I have 10k to invest what would you do?

[shea]

I need some logical advice from logical people. Where would you stick 10K right now. Gold? my roth 401k? Im 22 years old and have saved some money that i wont be needing for a long time. What would you do? thanks

Edited November 13, 2009 by GreedyCapitalist

[brian0918]

I need some logical advice from logical people. Where would you stick 10K right now. Gold? my roth 401k? Im 22 years old and have saved some money that i wont be needing for a long time. What would you do? thanks

I'm in a similar boat. Last year my company dumped about that same amount into a retirement account for me, a mutual fund called BlackRock (MCLOX) which has made great gains in the last year, primarily due to its precious metal and commodity related components. This December I will get another retirement dump from my company, and here some possibilities I'm considering for it:

^HUI

short selling SPY due to huge s&p 500 p/e ratio

VEU

GLD

SLV

silver mining/royalty stocks

silver warrants for mining companies

mining ETFs

foreign currencies and stocks

I wouldn't put it all into just one - probably spread it out over several. You should also check out Greedy Capitalist's thread on his investment strategy.

Primary reasoning for me:

http://www.youtube.com/user/schiffreport?b.../26/jj8rMwdQf6k

Edited November 13, 2009 by brian0918

[Rajesh Agarwal]

I need some logical advice from logical people. Where would you stick 10K right now. Gold? my roth 401k? Im 22 years old and have saved some money that i wont be needing for a long time. What would you do? thanks

Buy Gold. You don't need to look elsewhere. It is the only safety in this financial mess the world is in.

[DavidV]

Buy Gold. You don't need to look elsewhere. It is the only safety in this financial mess the world is in.

I'm not opposed to buying gold, but you should not risk a large portion of your investment in a single asset. Anyway, gold is a means of value preservation and speculation, but not an investment.

[HansH]

How about a dividend stock with good fundamentals, such as BBT?

[Greebo]

Gold's long term return only averages around 5-6% and right now it's in the middle of a big recent increase. Buy now by all means, if you want to buy high and sell low.

My $0.02.

[brian0918]

Gold's long term return only averages around 5-6% and right now it's in the middle of a big recent increase. Buy now by all means, if you want to buy high and sell low.

My $0.02.

Way to assume that the current market will work like the market of the past, completely ignoring the massive recent government intervention(s) into the economy, and the impending default of major govt programs.

Edited December 15, 2009 by brian0918

[SD26]

Way to assume that the current market will work like the market of the past, completely ignoring the massive recent government intervention(s) into the economy, and the impending default of major govt programs.

This is my thought too. I cannot predict the changes of gold, but I also cannot necessarily predict the overall longevity of a company, the continued existence of a consumer market for a product, and/or continued government intervention into those market places. Either way, to borrow the famous statement, gold will never be worth zero. Companies collapse, products collapse, and government can't seem to keep its hands out of resources, incomes, etc. So, there is a real risk of an investment becoming worth zero. And if it's value is stated in a monetary system with continued devaluation, what is one really getting?

[dream_weaver]

I'm not opposed to buying gold, but you should not risk a large portion of your investment in a single asset. Anyway, gold is a means of value preservation and speculation, but not an investment.

Investment versus saving? As the differences between Wall Street and Los Vagas become less distinguishable, the risk on the asset becomes a question of identifying the various values involved and their relationships to one another.

What is a large portion? If I put 25%-50% of my wealth into gold/silver or stocks/bonds or banks/treasury bills - which is the investment, which is the speculation, which is the value preservation?

[Greebo]

Way to assume that the current market will work like the market of the past, completely ignoring the massive recent government intervention(s) into the economy, and the impending default of major govt programs.

Yes Gold has a history of going up when people start thinking that the world is going to end.

But you need to ask yourself - do you really, really think companies like McDonalds, Wal*Mart, IBM, Cisco, Canon, and the like are all going to collapse and fold up shop because of the current financial crises?

Many people felt the same in 1929, I'm sure. Gold back then was $20.63 an ounce. Now it's $1,131, 80 years later. That's a hair over 5% increase since the last time the world was coming to a major financial end.

http://www.goldprice.org/gold-price-histor...year_gold_price

Am I saying never to buy gold? No.

I'm saying Gold is not a great vehicle over time, not compared to business, and never has been. And right now, it's in a bubble of it's own.

As for Gold being "the only security"? If you were in New Orleans during Katrina and had a choice between gold and water, you'd have taken water.

Gold only has value because we *believe* it has value. You cannot eat it, drink it, or wear it for anything other than show. It's value is just as illusory as fiat currency. In reality it's nothing more than a shiny metal. It's value to others is based on faith in them thinking it has value - just like fiat currency.

[dream_weaver]

Gold only has value because we *believe* it has value. You cannot eat it, drink it, or wear it for anything other than show. It's value is just as illusory as fiat currency. In reality it's nothing more than a shiny metal. It's value to others is based on faith in them thinking it has value - just like fiat currency.

So you can eat, drink, or wear a dollar bill?

Edited December 16, 2009 by dream_weaver

[brian0918]

Gold only has value because we *believe* it has value.

That is true for everything of value. What's your point? Gold is considered great for use as money for specific reasons, reasons for which paper and fiat currency ultimately fail.

But you need to ask yourself - do you really, really think companies like McDonalds, Wal*Mart, IBM, Cisco, Canon, and the like are all going to collapse and fold up shop because of the current financial crises?

They could certainly fold up shop in the US, particularly if they rely heavily on US financial institutions that are likely to collapse.

And right now, it's in a bubble of it's own.

That's quite absurd. Given that Cash 4 Gold is able to buy gold from the public in massive amounts for well below the current price of gold, I don't see any evidence of a bubble. A bull market, yes. But that bull market is just starting. Ask anyone you know what the price of a one ounce $50 gold coin is. Nobody will know. They'll think it's about $50. That does not indicate a bubble.

If and when we start having shows on cable about buying gold, like we did for buying houses, and when gold becomes as lucrative a store of wealth as a home once was, then I will certainly agree, it's time to get out of gold, because there is a bubble and it will burst. When ABC finally gets a show - Extreme Makeover Gold Edition - hosted by a former gold miner with a squeaky voice, yes definitely, a bubble.

But what evidence do you have of a bubble now, other than intuition, hunches, and an appeal to tradition that ignores the recent, unprecedented, massive govt interventions into the economy?

Edited December 16, 2009 by brian0918

[Greebo]

So you can eat, drink, or wear a dollar bill?

Why yes, how very astute of you to comprehend the actual point I was trying to make.

That is true for everything of value. What's your point? Gold is considered great for use as money for specific reasons, reasons for which paper and fiat currency ultimately fail.

And gold also is subject to those same reasons. Currency devaluation is hardly a problem unique to fiat currency.

My points - two of them - in this thread are:

1) Gold is by no means the only safe investment; and

2) Gold is by no means the best investment out there - particularly right now.

That's quite absurd. Given that Cash 4 Gold is able to buy gold from the public in massive amounts for well below the current price of gold, I don't see any evidence of a bubble. A bull market, yes. But that bull market is just starting. Ask anyone you know what the price of a one ounce $50 gold coin is. Nobody will know. They'll think it's about $50. That does not indicate a bubble.

Did you look at the charts? What is the rate of recent growth in the value of gold vs. the historical?

What was the rate of growth in real estate from around '95 to '08 compared to the historical?

Pick a bubble in history - ANY bubble - and look at the rate of growth nearing the pop compared to the historical.

If and when we start having shows on cable about buying gold,

Have you been watching?

But what evidence do you have of a bubble now, other than intuition, hunches, and an appeal to tradition that ignores the recent, unprecedented, massive govt interventions into the economy?

I'm not ignoring the intrusions of Gov't into the economy. I'm counting on the fact that, DESPITE the intrusions, MOST of the major corps are still going to be around, producing, on a global scale, for many many years to come.

Look at the latest Obama summit on the economy - he did a whole lot of encouraging them to lend, yeah - they passed an awful lot of hot air in DC. We could feel the climate change here in Baltimore. But what the Feds don't have is the teeth so many of us think/wish they did - the TARP loans are being repaid and the banks are being freed up again to do as they wish. HOPEFULLY much wiser than over the last 10 years.

Are there new intrusions and interventions? Yes. But do they spell out the beginning of the ultimate collapse, aka A.S.? Don't fall into the trap of thinking AS is prophecy. In that regard it's no more prophetic than Revelations.

[brian0918]

And gold also is subject to those same reasons. Currency devaluation is hardly a problem unique to fiat currency.

Mining gold takes a lot of effort and time, and it's impossible for people to make more gold. Currency can certainly devalue, but only fiat currency can become completely worthless and devalue rapidly, overnight, on a whim. People cannot prepare for such debasement the way they can for slow devaluing of gold over decades.

1) Gold is by no means the only safe investment; and

I did not claim it was.

Did you look at the charts? What is the rate of recent growth in the value of gold vs. the historical?

What was the rate of growth in real estate from around '95 to '08 compared to the historical?

Pick a bubble in history - ANY bubble - and look at the rate of growth nearing the pop compared to the historical.

As I said, you are relying on history, disregarding the massive govt interventions. You're also disregarding the very reason why bubbles burst. When everyone owns a .com business, get out of internet stocks. When everyone is flipping houses, get out of housing. When things like that happen with gold, it may be time to get out of gold. When popular "Cash 4 Gold" services are replaced with "Gold 4 Cash" or "Gold 4 Silver", or whatever, then there might be a bubble. Or maybe gold will simply replace the dollar as an unofficial currency among the population.

I'm not ignoring the intrusions of Gov't into the economy. I'm counting on the fact that, DESPITE the intrusions, MOST of the major corps are still going to be around, producing, on a global scale, for many many years to come.

But what is your reasoning for this? The corporations may certainly remain, but will they remain in the US, where we can actually benefit from them? If you believe so, why?

the TARP loans are being repaid and the banks are being freed up again to do as they wish. HOPEFULLY much wiser than over the last 10 years.

They were given money for making bad decisions, and an implicit guarantee that if they make bad decisions in the future, they will be given more money. They never felt the punishment for their mistakes, at least not at the same magnitude. Why do you believe they will be wiser?

It's like sticking your hand on a hot stove, feeling it only warm, being given a lollipop, and meanwhile someone else in the world gets burned.

Don't fall into the trap of thinking AS is prophecy.

I was not thinking about AS at all. I've been following the commentary and arguments of Peter Schiff. Maybe he has read AS, but he doesn't defer to AS for his reasons. He gives arguments.

Edited December 16, 2009 by brian0918

[Greebo]

Mining gold takes a lot of effort and time, and it's impossible for people to make more gold. Currency can certainly devalue, but only fiat currency can become completely worthless and devalue rapidly, overnight, on a whim. People cannot prepare for such debasement the way they can for slow devaluing of gold over decades.

Not true. In a gold based economy where there is no central currency, a run on a particular bank can destroy that bank, rendering all the notes for that bank worthless.

I did not claim it was.

I did not say you did. I said that was one of my points in this thread.

As I said, you are relying on history, disregarding the massive govt interventions. You're also disregarding the very reason why bubbles burst. When everyone owns a .com business, get out of internet stocks. When everyone is flipping houses, get out of housing. When things like that happen with gold, it may be time to get out of gold. When popular "Cash 4 Gold" services are replaced with "Gold 4 Cash" or "Gold 4 Silver", or whatever, then there might be a bubble. Or maybe gold will simply replace the dollar as an unofficial currency among the population.

I'm relying upon history because historically we've had mixed economies going back on record at least 500 years and there's always been a bubble burst cycle and there * have * always * been gloom and doom sayers predicting that "this is it, ethel, this is the big one!".

But what is your reasoning for this? The corporations may certainly remain, but will they remain in the US, where we can actually benefit from them? If you believe so, why?

False premise - that a corporation needs to be in the US for us to benefit. I buy mutual funds that are us based and also international based. If Coke left the US production market, their SHARES are still based here.

[dream_weaver]

Not true. In a gold based economy where there is no central currency, a run on a particular bank can destroy that bank, rendering all the notes for that bank worthless.

Only if the bank was swindling its customers. Issuing more notes than you have specie for is quite frankly fraudulant.

I do not quite understand the hostility toward honest money myself, but if trade and commerce are the lubricant of society, how well can it run with its medium contaminated?

This is digressing. The original query was about what to invest in. This appears to be moving toward what not to invest it. Having myself a significant percentage in PM's - your points have been iterated by many others in the past in lots of places - they have not compelled me to change course as of yet.

Edited December 16, 2009 by dream_weaver

[Greebo]

Only if the bank was swindling its customers. Issuing more notes than you have specie for is quite frankly fraudulant.

It is the accepted system of banking. It has been since long before we left the gold standard. It is called "Fractional reserve banking".

*** Mod's note ***

I've moved further replies about Fractional Reserve banking to another thread, which already contains some discussion on that subject.

There are also two other threads on Fractional Reserve banking: here and here.

*** sN ***

Edited December 16, 2009 by softwareNerd
'Moved posts' notice

[brian0918]

Greebo: I replied in the Fractional Reserve Banking thread regarding your first point in response to me.

I'm relying upon history because historically we've had mixed economies going back on record at least 500 years and there's always been a bubble burst cycle and there * have * always * been gloom and doom sayers predicting that "this is it, ethel, this is the big one!".

And we have never had govt. intervention on this level, nor the impending default of top govt programs - social security, medicare, medicaid, etc.

False premise - that a corporation needs to be in the US for us to benefit.

Well, I was referring to the corporations you listed, so you're dropping that context. If they stop shipping their items to the US, we can't get those items, unless a third party decides to buy them and trade in our risky/worthless currency. As for the mutual funds you buy - what bank do you ultimately keep your money in? What ATM do you get your physical currency out at. If those banks go under, which many should have if we hadn't bailed them out, then you would not have those bank accounts available, or those ATMs to withdraw from. So yes, you could play your online stock "games", but at the end of the day you could not get that money.

Edited December 16, 2009 by brian0918

[SD26]

And we have never had govt. intervention on this level, nor the impending default of top govt programs - social security, medicare, medicaid, etc.

This is my concern.

Looking at the decline of the dollar...using a simple example...

If I had worked on a day for a particular recognized value, the dollar I saved would be worth less the longer I held it. No, not always over the history of the USD, but, currently, I have a hard time justifying why it would become more valuable with what is being done.

So, a stock that goes up in value in USD's would have to really do something dramatic to just maintain that value of the $1 that I worked for at one time. And that won't happen for every stock, will it?

Gold, sure, it might be a hedge, but it won't go under like other companies can and will do. To me there is an attractiveness to the fact that gold IS. It doesn't have emissions, it doesn't have a board of directors, it won't have a merger with someone, it won't loose value because it hired more workers. Gold is gold.

Might be over bought right now, so maybe silver is an excellent alternative, in addition to its uses in various industries.

[brian0918]

Might be over bought right now, so maybe silver is an excellent alternative, in addition to its uses in various industries.

From the commentary I have read at goldprice.org, gold was overbought when it shot way ahead to the $1200/oz level, but since the recent drops and consolidation, it no longer is, so can go much higher. The same for silver. The commentator is not biased, I don't think. He was pointing out how much it was overbought back when it was actually hitting those peaks, and how likely it was that a pullback would eventually occur.

[DavidV]

So, a stock that goes up in value in USD's would have to really do something dramatic to just maintain that value of the $1 that I worked for at one time. And that won't happen for every stock, will it?

Unlike a bond, a stock is equity - a share of ownership in a business. The value of that share is a fraction of the the total value of the business. Since the value of a business is measured in nominal dollars, ceteris paribus, the values of stocks rise proportionally with inflation. So stocks are a good hedge against inflation, even if they are a poor hedge against the bear markers that typically come with high inflation. Historically speaking, the value of gold underperforms the stock market because gold just sits there, while businesses actively expand their value. That's why buying gold in the expectation of making a profit is speculation, not an investment.

[SD26]

Unlike a bond, a stock is equity - a share of ownership in a business. The value of that share is a fraction of the the total value of the business. Since the value of a business is measured in nominal dollars, ceteris paribus...

I agree mostly, David. The part that I struggle with is the dollars remaining the same. And if the business could remain the same outside of government intervention.

My investment opportunities just haven't been as kind as I would have liked. So, I'm a little more concerned anymore. There was even time when one might expect that home ownership would have been a valuable investment to over time, but that might even be in transition with continued property taxation, new zoning from local, state, and federal entities...

Each has to measure their own risk, right? I'm struggling with looking at a US Dollar as a constant. Therein lies my personal struggle.