Post Race!

[dday9]

Just like I had no idea what a perch was until I looked it up Wiki and it turns out its just a sacalait.

[dilettante]

I had the idea that when you become more risk-averse financially (e.g. retirement) you first move to more stable-growth stocks, then bonds, and then you pull out of those markets and move cash into banks. When bank interest rates fall during times of increasing inflation then cash moves into gold, real estate, etc. to slow the rate of "evaporation" of your wealth due to money-printing.

I assumed that an individual would do some combination of those things.

If you have money in 401(k) and IRA plans, at a certain point you are forced to withdraw and pay taxes on the accumulated value. Those Required Minimum Distributions can result in other costs, like the IRMAA cliffs on Medicare premiums. Options such as Roth Conversions can have the same impacts, but can't use RMD monies anyway.

So this cash can be taxably reinvested, stuffed into banks paying dwindling interest, or into gold (and to some extent silver, platinum, etc.) and real estate.

Perhaps aging "boomers'" RMDs are, in part, what is driving gold demand today? Not to make any money but just to avoid bank account evaporation?

[Shaggy Hiker]

"Bluegill" are often just a generic name for sunfish. There are numerous species of sunfish, which I didn't realize until I went to college. Bream is a different name for them. Technically, bluegill is a single species of sunfish. I may have to go back to the ponds of my youth and figure out whether I was actually catching bluegill (probably not), or some other species like pumpkinseed (more likely).

[Shaggy Hiker]

Perch are somewhat simpler, since most people mean yellow perch when talking about perch. There are others, they just aren't as common.

Never heard of a sacalait, but upon looking it up, that looks to be a crappie, not a perch. For that matter, bream is also a misnomer, since actual bream may not exist in the US. The term is used for sunfish, but there IS a fish called a bream and it is European.

[Shaggy Hiker]

Perhaps aging "boomers'" RMDs are, in part, what is driving gold demand today? Not to make any money but just to avoid bank account evaporation?

It's possible, but I doubt it. Those RMDs begin at 72. If you inherit an existing IRA with an RMD, you have to start taking disbursements immediately, regardless of age, so RMDs can start earlier in certain cases. Still, they tend to start pretty late in life.

The point of the RMD is that the IRS wants your IRA to expire at the same time that you do. My father has told me that his investments have been doing so well that his IRA has increased despite the RMDs being paid out. If that is common over the last couple decades of relentless stock market growth, then it may be that there are a bunch of seniors looking for somewhere to stash cash, but I still hear more gold hype coming from more youthful, retail investors. Retail investors have driven some impressive market booms over the last few decades. GameStop is probably still elevated. Bitcoin and others are still way up there. Gold is probably just another example, since there are plenty of people talking it up at any given time.

[dilettante]

The problem with stocks and bonds, no matter how they are held, is that they are denominated in shrinking IOUs. Some administrations even chose to weaponize those IOUs.

Even crypto fanatics have started dumping it in favor of gold. Not to mention governments and central banks.

So the question is how many people are going to find themselves holding a wheelbarrow overflowing with worthless paper. That's assuming the market bubble doesn't just pop massively before then.

But I don't think the gold FOMO panic has even started. The mass media seem to be downplaying it yet.

[Shaggy Hiker]

So the question is how many people are going to find themselves holding a wheelbarrow overflowing with worthless paper. That's assuming the market bubble doesn't just pop massively before then.

That is very much the question. That is ALWAYS the question.

We can't eat bonds nor live in them (technically, we could live in stocks, but only if you use a different definition of that rather common word). We can't eat gold, either. Given the right scenario, every possible investment would become worthless. Different scenarios for different investments, of course, but for every investment there is at least one scenario that wipes them out. The question is whether or not that scenario ever occurs. Life is a gamble in that regard.

But I don't think the gold FOMO panic has even started. The mass media seem to be downplaying it yet.

I don't think it WILL start. I think we went through it a couple decades back and folks remember that. This time around, I doubt there will be quite the hype train just because it was a train to nowhere the last time around. Gold was NOT the great investment in 2007-2009.

Once bitten, twice shy, and all that.

[wes4dbt]

Yeah, money/investments is strange that way. The only value you it has is what we say it has and no type of money/investments is an absolute.

Saw a Twilight Zone where these guys stole a bunch of gold. They find a cave and hibernate for like 100yrs. when they awake they kill each other over the gold. The last one alive is found just before he dies. The people that find him can't understand why he was carrying a bunch of worthless metal.

[dilettante]

Surely governments and central bankers have more understanding of matters than the rest of us. If it is so worthless in the long run why are they scrambling to hoard it now?

My guess would be that the proxy relied on for so many years (US Treasuries) is not expected to last much longer as the world's value reserve.

But I'm getting more serious than I intended to in this thread.

[wes4dbt]

I don't think anyone is saying gold is going to be worthless in the long run. But it is possible that it could lose it's value. Why are some governments and central banks increasing their gold purchases? Because of decreased faith in the US dollar.

Edit:

As I said before, gold is just another commodity. If you would have bought it when it was peaking @ 1980, it would have taken you @ 26yrs just to break even. Much longer than that considering inflation.

https://www.macrotrends.net/1333/his...100-year-chart

Is it peaking now? I have no idea.

[dilettante]

What do you call "peaking?" It has been over $3300/ounce for a month and spot is now well above $3500.

[Shaggy Hiker]

Peaking would probably be noted in retrospect if it dropped considerably from the current high.

[Shaggy Hiker]

If we could peek into the future and note a peak, we'd be rich, so to speak, which would cause a few fits of pique.

[wes4dbt]

What do you call "peaking?" It has been over $3300/ounce for a month and spot is now well above $3500.

I pretty confident you know what the word "peaking" means. So I don't understanding what your asking.

As for what the current price means, it means as of right now people are willing to pay more for gold. Will that continue, as I've said, I have no idea.

[dilettante]

Since this became topical when dedollarization took hold I started looking at it off and on.

What I found was that gold/Dollar (and other currencies) has not ever peaked unless you cherrypick very short time windows.

Silver is another case altogether, but silver is mainly an industrial commodity with only a secondary role as a monetary metal. Silver has indeed peaked and fallen back for many years more than once.

So when you speak of gold "peaking" I'm not sure whether you mean something else, since it doesn't do so in the conventional sense.

I think "the story being told by gold" right now is that the buying power of the Dollar is falling more rapidly than ever. Its valuation curve as exceeded the Dow.

My only interest is in whether us plebes on the outside have made a mistake.

[dilettante]

All that said, a price correction to $2800 or so does seem plausible after the September feeding frenzy subsides.

[Shaggy Hiker]

I wouldn't be willing to bet on it. Investing is always something of a gamble. I feel less certain than ever as to what the market is going to do. Bad news can be good news for certain sectors, while good news is bad news for other sectors.

Still, I've never liked commodities investing. I can understand people wanting to take a "moon shot" gamble, such as GameStop or Bitcoin. If it hits, you make a bundle. If it doesn't...well, that's likely, so don't put too much on it. Meanwhile, commodities never seem all that great. When they hit, they don't hit all that big. When they don't hit...it's a loss.

For example, you mention a price correction to $2800. That would be a significant price correction, yet as a percentage, it isn't all that high. It just feels like a lot of volatility risk with no chance of getting a large win. That may not be a fair perception, or correct, but investment is often about emotion, and I'm not feeling commodities.

[dilettante]

Well I see a bit over $3600/ounce the last couple of days. I think $2800 would feel like quite a price drop to somebody sitting on a tube of 20 Gold Eagles right now.

[Shaggy Hiker]

It certainly would, especially if you are buying in today. I just feel like commodities do that. I guess a swing of 25% is a pretty big one, especially if it happens quick. Commodities seem to do jumps like that, though not all that fast, usually. If you feel like it's a good investment, then wouldn't the thinking be to wait it out?

I feel like one would get into a metal because they think that either the market is going to cause demand to soar (and for some reason supply won't keep up), or because it's gold. Gold is weird as a commodity since it is so often used as an investment vehicle rather than a commodity consumed in industry. If a person buys because they think demand will soar, then a drop in the short term might not bother them all that much, even if it's as much as 25%, since they'd be expecting an increase of a few hundred percent in a longer term. I feel like commodities (other than gold) are bought on the expectation of increases much greater than 25%, so that drop might not be meaningful.

Don't like those investments, though, so I don't dwell on them all that much.

Consider lithium or copper. Something like EVs cause demand to soar, which causes prices to soar. If you were to get in before that, all is well, but if you get in late because the price is soaring...well, supply followed the demand and the prices headed back down. If you look at lithium now, you can find recent articles both talking about prices soaring and that over supply is causing prices to plummet. You need a strong stomach to take a ride like that one.

[gaouser]

It certainly would, especially if you are buying in today. I just feel like commodities do that. I guess a swing of 25% is a pretty big one, especially if it happens quick. Commodities seem to do jumps like that, though not all that fast, usually. If you feel like it's a good investment, then wouldn't the thinking be to wait it out?

I feel like one would get into a metal because they think that either the market is going to cause demand to soar (and for some reason supply won't keep up), or because it's gold. Gold is weird as a commodity since it is so often used as an investment vehicle rather than a commodity consumed in industry. If a person buys because they think demand will soar, then a drop in the short term might not bother them all that much, even if it's as much as 25%, since they'd be expecting an increase of a few hundred percent in a longer term. I feel like commodities (other than gold) are bought on the expectation of increases much greater than 25%, so that drop might not be meaningful.

Don't like those investments, though, so I don't dwell on them all that much.

Consider lithium or copper. Something like EVs cause demand to soar, which causes prices to soar. If you were to get in before that, all is well, but if you get in late because the price is soaring...well, supply followed the demand and the prices headed back down. If you look at lithium now, you can find recent articles both talking about prices soaring and that over supply is causing prices to plummet. You need a strong stomach to take a ride like that one.

hello

[dilettante]

I guess I don't know any gold stackers, so I can only go by guesses and hearsay.

But I think there are two types: Those that gradually buy a little, then a little more, ... And then those who will be using the money so they cashed out investments and worry about it shrinking given low bank interest rates. Need to buy a car? Cash out some gold. Need roofing done? Cash out some gold.

So not investing, just parking money.

[wes4dbt]

I feel less certain than ever as to what the market is going to do.

I agree. I don't know if it's because of the current social/political environment or that I've gotten older and learned guessing what the market is going to do(short term) is nothing more than a crap shoot. I still think if you have 10 or 15yrs before you may need the investment, that's it's the most profitable way to go.

[wes4dbt]

What I found was that gold/Dollar (and other currencies) has not ever peaked unless you cherrypick very short time windows.

I wouldn't call 26yrs a short time window.

Given an endless time frame, nothing "peaks" if it manages to stay in existence.

[wes4dbt]

It's always feels really good here in the central valley after months of 95+ degree weather when get that first cool down streak. Really nice this week.

[dday9]

My office is too cold. My knuckles turn blue.

[dday9]

We did get a very early cool front. It's 81 degrees with a feels like of only 84.

[dilettante]

Warming here. Should be in the 80s by the weekend.

[Shaggy Hiker]

I guess I don't know any gold stackers, so I can only go by guesses and hearsay.

From my experience, even if you DO know gold stackers, you are going by guesses and hearsay, cause that's how they operate. It's passion, but whether it is reason is debatable.

But I think there are two types: Those that gradually buy a little, then a little more, ... And then those who will be using the money so they cashed out investments and worry about it shrinking given low bank interest rates. Need to buy a car? Cash out some gold. Need roofing done? Cash out some gold.

So not investing, just parking money.

To some extent, we all are. With the gold obsessed, you go one layer deeper: Do you buy gold shares or do you buy physical gold? If the latter....what do you DO with it? If you keep it in a bank vault, you'll be paying rent, which certainly hurts your investment returns. If you don't keep it in a bank vault...well, that's when it gets interesting, I suppose.

[Shaggy Hiker]

I don't have the stomach for any commodities other than gold and I don't have any interest in investing in gold. That seems to be for the zealots, or those who are massively diversified.

[Shaggy Hiker]

I agree. I don't know if it's because of the current social/political environment or that I've gotten older and learned guessing what the market is going to do(short term) is nothing more than a crap shoot. I still think if you have 10 or 15yrs before you may need the investment, that's it's the most profitable way to go.

I was thinking about that, too. The market occasionally acts in quite predictable ways in the short term. That may be an illusion, though. If some unforeseen calamity occurs and the market tanks, everybody says, "the calamity caused this drop." If the market drops without a calamity, or if the market rises following some shock, people come up with some explanation for the direction that it moved. That's probably false. The market is certainly chaotic. If there is no obvious and fairly extreme influence like an unforeseen calamity, then a chaotic system is going to rise and fall for reasons that are not necessarily even possible to understand. We may just be rationalizing away past behavior.

[Shaggy Hiker]

Possible snow where I was supposed to be looking for fish in the next two days. Should be warm again by next week, though...or maybe it will go through warm and get back to more cold.

[Shaggy Hiker]

I love the weather this time of year. It's not good for walking around in streams trying to see things, though.

[dilettante]

I looked a little and found quite a number of "bury it in the back yard" safes for sale. However in the case of silver it's so bulky and heavy by value that such things look utterly impractical.

I see other places that offer space to rent in vaults, but I think you're right that doing that would eat up value pretty quickly. If there was much to be made operating such places we'd surely hear of the odd robbery attempt, right? And probably a few successful robberies as well.

I also saw safes that can be bolted to the floor or wall. It starts to look crazy pretty fast.

I assume most with any significant hoard of silver just try to hide it somewhere at home, maybe near the back of a pile of storage boxes. Seems easy to find if a thief suspected its presence, just kick stuff around until something doesn't readily budge.

Gold's more compact, so maybe safes would be more practical. I still think most of it ends up in sock drawers though.

[Shaggy Hiker]

I suspect that the reason my friend has gold is that he already has a massive safe. That's not uncommon out here, though it's not about precious metals, it's about guns. Gun safes are massive. Almost all of them are too large to be readily moved, which is as good as having them bolted to the floor. Most probably are bolted to the floor anyways, since you don't want them falling over. That would mean that any burglar would have to be able to crack the safe, which would require tools and some understanding. That would prevent any threat from opportunistic burglars.

If you buy a safe for gold, you really should factor that cost into your investment decision. If you already have a massive safe for other reasons, then the cost of the safe is irrelevant to the investment decision.

[Shaggy Hiker]

When I was living in Florida, my landlady told me that somebody broke into her house. They sat on something and drank all the booze she had (I think it was just a few bottles of wine). What they were sitting on contained some valuable amount of money in some form, but they just got tanked and staggered off none the wiser.

[Shaggy Hiker]

I don't think silver is worth holding. My friend has some, but he makes custom jewelry, so what he holds may be solely for material purposes. It's just not that valuable.

[dilettante]

One place where I worked large safes were used to hold program listings and documentation. It seems silly today, but back then it wasn't uncommon. I think it was about fire, not theft.

Of course the actual source code was archived to magnetic tape, copies were made and stored off-site in "coffins" inside an old indoor swimming pool.

[wes4dbt]

I was thinking about that, too. The market occasionally acts in quite predictable ways in the short term. That may be an illusion, though. If some unforeseen calamity occurs and the market tanks, everybody says, "the calamity caused this drop." If the market drops without a calamity, or if the market rises following some shock, people come up with some explanation for the direction that it moved. That's probably false. The market is certainly chaotic. If there is no obvious and fairly extreme influence like an unforeseen calamity, then a chaotic system is going to rise and fall for reasons that are not necessarily even possible to understand. We may just be rationalizing away past behavior.

Considering it's a system that's based on perception, whether true or not, I'd say it's a chaotic system. There are forces and people that have the power to affect the market but only in the short term.

But when fixed income were paying 1%, where else could you invest with an acceptable amount of risk. With CD's and Government bonds paying a reasonable rate the last few years it's made it easy for me to remove most of my investments from the market. I've enjoyed removing that stress.

[dday9]

I'm looking out of a window.

[dday9]

I've looked out of a window.