Hi folks, I have not been in the forum long but have profited already from the great advice / information. Thank you to those experts who have helped. In all the articles I have read about PM, they have included demand in India, China, leased gold versus physical etc. But one missing item has been the coming decrease in the population in the USA as baby boomers retire / die and the generation behind us (that is 1/3 smaller, has higher unemployment, lower income) replaces us. I have not discovered any articles that discuss this potential decrease in demand for all types of US investments. This has been a red flag in articles on Social Security / Medicare going bankrupt, but not to my knowledge in any forward looking forecast on the US stock, bond, PM, real estate markets. Is this because China and India and the Fed's stimulus are so large it is insignificant, or is it being ignored? Anyone here aware of any intelligent discussion on the looming population change?
My guess, and it's just that, is the first two items mentioned are dependent on the U.S. population. The others; stocks, bonds, PM and real estate markets have a lot of world players in them, where as the baby boomers are strictly a U.S. by-product.
Salty is right. But while commodities such as bullion are based on worldwide markets, it's notable that most industrialized nations have actually been decreasing in population. The places that are increasing are not bullion buying nations with much wealth. I think it's not so much generational in other areas like it is here, but I think the means to buy is decreasing globally overall. Not that we'll benefit from it in our lifetimes if you like lower prices in such things. Guy
I don't think we'll see lower prices. People in India and China may have small amounts of money, but they are buying PM's. The Baby Boomers may start to shed thieir assets, but there are going to be lots of buyers out there.
I think RE will have a tough time going forward. many boomers downsizing and less younger people to soak up the market. besides less of them many are stuck with big debts and not so great jobs. PMs should do better. hundreds of millions of people in emerging markets are growing in wealth and gold/silver are more popular in other parts of the world.
Howdy, The baby boom generation is about 70M in this country and extends to europe and asia ex-japan. If you think about WWII, the winners went home and made babies. This is a bloody huge demographic bulge working thru the system and a lot of money has, and can still be made, playing it. For example, take real estate. What type of housing do people buy throughout their lives and when? Apartment, starter, bighouse, retirement home, retirement village, senior housing, old folks, memory ward, grave. What are the boomers doing right now? The boomers are 1946 - 1964 - or 49 to 67 yo. This means the younger are either living in or moving to the 'big house' while the older are moving to the retirement home/condo on the lake or links. In a few years the older will start to move to retirement housing. To make a buck on this you need to stay ahead of the curve. Now as for the markets, most of them are international but for simplification lets separate pms and stocks. The demand function for pm's is both global and enormously diverse. A demographic bulge here or there doesn't really matter because of the breadth of the demand. Now the equity market is also subject to global demand but to a much lesser degree (i.e. big banks and the very rich and some sovereign nations). The other problem facing the equity market is that so many of the boomers have (or had) stocks via their 401s, retirement savings, etc. To some degree the baby boomers will change from being net investors to net spenders. Ah, there's the rub, 'to some degree'. Oh, BTW, this has been chatted about for quite a while as the baby boomer generation went over 'the line' back in 2009/10. By the line, I mean that point where they would be on average more retired than working. This transalates into the 70M boomers already and in increasing numbers becoming net/net DISinvestors. Ah, this is not good for the equity market. Not good at all. The only thing keeping the stock market gassed is the Federal Reserve printing money like a drunken sailor. They're calling it Quantitative Easing but it's essentially monetizing the debt. They're doing this because the Unfunded Liabilities i.e. the real national debt) is over $100 Trillion freakin dollars and they have no way to pay it. UL are social security, medicare/aid, various trust funds, debt service, war w/o taxes, not to mention the state and local stuff). There is no politically viable way to reduce these debts sufficiently, nor raise taxes sufficiently nor any combination of the two. Ergo, the Fed is left with no alternative but to monetize as much as possible in order to hopefully cut and tax to cover the rest. At least that's the plan. The issue is whether they can do this without imploding the currency into some hyperinflation nightmare . . . or any other sort of financial meltdown you can envision. And that is the bet we're all being forced to make as be try an plan for our own financial futures. Is this a great country or what? http://www.zerohedge.com/news/2013-02-22/late-friday-humor-quantitative-easing-simplified Now to bring this back to the thread, the stock market should be tanking and should do so for another lost decade. It's not because the Fed is pumping trillions of dollars and at zero interest rates, the stock market is about the only possible place to invest. The market is being kept afoat by QE . . . nth. It's like a tire with a leak. You can keep it inflated if you continually pump a lot of air into it but should you stop . . . How long can the Fed keep filling the punchbowl and what happens when they stop? just a few thoughts, peace, rono
Both India and China have huge populations with a growing middle class. They are also fiscally conservative with a tradition of holding gold and silver, more so than the west. The "third world" is also shrinking as more countries become industrialized. This should offset any demographic changes in the US as far as PM is concerned. As far as stocks go, you can buy international funds while the dollar is still good.
I don't see social entitlements going bankrupt as long as the people can pay more taxes and the debt can be monetized. Everyone depending on their handouts will receive it, but the people who don't depend on them will see less and less of the money they make, and less and less buying power on the money they already have, making them more likely to start taking the free handouts, and less likely to be paying in, especially if the employment to population ratio continues to decline as it has been. As more baby boomers retire the 47% will grow as the number of people getting a free ride increases and the number of people pulling the cart decreases. As more workers receive a greater burden on their stagnant wages for those not working, this slippery slope we are on of cart pullers carrying entitlement receivers will accelerate until the point where nobody is pulling the cart anymore. After that nobody will be getting any handouts.
Last Will and Testament: Being of sound mind and body I cashed off all my coins and spent all the money having a blast!
The passing of the Baby-Boomers may cause a "slight" down tick in population, but I think the rise and fall of "total weath" is independent of population. In fact, "disposable wealth" may even increase due to a drop in population (or drop in the rate of increase, anyway). Gold is a store of wealth...as long as gold maintains a steady relationship with other stores of wealth (stocks, bonds, etc), its price should remain steady. The prospect of rising interest rates and lower fuel costs will exert a much greater downward pressure on PMs (gold) than anything else (imo).
On a relative-basis, US RE in many areas may fall -50% as the financial system contracts further (with stagnant/falling wages.) I also suppose that LOSS will be partially hidden by inflation. Most importantly, the US Treasury market is the biggest financial bubble in history, period. When that pops, it may well take the USD (and most other USD Paper investments) with it. So Boomers investments may further lose ~-70% value, as the PostWar gimmicry of Wall St burns a generation against stocks as severe inflation/Dollar deflation takes hold. Boomers (perhaps the last gen of US wealth) will dump worth-less Paper to eat and fill their cars: that will be the Great Liquidation, after 2017. Most US "collectibles" are already junk, but we're nowhere near the bottom in relative pricing yet. For instance, Peatnut the Royal Blue Elephant (Bean Baby) sold last month for $355. - 305. (down from $3,100. in 1999.) Next ending auction might close below $280., so the trajectory down continues. http://www.ebay.com/itm/TY-Peanut-the-Royal-Blue-Elephant-Beanie-Baby-10-Day-Auction-Low-Reserve-RARE-/321078002994 For mass-mkt collectors, I believe prices for hoarded US crap must fall another -80% or so, against POG. Most numismatic value of US coins (non-PMs, esp) will drop somewhat less, but still dramatically, as mediocre collections get dumped on the market. Boomers croaking/estates getting liquidated is inevitable, folks! Anticipate the 'bust of Baby Boomers' should be a trifecta of BAD for most US coin prices, sometime between 2020-2035. But for YN buying US coins at a "discount" sometime in the near future (~ 10-15 years) that washout will be a boon, too. So if you're 15-20yo, you will almost certainly get a chance to own mid-range coins MUCH CHEAPER. (Lots of other junk, too.) Good news! Until then, learn how to profitably and opportunisitically accumulate PM bullion (on rare periodic dips) for your growing piggy-bank reserve... Also: buy solid-value coins from the BRICs, what the future collectors (foreigners) will want.
Howdy Juan/all, Good points. Harry Dent, whom I've read for years, sometimes agreeing and sometimes not, called the current bust pretty well and said, while there would be bit of a thawing around 2013, we wouldn't see any sort of real recovery until around 2023or so. Much of his work is based upon demographics and macroeconomic trends. They whole arguement in Washington is over which promises to break and which taxes to raise, while the Fed is monetizing everything in sight as fast as the dare. Few years back, I read that they were going to have to halve the value of the dollar over the next decade to monetize enough of the tab. Now this the same dollar that has lost 96% of its value since the Federal Reserve was created in 1913. But, feh, when you're 96% down what's another 2%? I concur completely that most 'collectibles' are worthless. I've been proving that to my grandsons with the Pokemon cards, collectibles in general, ebay and the buyers market. The oldest decided he liked coins better. As I told him, I collected everything off and on at one time, but stuck with coins because I always new I could at least spend them. You're starting to see the great liquidation [read: boomers disposing assets for retirement income]. It will be houses, stocks, bonds, collectibles, coins, etc. How many reverse mortgage ads are now on TV? And it still gets back to diversifying your wealth and covering you *ss. peace, rono I like bullion and particularly world bullion. Present day stuff is gorgeous but silver crowns are another nice way. I guess I have a paranoid streak somewhere with regards to my bullion. I want to have bullion that I can claim to be of numismatic interest. I also like diversity. I like slabbed key and semi key coins in higher grades. Read some of the Scott Travers books on coins for retirement. Good stuff.
