Investing and GOLD

gold nuggetsTo maximize profit and minimize risk we have to be active investors. Not passive, lets give it to some random firm or dump it into some random type of investment vehicle and see what happens.

The capitalist theory is that people activly managing capital resources like money will allocate the money to maximize profit and minimize risk to the benefit of all. If no one is actively looking to allocate resouces to the creative and innovative but just putting it into the S&P 500 or growth or income funds then how efficient does the efficient capital theory work? You start to get people like Citibank, AIG, Enron,and the Madoffs. I think the answer is quite clear. Things get very inefficient very fast.

If the government prints paper like a mad hatter then people will stop buying treasuries and/or demand higher interest and rather than stimulating they merely will be causing inflation.If corporations become the pinnacle of misappropriation of money and risk then investors will sell them and will make it hard or impossible to go to the bond market to get cash without paying a huge premium.If commodities (gold is one despite peoples prognostations otherwise) don't scale back production in the face of faling demand then they will be looking at very low prices sooner or later even if they convince people to pilfer away as much as possible in vaults. That only takes some percentage of production off the market.If all of these things look grim you can always invest in yourself by inproving your education, or being selective in what equities you invest in, or start your own business. I am not a broker so I have no problem in saying that your investment options are only limited to ones that make a trasaction fee for the financial industry.If you are not independently wealthy it's also helpful to remember your job is probably your most important asset. Spending extra time and money to improve it may be the best investment advice you'll ever get.      White's TDI metal detector

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Gold is not an investment — It’s a store of value

California gold nuggetNo one would recommend putting all of your money in gold, nor all of it in the stock market. I really don't understand all of the logical stumbling blocks people try to put between themselves and the ownership of gold.

For instance: no one has a problem with buying gas to put in their car. Gas, like gold, corn, whiskey, etc. has a function, and trading in dollars for any one of them doesn't make you crazy. Gold's function is a portable store of wealth. It has intrinsic value as a store of wealth. Paper does not. Gas has an intrinsic value as fuel that you put in your car. Trading a temporary, extrinsic store of wealth (paper dollars) for something real is not the act of a madman. Everyone does the very same thing every day!

 

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Gold … A Long Term Store of Wealth

Arizona gold prospectingA fair number of folk see gold as a long term store of their wealth. It's not a lump of metal that returns dividends like the stocks of some companies. It is an item that holds it's monetary value over time and performs it's task when needed.
 
Gold has done very well in the last 8 years in terms of return, but we don't invest in this stuff for return - we buy it to store our wealth to free us from govt intervention.             Arizona gold prospecting
 
 
 
 

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Just Another Trillion or Two …

gold nuggetThe financial crisis is far worse than we are aware of as yet, and it will get worse than it is once all the bail-out and freshly printed money has been distributed. Too much cheap money that was not always fairly earned got us into this mess, and the solution of more of the same will not help us recover.

Now it's toxic debt, some unknowable evil, and we're going to own it. We need the geniuses that created it to stay on at fortune-sized payscales. Washington is really looking out for us. Quick, another trillion or two.

Since trillions are being conjured up regularly, let's do what they say we can't: Hand money to real people to pay off their bills and debts. We're creating debt to pay debt anyway. 

Money is a token of useful production. Financial engineers adjust that real money in their attempts to deal with credit and produce products that enable us to save or borrow, as we wish. As long as the engineered money is proportional to the whole, fine: but the past years have seen a disproportionate amount being constructed into houses of straw, arid landscapes and other items of apparent but worthless value. Now we are having to account for it, and until we do, we can expect more financial pain. Let's use this time to return to a system where real values matter, and in doing so make the politicians and financiers aware that we expect them to contribute real value too.                                                spot gold price
 

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