Ace/economic peoples: What would you do now with $5000 in cash (no, im not buyinggold

[Thorgrim]

Originally Posted by Ardentfrost

Certainly! If I could get 3.4% on student loans, I'd want to start paying for my kids' college right now! And I don't have any kids yet!

Well you can thank the Democrats

Unfortunately US managed loans given to me...are not controlling the entire banking sector, and I admit I am unfamiliar with reconsolidating federal loans?

That's why I thought SOMEONE here with economics would know what will happen to all of us when it hits 3.4%...cmon someone!

I have a nagging feelings the banks are going to go "so what, you aren't getting any new loans in 2011, so why should we care, your rate was 6.75 and we see no reason to lower it just because other new lenders are getting less for student loans"

That would make me

[Ardentfrost]

The government doesn't give the loans, they are just subsidizing the loans. The banks won't prevent you from refinancing, they get their money either way. It's no different with federally subsidized home loans. Banks will make riskier investments because if something goes awry, the government is there to make up the difference.

And this is why I'm 100% against them doing this. It's the job of the banks to assess risk and decide if they want to loan the money or not. The government does no risk assessment, they just give to anyone (given nominal qualifications), and it's a waste of tax dollars when those riskier investments default.

Don't get me wrong, I take advantage of the government programs (I have a FHA home loan right now)... I'd be stupid not to. Not only does it save me money, but part of my tax dollars goes to the program anyway. So by using it, I am getting something I'm paying for via taxes.

But make no mistake, if they took away FHA loans tomorrow, I would be pleased, not at all upset.

[Thorgrim]

student loans are different...we NEED to invest in human capital if India and China aren't going to rape us...and MANY MANY americans would skip college if it wasn't for these loans

Also, getting out of student loans...defaulting...is RIDICULOUSLY hard, the courts will garnish everything...if they find you have a cellphone they'll say u have enough money...even from relatives (even if u have no income of your own) to pay SOMETHING) until it is all paid off...

the only cases ive read where people got a default...were like horrible car accidents which lead someone unable to function properly and had huge medical expenses...things along those lines

[Thorgrim]

but anyway, i know they are government subsidized, but that doesn't mean the bank HAS to re-finance your loans at 3.4%...it just means they have to offer the federal loans at 3.4%...at least ive never read that anywhere...if that was the case...why isn't everyone talking about how they are ALL going to half their interest rates in 3 years? I haven't heard ONE person say that

[Fed Up]

The S&P 500 will trend until this election is over in November. Dems get in, which is highly likely, I wouldn't want to be long the market.

I'd put 2k into a Renminbi CD with Everbank. It doesn't pay interest, but you can "bank" on the fact that the Reminbi will be appreciating sooner than later as inflation in China is getting out of control. Profit potential 10% in 2 years.
2007 Economic Trends

I'd put the remaining $3,000 in a 8 month CD to catch the current dollar rebound (till November) and then check to see that Silver has bottomed out. Based on the current price of silver, I'd put the $3,000 into the ETF, SLV (Silver, not gold, ha). It's an industrial metal subject to supply and demand issues as well as a monetary metal and inflation hedge. Profit potential 40% in 5 years (depending on how bad the Dems mess things up). Silver is more rare than gold: http://www.moneyweek.com/file/30675/metals-shortages-have-a-silver-lining-for-investors.html

Fed Up

[Thorgrim]

isn't there close to a monopoly on silver? i mean nothing like diamonds...but you know what i mean

[Fed Up]

Originally Posted by Thorgrim

isn't there close to a monopoly on silver? i mean nothing like diamonds...but you know what i mean

Some think that the Commericals have been shorting the shit out of it thus surpressing the price. There is no proof of this.

When silver hit over $50 it was a manipulation of the market by the Hunt brothers (later convicted of conspiring to manipulate the market).

With the introduction of the ETF, SLV, it is a wide open market with plenty of liquidity. As more people want silver, especially as an inflation hedge against their currencies depreciation, not just the U.S. dollars, the supply issues will become more of a problem and thus the price will increase. The trend is still your friend and buying the dips makes sense and cents.

Fed Up

[Thorgrim]

this is kind of offtopic, but with gold/silver...aren't you always worried about new mining technology creating a vast new find that really devalues your holdings...

also, what about Platinum...or maybe partial ownership of uranium mines? i don't know why everyone is so obsessed with gold...didn't ever get over Pizzaro?

[Fed Up]

Originally Posted by Thorgrim

this is kind of offtopic, but with gold/silver...aren't you always worried about new mining technology creating a vast new find that really devalues your holdings...

also, what about Platinum...or maybe partial ownership of uranium mines? i don't know why everyone is so obsessed with gold...didn't ever get over Pizzaro?

If I were to speculate on a good return from investing in a metal, I'd go with palladium (outside of silver).

Platinum, outside of its other uses touted by the investment community, is used in catalytic converters and the price has skyrocketed since. Palladium used to be used in catalytic converters and was over $1,000 an ounce because of the switch from platinum to palladium. When the auto makers switched back, the palladium price plummeted 80%.

Now that platinum is so expensive, I could easily see a switch back. The Chinese auto market is key: Value Area: China and Palladium and the U.S. market could easily follow suit as I'm sure profitability is important to them, ha!

The stock PAL would be a good way to play Palladium and is currently in a nice pullback. Dollar cost averaging in at 5.47 wouldn't be a bad investment IMO.

One would have to keep up with the tecnological advances in this area though.

Personally not worried about the gold/silver mining discovery issues.

Fed Up

[Phantom]

Why not buy gold?

Not only should you buy gold with your cash, you should take out a loan so you can buy MORE gold. The price of gold has been increasing like crazy lately because there will always be demand and the quantity of gold out there is barely changing.

If for some reason this plan doesn't work, there should be a Dem in the White House by that time and the government will bail you out, right?

[Ardentfrost]

Personally, if you're going to buy gold, just buy stocks based on gold (like companies that search for new gold). I took an investments class last year and said to myself "for this class project, I should buy stocks in companies that mine for new gold" and boy did that pay off. I had one of the highest returns in the class. Rangold Resources (NYSE:GOLD) doubled in price during the 3 months of the project, and since then they have doubled in price again.

It was one of my speculations that really panned out.

But, at the same time, over 5 years who knows what will happen with gold. The price is so high right now, it could very well peak out sometime in the next year or so, then fall so that gold and stocks related to gold cause you to lose or make very little money on the deal.

There's always that risk though. It depends on how averse you are to it.

[kinggovernor]

I would go to Vegas before I would buy gold

[Fed Up]

Originally Posted by Ardentfrost

But, at the same time, over 5 years who knows what will happen with gold. The price is so high right now, it could very well peak out sometime in the next year or so, then fall so that gold and stocks related to gold cause you to lose or make very little money on the deal.

There's always that risk though. It depends on how averse you are to it.

I've researched gold quite a bit. I even went to work for a gold dealer for 6 months as part of my research. Most people have no clue about gold and its history.

Right now gold is in it's 2nd phase, which is considered to be the longest phase. The 3rd phase is the "blow off" where prices will go parabolic. We're not there yet.

The chart and info below will give you an idea of where gold will go IMO. When the price of gold hit $850 in January of 1980, a dollar then does not have the same value as a dollar today because of inflation. There are simply many more dollars today than in 1980. So gold needs to be adjusted for inflation.

What I find fascinating is that Central Banks have been selling via Bretton Woods I and II agreements as the price of gold has been in its biggest bull run of all-time. The people of Switzerland can't be too happy about their Central Bank being forced to sell during this time.

Gold still has a ways to go. Jim Rogers points out that commodity bull markets last on average about 13 years. We're only about 6 years into this bull run. I do realize that supply and demand play into this too. I'm actually a bigger fan of silver than I am of gold because it is actually rarer than gold and also utilized as an industrial metal.

Since gold does have a correlation with the U.S. dollar, the fact that the Fed is inflating at a rate of 16% or so a year (M3 via Hidden Government Statistics website), doesn't help matters. Add to that future bank failures, investment firm bailouts, derivative disasters, hedge fund disaters....there's quite a few reasons to own gold. Heck, it only has 5,000 years of history behind it while the dollar has 37 years without gold backing.....and it hasn't done too well at holding its purchasing power sans gold backing during this short timeframe.

Fed Up

The following was written when gold was in the $700 range and utilizes the governments CPI, which is not a real indicator of inflation:



Note that gold in constant 2007 dollars spent the better part of five years over $750 in the early 1980s! In order to get anywhere close to hitting an all-time real high today, gold would have to rocket to nearly $2300 per ounce! This, more than anything, puts today’s gold levels in proper perspective. Gold may be high in nominal terms today, but it remains quite low relative to where its last secular bull gave up the ghost.

It is also interesting to consider today’s gold levels relative to the major secular gold highs of the past four decades. There have been seven of these highs, all of which are numbered above. For every secular high, the inflation-adjusted gold price is labeled in blue and the nominal one in red. While the gold price is certainly significant today, it is still only higher than one of these six secular real highs so far.

Although this chart is pretty self-explanatory, that gold is not all that high today compared to a secular bull top, there are some interesting observations to consider. For example, note that it was near $750 real in 1979 when gold went parabolic and tripled in about 8 months. It is provocative that we are once again nearing the same real levels at which the last gold superspike started. On the other hand though, gold’s biggest slump of the 1970s also started near $750 real in late 1974. I’ll discuss this further after the next chart.

Before that though, I do realize $2300 gold seems impossibly high today. But we shouldn’t underestimate the power of secular bull markets. Believe me, six years ago this month when gold was trading under $295, $725 seemed impossibly high too. Yet here we are. Long-term bull markets are governed by supply and demand. And since it can take a decade for gold miners to respond to high price signals by bringing new mines online, the gold price can go much higher and stay for much longer than most imagine.

And incredibly, in some ways the all-time $2300 real high shown above is conservative. Of course the CPI is lowballed for political reasons, being reported as far below monetary inflation. As mentioned above, US MZM money has grown by 9.1x since early 1980. In order to witness such a gain over 27 years, an annual compound growth rate of about 8.5% is required. This should be much closer to true inflation than the 3.7% compound CPI growth required over 27 years to see it multiply by 2.7x.

But the gold market is global, and around the world the broad money supplies for first-world nations generally average growth rates around 7% a year. This leads to a conservative estimate of 6.2x more paper money sloshing around the world today than in January 1980. Of course non-first-world countries often have much higher money-supply growth rates, which is one reason this 7% estimate is conservative.

Meanwhile, all the mining in the world only manages to grow the global gold supply by about 1% a year. Provocatively this average has held for centuries due to the extreme difficulty of wresting gold from the bowels of the earth. This slow natural growth in global gold is why it has been the ultimate form of money throughout all of history. Since it cannot grow fast due to natural limitations, excessive inflation is impossible. At 1% growth annually over 27 years, today’s gold supply should be 1.3x as big as 1980’s.

So we have a 27-year estimate in first-world fiat-currency-supply growth of 6.2x compared to 1.3x in global gold-supply growth. Dividing these numbers shows paper-money growth outpacing gold by 4.8x. So based on these assumptions there is 4.8x as much paper money floating around today per ounce of gold as there was in 1980. If you multiply the nominal $850 gold high of January 1980 by 4.8x, it yields $4000 per ounce! Yes, the climax high of today’s secular bull could briefly drive gold to such staggering levels.

But even this may be conservative! In early 1980, Asia was slumbering. Today it is awakening. Several billion people are industrializing and seeking to raise the standards of living for their families. This is fueling global commodities demand the likes of which the world has never seen. As these Asians grow more affluent, they are going to invest in gold. Unlike the West, Asia has a deep cultural affinity for gold (and distrust of paper money) that will never fade. And if a modest fraction of 3b Asians get excited and buy even small amounts of gold each, the potential mania highs in this gold bull are just unimaginable.

So truly the $2300 CPI-adjusted gold price of January 1980 is conservative in many ways. And today’s $725ish gold is so far below the stellar levels that ought to be seen at the next secular top that this bull can only be considered young. So don’t let the financial media convince you that gold over $700 is an extreme event that is unsustainable. Nothing could be farther from the truth based on history.

[Fed Up]

Originally Posted by kinggovernor

I would go to Vegas before I would buy gold

Vegas is good... I'm partial to Baccarat. I'm also the person at the craps table everybody hates as I play the "don't pass" and "don't come" line.

That's why I like going to a table where I'm the only one playing...and I bet against myself!

But I'd rather buy gold and silver. Vegas is just for fun money that after a few too many drinks seems to dissappear. I'm actually a decent "sober" gambler....during the day! There are many ways to lose money in the evening...

Fed Up

[Fed Up]

Just one other note on gold...

This just came out today from Jim Sinclair. Perhaps one of you gold bears can take him up on it! (See highlighted section below):

Gold Bears: Put Your Money Where Your Mouth Is

Author: Jim Sinclair




Dear Comrades in Golden Arms (CIGAs),

In times like these I invite you to put your non-margined hand in my totally confident hand. Be calmed as we walk the wildness of the gold market to $1650.

I know gold is headed for $1650. If that is not enough for you today, then please allow me to demonstrate my commitment to my view of the gold price.

We wish the Fed, the US Treasury and all other central banks well in this process as there is NO other alternative.

KNOW that there are consequences to the increase of non-drainable international liquidity created to craft the appearance that no further major international investment and banking companies will need rescuing.

My position on timing and price is that Gold will trade at USD $1650 before the second week of January 2011.

I am offering a $1,000,000USD wager to a financially qualified party that this will occur within the stated timeframe. Any party on Bloomberg, CNBC or CNN-Business stating an opposite opinion on the price of gold should be informed of this challenge.

Please communicate to ANY vocal bearish so-called gold expert that I challenge them to put their money on their views.

Any commentator unable to financially meet this challenge should not be opining. If they really knew the gold and currency market they could easily meet the challenge.

I am relying on you CIGAs to forward this challenge to any vocal bear, suggesting they stop flapping their lips by putting up or shutting up. It is one thing to hide behind a computer screen. It is another to bet the ranch on the view you promote.

The technical procedure of a serious wager is:

1. Prove you can in fact wage the challenge by an attorney's letter.
2. Segregate the funds in cash or near cash kind in the hands of your attorney.
3. Execute an agreed upon binding contract stating the terms of the wager.

(This offer is void in all areas where wagering is illegal if any such areas still exist in our algorithm-geek casino world)

Respectfully yours,
Jim Sinclair



Welcome to Jim Sinclair's MineSet

[A_C_E]

Originally Posted by Fed Up

Vegas is good... I'm partial to Baccarat. I'm also the person at the craps table everybody hates as I play the "don't pass" and "don't come" line.

That's why I like going to a table where I'm the only one playing...and I bet against myself!

But I'd rather buy gold and silver. Vegas is just for fun money that after a few too many drinks seems to dissappear. I'm actually a decent "sober" gambler....during the day! There are many ways to lose money in the evening...

Fed Up

You're seriously that guy???

I both hate and respect you for it. At the same time, when everyone at the table is happy and jumping, you're losing. But at least there's good energy and it's fun. And then when everyone gets really depressed because they're losing, you are happy because you're winning. So that strategy garners respect.

But at the same time, you're still betting against the rest of the table in a game that's supposed to be fun for a whole group. And for that, I hate you.

[Fed Up]

Originally Posted by A_C_E

You're seriously that guy???

I both hate and respect you for it. At the same time, when everyone at the table is happy and jumping, you're losing. But at least there's good energy and it's fun. And then when everyone gets really depressed because they're losing, you are happy because you're winning. So that strategy garners respect.

But at the same time, you're still betting against the rest of the table in a game that's supposed to be fun for a whole group. And for that, I hate you.

Very true...

but you missed the part where I said I go to a table where "I am the only one playing!"

I tip the 4 "stick men/dealers" and have a blast! Anyone can come join "my" table, but they do so at their own risk. As a matter of fact, even though the odds are with me, when I roll a 6 or 8 on the come out roll, I tell the stick man I don't want to roll anymore and they have this strange look on their faces. They take the dice back and since there is no one at the table but me, I tell them I want to roll again and they give me the dice. I get a kick out of screwing with them....but they love me because I tip (usually saying "dealers choice" whereby they put their money on the line with me.

Fed Up

[kombayn]

Best thing to do would be investing in high-interest CD accounts, money market accounts or IRA's. If you watn to turn that $5,000 into $20,000 that's the best way to go.