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Are pennies exempted? Remember those machines in tourist spots that crush pennies into souvenir?

I don't think so. I just think it's not enforced because it doesn't hurt anything. If you were to start destroying thousands of tons of pennies a week, they might well decide to enforce those laws upon you.

I bought a few physical gold coins (

(sorry - last post had a less-than-sign which got link-interpreted)

I bought a few physical gold coins ( less than 10) back in 2000 as the NASDAQ was tanking. I had always wanted to own some gold coins and I had dot-com cash so WTF.

I bought 100 silver coins 2 years ago on a vague paranoia that they'd be useful in a pinch.

I sold half of my gold coins two weeks ago at $640. Sure, they've gone up since then, but for those of you wanting to get into gold, I strongly recommend going into a gold store, taking out $680 in twenties and looking at a single 1oz Eagle coin. Then think about all the things you can buy with that $680 (a new dell laptop perhaps? a new bike for this glorious weather? Maybe 1000lbs of rice for those of you with bunker ambitions. How about a nice set of Craftmen power tools? Or a 100 burritos?)

Set against these hard assets (or necessary consumables), doesn't gold strike you as a bubble?

Conor, Peter P,

It appears you guys are technically correct about destruction of currency. Reference.

There are different laws for paper currency and coinage. It appears that, with coinage, there may be some intellectual property arguments which could be brought to bear against someone destroying coinage. These wouldn't be criminal, though.

Criminal statues require an intent to defraud. Melting for salvage would not be intent to defraud.

Arb Away!

I strongly recommend going into a gold store, taking out $680 in twenties and looking at a single 1oz Eagle coin.

Personally, I prefer Maple. Eagle is only 0.917 fine.

Peter P:Personally, I prefer Maple. Eagle is only 0.917 fine.

Really? Now I'll definitely sell the rest. ;-)

Really? Now I’ll definitely sell the rest.

http://www.taxfreegold.co.uk/comparisons.html

Conor,

I love like ya like a brother but if I was down $100 in a week I'd be ill for the rest of the month, seriously. That's like what a 15-20% hit in a week. If you're not worried you should be.

Yeah, I had a buddy that almost burned his garage down melting lead wheel weights into fishing lures. He now has nick name. "Shake and Bake". I swear everytime we get together to watch a game or play cards some tacky drunk brings it up. Me? I'll go to G.I Joe's Sporting Goods if I need fishing weights thank you. Playing with white gas is da bomb baby! It's da bomb!

Burbed.com has a nice piece on Bay Area intangibles. Here is an excerpt:

New York has the Statue of Liberty and the Empire State Museum - we have the Winchester Mystery Mansion.
Washington DC has the Smithsonian - we have the San Jose Museum of Art
Egypt has the pyramids - we have the Fry’s in Campbell
Boston has the birth of America - we have Great America.
The Mediterranean has villages - we have Santana Row.
London has the Tube - we have Light Rail.
Alaska has glaciers - we have Valco.
China has the Great Wall - we have the Great Mall of Milpitas.
Everywhere else has an airport - we have Terminal C at SJC.
Paris has Champs Elysées - we have El Camino Real.
Asia has Shanghai, Hong Kong, Taipei - we have Cupertino Village.

See, no bubble. ;)

"Set against these hard assets (or necessary consumables), doesn’t gold strike you as a bubble?"

I'm putting my money in forged knives and tomato seeds...

Randy and Owneroccupier, check your gmail

I'm putting all my money in cushie toys and chick lit.

Peter P,

Too funny! Burbed? Now I've got to check it out.

George,

I agree. We can't compete with the efficiency of big operations. However, I think the dumb money will follow us. Gold is still quite cheap by historical standards. Furthermore, gold hasn't edged up much against the Euro. We're just hedging for the hidden depreciation of the almighty dollar.

SFWoman,

I am concerned about bird flu. We've dodged a replay of 1918 for a while now, maybe we're due for something.

Keep in mind that Tulipmania was happening in the shadow of Black Death.

Randy,

I suggest buying up worthless old coins of EU nations and melting those down if you want to - think Czech Korunnas, Swedish pennies, one franc coins etc.

If you can find some around and you want to melt them down, check this out:

http://tinyurl.com/nju9p

Also, if you want to melt down Canadian pennies, they need to be the old ones:

http://tinyurl.com/l5nu3

SFWoman,

Welcome back btw! Globetrotting? Anyway are sure that article wasn't writtem by Kim CARNES? Ma'am, there isn't a lot any of us can do about bird flu, landslides or gas prices but the one thing we can do is our checkbooks snug, safe and secure at home when it comes to fluffy RE prices!

Keep in mind that Tulipmania was happening in the shadow of Black Death.

Planetary influences.

Peter P,

When will the planets be aligned for a run on high carbon steel knives? :P

Conor,

I guess that's O.K. I sure don't want to get on a soapbox on a Friday. I have a 2:00pm appt. in the city and this will keep my "low beer warning indicator" illuminating intemittently a little longer. So forgive me if I seem a little "edgy". Anyway, that's the difference between representing yourself and representing a client. SQT (help me out here a little). When an individual miscalulates the entry point, it's no big deal b/c either he/she was going to hold it long term or; the were going to dollar cost average. Traders and brokers get flamed by their boss and fund managers are given a quarter to get it "cleaned up" or they are gone. I guess the question here is that if you were managing some kind of gold account for me what would be my index be to track your performance against? Anytime we invest, we have options so if you put me into gold and it's flat or only slightly up when the S+P 500 is taking off or REIT's are going through the roof you have my speculative capital in the wrong asset class. The relationship and your credibility are strained. TTIYF.

If a lemming wants to buy a house, he gets an absurd neg-amo interest-only ARM which he never intends to pay back. If a lemming wants to buy gold he pays for it with 100% cash.

With gold futures ont can control 100oz with as little as $2500 on eCBOT.

This amounts to a leverage greater than 1:25.

NOT INVESTMENT ADVICE

Conor,

I do get your meaning and your words have not fallen on deaf ears! Btw, the eCBOT players in Peter's scenario have more skin in the game than the avg. homebuyer today.

At least the commodities exchanges RAISE margin requirements during volatile markets, which sadly isn’t the case with equities or housing, as we’ve seen over the past several years.

Exchanges are more concerned over daily fluctuations when setting margin requirements. They do not care if speculators will lose money or not.

If anyone has to ask about whether or not a futures account is appropriate for them, the answer is no.

Unless that someone has some colored jackets in his closet. :)

Conor,

True. I try not to get roped into the "benchmark game" if at all possible. It leads to golden statements like; The R2K is down 28% YTD and your account is only down 26.5% so Mr. Client, you are actually outperforming the market. Ahem.

I’m worried about a sharp gold pullback to a certain extent — a quick drop to $550-600 is in the realm of possibility, imho, but in the long run I think gold is going much, much higher.

I share the same sentiment.

It is frustrating that GLD does not have options. It would be nice to setup a collar now.

NOT INVESTMENT ADVICE

Bork, it is often irrational behavior that bring prices to a new high. Gold is still mostly a precious metal and a form of currency. If you want industrial uses, look into silver.

NOT INVESTMENT ADVICE

35$ to 850$ over 10 years: 37% annual growth
670$ to 5000$ over 10 years: 22% annual growth

(rough figures)

Conor,

Exactly! I think the next time I get an earful from a fund manager about "upside/downside" capture I'm going to go off!

$850 to $270 over 15 years factoring in inflation: losing your shirt

You guys are supposed to be contrarians in your housing position. Why follow this gold rush crowd?

Gold will form a bubble sooner or later. There are not many places left for dumb money to roam free.

NOT INVESTMENT ADVICE

SQT: I think it’s an acknowledgment of another bubble combined with the hope of taking advantage of this one.

Gold fell from that $850 peak to $490 in less than 6 months followed by a suckers rally.

Best of luck. Anybody want to buy my remaining Eagles?

Gold fell from that $850 peak to $490 in less than 6 months followed by a suckers rally.

So?

SQT Says:

You guys are supposed to be contrarians in your housing position. Why follow this gold rush crowd?

I think it’s an acknowledgment of another bubble combined with the hope of taking advantage of this one.

It could be true. The Gold bubble hasn't even begun by most definitions of the bubble. We are still in the doubt phase, questioning why it is moving higher, and how it is going to crash. It will be bubble when everyone is defending why it will continue to go up. That has been mentioned quite a few times.

But isn't a good diversified portfolio supposed to have SOME exposure to precious metals, commodities etc ? The % amount would be different for different fold depending on the circumstances.

Some may be trying to cash in on the next big thing. But there is now a new sense of urgency that is in large part driven by the fear of imminent devaluation of US$ over LONG term, and taking a hedging position. In this aspect, it is consistent for bloggers here to evaluate Gold as the hedge.

Other hedges are other commodities and bonds/stocks in other currencies. Again, a diversified portfolio should have SOME exposure to other currencies.

NOT AN INVESTMENT ADVICE

I guess I’m still not seeing the gold bubble. Other than chatter on some blogs and late-night infomercials I don’t see the gold mania anywhere.

It is too early to tell if there is a gold bubble. It is impossible to ascertain whether there is a gold bubble now, although there may be regional gold froth.

Peter P,

Didn't the same old wise sage also said "Bubble can be identified only in retrospect" or something like that ? Or who said it ?

Or who said it ?

That green wise sage.

There are not many places left for dumb money to roam free.

With pergraniteel in every kitchen, the discerning homeowner needs a way to stand out from the crowd. As any executive chef will tell you, the quality of a cook can be seen in his knives. With a set of Japanese blades hand-forged in the traditional matter, you too can send a message to your visitors that you can afford the very best. A good set of knives, like a good home, can last for a lifetime, and prices will only go up.

etc., etc.

Peter P: So?

High Beta -> High Return in the stock market.

Normalize gold by dollar inflation and its return doesn't justify these spikes.

So where do you hide your loot against dollar inflation? I confess I'm not sure although oil stocks have been pretty good. Eurobank trims too much off the top. Go gold if you want for a small part of your portfolio, but if you bank the nest egg, you're as risk-taking as the ARM interest only crowd. I bet you'd sleep more soundly with 5% short-term CDs.

NOT INVESTMENT ADVICE