truly eveluate real price of the Gold. What ratios to look for ? What metric to use ?

Owneroccupier,

There's just not enough gold to fill in for fiat money. Gold is still psychologically valuable because of its past history, but it just can't work as a carrier of value in any real sense.

But it’s so hard to truly eveluate real price of the Gold. What ratios to look for ? What metric to use ?

Finding the "real" fundamental price will do you no good because people are emotional beings. One must anticipate their next stupid move.

SFWoman,

I always felt the brown-nosers were living the unexamined life. While I've admired that unthinking quality in some of my weaker moments, I think I'd go complete stark raving mad if I had to live like that.

BTW, if you do buy gold, you need an exit strategy because gold really has less intrinsic value than corn (you cannot eat it).

NOT INVESTMENT ADVICE

Did anyone pay attention to what Heli Ben said today ? He gave a signal, that Fed may pause increasing the rates.

Not to parse what he is really trying to say etc, but how about the a new thread on "Let's assume Fed has paused the hikes. How will that affect economy in general and housing in particular ?"

Peter P,

There's no doubt in my mind that energy, either fossil or nuclear, will be the ultimate holder of value, followed by IP, access to clean water, good agricultural land, minerals, etc. By that measure, California is not doing too badly (windmills and solar cell farms)...if it'd only fix up its government...

To BA,

check out the oil/gold ratio. Right now either gold is too cheap or oil is too expensive, you can judge for yourself. Google oil/gold ratio and there are plenty of historical charts.

SFWoman,

I completely agree with you that strict parent planning is the worse one can do for his kids. It doesn't mean that the parents shouldn't provide excellent education, just that the parents should refrain from planning out the career path for their kids just because the career path seems profitable, today. Everyone is unique, one needs to be in touch with his own talent and happiness.

The ultimate determinant in an unstable world order will be arms...

Owneroccupier,

Going completely OT. You know, I've always maintained that Mainland China cannot possibly invade Taiwan forcibly because of all the crazy Mainland dams built. If they ever invade Taiwan, the Taiwan government can force their hands by calling for air strikes. Since the Taiwanese air force is superior that anything the PLA has yet to put together, they really can't "forcibly reunite" China.

Peter P and OO
You guys may have a point with gold. I remember when it was at $600 before(I won a contest for an oz of gold and they kept waiting to pay because the price was so high)
About 3 years ago a friend of mine got divorced. She decided to rent because apparently we were at the top of the housing market. Well, we all know what happened to the market . It grew to extremes we couldn't even imagine. I wonder if that will happen to gold? It's been here before...but not much beyond...maybe it too will break it's own barriers. Hmmmm
I'll have to seriously consider this one......

ryan,

I am just speaking from a general conception point of view. Investors needn't be convinced, they are already in and they usually have the knowledge.

Just from a visual point of view, something that people attach value to must stand out from the crowd. That is just how our mind works. Btw, SLV hits the market tomorrow if you are interested in silver.

astrid,

not quite getting your point. I thought China couldn't invade Taiwan because of the American military power in the Pacific (or the American consumer market that is open for trade). Can you elaborate?

Owneroccupier,

I think at least with the American military presence, there's still bargaining room and the chance of the Chinese pulling a fait accompli before the Americans have a chance to respond. (think Poland 1939) With Taiwan holding essentially the nuclear option over most of China's most productive cities (almost all of them are located next to a major dammed river), I think the threat is much more immediate.

Ladies can also hoard diamonds, which again is something that has no impact on general price level. But, here is the catch. Diamond under a carat has no hoarding value at all, because man-made colorless diamond with absolutely no difference in qualities can do a carat and below. Diamonds below 3 carats don't appreciate much either, because the rarity effect is not there, somehow the supply of diamonds above 3 carats drops off a sharp cliff.

So now is a perfect time to convince your hubby to buy you a big stone.

No, not the raw diamond holding thing again :) I really think that one is designed for war refugees...

Well, if you ladies are looking, definately go to the resale market to avoid the retail/de Beer mark up and pay attention to clarity, cut, and color, in addition to carat.

Fewlesh,

How long is your lease? You really need to be careful about making undocumented improvements on rental property, that may be the basis for them to jack up your rent when your lease comes up.

SFWoman,

I won't wear natural diamonds. Partly because of the expense of anything really nice, and partly because of the way they're extracted and marketed. If I had real money and expertise, I'd be collecting antique jade pieces.

PS - I just realized how standoffish I sounded in the last post :oops:

Thanks for sharing your knowledge about vintage diamonds. They're definitely the place to look for classy and interesting pieces.

@ everyone
A note to say I really enjoy reading the Patrick.net threads in the blog space and can't often comment since I have no internet at work, and am busy with chores, etc. at night, so i usually copy-paste the text into an MS word document and read them when I have an idle moment (which has been infrequent this week). Nice to see Astrid again after that Who is Patrick.net thread lured her out again (yeah, I read your stuff the first time you posted frequently) and always enjoy HARM, Randy H, Zephyr (where is he?) Owneroccupier, SFWoman, Linda and the many other frequent posters. Maybe even Surfer X.

@SF Woman, Astrid: We got my engagement ring from a place that dealt only in vintage and antique jewelry and watches. I went to look at Birks (the equivalent of Tiffany in Canada), Tiffany and a few other big name places. Basically, I got my 1930s to 1950s ring and wedding band between 1/3 and 1/2 of what brand-new-brand-name cost. Less if I were able to bargain. The other nice thing is that most of the big jewelry houses have a paucity of design, whereas the antique jewelery dealers will often have hundreds of different styles, diamond cuts, diamond shapes to pick from. We had much fun choosing from them -- unlike Birks / Tiffany. Three years later I still get lots of compliments for how pretty the set is (best compliment was "that's the most tasteful engagement ring I've ever seen" -- blowback from all the clunky rings with bulky 1 ct+ stones?)

Keep posting, many lurkers are reading you!

@SFWoman, Astrid

Oh yeah, vintage/antique jewelery also means you give a "second" or "aftermarket" to these objects which, for obvious reasons, DeBeers would prefer to not exist. There are plenty of books about how DeBeers does a great deal of marketing to brainwash us into linking diamonds with love and how it would never do to sell your love-token (or buy it second hand, I guess). Balderdash! Also, the labour (particularly in the case of blood-diamonds) required to get a diamond is so immense, that if I were the person expending that effort, I'd want to know it remained valuable after it was purchased and left the "first market" of mall stores, brand-name jewelery houses, etc.

OwnerOccupier,

I was better off in the end not going to MIT. Ohio State gave me the chance to mature and learn to survive outside of smallville. I would have been dog food at MIT. OSU had top-notch computer science facilities, a good business undergrad program, and eventually landed me in an Ivy grad program, so all's well that ends well.

I'm hoping my son favors Cal (that's Berkeley for out of towners) or CalTech. Maybe Stanford as a backup.*

* Not intended as a slight to the elite from "the farm".

TOLurker,

Thank you for your kind words and for sharing your experience. Though, LOL, you can't be a lurker if you've delurked :P

Randy H,

I hope your son will consider other tech schools (cough Harvey Mudd cough MIT cough cough) and liberal arts schools. I've definitely meet happy alumni from HMC and MIT, so it just depends on the sort of person your son is at 18 (if he's an extremely messy and interested in screwing other people, Claremont McKenna College may be just the ticket; if he likes hemp products, Pitzer College and St. Johns College in Annapolis may be good choices).

As for Stanford, yawn. What can be so great about a school that let's its students drop classes right til the end of the semester?

o.t.,

I've been lucky to avoid courts thus far, so I can't comment based on direct experiement. But as I understand it, it's always worthwhile to dispute a speeding ticket while you're in California.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/04/27/CALBUDGET.TMP

SACRAMENTO
California coffers fill with $1.5 billion in extra income tax

Where do you think the extra income tax come from? Solid income gains? Flipper capital gains? Anyway that I can find data on the breakdown?

As for Stanford, yawn. What can be so great about a school that let’s its students drop classes right til the end of the semester?

If I'm not mistaken, you can drop after the final at Stanford.

Randy H Says:

"I was better off in the end not going to MIT. I’m hoping my son favors Cal (that’s Berkeley for out of towners) or CalTech. Maybe Stanford as a backup. (Not intended as a slight to the elite from “the farm”)."

As a person who has sat on both sides of the field for the big game the one piece of advice I give kids thinking about going to college is to "graduate from the best school near where you plan to spend the rest of your life" (notice I say "graduate from" since no one ever asks if you graduated from Cal "after 2 years at UCR"). If you plan to work and raise your kids in Austin a degree from UT will open a lot more doors than a degree from "that school in CA with all the left wing protestors" or "the Junior University south of San Francisco started by the railroad guy"...

One of my childhood best friends ended up going to CalTech and I spent a lot of time visiting him down there at the Blacker Hovse (the "v" is not a typo and you can find out more with a Google search). I was only back at MIT once (when I was older and in Grad School), but as a whole CalTech kids seem to have a lot more fun than the kids at MIT. As a clean cut fraternity guy coming down to visit, the CalTech guys did not welcome me with open arms at first but after they found out that I was a closet geek and liked to blow stuff up I became an honorary Blacker Hovse member...

P.S. More advice to parents don't ever tell your kids where you want them to go to school try and get some younger person that they respect to tell them...