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Normally, stocks are the way to go, but we are not in normal times. The best place for you to put your money that fits your requirements is bullion. Gold, silv
by lzw 16y ago
Normally, stocks are the way to go, but we are not in normal times. The best place for you to put your money that fits your requirements is bullion. Gold, silver or platinum, or a spread of all three.
Right now, were in a high inflation environment, with the interest rates being forced down below the inflation rate. This is very similar to the scenario that created the housing bubble, only there is no longer a mania in housing. We have an ongoing sovereign debt crisis in europe, most of which is not being recognized and an even bigger one in the USA which nearly nobody recognizes, and hasn't even started yet.
This means that the dollar is poised to crash, interest rates will have to rise sharply, and both of these are very bad for bonds. Stocks will rise in an inflationary environment but this is really due to the decline in the value of the dollars used to price them.
I'm sure I'm going to be down voted for saying this because it is popular to believe that inflation is low (by changing the baskets of goods to pretend prices aren't going up) and that the "recession is over" etc. Etc. It is popular because it makes the government's job easier and the government wants to just print money like never before without consequences. But there are always consequences.
I've been around a long time, and when I was 25 I was not wise enough to save. If I'd bought stocks then, it would have been a good investment, but having many hears of investing experience now and having studied investing and studied economics, I have learned a thing or two. After I made a killing from knowing the housing market was going to implode, I got out of every asset with counter party risk. I've done better than %25 a year holding the "dumbest", least fancy investment you can- bullion. Meanwhile, the derivatives bubble is just getting going, with one of the largest bubbles being in paper gold, btw, such as etfs. Buy physical gold, silver and platinum, and hold onto it for a couple years.
2008 was the rough equivilent of 1929. We're just now entering the first part of the truly great depression. If you do want ot invest in stocks anyway, make them Canadian mining companies or canadian royalty trusts. Two reasons- commodity based businesses will do better, and thevcanadian dollar will do better, so assets in Canada and priced in canadian dollars will provide some protection from the decline in paper money.
We have about 90 years of inflation that the us has managed to export to other countries. This means we've benefited from low cost of living by exporting our inflation abroad for a very long time. This only owkrs, though, when you're a major industrial power and the other countries want to finance your debt because they believe you will be able to repay it.
The US has recently passed the levels where repayment is traditionally considered viable, and has inly increased the rhythm of the printing presses...at the same time we are longer the manfuacturing power we were.
This is going to be a very painful crisis.
- Retric 16y agoDon't buy Gold it's in the middle of a huge bubble right now.
- rphlx 16y agoDebatable. For gold to drop, world govts either need to destroy currency, raise interest rates, or somehow make other asset classes more attractive. I guess the stock market is becoming more attractive, as mass layoffs have temporarily boosted earnings. That is not sustainable though. Anyway, it hasn't really hurt gold so far.
- lzw 16y agoGold will be in a bubble when my mentioning it doesn't always produdpce someone like you saying it is in a bubble. Bonds are a massive bubble that has expanded since 2008 enormously. Rates are at historical lows and the amount of new issuance is at historical highs. You'll forget about it when it happens, but the next bubble to burst, by 2012, will be the bond bubble. The rest of the world can only buy so much, the fed is printing and buying it's own auctions under the table, and when interest rates have to rise to try and make them attractively, current bonds will crash, most of which are short term and the government is surviving by rolling them over every couple of months...... It's a massive cluster fuck just waiting to happen..... Actually, now that i think about it, I need to figure out a way to short bonds with leverage. Maybe put options on a bond ETF?
- eru 16y ago> Right now, were in a high inflation environment [...] Have you checked inflation figures recently?
- deleted 16y ago[deleted]
- mipnix 16y agoI'm not sure that is correct. The fear of inflation is there but the latest figures I am aware of put the inflation rate at below 1.0% (If you never need to buy food or fuel). Some even worry about the prospect of deflation.