Stocks, Gold, Silver, and the printing press.

[Jackson]

Where is a good place to build and maintain wealth?

Your concerns are very justified. The stock market only reached positive returns since 2000 just recently and is actually still negative when inflation adjusted. link

Inflation-adjusted returns (click image to expand):


Unfortunately, the stock market has been running through a series of bubbles with the dot-com bubble in 2000, the housing bubble in 2008, and a QE-driven bubble now. With the Fed holding bank-level interest rates at right around 0% (other interest rates are based on this), savings, CD and "safe" bond returns are negative vs. inflation. Basically, paper assets just aren't a great place to try and maintain/build wealth.

 

[pudly]

FYI- Had to edit the first sentence for accuracy.

Wish I had an easy answer. I'm very worried about current stock market valuations. I would agree with smokingman about the market being at/near the top, but I believe that it is highly likely that we will see a QE4 if the market starts a significant decline. QE increases the supply of currency, but not the real wealth of the nation (which is measured in things/services, not dollars), so I don't believe that the market can stay at these valuations for very long without it. A buy-and-hold strategy doesn't really make sense in a serial bubble market.

From what I've been reading, the "smart money" is moving out of the market and into cash and "real assets"- anything that doesn't require trusting in the good faith and solvency of another party (real estate, precious metals, collectables, etc). Watching high-end real estate rise while the middle/low end has stagnated and high-end collectables (art, cars, etc) go through the roof over the last couple of years has been informative.

 

[rhino]

It's times like these when I recall my consumer economics class in high school. The teacher (who left teaching to become a financial adviser) told us that it dumb to keep our money in a passbook savings account because banks "only" paid 5.25% and S&Ls "only" paid 5.5%. He was right for 1981, but today I'd have a financ-o-gasm if I could secure a guaranteed 5.25% with secure principal.

I panicked a couple of years ago and started buying some silver when it was way too high, but climbing. What I bought then is worth less than half what I paid for it. The pain is lessened because my intent was to have at least a small amount of precious metal "just in case." I certainly wish I had waited until a few weeks ago, though!

 

[pudly]

Understandable on the PMs. Gold and silver had a very nice, long run until 2011 and have been in a three year bear market which is very "interesting" considering how much China, Russia, India and others are buying. I bought some more silver a couple of weeks ago at around $15 and as of Friday it is back to nearly that level, so I'm thinking of buying some more.

The difficulty in investing is in following the iron law: buy low, sell high. When are prices of an investment low? When no one wants it. When are prices of an investment high? When everyone wants it. In other words, human psychology leans towards the exact opposite of successful investing. We are (mostly) all just lemmings, following the herd.

 

[Jackson]

It's times like these when I recall my consumer economics class in high school. The teacher (who left teaching to become a financial adviser) told us that it dumb to keep our money in a passbook savings account because banks "only" paid 5.25% and S&Ls "only" paid 5.5%. He was right for 1981, but today I'd have a financ-o-gasm if I could secure a guaranteed 5.25% with secure principal.

And what was inflation running in 1981?

I panicked a couple of years ago and started buying some silver when it was way too high, but climbing. What I bought then is worth less than half what I paid for it. The pain is lessened because my intent was to have at least a small amount of precious metal "just in case." I certainly wish I had waited until a few weeks ago, though!

This kind of timing is where people screw up most often. Buying when everyone else is buying, and selling when everyone else is selling. I don't konw how many people I heard in 2008 saying they were "getting out of the market" to wait until "things got better". They screwed themselves out of any possible recovery. Then, when the market went back up and they "felt safe" they got back in to their previous position with half the assets.

Your concerns are very justified. The stock market only reached positive returns since 2000 on an inflation-adjusted basis just recently. link

And this would match individual returns if someone put a lump sum in to the market in 2000 and invested nothing else. This is not how most people save and invest. The majority of people with jobs and 401K or other investment accounts would (should?) have been investing all along that time. They would have been adding money from 2001 to 2004 and 2009 to 2012 when the markets were at significant lows. They would have made good returns on that money if they had the stomach to continue investing in the down market instead of stopping.

For the people spending down their nest egg in retirement, things are a lot more precarious. However, the early-retirement.org forum I mentioned above is full of people who stuck to their plan, rode out that storm, and are still retired.

 

[rhino]

Understandable on the PMs. Gold and silver had a very nice, long run until 2011 and have been in a three year bear market which is very "interesting" considering how much China, Russia, India and others are buying. I bought some more silver a couple of weeks ago at around $15 and as of Friday it is back to nearly that level, so I'm thinking of buying some more.

The difficulty in investing is in following the iron law: buy low, sell high. When are prices of an investment low? When no one wants it. When are prices of an investment high? When everyone wants it. In other words, human psychology leans towards the exact opposite of successful investing. We are (mostly) all just lemmings, following the herd.

Provident Metals has 1-oz silver rounds for $15.38 + $11.95 shipping as of 10:15 29NOV14.

 

[Lebowski]

Provident Metals has 1-oz silver rounds for $15.38 + $11.95 shipping as of 10:15 29NOV14.

They're the reason the group-buy I had signed up for to get Australian Kookaburra's at cost from a different supplier was canceled. Their price is about $0.80 less than what other company was able to swing with a pre-order of 700oz (10 of which was mine).

Haven't shopped Provident Metals after reading shipping complaints but figure I may pick up a lil' something after I complete online holiday shopping. Prices are good and selection isn't bad. Not APMEX selection, but pricing is better than APMEX. Usually buy from JMBullion, APMEX, SDBullion or ShinyBars. Listed in order of preference.

EDIT: Sorry, just discovered this thread and haven't actually read it in detail to figure out what it's actually about. I just like shiny stuff.

 

[rhino]

They're the reason the group-buy I had signed up for to get Australian Kookaburra's at cost from a different supplier was canceled. Their price is about $0.80 less than what other company was able to swing with a pre-order of 700oz (10 of which was mine).

Haven't shopped Provident Metals after reading shipping complaints but figure I may pick up a lil' something after I complete online holiday shopping. Usually buy from JMBullion, APMEX, SDBullion or ShinyBars. Listed in order of preference.

It seems like they take a while to ship, but they are also candid about why. They won't ship until your check clears or the bank transfer is for sure and for certain. I used to think electronic transfers were good to go immediately, but that's apparently not the case.

Their selling price is usually as good or better than others and the shipping rate is much lower than what I've seen at APMEX. It's $11.95 flat rate.

 

[Lebowski]

It seems like they take a while to ship, but they are also candid about why. They won't ship until your check clears or the bank transfer is for sure and for certain. I used to think electronic transfers were good to go immediately, but that's apparently not the case.

Their selling price is usually as good or better than others and the shipping rate is much lower than what I've seen at APMEX. It's $11.95 flat rate.

Well, I don't mind paying a bit more from orders from APMEX because they have some awesome stuff. I won't buy the normal government coins from them since they're too expensive, can always find ASEs, RCMs, Mexican Libertads, etc elsewhere for much cheaper... but, in APMEX's defense... they ship fast and have great customer service. I can buy on Monday and have it here Wednesday or Thursday. SDBullion also ships comically fast (same day before 4PM I believe) and is based out of Michigan... so for those of you in Northern Indiana you could literally place an order on a Monday and get your shiny on Tuesday. For generics, I don't mind waiting for them to arrive but for some of the more unique stuff I'm impatient and want it as soon as possible. Then again, this is all based on debit/credit purchases and not doing the cash price or bank transfer method.

EDIT: JMBullion has free shipping on all orders, and ShinyBars is a smaller distributor that is gaining strength since they're active in the online silverbug communities and what not and accept crypto-currencies like BitCoin. They do free shipping on orders of $150 or more. SDBullion right now has $7.77 shipping on all orders too ( http://sdbullion.com/specials/any-product-any-size-777-shipping )

What I normally do when I want to make a purchase is load up three or four browser tabs from trusted/known distributors and add what I want to their carts and go with whoever has the best deal after pricing. I may mix it up a bit between each one a bit depending on their stock and availability, but that's my go-to method of getting the best deal without getting ripped off. APMEX never wins that test but they still have some awesome stuff though.

 

[rhino]

What I normally do when I want to make a purchase is load up three or four browser tabs from trusted/known distributors and add what I want to their carts and go with whoever has the best deal after pricing. I may mix it up a bit between each one a bit depending on their stock and availability, but that's my go-to method of getting the best deal without getting ripped off. APMEX never wins that test but they still have some awesome stuff though.

That's what I used to do, but Provident kept winning! Of course, I don't go for any collectibles or cool stuff, just interested in the bullion.

Thanks for the info, though. I was unaware of a couple of those vendors and I will check them out!

 

[dmarsh8]

A good way to buy for instance,Silver Eagles is at an antique shop or the like , where you can pay cash.

 

[ruger1800]

http://silverseek.com/commentary/comex-–-why-it’s-corrupt-13323

 

[smokingman]

Chicken,meet roost.
http://www.ft.com/cms/s/0/8b33af5c-76d8-11e4-8273-00144feabdc0.html
OPEC upheaval delivers a broadside to major energy companies as oil prices plunge sharply | Fox Business
Plunging Crude Prices Hammer Energy Companies - ABC News

I will add this.Expect the United States to go into a recession Q1 of 2015.Our largest export(162 billion in 2013)was refined petroleum product.The oil price will shave a good deal off our GDP and hurt our already terrible trade imbalances.Add to that the amount of debt tied to fracking/shale oil companies and the reason for some of those companies losing 50%+ of their value in the last 48 hours becomes clear.Margin calls where happening all over the fracking world today,and will continue Monday I am sure.
Exxon,the largest company in the world lost 9% of its value in 48 hours,and is no longer the largest market cap.

I am also going to do something I should not,but the worst that can happen is I am wrong.
I am going to call the DOW 17,828.24 the record high(today's close).No QE,debts blowing up,congressional hearing on bank manipulation of physical commodities release today including oil with blame clearly placed by both Republicans and Democrats on the committee at the Federal Reserve(Big Banks Take Huge Stakes In Aluminum, Petroleum and Other Physical Markets ... Then Manipulate Their Prices | Zero Hedge ) and I just do not see much to justify the 25.1 PE.

[/IMG]

11/28/2014

Side note.When I say no QE I am talking about QE3.QE 1.5,that is using funds from maturing MBS and Treasuries is still ongoing,and means the FED has not totally taken away the punch bowl.It is substantially less than QE3 though.

The record high on the DOW was set December 5,2014.Five days after I made my "top" call.

Since then things have gone hill.
U.S. Stocks Tumble to Cap Dow?s Worst Week Since 2011 - Bloomberg
One of the main reasons for the declines is of course tightening credit.

• HY Credit's worst 2 weeks since May 2012
• IG Credit's worst week in 2 months
• 
  [/IMG]
• http://www.zerohedge.com/news/2014-...iggest-stock-bloodbath-3-years-credit-crashes

 

[smokingman]

Of course now Taxpayers are on the hook thanks to congress and the Omnicriminal spending bill.
What Wall Street won in budget deal - Dec. 12, 2014


Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For

Of course many of those derivatives are blowing up in the energy sector,and that damage will spread.
http://www.zerohedge.com/news/2014-...rillion-derivatives-us-taxpayers-are-now-hook

This is the most disgusting thing our representatives have done in quite awhile,but with Jamie Diamond(head of JP Morgan) personally calling members I would not really expect anything different.I am shocked it made headlines so quickly.Nice video at the link below.
http://money.cnn.com/2014/12/12/investing/congress-wall-street/index.html?iid=HP_LN

 

[pudly]

^^Among many other problems with the Cromnibus spending package, this is the single worst.

 

[smokingman]

[/IMG]
DOW futures up 9899% whooooo hooo.Welcome to the new normal and the latest episode of algos gone wild.
Oil algos did a huge ramp on one Libyan port being shut down,only to crash back down almost instantly.

 

[smokingman]

Of course now Taxpayers are on the hook thanks to congress and the Omnicriminal spending bill.
What Wall Street won in budget deal - Dec. 12, 2014


Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For

Of course many of those derivatives are blowing up in the energy sector,and that damage will spread.
Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For | Zero Hedge

This is the most disgusting thing our representatives have done in quite awhile,but with Jamie Diamond(head of JP Morgan) personally calling members I would not really expect anything different.I am shocked it made headlines so quickly.Nice video at the link below.
What Wall Street won in budget deal - Dec. 12, 2014

JPMorgan Chase
Total Assets: $2,520,336,000,000 (about 2.5 trillion dollars)
Total Exposure To Derivatives: $68,326,075,000,000 (more than 68 trillion dollars)
Citibank
Total Assets: $1,909,715,000,000 (slightly more than 1.9 trillion dollars)
Total Exposure To Derivatives: $61,753,462,000,000 (more than 61 trillion dollars)
Goldman Sachs
Total Assets: $860,008,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $57,695,156,000,000 (more than 57 trillion dollars)
Bank Of America
Total Assets: $2,172,001,000,000 (a bit more than 2.1 trillion dollars)
Total Exposure To Derivatives: $55,472,434,000,000 (more than 55 trillion dollars)
Morgan Stanley
Total Assets: $826,568,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $44,134,518,000,000 (more than 44 trillion dollars)

*source Office of the Comptroller of the Currency quarterly report graph 5a page 17.
http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq114.pdf

Now all backed by the FDIC deposit insurance program.

 

[smokingman]

I think everyone knows subconsciously that it is going to get worse before it gets better.

I'm waiting to see how the Christmas season goes.

I can tell you the headlines already "Worse than expected" or "Worse than economist predicted".

The scariest part about treasury is the knock off effect on the Social Security fund since it can buy ONLY US Treasuries and the CBO is still using the average yield of 4.5% in calculations for predicting future funding.

Retail sales for December officially came out on 1/14/2015 and the numbers are as I expected,but PHD economist are left if shock.

Retail sales unexpectedly dropped 0.9 percent in December compared with the previous month, according to figures released on Wednesday, suggesting that falling gas prices and a brighter job market have yet to lift consumer spending.
The decrease, far worse than economists’ median forecast of a decline of 0.1 percent, followed a smaller-than-expected gain of 0.4 percent in November. The weak spending numbers could prompt economists to be more pessimistic in their outlook for economic growth this year.
http://www.nytimes.com/2015/01/15/b...pped-more-than-expected-in-december.html?_r=0
Trade group: 2008 holiday sales decline 2.8% - Jan. 14, 2009

Holiday sales: Much worse than feared

Retail group says combined November-December sales fell 2.8%, after expecting a modest gain.


The National Retail Federation had originally forecast holiday sales for the combined November-December shopping months to grow 2.2%, which would still have been the weakest pace of gain in at least six years.
As it was, it turned out to be the first-ever decline in the measure since the group initiated it in 1995.



On another note the US 10 year,the linchpin of social security holdings is at 1.77%
Which is probably the largest story no one is talking about.At that rate of return Social Security will run out of funds much faster than the CBO expects(CBO last report in Nov 2014 still used 4.5% average yield).
http://money.cnn.com/data/bonds/
The 30 year is at 2.41%

 

[AtTheMurph]

It's damn hard to spend more on retail when you health insurance costs went up 80%.

But hey, those consumer spending numbers sure looked good for the same reason!

 

[Jackson]

So, what do we do?