Hello all,
I am fairly new to the forum part of mises.org and have been wanting to start posting on here regularly...so here it goes. I am in need of some investment advice.
I do currently own some gold and silver, but I am wanting to get into some other investments as well; however, the question is what. I have put my money into CDs before, but they haven't produced like I have wanted. To be blunt, should I put some money into mutual funds, stocks, futures, IRA, regular savings account, or just buy more gold and silver? I really just want a free market perspective on all of this and am just searching for the best option.
I've just bought some euro bank obligations. Part of them are six years with a fixed "creep up" rate (3.70% the first year, 3.80% the second year and so on) and part of them are linked to the ECB interest rate. I get 3.25% minimum no matter what and will get more (up to 5%) should the ECB increase interest rates. I am convinced this will happen before the Summer so I took this (relative) risk. These are not huge gains but they are also very safe: I don't want that hard-earned capital to be dented.
I briefly toyed with the idea of getting stocks but right now the market is overbought and unless there's a correction (in the 10+% order) I am not buying. Stock markets are fueled by free/cheap money provided by the Fed, ECB and BoJ. So is the commodity market. If interest rates increase even slightly a correction will be in order and it will be the time to buy. Right now the ECB has decided not to decide: they will act in April because right now they are scared silly by the raising commodities prices they helped to create and that are now blamed on Middle East unrest. If they raise rates even the hard-headed Bernanke will have to take notice.
Gold and silver. I have not much faith in silver, that's why I owe so little of it. Gold in the long distance is a winner, no matter what. Increased demand from India and China will keep prices up. Again, should the ECB raise interest rates in April we are bound to see a correction and it will be time to buy. Should this not happen, no problem: gold has cyclical fluctuations which can be exploited by a savvy and alert buyer. Gold hit the bottom of one of these fluctuations in early February and is now on an upward trend again. As always do not be tempted to put too many eggs in one basket: owing no gold is stupid, owing too much of it may be foolish.
Finally a word of advice: I am currently exploring Chinese Agri-Equities. They seem to hold a lot of long-term potential and perform very well. They may well be my next purchase.
Thanks for the input. I hope others respond to this so I can get even more perspectives.
The entire global market is extremely dangerous because of the tsunami of hot cash which has been flooding in from the Fed. As Marc Faber says, there is a bubble in everything, the first time this has happened in the history of the world.
I'm hesitant to give advice precisely because of the dicey market. However, I can point you in some directions that have helped me. First of all, read everything you can find by Jim Rogers and Marc Faber. Look up the names of some of the big hedge fund managers because they tend to have a more mercenary approach to investing and speak plainly about the true nature of inflation and the political monetary regime in general.
Also, realign your mindset... start thinking like you're a duke or the patriarch of some old aristocratic family... it's your job to protect your family's property from the rabbles and their pilfering democratic governments. That means you have to do surveillance on the enemy... what I do is I regularly search Google News with a list of keywords (I'll gladly provide them if you're interested) related to gold, oil, agriculture and other commodities, countries where there is instability, the major capitols of the world, the names of the heads of central banks, and so on. Because our monetary system is political, you constantly have to keep an eye on the political situation. For the most part, the old financial rags are useless... Bloomberg, Wall Street Journal, etc. These guys have blinders on to the political nature of the monetary system and want to pretend that it's just business as usual no matter currency wars, central bank inflationary tsunamis, etc. They have a childish mindset about money and politics.
I predicted early this summer that silver and oil would be a better place to be than gold and this has come true. At this point, silver is looking overheated to me and I would move money out of silver into oil (even though oil has already been on a long, bull run since '09) and continue to hold your gold. Agricultural commodities is the big one being consistently mentioned by Faber and Rogers but I don't know a lot about how to invest in ag commodities. I imagine you can just go buy bushels wheat on some index somewhere. The inflationary flood is driving up food prices and people in second- and third-world countries are feeling the pinch the most... this is the spark that triggered the riots in Egypt and elsewhere. There are reports of some protesting in India due to rising food prices. The inevitable effect of all this hot cash will be to drive up food prices, particuarly in poor countries, since inflation is a regressive tax that gets shed off to the weakest in the economy. So, buy ag commodities for sure and you can also look into buying ag stocks (be careful inside the US since our ag system is strangled by massive regs).
As always, do your own homework and maintain humility. You don't know any more than the next guy and you're not an insider. The best you and I can do is (a) enumerate the insane courses of action from which the political leaders can choose and (b) guess what insane course of action the political leaders will choose next. This is what I like about Faber's approach... he doesn't say "they're printing money, prices will rise!" he gets inside the mind of a government, as if he were one, and asks himself what are the possible choices that can be made? Nothing's off the table, not even starting a war to distract the public. When you start thinking like that, you're on the right track.
P.S. if you have any money in IRAs, 401(k), etc. get it out! Pay the penalty and get that money out, they're coming for it. Set aside a certain amount of money to be "untraceable", i.e. no paper trail. Regularly go to your local coin shop and buy silver with cash and store it in a (real) safe. Buy silver, not gold, for two reasons. First, gold purchases are now tracked under the healthcare law requiring all transactions over $600 to be reported to the IRS. Second, silver is most likely to have street value in a SHTF scenario. You should not have a large percentage of your nest egg in this form but enough to keep yourself fed and clothed while making arrangements to leave the country if things get that bad (sad to say, they really just might get that bad).
Clayton -
Wow, didn't know gold transactions in the US were tracked because of the high value... now I know why silver is in such demand.
And knowing is half the battle.
If gold transactions are tracked, it is done illegally, but that wouldn't surprise me if they are. Where did you find that out?
http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/
Where is a good place to learn more and purchase euro bank obligations and chinese agri-equities?
Everytime you read something (especially about investment), ask yourself: could the person giving me this advice be completely insane? - or at least wrong. Also a good tactic when dealing with economists or politicians.
Clayton:...
Hi, your advice is quite good, thanks. Hope the OP doesn't mind my butting in but can you by any chance recommend any books specifically written for people who only know very little about the stock market (like me :P)? Cheers.
Right-O. "How much does it cost this person if they're wrong?" Even for big-name investment fund managers who you would think acutely depend on their reputation for being right, the costs are usually a lot less than you might suppose.
I've just bought some euro bank obligations. Part of them are six years with a fixed "creep up" rate (3.70% the first year, 3.80% the second year and so on) and part of them are linked to the ECB interest rate. I get 3.25% minimum no matter what and will get more (up to 5%) should the ECB increase interest rates.
Where did you purchase these obligations and what was the minimum deposit?
Of course Peter Schiff is the most publically visible investment advisor commenting from an Austrian perspective, and while they don't claim to be Austrians, Jim Rogers and Marc Faber admit their views most closely align with Austrian economics.
I would recommend checking out the periodic articles published on Schiff's site, as well as tuning in to his radio show for daily analyses on current events and the market.
http://www.europac.net/
http://schiffradio.com/
There are also some special reports that his firm has published and made publically available for free, looking into
Check those out here.
sonofliberty75: I've just bought some euro bank obligations. Part of them are six years with a fixed "creep up" rate (3.70% the first year, 3.80% the second year and so on) and part of them are linked to the ECB interest rate. I get 3.25% minimum no matter what and will get more (up to 5%) should the ECB increase interest rates. Where did you purchase these obligations and what was the minimum deposit? Forgot to mention I live in Europe... My bank gave me a trading software which allows me to see pretty much everything in Frankfurt, London, Milan, New York and Paris and buy/sell in real time. These obligations have been issued by Intesa-San Paolo, the second Italian bank. Minimum deposit is 10000€ and there are no entry fees for over 40000€ deposits. Together we go unsung... together we go down with our people | Post Points: 20
That disqualifies me then haha. I did look into a marketsafe CD that is offered by EverBank; it deals with commodities and currencies. The good thing about it is that no matter how the market performs you will not lose any of the principal that you put in.
https://www.everbank.com/personal/marketsafe-cd.aspx
Also, peter schiff's europac does have a few mutual funds that allow for long term capital appreciation. They are fairly new funds and didn't perform that well last year. Any advice on what to do?
http://www.ephasiafunds.com/
Assess the level of risk that you are comfortable with. This will determine the type and ratio of the different investments you are going to make.
Allocate your assets. Keep the majority, like 80%, in lower risk instruments (cash, gold, silver, stocks, bonds, etc), main objective should be to maintain purchasing power. With the rest you are going to make "bets" and try and hit big. You are hoping to find a black swan.
Avoid cash, CD's, and mutual funds.
Learn to manage your personal finances like a business. Ideally you would keep all your wealth/capital/money invested and earning something at all times, purchase everything on credit and periodically convert something to cash to pay off the credit bill.
Learn fundamental analysis and look for small companies with low p/e ratios for any and all stock purchases.
Learn technical analysis and how to trade options and futures. Make these riskier trades with the smaller portion of your assets. These purchases are the ones that have the potential to make large short term gains.