2012/2013 Fiscal Cliff

[bjl584]

Carpenter, are we to believe that you only invest in gold? You have no other holdings? No diversification at all? No stocks, cash, mutual funds, cds, mm accounts, etc? From the arguments that you have been giving it would seem that this is the case. I hope that it isn't. I hope that you do have some other holdings besides metal. If you do, then you must agree with some of what I have been saying even though you haven't aknowledged it. If you don't, then how are you doing with investing in gold only?

[Carpenter]

Thank you Petunia. I knew there was a problem with his numbers. There was no way that gold outperformed the stock market.

Here are the correct numbers including reinvested dividends from December 1972 through August 2012.

$1,000 would have grown not to $11,983 but to $54,805.46.

That sure beats 26K with gold - more than twice as much money in fact.

The S&P 500 has had an average annual return of 9.616% during that time period.

Not so fast there Disey.

I wondered when someone would pull divedends out of their ... hat.

For the sake of simplicity, I'll ignore the brokers fees associated with reinvesting the divedends, and accept Petunia's numbers at face value.

Since we are allowing for the reinvestment of proceeds, I choose to lease my gold.

The lease rate is the cost of borrowing gold.

In much the same way individuals borrow dollars, gold bullion participants will borrow gold, pay a borrowing cost, and return the ounces of gold to the lender. The debt is measured in terms of ounces, the value of the metal when it is being borrowed or returned is not a factor.
A review of historical records reveal lease rates as high as 7%.
The last 4-5 years have produced lower rates, but since they come at the end of our investment periods those arguably have a smaller affect on the outcome.

My best guesstimate puts the historical average of gold lease rates north of 2%.

My original $1000 investment afforded me 30 ounces of gold.

2% simple interest over 40 years increases my gold holdings to 54 ounces.
At todays price the net worth of my initial investment is now $90,000.00

Apply the same rate for 60 years, and my gold has grown to 66 ounces.
At todays price an astounding $109,000.00.

How do you like me now?

[bjl584]

For the sake of simplicity, I'll ignore the brokers fees associated with reinvesting the divedends, and accept Petunia's numbers at face value.

There are no fees associated with automatically reinvesting dividends.

[Carpenter]

You are giving one example. If you invest in the entire market you have so much more opportunity. Restricting yourself to one asset class is a foolish way to invest. There is endless opportunity out there to take advantage of over the course of time and over the course of ones life. And, as others have pointed out already, you are disregarding dividend reinvesting in your figures.

Carpenter, are we to believe that you only invest in gold? You have no other holdings? No diversification at all? No stocks, cash, mutual funds, cds, mm accounts, etc? From the arguments that you have been giving it would seem that this is the case. I hope that it isn't. I hope that you do have some other holdings besides metal. If you do, then you must agree with some of what I have been saying even though you haven't aknowledged it. If you don't, then how are you doing with investing in gold only?

I'm an anonymous poster on the internet, you are not to believe anything I tell you.
You are to Do Your Own Due Diligence.

Please don't refer to my investment strategies as "foolish" I have refrained from such, and expect as much in return.

How am I doing with metals?
How are you doing with stocks?

I hold silver today that I had a hand in removing from circulation in the 60's.
I have gold coins that my father purchased in the 70's.

Sound money has been in my sphere of consciousness since childhood.

I began converting savings to metals in earnest during the collapse.

I sleep very well.

[Carpenter]

There are no fees associated with automatically reinvesting dividends.

Shows you what I know.

Edit:

Now that I look, I find that is not always the case.

Shame on you. LOL

[bjl584]

I'm an anonymous poster on the internet, you are not to believe anything I tell you.
You are to Do Your Own Due Diligence.

Please don't refer to my investment strategies as "foolish" I have refrained from such, and expect as much in return.

How am I doing with metals?
How are you doing with stocks?

I hold silver today that I had a hand in removing from circulation in the 60's.
I have gold coins that my father purchased in the 70's.

Sound money has been in my sphere of consciousness since childhood.

I began converting savings to metals in earnest during the collapse.

I sleep very well.

I'm not calling you foolish. What is foolish is investing in soley one asset class over an extended period of time. Do you remember Enron? That is basically what happened to those people. They had all their eggs in one basket and lost everything when it fell apart. No matter how much you believe in something, in your case gold, you must not invest everything in it. You need to spread your money around across different investments.

[bjl584]

Shows you what I know.

Edit:

Now that I look, I find that is not always the case.

Shame on you. LOL

There are no fees at my brokerage firm with any of the securities that I own. There may be exceptions but they are far and few between.

[disneysteve]

Since we are allowing for the reinvestment of proceeds, I choose to lease my gold.

The lease rate is the cost of borrowing gold.

In much the same way individuals borrow dollars, gold bullion participants will borrow gold, pay a borrowing cost, and return the ounces of gold to the lender.

I must admit this is the first time I have ever heard of the concept of leasing gold. Can you tell me more about that? What possible purpose does it serve? If you own gold, what benefit is there to me from borrowing it from you and paying you for that service? What would I get out of the deal?

Okay, I just Googled a bit and it seems that leasing gold is the equivalent of shorting a stock. Borrow it at today's price with the hope of returning it at a lower price down the line. So leasing works best in a bear market when the price of the asset is expected to fall. I didn't find a current rate but an article from Market Watch from last fall said the rate was close to 0% so if you are leasing your gold, it doesn't sound like you're earning much of anything doing so. Nobody wants to lease it if they expect the price to continue rising.

[bjl584]

How are you doing with stocks?

Since the spring of 2006 I am up 600%.

I sleep well too.

[Carpenter]

Since the spring of 2006 I am up 600%.

I sleep well too.

Congratulations.

The norm for investors however pales in comparison.

I read somwhere The Good Investor Rule: Focus on How Not to Lose Money ...

With that kind of success you should start a newsletter, heck, I'll read it.

[bjl584]

Congratulations.

The norm for investors however pales in comparison.

I read somwhere The Good Investor Rule: Focus on How Not to Lose Money ...

With that kind of success you should start a newsletter, heck, I'll read it.

I can't take all the credit. I've made a lot of good moves over the past six plus years. Some of them smart, some of them luck.

The thing that helped me the most was the crash in 2008. I went on a buying binge and bought a ton of stock at near nothing. Most of them have rocketed back up to a more fair market price, often tripling and quadrupling in value. I've also bought into several high yielding funds to take advantage of the near 0% interest rates. A lot of them pay out 10% or more in dividend yield. Not a long term strategy, but you can play it so long as you know when to get out.

[Carpenter]

I must admit this is the first time I have ever heard of the concept of leasing gold. Can you tell me more about that? What possible purpose does it serve? If you own gold, what benefit is there to me from borrowing it from you and paying you for that service? What would I get out of the deal?

Okay, I just Googled a bit and it seems that leasing gold is the equivalent of shorting a stock. Borrow it at today's price with the hope of returning it at a lower price down the line. So leasing works best in a bear market when the price of the asset is expected to fall. I didn't find a current rate but an article from Market Watch from last fall said the rate was close to 0% so if you are leasing your gold, it doesn't sound like you're earning much of anything doing so. Nobody wants to lease it if they expect the price to continue rising.

The zero lease rate is a fallacy, you need to do more research.

The lease rate (if I remember correctly) is a function of LIBOR, and GOFOR. (Gold forward rates).

Shorting gold may be one purpose of leasing physical, but there are better ways to do that.

Consumers of gold borrow it, they may have no choice.

Gold leasing is more complicated than I claim to understand.

It exists, and those owners of physical who qualify may participate.

It's been fun, but I've got a door to hang, and livestock to tend.

See Ya'


A little info on gold leasing.

http://www.rapidtrends.com/gold-carry-trade-what-is-it/

[Petunia 100]

Congratulations.

The norm for investors however pales in comparison.

I read somwhere The Good Investor Rule: Focus on How Not to Lose Money ...

With that kind of success you should start a newsletter, heck, I'll read it.

Sad but true. Most investors behave contrary to their own best interests. They buy lots of whatever has recently been hot. They sell after a market correction, move to cash, and wait for "the market to stabilize" to move back in. Essentially, they buy high and sell low.

They fail to make a reasonable asset allocation plan, they fail to pay attention to costs, and they fail to stay the course.

[Petunia 100]

The zero lease rate is a fallacy, you need to do more research.

The lease rate (if I remember correctly) is a function of LIBOR, and GOFOR. (Gold forward rates).

Shorting gold may be one purpose of leasing physical, but there are better ways to do that.

Consumers of gold borrow it, they may have no choice.

Gold leasing is more complicated than I claim to understand.

It exists, and those owners of physical who qualify may participate.

It's been fun, but I've got a door to hang, and livestock to tend.

See Ya'


A little info on gold leasing.
http://www.rapidtrends.com/gold-carry-trade-what-is-it/

I've never heard of it, either. It sounds like speculation to me. Speculation is pretty much all you can do with gold.

I'm glad it has worked well for you.

[Petunia 100]

Not so fast there Disey.

I wondered when someone would pull divedends out of their ... hat.
For the sake of simplicity, I'll ignore the brokers fees associated with reinvesting the divedends, and accept Petunia's numbers at face value.

Since we are allowing for the reinvestment of proceeds, I choose to lease my gold.

The lease rate is the cost of borrowing gold.

In much the same way individuals borrow dollars, gold bullion participants will borrow gold, pay a borrowing cost, and return the ounces of gold to the lender. The debt is measured in terms of ounces, the value of the metal when it is being borrowed or returned is not a factor.
A review of historical records reveal lease rates as high as 7%.
The last 4-5 years have produced lower rates, but since they come at the end of our investment periods those arguably have a smaller affect on the outcome.

My best guesstimate puts the historical average of gold lease rates north of 2%.

My original $1000 investment afforded me 30 ounces of gold.

2% simple interest over 40 years increases my gold holdings to 54 ounces.
At todays price the net worth of my initial investment is now $90,000.00

Apply the same rate for 60 years, and my gold has grown to 66 ounces.
At todays price an astounding $109,000.00.

How do you like me now?

In other words, you realized you were ignoring dividends, but chose to do so anyway?