Brace Yourself!!

Lol, that is right. My aftertax stocks have a beta of over 2.

I agree with you Doug sitting on cash is not a great place to be. We just disagree how much should be in pm perfentage wise, not a huge disagreement.

 

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I think this may be a good time to buy PM's because the price is down. It's never a good idea to buy at the top of the market. Of course we might not be at the bottom of the PM market yet, in which case don't take my advice.

 

What?! I'm sorry, no. That's the equivalent of a grand conspiracy against Silver.

Look at your link, dated April 2, nearly a MONTH after the rally started. The rules didn't go into effect for another 2.5 months. "All three FSPs will be effective for periods ending after June 15, 2009"

Marking-to-market is exactly what we should DO, not avoid (??!) US (crap) paper is worth-less - many hollowed-out, non-productive companies perhaps less than 25% their current "valuations" - but this didn't cause the deflationary downdraft of 2008-9 either. We did NOT have price discovery, so we did NOT see the bottom... the much-hated bailouts only papered over reality (the maw) once again*, that's all.

Reflationary bailing fast-&-furious, (or 'Things that make you go Hmmmm!') :
Flashback #1, when that Republican President got on teevee and said he wanted all Americans to own a home: http://georgewbush-whitehouse.archives.gov/news/releases/2002/10/20021015-7.html
Flashback #2, when that Republican President sent every mouth-breathing taxpayer a check hahahaha, "Free Money!" http://articles.cnn.com/2008-02-13/...te-checks-economic-stimulus-act-stimulus-bill

Utter insanity. Can someone explain to me why Americans are so stupid they cannot see the incredible ruse unfolding before their very own eyes, time & time again? And now we (collectively) imagine 'the problem's been fixed' ... by shuffling deck-chairs around the Titantic's listing stern? Good grief: GET A GRIP! Oh sure, the next 'paper-over' event (2014-6?) will also probably succeed too. But when the major pension funds start failing (c.2017) they won't be able to change the rules fast enough - Boomers will NEED that money for cat-food eventually. Eventually is a-comin, people.

This (Credit) Paper Crisis began with disinflation/deflation in 2000-2 and gained momentum in 2007-8: it was NOT fixed, we are just awaiting The Next Leg Down. Don't be deceived by the MSM otherwise.

 

Finally, a true Believer.

I am still looking for a good excuse to sell the last of my stocks and buy two bags of junk silver. Then I will be happier because I've prepared, but not happy about what's happening to our dear country. Incidentally, and this makes a difference, with no wife and no kids, any mistakes I make affect only me, not an incredulous family. PMs will then be weighted about the same percentage-wise as my coin collection, which I cannot bear to sell, other than odds and ends. I have made a few consignments of highly-illiquid items to Stacks-Bowers, and they're gone.

 

I am afraid that I agree. I would like to see the world as a wonderful place and that inflation would gently lift our boats while we all get checks, but the reality is that the whole financial crisis is going to continue. Fiat money is a problem, since it was invented when there was a little more energy every year, and the amount of paper that represented the economy could go up commensurate with the amount of extra energy we found every year. The world was comfy with 3% growth for a long time, but now that's over and they are still printing. You would think it was going to be inflationary, but it will in the end be deflationary as the money gets hoovered up by the big people leaving us little people fighting for what's left. I used to think PM's were the answer, but I'm not so sure any more. We are going to have a rough time from now on. I have even considered cashing everything in and living off the proceeds. I am going to wait 5 years and I hope it all hangs on that long. Juan is predicting that pensions will go south around 2017, and I have to make it to 2018. I hope he's wrong, but I think he may be right.

 

Agreed. ...and here's yet another way to look at it:

I don't think of my PM stash as an investment so much as insurance.

I also have car insurance. Does that mean I want to get in an accident? Nope!
I also have homeowners' insurance. Does that mean I want my house to burn down? Absolutely not!
I have medical insurance. Does that mean I want to go to the ER? Not if I can avoid it!
I also have life insurance. Does that mean I want to die prematurely? Heck no!

I do not spend a large portion of my income on insurance. My employer pays for virtually all of my medical and life insurance. My car and homeowners' insurance account for less than 3% of my income. Likewise, my PM purchases account for a small portion of my income and once I accumulate a comfortable pile, I will probably not use any of my income to maintain it. I'll probably just trade between gold and silver depending on where the gold/silver ratio is to grow my pile. Also, we have not changed my automatic contributions to my IRA, my wife's IRA, my childrens' college savings accounts, or our brokerage account.

What does the paragraph above mean? That my PM purchases are not harming the economy. I am not abandoning ship on the dollar. I have MUCH more money that is dependent upon the US economy than I have in PM.

So what I have to wonder, and what I sometimes take offense with, is why is it that a person who buys PM for the purpose of being prepared is often assumed to want the economy to fail? And why is it when a person even speaks of being prepared, they are often assigned the derogatory label of being a "prepper"? Since when is being prepared a bad thing?

ETA: Keep in mind that predictions of the economy failing are not the same as wanting it to fail. There are quite a few people who believe our economy can't continue the way it's headed without failing. But, that doesn't mean we can't change where it's headed, or that we want it to fail...

 

A reasonable point of view. However...

"...I have MUCH more money that is dependent upon the US economy than I have in PM."

Bottom line, you are under-insured. But millions are not "insured" at all.

​

 

CONFLATION. Why? This.

 

WHOA!! Juan...take a pill! :grandpa:

First off, the markets turned just one (1) week before FAS-157b was adopted (insider trading, no doubt). I was one of the first (#21) respondents to the RFC that created FAS-157b...I know what I'm talking about (on this subject, anyway).

Yes, we needed something other than Mark-to-Price. Mark-to-Price didn't reflect changing market conditions. However, the FASB fell in love with their "elegant" Mark-to-Market algorithm :5hearts:and didn't perform a robust use-case analysis. Basically, they never considered what would happen if markets behaved in an inefficient manner; they never considered how the Mark-to-Market rule would value an asset in an inactive market.

Sally-Mae and Freddy-Mac "securitized" mortgages into pools (or Tranches) and no one could effectively determine which mortgages were in which Tranch. Banks bought shares of these tranches...or Collateralize Debt Obligations (CDO's) and used them as capital to back new loans. When the housing bubble burst, no one knew how to value the CDOs so the Mark-to-Market rule drove their values to zero (0). Net result...banks were forbidden to lend new money until they could meet capital requirements.

Note: Had CDOs been valued Mark-to-Cashflow (like bonds), none of this mess would have happened.

The velocity of money came to a screeching halt and markets around the world began to tank. Sure, there were other factors that created this mess...but the Mark-to-Market rule magnified a small problem and caused financial markets around the world to seize up. Once FAS-157b was adopted "Valuing Assets in an Inactive Market" money began flowing again...and stock markets (artificially driven to their knees) rebounded.

Anyway...I love owning "numismatic" PMs (10%...maybe)...but it's ridiculous to stock up on PMs in the "hope" that the world will end...that's just nuts! :goofer:

 

yakpoo-
1) The US Stock Market turned on ~6 March 2009. This is not a debatable point, it's a fact.
2) FSP FAS 157-4 (as issued) was on 9 April 2009, a full month after the monster rally started.

Staff position on FASB - 157b was propoosed December 2007. "This FSP shall be effective upon the initial adoption of Statement 157." Amendments were published in February 2008: "This FSP defers the effective date of Statement 157 to fiscal years beginning after November 15, 2008" ; no amendments in March 2009.

As published 9 April 2009: "This FSP shall be effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Early adoption is permitted for periods ending after March 15, 2009. Earlier adoption for periods ending before March 15, 2009, is not permitted."

By the timing of adoption (mid June 2009) the market rally was well under way and certainly NOT "caused by" this minor change. You're misinformed otherwise.

Your contribution to the RFC was less germane to the rally than Faber's call on CNBC, I think.
[video=youtube;1BgnSPnO-I8]http://www.youtube.com/watch?v=1BgnSPnO-I8[/video]

 

Here's a good article on the subject that came out around that time...

http://online.wsj.com/article/SB123867739560682309.html


I recall the markets turned around before FAS-157 was modified. I was thinking it was one week before, but maybe it was three or four (in anticipation of the rule change). I just recall that I wasn't getting back into the markets until the Mark-to-Market rule actually changed.

The markets really took off after that. Stocks lost half their value in less than a year prior...while earnings remained relatively constant. This was the biggest "no brainer" investment move I'll ever see in my life...compliments of the FASB!! (morons)

 

It was known that directives to FAS 157 were going to be issued well before their adoption in April 2009. Although the accounting impact of adopting the changes were reported perspectively given the ability to adopt the changes based on Interim Reporting Periods effectively provided for a retroactive effect that could extend as far back as March 16, 2008. Depending on which quarter of a company's financial year included March 16, 2009.

 

Here's another very interesting summary of half a dozen opinions on the prospects for silver in 2013, some pro, some con. Definitely worth reading: http://tinyurl.com/d4glc5w - with particular emphasis on the economics of mining, and which industries use (in what proportion) the available supply of silver.

 

Howdy Juan,

What makes you think the next meltdown will occur in 2017? I'm not denying, just asking why then?

I say this because there are many pension funds that are very solvent and well maintained. However, there are a bunch that are worse than a house of cards - Illinois can lead the states, but down at the county and municipal level, there are 1000's that are in terrible shape.

thanks,

rono

 

Here's a link to the Illinois pension issue

http://www.nytimes.com/2013/03/12/business/sec-accuses-illinois-of-securities-fraud.html?_r=1&

rono

 

Hi Rono-
I'm sure there are some major pension funds that are solvent and well-maintained, now. And others that look to be solvent... but might not be, when the next crisis hits.
http://globaleconomicanalysis.blogspot.com/2010/12/wsj-reports-new-jersey-pension-deficit.html

CIRCA 2017, not "in":
http://www.zerohedge.com/article/no-garden-variety-public-pension-crisis
"...there's a 25 percent chance of the {NJ} fund running out prior to 2019 and a 10 percent chance of insolvency by 2017."

Watch Illinois, New Jersey, Conneticut, Arizona, even Massachusetts ... the dominos will start falling very quickly soon after 2017.
'No funds left' mean the stocks get sold in liquidation. (Boomers will be bailing out en masse, likewise.)

Pritchard AL looks like the future when the tsunami of defaults begins: http://blog.al.com/live/2013/02/chickasaw_erects_barricades_be.html

 

Hi Juan,

Thanks. Christie has done quiet a bit in NJ to 'fix' their issues, but indeed, nationwide, there are some real problem pensions and I too believe it's going to get very ugly down the road. Geez, in Illinois, they tried to pass some fix legislation back before the holidays and couldn't get it through the legislature. They're screwed. At the state level, Michigan is actually one of the better pensions in the nation. At the county and local level . . . not so nice.

peace,

rono