I am not as well versed in economics, as am I with the various political theory, knowledge, etc. that I've read, thus far, 2 years into my journey as a Libertarian (sub-branches & stances of philosophy aside...). For those who know better than I, please forgive any naivety that my questioning brings, as well as a possible naive use of phrases and/or terms:1.) How does one get into stocks? I know next to nothing unfortunately, and don't have any advisors or a portfolio (none that I know of). I ask because with the oncoming Depression, it would obviously be important to know such matters in an effort to either ensure I make some money or (most likely) be able to keep what little savings I manage.2.) (comes after the first one I suppose...) How does one get into buying gold? What does one do with it? How does one ensure their money is insured via gold, or ensure their savings are kept safe? The only thing I know thus far, in terms of protecting savings, would be to not keep it all in a bank account (mattress), and use my credit card as little as possible or not at all.3.) Adding on, aside from stocks, what are the other options to ensure my money is somewhat protected or least affected by such stagflation, recession, & depression? I vaugley know of certain account names (401k, Roth IRA, etc.), but nothing in-depth at all. I suppose I could consult Goolgle, Wikipedia, etc. for such information, but any real-world advice / experience with such would be more helpful, methinks...Thanks for bearing with my ignorance.
"Look at me, I'm quoting another user to show how wrong I think they are, out of arrogance of my own position. Wait, this is my own quote, oh shi-" ~ Nitroadict
One of my big questions in modern investing is how to keep the government from stealing the money, either directly or through inflation. The various types of accounts you list are tax advantaged retirement accounts. In a 401k you contribute pre-tax money that grows tax free, but you pay taxes on it when you take it out after you retire. If you need it early, there are substantial penalties. The contribution limit per year is a fixed amount, I believe. In a Roth you contribute post-tax money, but it can grow and is disbursed tax free. The amount that can be contributed per year is much smaller than a 401k, 2000 to 3000 dollars per person, but I believe the limit is scheduled to go up. The problem with any of these accounts is that what the government giveth, the government can taketh away. The attraction of these accounts is their tax favored status, and laws can be (and are) changed. Another big concern is that you don't have any attractive options for taking the money back out in the face of a massive recession. The best thing that I have figured out to do is money market/stable principle funds. That is another limitation of those instruments - generally your choices are more limited than investing through your own broker or Etrade/Scottrade/etc. account.
If I actually lived in the States right now, I would be buying some gold and silver (and guns). Just about every jewelery store can sell you coin or bullion gold. You should check the spot price and become familiar with the spot values offered for various different coins (Canadian maple leaves, South African kruggerands, etc). There are a variety of ways to store them, but it all depends on your level of trust for the institutions. The question I would ask myself are "If the FBI or DT (Treasury) showed up at the bank/store/holder of my gold, and demanded the surrender of it, would the institution give it up?" A paranoid man would pay for the metal with cash, refuse to give names or sign anything, not tell anyone he had it, and keep it in a place where no one could get it and where it was defended by the aforementioned guns. Fairly recent events in Indiana show just how far the federal government will go in violating the rights of its citizens to protect its own monetary hegemony.
I personally think there is a lot of risk in holding money in banks right now, due to the collapsing fractional reserve lending. I have begun limiting my exposure to potential loss by paying off debt (mortgage) rather than holding cash in the account. Some would argue that the present and coming inflation makes paying off debt now a fools game (due to the decreased real value anticipated on a future dollar), but I look at it as I have assumed an obligation to pay, and since the future is unknown, I may as well pay off the debt I have assumed.
My opinion on credit cards is as long as you pay in full every month and spend with credit like you spend with cash, there is no problem. A credit card is a horrible place to carry debt. The mob has better lending terms! Cash has power, though. If you like to negotiate, then shop with cash and let the store owner know that you will pay them with cash. You can probably negotiate a better price than sticker, due to the credit expenses that the card companies charge the vendor. Cash is also much harder to trace than the credit card. I ask myself again "If the FBI showed up at the credit card issuer and demanded a record of my transactions, would they give them out?" Almost certainly. What can be tracked can be easily siezed.
Another of my grave concerns recently is how dependant the various markets are on government information and policy. A perfect object lesson that the US is not a free market is the huge run up immediately following the $200BN pledged by the Fed to loan. The underlying health of the whole system had not changed. Performance since then illustrates that it hasn't.
Perhaps one of the economists can speculate on what will happen to commodity prices during this recession/depression. The prices now are skyrocketing due a large degree (in my opinion) to the plummeting value of the dollar. However, during the big one the consumption of commodities dropped a huge amount due to contraction of the boom-expanded capital goods industries. I recall Rothbard pointed out that pig iron production dropped by 2/3 from the 1920's peak to the Depression low. That would have to affect the price of iron, steel, etc. Other industrial metals and commodities would surely follow. Ag commodities have been driven up by federal regulation toward ethanol and alternative energy. Again, federal policy is distorting the market value. Policy can change.
I may post more later. Good luck!
One hundred trillion Zimbabwe dollar note
i think the best thing to do would be to give your money to a company called Euro Pacific Capital. It's run by a guy named Peter Schiff who is an official economic advisor to the Ron Paul campaign. He wrote a book called "Crash Proof: How to Profit from the comming economic collapse". So if i were you, i'd check out their website... go on youtube and search for "peter schiff" ... he's been predicting this collapse for years. his firm basically invests money abroad in conservative dividend paying stocks. He's basically trying to get his clients' money out of the dollar.
here's the website
http://www.europac.net
so you can read his comentaries that he has been writing for years. if you go under the resources tab, there's video interviews he does on Fox Business, he does a weekly radio show where he takes calls... so you can listen to some of his past shows.
he's been a huge bull on gold and gold stocks for many years. he buys gold, silver and other metals for his clients though the "perth mint" program in austrailia.
so if you don't know too much about buying stocks or how to protect your money, just send your money to this firm and they'll be able to help you. i don't work for them or have any connection to the firm... but i love shiff's book crashproof and i listen to all his radio shows and stuff.
here's a really good lecture he did:
http://youtube.com/watch?v=sDh3FNuwrTc
oh, and i forgot to mention that peter schiff believes in austrian economics... everyone has been really happy with his firm... if i had any money, i would definately give it to this firm.
hope this helps
Thank you for the replies; I will heavly consider putting aside some money per 2 weeks aside for a possible investment in EPC's services. I suppose the only thing i can do other than that is be frugal and continue reading up on information.
I'm in Canada and can't move my retirement funds into the US. Do you think buying a Precious Metals fund is still a good idea? Natural Resources fund? I'm sort of at a loss (literally). Just sold a fund I've been loosing $1000+ a month on. I need to find some winners.
I'm canadian also (living in vancouver, moving back to toronto in a couple months).... but canadian's are also able to invest with Euro Pacific Capital. I still think this is the best thing to do because the brokers will take care of you and you don't have to figure this stuff out for yourself. I bought some gold last summer from the Scoita Bank in downtown toronto... you can go there and buy the phyiscal gold bars, tax free, with only like a $5 bar charge. there's also some gold ETF stocks that are basically the same as buying gold. the gold ETF in the US is "GLD" ... i think the one trading on the TSX is HGU.TO or something.
but if you're looking for things to invest in, just buy commodities and agricultural stocks. Gold and Silver are probably the best ones. gold and silver have done really well lately and have been going up a lot since last summer. Though pullbacks can happen at any time, gold and silver will continue to go up a lot in the comming years. Silver is a little more volitile than gold, but i think silver will probably out perform gold. but i would buy both gold and silver if you don't already own some. Just buy some, don't worry about the fluctuations, and in a few months you'll be up for sure.
if you have retirement funds in your RRSP or something, there are plenty of good natural resource companies in Canada to invest in. Euro Pacific Capital just sent out a report to everyone in their database where they recomend buying Canadian Energy Trusts. There were some new tax laws passed last year which caused the Canadian Energy Trusts to go down in price... so EuroPac thinks these Canadian Energy Trusts are a good value now. They pay a high dividend and will also probably go up in price ... so you'll get capital gains and dividends. i can forward you a copy of Euro Pac's report if you want to see their information on the Canadian Energy Trusts. my e-mail is adamletalik@hotmail.com ... so just e-mail me there and i'll forward you a copy of their report, since you should be able to use your RRSP money to invest in some of these things.
I was holding cash in £ which it seems was a really dumb thing to do. Gold prices inflation-adjusted to the purchasing power of today's $ were well over $2000 in 1980 and will go just as high, and although they grew about 100% in $ in the last two years they only grew about 50-60% in £ so I think it's still a good idea to go for gold.
But what happens if the US government floods the gold market with the gold of Fort Knox?
Miklos Hollender:But what happens if the US government floods the gold market with the gold of Fort Knox?
who even knows if there is any gold in fort Knox? and if they did that... it would bring the price down, but i have a feeling that it would be bought up very quickly if they did. i bet you china would buy all the gold in fort knox if it was made available.
Any ideas what is going on in the markets today? Gold and mining companies are way down, the components from the mutual fund I just sold are way up, and the market looks peachy. Is this for real or some kind of short lived manipulation by the Feds?
a few things happened today. leamon brothers had better earnings than expected, and the fed cut rates. when the fed cuts rates, they basically print more dollars. however, whenever they cut rates, the stock market goes up, and rherefore the demand for dollars goes up because people need the dollars to buy the stocks to get in on the rally. if you look at the US dollar index (just google "us dollar index") you'll see that the dollar went up about 0.6%. Also, a lot of people thought the rate cut would be a full percent, and it was only .75... So the dollar did well yesterday as stocks rose. Stocks almost always go up after the rate cut. the market was up about 420 points... but it will probably lose most of that before the end of the week. the last time the market rallied 400 points, the gains were gone before the end of the week. So either late this week or sometime next week, the market will probably be lower. Everytime this happens, people think the market hit the bottom and that things will be going up from here on in... which of course is just wishfull thinking.
gold made a new high over the weekend, when it hit $1030 an ounce, but fell to about $1010 by the time the markets opened on monday. So gold basically fell from 1010 down to 980, which is a pretty decent sized pull back, but nothing too extreme. But it stopped falling at 980, and has been slowly rising ever since. Gold is now at $990 an ounce and heading up again. The dollar is also on the way back down.
So we'll have to see what happens tomorrow, if the market can keep the rally going or not. but it's only a matter of time before the markets are down again and gold is back up making new highs. Don't be fooled into thinking that the market looks peachy. it only did well because the fed cut rates and threw a bunch of money into a dying market. in a few weeks, the dollar will be back down, gold will be back up, and more and more companies are gonna be in trouble and needing another fed bailout. it's obviously pretty crazy times out there... but in the long run, gold, silver, commodities, etc. are going to do great. the dollar is going to keep getting crushed, and stocks will continue to fall priced in gold (and the nominal value will likely fall as well, but that depends on how much inflation there is).
if you want to hear a market update... listen to peter schiff's radio show on Wednesday at 8pm EST, 5pm Pacific. you can listen online at europac.net or on shortwave radio 5.070 Megahertz. that sucks that you sold your mutual fund before the rally... but it's basically like trying to get in one more dance on the titanic. it's much better just to get off the sinking ship while you still can.
What is the advice for those poor souls, such as myself, who are in debt? Pay it off ASAP? Go half and half in paying down balances and buying precious metals?
I agree fully. Gold is at about $940 now at bullionvault.com but it will start going up and when it will it will go beyond $1500-$2000. Remember, the inflation adjusted price of gold in 1980 is well beyond 2000 and that was a smaller crisis.
I also had some good rumours about a Chinese company, CMED on NYSE who have some very interesting treatment for cancer, and of course there are the RJA index you can't go wrong with that as inflation will drive up the commodity prices, and also investing a bit into India, China, Eastern Europe cannot hurt. I think I will go with 70% gold 10% CMED 10% EUROX 10% RJA and then just wait it out. But wait until the gold starts to climb back and the eventual fall of the market drives CMED slightly down to about $37
Any better ideas?
What I would do if I were you is I would subscribe to Mark Skousen's Forecasts http://www.markskousen.com/ and perhaps use the option that's offered to subscribers to ask him about it in e-mail. He is the bloke who wrote Austrian Economics for Investors. And you can cancel it in 3 months and get your money back if you think you didn't get your money's worth.
So here's kind of a dumb question. Lets say you put lots into Gold stocks or mutual funds, and the currency collapses. How do you get your money out? You're going to be paid in currency, right?
Don't miss this important piece of news:
"Then this week, the need for liquidation of long commodity positions to finance losses elsewhere contributed to the commodity selling."
http://www.reuters.com/article/usDollarRpt/idUSSP26615720080320
In other words: gold and commodities are down not because there is more trust in the economy but because they ran out of cash... so it will go back...
if you want to know what's going on.... listen to Peter Schiff's market update that he gave on Wednesday.
http://www.europac.net/media/PeterSchiff_03-19-2008.mp3
the advice i've been giving to everyone for months is to open up an account with euro pacific captial, and their brokers will invest your money safely and get it out of US dollars and overseas where your money will be safe. the commodities are in a big pull back... but the bull market is still in tact, and things like gold, silver, oil, etc. will all be making new highs within a several months. bull markets have violent pull backs designed to shake people out. bear markets by contrast like the stock market will have big rallies like the 400 point rally on tuesday, which basically got erased the next day.
so if you're still holding US dollars or dollar denominated assets... go to www.europac.net and open up an account with them. (i don't work for europac or have any connection to them... i just think that Peter Schiff understands what's going on and is trying to help his fellow Americans)
Still don't know how easy it would be to shift my retirement accounts to a US investment firm. Probably not doable.
Perhaps the most important thing at this point: stay away from the Euro. Why?
"The ECB's little secret is that it must never allow a Northern Rock failure in the eurozone because this would expose the reality that there is no EU treasury and no EU lender of last resort behind the system. Would German taxpayers foot the bill for a Spanish bail-out in the way that Kentish men and maids must foot the bill for Newcastle's Rock?"
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/23/cccrisis123.xml&page=3
Let me put it into perspective: basically the EU is playing the same state-fiat game as the US without actually having the coercive power of a state. It's a colossal bluff that I think will blow up much more than the US.
Miklos Hollender:Perhaps the most important thing at this point: stay away from the Euro.
So you would you not recommend using Euro Pacific Capital to invest in international stocks, foreign currencies and commmodities then?
Yours in liberty,Geoffrey Allan Plauché, Ph.D.Adjunct Instructor, Buena Vista UniversityWebmaster, LibertarianStandard.comFounder / Executive Editor, Prometheusreview.com
I think EPC invests outside the eurozone - Asia and Eastern Europe which are probably OK. Though to be honest I really don't know, I'm not an expert. All I know is that Europe did not do anything better in the economic sense than the US so why would the Euro stay up. The reason I think it will be worse that the US financial system is based on the fiat while the Eurozone is on the bluff of a fiat and I just can't think of any reasons why would that work better.
Did a little experiement. Took gold prices from 1975 to present and ran them through the CPI inflation calculator to 2008. It pretty much consistently placed gold at between $500-$700. The Bank of Canada places it between $300-$500. Analysis?
http://data.bls.gov/cgi-bin/cpicalc.pl
http://www.bankofcanada.ca/en/rates/inflation_calc.html
Shouldn't gold show up at its present $900+US an oz?
The Euro stays up and the dollar sinks because the present U.S. administration has spent more through DEFICT FINANCING than all previous administrations in this country combined. This can only get worse, as despite anything politicians say the geopolitical situation will not change, and more expensive social programs are inevitable. Gold is risky, as a hedge against the falling dollar, because in a deflationary environment gold will fall along with all other assets. International bond funds, of countries with hard currencys, are my preference. IMHO these bonds will fall only if interest rates rise and not if the gold backing the currencys involved falls in value. Additionally, central banks are well known to suddenly sell millions of ounces of gold without warning, causing the price to collapse.
jbar:International bond funds, of countries with hard currencys, are my preference.
International bond funds, of countries with hard currencys, are my preference.
Countries such as...?
"Melody is a form of remembrance. It must have a quality of inevitability in our ears." - Gian Carlo Menotti
Hey I wanted to give some real info here. I listen to Schiff all the time and think he speaks the truth on the big picture economic matters.
HOWEVER .. I talked a relative into getting a Europac account opened up at beginning of this year and he is DOWN 18% since January. Boy do I feel like a heel as this relative is near retirement age. So just because Schiff knows the big picture doesn't mean he is making good decisions at the investment level. So please be careful, I don't have any great investment insight but be aware that people are losing in Europac. In fact Schiff sent a video email out not too long ago addressing recent losses.
misesfanpdx:Hey I wanted to give some real info here. I listen to Schiff all the time and think he speaks the truth on the big picture economic matters. HOWEVER .. I talked a relative into getting a Europac account opened up at beginning of this year and he is DOWN 18% since January. Boy do I feel like a heel as this relative is near retirement age. So just because Schiff knows the big picture doesn't mean he is making good decisions at the investment level. So please be careful, I don't have any great investment insight but be aware that people are losing in Europac. In fact Schiff sent a video email out not too long ago addressing recent losses.
Thanks for the info. I've been thinking of opening an account with EuroPac. It's something to consider. Isn't the US stock market down around 15% since October though?
yeah the US stock market is probably down 15% but the whole purpose is to beat the US market and stay safe in other countries when investing w/ Europac. He would have done a ton better selling off his US stocks and putting them into European currency!
My relative lost mostly in mining stocks that were recommended even after he said he wanted conservative style investments to the broker. Different brokers, different recommendations. But don't think Europac is a big safe harbor. Schiff is definitely very good at recognizing the state of the US economy but in my relative's case it didn't translate to any wealth preservation but rather loss.
misesfanpdx:yeah the US stock market is probably down 15% but the whole purpose is to beat the US market and stay safe in other countries when investing w/ Europac. He would have done a ton better selling off his US stocks and putting them into European currency! My relative lost mostly in mining stocks that were recommended even after he said he wanted conservative style investments to the broker. Different brokers, different recommendations. But don't think Europac is a big safe harbor. Schiff is definitely very good at recognizing the state of the US economy but in my relative's case it didn't translate to any wealth preservation but rather loss.
Morningstar explains the recent hard hit on international funds:
http://news.morningstar.com/articlenet/article.aspx?id=232131
http://news.morningstar.com/articlenet/article.aspx?id=231437
What about investing in coal? At the current oil prices I think the Fischer-Tropsch plants will become a distinct possibility and that will drive the demand up... http://en.wikipedia.org/wiki/Fischer-Tropsch_process
1. DO NOT JUST DO IT. Stocks are not nike. If you don't know what you are doing you can lose a lot of money. My advice is grab a few books, or get someone to manage your account for you. If you have friends who do any trading (either for a living or for fun) I suggest you ask them. Don't listen to the nay-sayers I am still making money, granted not as much but my divs are still impressive. This is a great opportunity for bargain buys. I just picked up some very nice large-cap stocks for basement prices.
2. Depending on where you live you can call any full service broker. If you want to trade on the internet, Buyer beware. Its filled with hidden fees, and you are usually still stuck paying some guy commission.
3. I don't buy gold, but I usually avoid commodies cause the risk is to high.
4. LoL. Dont' be silly. First I would sit down and figure out EXACTLY how much money you can afford to invest. I would say about 10k is a good round number to start with.
Low risk= CDs/Treasury bills and some other types of long-term bonds.Large-cap stock are usually pretty low risk, stuff like Coca-Cola, Pepsi, I dunno whatever major brands you can think of pretty much. I would also do some research into these companies before you buy into them, most services like Yahoo, TD, Scott, Fool, etc have nice research tools for investors.
Med to high risk = Mutual Funds (especially now) Theses funds all have different goals and objectives, make sure its what you're looking for before you invest.
High risk = Small cap stocks, high yield bonds, options, commodies (energy, food etc). Foreign markets/ emerging markets.
If you stick to lower risk, long-term, you should see a sizable increase in your savings. Just be patient. People who are not usually don't make it in the market.
The oil sands in Alberta are looking especially good...
Suncor Energy (SU) (i just grabbed this up last week)
ConoccoPhilps (COP) (I am also holding)
Mining stocks might be a bad idea, what's the consensus about Canadian energy trusts?
Those sound like a good inflation hedge.
Political Atheists Blog
Nitro, if you're still wondering about Gold, you might get something from this.
http://fskrealityguide.blogspot.com/2007/12/gold-and-silver-buyers-guide.html
http://fskrealityguide.blogspot.com/2008/05/unconfiscatable-gold-myth.html