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  •  I took 20K (none / 0)

    out of Fidelity funds last month and bought gold.  I've also taken a cash position in my 401K plan.

    This market is not going any higher.

    "I just had the basic view of the American public -- it can't be that bad out there." Marine Travis Williams after 11 members of his squad were killed.

    by Steven D on Sun Feb 20, 2005 at 04:32:38 PM PDT

    •  Let's see if I can be that smart (4.00 / 3)

      I sat through the last one, and have just now edged past breakeven (I'd be in much better shape if I hadn't sold that Apple stock last year, it's made a seven fold increase in 12 months, but I was an idiot and got out with only a marginal gain).  

      This time, I've got to be brave enough to not weather the storm, but take some action to protect myself.  I'm getting too darned old to face another one of these things.

      Just think: it's not a recession for every Bush you elect, it's a fresh recession for every Bush term.

      by Devilstower on Sun Feb 20, 2005 at 04:44:14 PM PDT

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    •  Out of curiosity (none / 0)

      since I don't have any investments or stocks or anything, being as I'm just a student and make crapola. What does that mean when you say you 'bought gold?'

      Do you have...like...a stockpile of gold sitting in your cellar now, covered over with old newspapers and a warning to the kids not to look under the daddy's newspapers?

      ;p

      My signature beat up your signature.

      by Stand Strong on Sun Feb 20, 2005 at 04:48:15 PM PDT

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      •  Standard way to buy gold is to buy (none / 0)

        established 1 oz. coins like the South African Krugerrand. One can also buy bullion (that is, bars). It can be held at a deposit company or in a safe deposit box at a bank or buried in the back yard. I looked into this myself about two years ago, and I'm kicking myself that I didn't put everything into gold at that point. I've lost money on stocks in that time, but I could have made 40 percent so far on gold.

        by Timaeus on Sun Feb 20, 2005 at 04:59:27 PM PDT

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        •  I'm curious (none / 0)

          I honestly don't "get" economic stuff, so please be gentle with me.
          Couldn't you have protected yourself just as well by investing in something like hedge funds? What in the world can be done with gold bullion, that wouldn't be subject the same bank and market issues as, say, bonds?
          I hate it that I'm so confused by this stuff, but I'd greatly appreciate any help you all can give me understanding the strengths and weaknesses of each investment option - including real estate (which tends to be where I feel most comfortable when the notion of investing wisely comes up).

          Time flies, whether you're having fun or not.

          by Kimberley on Sun Feb 20, 2005 at 05:21:30 PM PDT

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          •  One idea (none / 0)

            what in the world can be done with gold bullion

            You can pretend to be a pirate?
            Yar!

            Do YOU Disagree With The GOP?

            by I disagree with the GOP on Sun Feb 20, 2005 at 05:25:29 PM PDT

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            •  I'm doin' that already (none / 0)

              I don't wear this parrot on my shoulder and the eye patch for nothing.

              Time flies, whether you're having fun or not.

              by Kimberley on Sun Feb 20, 2005 at 05:34:03 PM PDT

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            •  Why Buy Gold? (none / 0)

              The short answer is: Gold's value is incredibly stable.  Just as a for-instance, right now, old is $426.00 an ounce.

              That will buy a rich man's business suit perfectly well.

              In 100 AD, 1 ounce of gold bought a richly decorated Toga.

              Basically, if you are getting into Gold, it means you think there will either be deflation, or that there will be very rapid inflation.

              We have no desire to offend you -- unless you are a twit!

              by ScrewySquirrel on Sun Feb 20, 2005 at 05:49:05 PM PDT

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          •  Well... (none / 1)

            The main argument for gold is that George Bush can't print more gold to pay for his wars and mismanagement. People start talking about gold (and other alternatives) when they lose confidence in a government's ability to responsibly manage it's currency.

            When a currency starts losing their value, people (everyone from Bill Gates to Joe Schmoe) don't want to store their savings/value in that currency. Gold has historically been a reliable alternative, because it is a fairly finite supply, easily storable and durable (unlike a silo of oats), fairly safe from counterfeit/fraud risk, portable (unlike real estate), divisible (unlike paintings for instance) and fairly liquid (many buyers and sellers worldwide from small to large scale).

            Other commodities can also conceivably be instruments of storing value, each with various pros and cons. The idea is to flee the localized environment of irresponsibility/risk--not to make a great amount of profit--although that will happen if there is a panic/collapse. But even most goldbugs understand that the chaos from a true panic is pretty undesirable and don't pray for it.

            Anyways, the rise in gold over the last two years has mirrored the decline in the dollar almost perfectly. If you factor out the decline if the dollar, gold has basically stayed flat. That stability is what people want when they stop trusting the US (or any other currency-issuing government.)

            As to how various other instruments compare to dollars, that is a complex subject. But regarding bonds, they are just a kind of loan denominated in a specific currency--and are thus very sensitive to the health of that currency as well; regardless of whether the entity receiving the loan is a high-risk or low risk venture. Does that make sense?

            Anyways, good luck and I encourage you to actively educate yourself about economics. It can be a very fascinating subject.

            by Tropicana on Sun Feb 20, 2005 at 09:49:38 PM PDT

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            •  Thank you (none / 0)

              Yes, the thing I was angling at (without using the proper terminology) was liquidity.
              I appreciate you taking the time to explain some of this to me. It's intimidating but, as you said, fascinating.

              Time flies, whether you're having fun or not.

              by Kimberley on Mon Feb 21, 2005 at 01:22:08 AM PDT

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        •  You can buy gold right on the Nasdaq (4.00 / 2)

          GLD is the ticker symbol.

          by philo on Sun Feb 20, 2005 at 05:33:40 PM PDT

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        •  '... buried in the back yard' (4.00 / 2)

          Uh, what's your address?

          by Bob Johnson on Sun Feb 20, 2005 at 06:23:00 PM PDT

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      •  Gold stocks/funds (none / 0)

        It might sound odd, but you can also buy gold stocks and gold funds.  In addition to owning gold bullion, these companies are involved in gold extraction, processing, etc.

        I am all for freedom of speech...it makes it easier to identify the idiots.

        by Mote Dai on Sun Feb 20, 2005 at 05:19:15 PM PDT

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      •  buying gold (none / 0)

        You can also buy gold on the NYSE, ticker GLD or IAU.

        "I would ask the walls about it, but they vanished overnight"

        by emmanuel on Sun Feb 20, 2005 at 06:06:29 PM PDT

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      •  At the small investor level (none / 0)

        you buy into gold through mutual funds that invest in gold for you.  Don't pay a front-end or back-end "load" or fee.

        by sparks on Sun Feb 20, 2005 at 08:30:57 PM PDT

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    •  Gold (4.00 / 3)

      has never been a great investment. This piece from the New Yorker talked about it a few months ago.

      SNAP: Students for a New American Politics

      by NewPoliticsNow on Sun Feb 20, 2005 at 05:18:57 PM PDT

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      •  No commodity purchase is a growth investment (none / 0)

        Gold is a commodity, not a growth investment.

        Gold is, however, an excellent store of value.

        When people recommend buying gold in times that seem to be leading up to an economic crisis, they are essentially saying that inflation or hyper-inflation is a big danger.

        If you already have wealth and want to try to dodge the financial bullet, then putting your money in gold can preserve its value.

        Why? Inflation is literally currency losing its value (in terms of purchasing power). Transfer your wealth from one denomination (dollars) to another (gold) if you think dollars aren't a safe way to store your wealth -- that is, if you think high-digit inflation is a looming hazard.

        Every financial decision has risks, though...

        If one was so paranoid about the economy collapsing that you put all of your money in to gold, you might lose out on growth investment opportunities while your cash was tied up in yellow metal.

        If you put $10k in gold, that's $10k you don't have available to put to work elsewhere. You'd be passing up all those potential opportunities in order to take advantagfe of the perceived safety of gold.

        "... if you wish to know how libertarians regard the State and any of its acts, simply think of the State as a criminal band..." -- Murray Rothbard

        by bradspangler on Sun Feb 20, 2005 at 06:02:49 PM PDT

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    •  Wow (none / 1)

      I took 20K out of Fidelity funds last month and bought gold.  I've also taken a cash position in my 401K plan.

      I can't wait until I am in a postion, perhaps at some point in the far off future, to actually worry about what to do with the money I have instead of the opposite.
      :-)

      Back on topic though... Why do you believe that the market "isn't going any higher"?  Do you have reasons beyond what the author of this diary stated?   Oh, and author of this diary; ace, very interesting.  Recommended!

      www.idisagreewiththegop.com

      Do YOU Disagree With The GOP?

      by I disagree with the GOP on Sun Feb 20, 2005 at 05:23:56 PM PDT

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      •  Massive debt (none / 0)

        all held by the Japanese and Chinese, who are starting to talk of moving out of dollars and into Euros.  If they stop buying our treasury bonds this economy could go very quickly into a Depression imo.  And Bush'd fiscal policies make it worse, especially if his privatization schemes get approved by Congress, which btw have to be financed by more debt.

        And remember, they want to make the tax cuts permanent.  If they do that, the debt gets much worse.

        Add in our trade deficit whgich has never been higher and I think you can start to see the picture is not very rosy.

        "I just had the basic view of the American public -- it can't be that bad out there." Marine Travis Williams after 11 members of his squad were killed.

        by Steven D on Mon Feb 21, 2005 at 08:51:34 AM PDT

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    •  I've been considering cashing in my 401K (none / 0)

      for about a month now. My husband doesn't want me to do it, is worried about the taxes on it, but I think it we wait, it won't be worth anything. It's not a lot of money, but why waste money, ya know? I think I'm going to do it this week.

      by 2care4others on Sun Feb 20, 2005 at 06:44:15 PM PDT

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      •  No! (4.00 / 3)

        I'm sorry, but I think that would be the absolutely wrong thing to do. You will be destroyed on the taxes.  You will have to pay the full tax at the time of withdrawal plus another 10% on the pretax total.  You could loose 40% or more on the current value.  Just move your 401K funds out of the market and into cash funds or some other low yield, low risk setup.

        www.queenofthequeens.com

        by Thom in SF on Sun Feb 20, 2005 at 06:56:53 PM PDT

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      •  A suggestion (none / 0)

        Cashing it out only makes sense if you need the cash now for immediate expenses/consumption. Otherwise you are going to pay quite a bit in taxes.

        It is probably better to use that 30-40% tolerance for loss and put it in managed funds designed for very-low risk,or even a fund designed for bear-market/shorting strategies. If gold appeals to you, you should be able to buy it without cashing out to buy the physical metal--or taking the tax hit. It is unlikely any losses will surpass the tax hit you are comfortable with, and you will still have possible upside.

        Dollars in hand might make you feel more safe in the short term but, emotions aside, that is just a 100% allocation of your savings in a single instrument. Probably a very poor instrument if the dollar breaks further as many are concerned it will.

        Talk to a professional or do research yourself. Going with your gut isn't wise unless you understand the various options available to you. Good luck.

        by Tropicana on Sun Feb 20, 2005 at 08:39:07 PM PDT

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    •  I moved everything (none / 0)

      to international funds.  I'm not going down on the financial ship, too.

      wondering if I should take the cash I like to keep on hand, in case of a terra attack, and buy other currencies...

      No matter how cynical you get ... you can never keep up.

      by LegalSpice on Sun Feb 20, 2005 at 07:05:04 PM PDT

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      •  Same here. (none / 0)

        I put about 60% of my 401k into funds that invest antirely in foreign companies. Funny, the wealthy Republicans I work with did the same right before I did. They all voted for Bush, but cashed out.

        Signature Impaired.

        by gttim on Sun Feb 20, 2005 at 08:38:29 PM PDT

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      •  International funds are one way to go (none / 0)

        Export-oriented companies (or funds) are another.  If the dollar tanks, many American exporting companies should do relatively well, as our huge trade deficit begins to right itself.

        Some gold seems prudent, as a bet, but I wouldn't go overboard on it.  Shifts in gold holdings by central banks (ours, for instance, if things get really shitty) can make this a tricky market.

        In really bad times, such as the coming likely period of stagflation, cash is king.  Pay off debts, liquidate most long stock positions, shorten up bond investments, and hold safe cash instruments.  Downsize living expenses wherever possible, before you're forced to do so involuntarily.

        I can't expect to live in a democracy if I'm not prepared to do the work of being a citizen.

        by Dallasdoc on Sun Feb 20, 2005 at 09:46:38 PM PDT

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