Author Topic: Mike Maloney's Top 10 Reasons To Buy Gold & Silver  (Read 14475 times)

blackjack

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Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« on: November 05, 2013, 08:46:41 PM »
I came across this today and thought it was interesting, thoughts?


Quote

As Mike "Hidden Secrets Of Money" Maloney has said many times before, the economic crisis of 2008 was only a speed bump on the way to the main event.  He believes that before the end of this decade there will be an economic crisis so historic that it will eclipse the crash of 29 and the subsequent great depression.  He also believes it is both unavoidable and inevitable, because it is merely the free market releasing the stored up energy from decades of economic manipulation. As Maolney notes, "the best investment that you will ever make in your lifetime is your own financial education," and the following provides a succinct reminder of the top reasons to buy gold and silver...

 

The Top 10 Reasons "I" Buy Gold and Silver

By Mike Maloney,

So here you go… a countdown of “The Top Ten Reasons That I Buy Gold And Silver.”
10. All World’s Currencies are Fiat Currencies, and Fiat Currencies Always Fail.

99.9% of the world’s population is unaware that we no longer use money… we use “fiat” national currencies.  What is a fiat currency?  Fiat currencies are faith based.  They are national currencies that are not backed by anything of value like gold, instead the government just declares that they have value and, as long as the people keep believing, they accept it… for a while.  But here’s the thing, there have been thousands upon thousands of fiat currencies throughout history, and they have all failed… 100%... no exceptions.

But there is a vast difference this time around.  Since 1971, for the very first time in history, all of the world’s currencies are fiat currencies simultaneously.

Remember this as we progress through the Top Ten…

ALL FIAT CURRENCIES FAIL.
9. The Current State of the Global Economy.

In my book, Guide to Investing in Gold and Silver, and in Hidden Secrets of Money, I show how societies have swung back and forth from quality money to quantity currency.  Originally, quantity currency took the form of debased coinage (gold or silver money that has been diluted by adding cheap and abundant base metals such as copper).  Then it took the deceptive form of national currencies that were initially backed by money, IE: claim checks on gold and/or silver. Once these were established, governments then could change the laws, basically making fraud legal, so they could print claim checks on gold that didn’t exist.  The next step was to sever the connection between money and currencies entirely. 

Back when we used real money gold would automatically balance all economies.  When one country experienced an economic boom they would import cheap goods from countries with depressed economies and lower wage rates.  The outflows of gold from the boom country would cause a deflation, cooling the economy, while the countries experiencing gold inflows would boom, causing their labor rates to increase, which in turn would cause the prices of their goods to rise.  This meant that trade imbalances would always automatically rebalance.  Government spending was also constrained.  If a government wanted to spend more than its income (deficit spending) it had to borrow gold from the private sector.  If the government borrowed too much it would cause interest rates to rise, which in turn would slow the economy, which in turn would cause tax revenues to fall, which meant less income for the government, which in turn would cause the government to cut spending.

But the debt based global monetary system has allowed deficit spending, trade imbalances, and bubbles to persist and balloon to levels unprecedented in all of history.  We are in completely uncharted territory.  The credit/debt bubble and the derivatives bubble threaten to take down the world economy.  The only comparison you could make is to take every great bubble in history times one million and have it burst everywhere on the planet simultaneously… It threatens to be a global financial nuclear holocaust the only financial survivors of which will be the owners of gold and silver.
8. Currency Crisis / New World Monetary System.

I am a firm believer that everything happens in waves and cycles.  So when I started writing my book back in 2005 I entered every financial crisis that I could identify into a spreadsheet, starting from the beginning of the USA, looking for a cycle, and something very dramatic stuck out at me.  I had discovered that every 30-40 years the world has an entirely new monetary system.

From that day till now I have been telling as many people as I could that before the end of this decade (before 2020) there will be an emergency meeting of the G-20 finance ministers (or something like that) to hash out a new world monetary system.  It’s normal.  No man made monetary system can possibly account for all of the forces in the free market.  They get old… they develop stress cracks… then they implode. 

We have had four different monetary systems in the past 100-years.  The system we are on today is the U.S. dollar standard.  It is an ageing system that is way overdue for its own demise.  It is now developing stress cracks, and will one day implode.  Like I said, it’s normal. 

But what is different this time around is that the last three transitions were baby-steps from full gold backing, to partial gold backing, to less gold backing, to no gold backing.  In each of these transitions the system we were transitioning from had a component that could never fail… gold.  This time we will be transitioning from a system based on something that always fails… fiat currencies.  The key component to this transition from the U.S. dollar standard to some new standard is of course the U.S. dollar.  By the time the emergency meeting takes place the U.S. dollar will be in the final stages of the terminal condition known as fiat failure.   

But the U.S. dollar represents more than half of the value of all the world’s currency.  A dollar crisis would cast doubts on all fiat currencies, and the cascading effect of loss of faith could cause the rest of them to fall like dominos.  The central bankers will try everything they can think of to keep the fiat game going, but when everything they try fails they’ll look around and say, “What worked before.”  And once again the pendulum will swing back to quality money.

The only beneficiaries of this event will be gold and silver, and those who own them.
7. Gold and Silver Come with a Central Bank Guarantee.

My book was written from 2005 through 2007.  In it I said there would first be the threat of deflation (this came true in the crisis of 2008) to which Ben Bernanke would overreact with a helicopter drop (this came true with the bailouts and QEs) which would cause an inflation (this came true when the stock markets and real estate reflated.)   Next there will be a real deflation… a contraction of the currency supply.  This will happen when the credit/debt/bond/fiat currency bubble and the derivatives bubble begin to implode.  The reaction of the world’s central banks will be to print until deflation gives way.  I believe this will cause a hyperinflation.  A hyperinflation doesn’t require a nation to print its currency into oblivion… it only requires a loss of faith.

But never fear, because, periodically, throughout history, gold has revalued itself as it is bid up in price by the free market as people rush back to it for safety.  This is when gold does an accounting of all of the currency that had been created since the last time gold revalued itself.  In doing so its purchasing power rises exponentially.

It’s always done this… and I believe it always will.
6. Everything Else is a Scary Investment.

By any realistic measure stocks have been in a super-bubble for more than a decade now with valuations and yields in the danger zone, while bonds are in the later stages of a 30-year bull market and real estate is still deflating from the biggest bubble in history.

Dr. Robert Shiller, of Yale University, has compiled data on the stock market going all the way back to the year 1880.  His research concludes that by one measure the stock market has been in a bubble since 1998 and by his other measure the bubble is far bigger and more extreme than any prior bubble, including the stock market bubble of the Roaring `20s that led to the crash of `29.  Further research shows that the only reason the markets have been levitated to these levels is due to Federal Reserve stimulus.  What will happen if they take away the training wheels? I wouldn’t want to be invested in stocks when it finally implodes.

U.S. Treasury bonds have been a great investment for more than 30-years, but no bull market lasts forever.  In fact, for the 37 years after WII, bonds were such a bad investment that by the end of the `70s they had earned the nickname “certificates of confiscation”, because they confiscated your wealth.  But that was back when countries were financially responsible.  Now most countries on the planet run their finances like Greece, and the United States of America is leading the way.  And as the world’s central banks keep interest rates low it has caused bond investors to take extraordinary risks in search of a reasonable return.  We are now in a global bond bubble, and I believe that this has made the bond market one of the most dangerous places to invest right now.

When the stock market crashed in 2000 it caused a recession in 2001.  Alan Greenspan’s response was to cut interest rates dramatically.  Then along came 9/11, making the stock market crash even worse, and his response was to take the Federal Funds Rate to lows for a duration last seen in the Great Depression.  Greenspan’s goal was to reflate the stock market… his achievement was to accidentally create the greatest real estate bubble in history.

Since the popping of the bubble in 2007 real estate values have come back down to fair value and then bounced back into a small bubble. Dr. Shiller, also the creator of the Case-Shiller Home Price Index, agrees.  This is typical price action of any super-bubble that’s in the process of popping… it’s called a “dead cat bounce.”  The public always chases yesterday’s news.  As prices reverted near fair value, investors rushed in to scoop up deals causing prices to rise once again.  But then, just as in the crash of `29 and the NASDAQ crash of 2000, the dead cat bounce will roll over and the crash will continue until the opposite extreme of severe undervaluation is reached.  This is natural and is what is required to clear out the excesses left over from the bubble days.  Too many jobs were created in that sector and too many homes were built.  Undervaluation is required to clear out the excess inventory and cause workers to move on.

But what worries Dr. Shiller is that institutional investment firms have bought up as much as 30% of the homes that were foreclosed on since the crash of 2008.  This has the potential of making real estate as volatile as the stock market.  If these firms ever decide to sell they can dump thousands of homes all at once, causing the 2008 real estate crash to look like the calm before the storm.

Personally… the thought of investing in real estate right now is down right scary.

So the stock market, bonds, and real estate are either in a bubble or have been in a bubble in the last decade.  Gold and silver, however, haven’t been in a bubble for more than 30-years, and from my measurements still appear to be less than half way through their bull market.   

The next great bubble will someday be in gold and silver… It‘s just their turn.
5. Market Psychology.

continue...

http://www.zerohedge.com/news/2013-11-05/mike-maloneys-top-10-reasons-buy-gold-silver

Khan

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #1 on: November 05, 2013, 09:20:23 PM »
Person who's a noted gold/silver peddler, who makes money off of books about gold and silver, and loves gold and silver advocates gold and silver. News at 11.

Also, I take issue with the historical graph of P/E making current valuations "scawwy" and overvalued. The average P/E since WW2 is 18.5.
See
http://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio
http://www.multpl.com/


Look, if you're a gold bug, if you believe in it as an investment, more power to you. I keep too the Buffett school myself. Also, if you are a gold bug, I highly recommend you check the newest research on that subject.
http://www.forbes.com/sites/danielfisher/2013/08/08/gold-not-much-of-a-hedge-for-anything-unless-youre-a-centurion/

Eric

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #2 on: November 05, 2013, 09:45:53 PM »
Quote
As Mike "Hidden Secrets Of Money" Maloney
Sorry, I didn't get any further than this.  Informercials are just not that interesting to me.

Honest Abe

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #3 on: November 06, 2013, 03:13:36 AM »
Even the goldbugs on the Kitco forums don't take this guy seriously

HamhockHammock

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #4 on: November 06, 2013, 03:35:05 AM »
If you really thought the dollar was about to "fail," wouldn't a better bet be to invest in barter-ables, canned goods, and ammunition?

Khan

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #5 on: November 06, 2013, 04:21:36 AM »
If you really thought the dollar was about to "fail," wouldn't a better bet be to invest in barter-ables, canned goods, and ammunition?

And a portable water purifier, and iodine tablets, and a farm(land), and chickens... lol but no, gold will get us through!

blackjack

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #6 on: November 06, 2013, 07:43:13 AM »
Yeah I am starting to investigate all areas of portfolio, while I still like the idea of holding a very small % of my portfolio (1-2%) in precious metals. I like the idea of farm land, canned foods, guns more though.

KingCoin

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #7 on: November 06, 2013, 07:57:46 AM »
The problem with so many gold arguments is that they're true at basically every point in history. Yet we know that gold has been a very poor long term investment, even after this last major bull cycle. The arguments are rarely predictive of price either. All these arguments are "true" if gold is $300/oz, $3,000/oz or $30,000oz.

It's worth noting that ZeroHedge has been massively bearish on stocks and real estate since 2009 and bullish on gold. Anyone who's listened to their advice or bought into their worldview has suffered tremendously financially (and probably gone broke if short stocks).

iamlindoro

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #8 on: November 06, 2013, 08:38:45 AM »
Yeah I am starting to investigate all areas of portfolio, while I still like the idea of holding a very small % of my portfolio (1-2%) in precious metals. I like the idea of farm land, canned foods, guns more though.

Just for the record, I don't think anyone was trying to convince you to go with farmland, canned foods, and guns, as those are also horrible investments if the aim is the turn money into more money.

dadof4

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #9 on: November 06, 2013, 10:25:35 AM »
Gold is worth 4-5 times what it was a mere 10 years ago. During that time, it has sparked no new innovation or produced anything to warrant real growth. If you're looking for a bubble waiting to burst, look no further.


matchewed

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #10 on: November 06, 2013, 10:28:30 AM »
Why do I see a fiat currency discussion in our near future?

iamlindoro

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #11 on: November 06, 2013, 10:31:17 AM »
Why do I see a fiat currency discussion in our near future?

Because like the "market seems overpriced, should I wait to buy stocks" conversation, it's a mandatory weekly occurrence?  :)

matchewed

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #12 on: November 06, 2013, 10:40:39 AM »
Why do I see a fiat currency discussion in our near future?

Because like the "market seems overpriced, should I wait to buy stocks" conversation, it's a mandatory weekly occurrence?  :)

I do have to admit that one is a personal fave as I've been hearing it for the last three years. Maybe just reverberations from 2008/2009.

brewer12345

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #13 on: November 06, 2013, 11:13:40 AM »

Just for the record, I don't think anyone was trying to convince you to go with farmland, canned foods, and guns, as those are also horrible investments if the aim is the turn money into more money.

I would not say that.  Canned goods I dunno about, but farmland has been zooming upward for years.  Guns have done well, but ammunition has gone crazy.  If only I had bought several pallets of .22 18 months ago...

Loud Noises

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #14 on: November 06, 2013, 12:55:40 PM »
I largely agree with Mike Maloney.  However, the realities of precious metals are so obfuscated in our western system that many people on both sides of the argument sound like idiots when they back up their position.  I happen to agree with his general premise for a variety of reasons... but with one caveat.  I have no idea, whatsoever, how long it will take for things to play out.  We're talking about changes that are as macro level as it gets.  It could be next year, it could be more than a century.  Thus, I'm positioned as well as I can be for all outcomes.  Money invested traditionally, invested in metals, in my business and a lifestyle that moves closer to sustainability every year.  I feel confident that I won't be left behind no matter what tomorrow looks like. 

AdrianM

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #15 on: November 06, 2013, 07:33:36 PM »
Nothing really new in it. As Eric said, Infomercial to sell his book.

That said, I would agree with his premise about fiat currencies and global monetary systems.

I also agree that I have no idea when a reset will happen but before it occurs we should see a move down exters pyramid


CDP45

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #16 on: November 06, 2013, 11:16:00 PM »
Shhh, be calm children. I must recommend partnering with smart motivated people seeking profit for long term results, ie stocks, ownership of companies. If shtf, I'd rather own a some land or have a valuable skill to help others. All you gov employees hopefully have a back up plan lol. Farmland is interesting because while it does produce, food costs are at historical lows and will keep falling, humanity keep getting better at producing it. Plus, what's the max a human can consume? 5000 calories/day? That times 9 billion will be the most ever needed, plus there currently enough supply to feed everyone so new production is superfluous and will cause prices to drop even further. Welcome to post-scarcity, this blog is witness. 

matchewed

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #17 on: November 07, 2013, 04:36:34 AM »
Nope I was wrong, not necessarily a fiat currency discussion, but an inevitable just around the corner societal collapse discussion.

Loud Noises

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #18 on: November 07, 2013, 07:26:04 AM »
Nope I was wrong, not necessarily a fiat currency discussion, but an inevitable just around the corner societal collapse discussion.

OR, instead of adding random snide comments like above, we could talk about legitimate factors in the gold market.  There's Asian demand, the draining of Western bullion bank reserves, decreased ore grades on average worldwide, Chinese moves to weaken the dollar as a reserve currency....   I don't know, any number of reasonable things.  For the person interested in gold as an asset inside their portfolio there are plenty of factors to research and understand.  If you don't like yellow rocks that fine, but there's a time to buy and a time to sell just about anything.

matchewed

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #19 on: November 07, 2013, 09:48:09 AM »
Nope I was wrong, not necessarily a fiat currency discussion, but an inevitable just around the corner societal collapse discussion.

OR, instead of adding random snide comments like above, we could talk about legitimate factors in the gold market.  There's Asian demand, the draining of Western bullion bank reserves, decreased ore grades on average worldwide, Chinese moves to weaken the dollar as a reserve currency....   I don't know, any number of reasonable things.  For the person interested in gold as an asset inside their portfolio there are plenty of factors to research and understand.  If you don't like yellow rocks that fine, but there's a time to buy and a time to sell just about anything.

Sure let's talk legitimate factors in the gold markets. I'm okay with that.

But when the discussion centers around doomsday scenarios we are no longer discussing the gold market and instead entertaining pure speculation and actually talking more about my snide comment than about legitimate factors.

The article which is supposed to spawn this mature discussion about gold starts off with -

ALL FIAT CURRENCIES FAIL, then the State of the Current Global Economy is terrible, then we're either in a currency crisis or a global currency is being developed so be afraid...etc. Literally one of the reasons (#6) says "Everything Else is Scary." But sure my snide comments are the problem and not the manufactured fear.

So please let me know of a good reason to buy gold. Beyond the scare tactics is there a practical reason that it is a better investment than some other investment?

KingCoin

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #20 on: November 07, 2013, 10:12:23 AM »
The problem with gold is that it's easy to find 20 reasons to be bullish or 20 reasons to be bearish (whether sober and rational or paranoid and conspiratorial), but rarely do any of these reasons point to an appropriate valuation.

There's Asian demand, the draining of Western bullion bank reserves, decreased ore grades on average worldwide, Chinese moves to weaken the dollar as a reserve currency....   I don't know, any number of reasonable things. 

So do these factors imply that gold should be $1700/oz? $17,000/oz? Maybe they're already priced in at a too-high probability, so gold should be $700/oz? Without any rational criteria for valuation, gold "investing" is just speculation. Because there's no DCF analysis to be done, you can make pretty much any claim about price that you want and it's almost impossible to rationally argue with it. I think this is why the asset class attracts so many cranks, conspiracy theorists, and doomers who can't be bothered with things like probability weighted cash flow analysis and would rather just argue from the gut about which way the wind is blowing (for some reason, usually up from the fiery pits of hell).

Nothing wrong with gold as an alternate currency (albeit a volatile one), and it may well have a place in a balanced portfolio as a diversifier, but arguing around in circles for hours about whether it should go up or down is more or less an exercise in futility IMHO.

Oh, and the whole "fiat currency" argument is a straw man as far as I'm concerned. Of course paper money is a bad long term investment. Of course gold will outperform it over the long haul. Maybe paper money will devalue like clockwork at 2%/yr, maybe it will experience periods of faster devaluation. I don't know anyone arguing differently. That doesn't mean gold still isn't a loser.

CB

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #21 on: November 07, 2013, 10:14:40 AM »
So please let me know of a good reason to buy gold. Beyond the scare tactics is there a practical reason that it is a better investment than some other investment?

Completely agree with your sentiments and get tired of the doomsday crap and goldbug nonsense that seems to be cropping up more frequently.  That aside I don't think gold needs to be dismissed completely.

The best reason to hold gold is not because it's a good investment in and of itself.  Its real value is that it's weakly correlated with almost everything else.  Greg Mankiw (chair of Harvard's econ department and a former GW Bush economic adviser) had a good blog post on the topic (and accompanying newspaper editorial) this summer.  The bottom line was that holding a couple of percentage points of your overall portfolio in gold is reasonable to people thinking rationally and critically about long-term asset allocation.

Here's a quote from a grad student who provided a nice "solution" to a back-of-the-envelope asset allocation question involving gold (note that this was a purely hypothetical exercise):
Quote
...even though gold has the same expected return as bonds with 3 times as much risk, an investor will still choose to hold some gold for diversification purposes. Especially because it is uncorrelated with stocks and bonds.

Loud Noises

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #22 on: November 07, 2013, 10:30:21 AM »
I'll speak from what I see.  I personally think now is a good time to be dollar cost averaging into gold.  China is importing/producing like crazy and if you read their official statements, they make no attempt to hide the fact that gold will act as a buffer against the risk that their US Treasury holdings represent.  They actively encourage precious metals to their population and are aiming to increase the stature of the Renminbi in world currency markets.  China has been pushing hard for the USD to be supplanted as the world's sole reserve currency. 

To me, this indicates higher prices in the future.  You don't have to agree with that.  You can think all of this and more is priced in and say gold should be $400 an ounce.  That's fine.  But emotionally rejecting it as a doomsday play is ridiculous. 

Keep in mind that there's no difference between the statement that all fiat currencies have failed and the statement that long term, buy and hold, index investing has proven an extremely effective way to build wealth.  Both are statements of fact.  However one is always loved and one is always hated in this forum.  I prefer to take it all in aggregate and position accordingly.

I should add that I don't view gold as a standard "investment."  I view it much the way that others view cash allocations in their portfolio.  The gold portion of my portfolio is a cash hedge (not dry powder for stocks) that is better than cash when held for decades (or centuries, when planning for inheritance.)  It is completely different than the money I have in stocks and there is no competition between the two whatsoever.  It happens to be a bonus that the precious metals in my portfolio have appreciated so dramatically over the past 10 years.

KingCoin

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #23 on: November 07, 2013, 12:17:14 PM »
But emotionally rejecting it as a doomsday play is ridiculous. 

We're not rejecting gold as a doomsday play, we're rejecting doomsday arguments as a reason to play gold.

AdrianM

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #24 on: November 07, 2013, 10:05:33 PM »
Cui Bono.

When you look at any investment or argument always ask "who benefits"

Pretty much in every argument, that I read on this board is slanted to confirm the posters own personal beliefs.

The other thing is it seems to be an all or nothing argument.

You are either 100% gold or stocks

Or gold is of no use to anyone pursuing ERE.


CB

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #25 on: November 08, 2013, 08:10:33 AM »

You are either 100% gold or stocks

Or gold is of no use to anyone pursuing ERE.

Did you miss my post, just three above yours, where I presented evidence for a few percentage points of gold being a rational addition to a portfolio?

KingCoin

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #26 on: November 08, 2013, 08:35:17 AM »
The other thing is it seems to be an all or nothing argument.

Myself, CB, Loud Noises, and blackjack all argued that it may have a place in a portfolio. I didn't see anyone argue an all or nothing approach.

When you look at any investment or argument always ask "who benefits"

I'm not exactly sure what this is meant to imply. While it certainly pays to be weary, the beauty of investing in productive assets is that everyone can benefit, from the investor, to the producer, to the consumer. The world isn't a zero sum game pitting fleecers against fleecees.

gillstone

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #27 on: November 08, 2013, 09:05:06 AM »
Lord help me. I know I'm about to walk into a buzzsaw by even posting on this topic but....

This has always bugged the hell out of me about the idea that fiat currency is somehow illegitimate or unstable relative to gold.  The very premise is based on a very selective reading of historic economic trends.  While the US was married to a gold standard economic panics every 20-30 years were standard.  These panics were devastating and were usually in part driven by gold pricing causing deflation and wiping out those in debt (see the Cross of Gold speech) or spiking absurd levels of inflation and wiping out low and middle income consumers.  Look at the current economy that is in part driven by oil pricing.  When the cost of oil spikes we see the price shock translate to higher prices for consumer goods, reduced saving rates and eventually a pulling back from economic activity as consumers adjust.  That is the knock-on effect of one commodity that is important but not central to our economy.  If we had maintained our ties to gold we would be basing our economy on the supplies of gold from South Africa, the Philippines and other nations (not as much gold left here) and price spikes or drops due to availability would have outsized effects on the value of our currency, our buying power as individuals and as a nation. 

There now we can have a fiat currency discussion.  Are you happy now? ;-)
« Last Edit: November 11, 2013, 09:32:08 PM by gillstone »

steveo

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #28 on: November 08, 2013, 06:41:53 PM »
This has always bugged the hell out of me about the idea that fiat currency is somehow illegitimate or unstable realtive to gold.  The very premise is based on a very selective reading of historic economic trends.

It is interesting how easily people base their opinions on such small chunks of history. The stock market is another example. The data is limited in its scope.

I personally think that most of the opinions that people come up with are pretty close to accurate. Equities will probably be the best asset performer over time considering that they are companies that are making profits. Some gold or silver is probably okay to have within your overall portfolio.

AdrianM

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #29 on: November 10, 2013, 01:28:02 PM »

You are either 100% gold or stocks

Or gold is of no use to anyone pursuing ERE.

Did you miss my post, just three above yours, where I presented evidence for a few percentage points of gold being a rational addition to a portfolio?

No I didn't miss your post, I was referring to all the threads about gold in this forum, If you have read/participated in all of them you would have understood what I was referring to.

It was my mistake that I did not not make this clear.

AdrianM

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Re: Mike Maloney's Top 10 Reasons To Buy Gold & Silver
« Reply #30 on: November 10, 2013, 01:46:52 PM »
Myself, CB, Loud Noises, and blackjack all argued that it may have a place in a portfolio. I didn't see anyone argue an all or nothing approach.
See above comment

When you look at any investment or argument always ask "who benefits"
I'm not exactly sure what this is meant to imply. While it certainly pays to be weary, the beauty of investing in productive assets is that everyone can benefit, from the investor, to the producer, to the consumer. The world isn't a zero sum game pitting fleecers against fleecees.
[/quote]

Who benefits from spruking this book?
Who benefits by knocking it down or building it up?