How I got into bullion investing.

One of the problems I see is that the 401k turns capital gains and dividend income into ordinary income. That offsets a lot of the tax deferral.

 

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Sure, a lot of it will depend on the difference of your tax rate when you are putting it in, vs. your tax rate when withdrawing. In addition we are not guaranteed a 15% tax rate on capital gains and dividends forever, so if that goes up, the 401k becomes more attractive.

Now don't misunderstand me, I am not saying a person should only have a company 401k. My wife and I have a combination of company 401k's, rollover 401k's and brokerage accounts. They all have advantages.

 

I don't need to look it up because I know what it is. It's when a business model depends upon more people putting money into it than taking out of it, as opposed to actually generating something of value. That is precisely what insurance companies do. Why do you think so many went out of business after Katrina?

Wealth, by definition, is a store of money. Gold, among other things, by definition, is money. Stocks are not money. Goods and services are not money. That is, unless you look at the "economic" definition of wealth, then it also includes anything capable of being exchanged. This would include stocks, bonds, back rubs, cartons of milk, and online gaming items among other things.

Where it gets tricky is, are dollars wealth? They are money, and they are a store of value, but they are not a reliable store of longterm value. Is that really wealth? Not how I see it. When I think wealth I think old world. What will still be valuable when we are thought of as the old world? That's the real question I suppose.

I still believe that real wealth is only what I originally stated (thank you David Morgan) which is land/Earth; soil, crops, timber, homes, metals, gems. But only one of them fulfills the 4 rules for a unit of account; fungibility, divisibility, durabilty, portability, which is the one that is also money. Now do you see the circle These can't be created in cyberspace. Those things are just a means to gather (transfer) wealth.

 

But I seriously doubt this will matter for very much longer, do you?

 

I thought money was store of wealth? Anyway, not sure I agree with that (here & now;anymore.) From a modern, civilized, Western, financial standpoint, that WAS true when "money" was primarily a tangible (not just 'credit-based accounting' notes). The reality is, over the last ~100 years money has become more and more an abstraction; with that process, wealth too has evolved into - what? an expression of power perhaps? I'm still grappling with the ideation of money, but the 'Paper Faith' thing really does read like a bad joke. OF COURSE the Paper must fail (again & again & again) !

Now that credit cards are effectively/functionally "money" we must admit the significance of thetangible (gold coin, paper bills) is almost moot. We're living in the purest credit- and derivative based system in human history, physical money is almost irrelevant now. Until the Zero Hour, anyway.

Think of PMs as powercash, held in reserve, and you'll always have something when the joke's been told again.

 

It has for a long time and I don't foresee capital gains tax rates ever being the same as ordinary income.

 

You are wrong about insurance. It NEVER depends on people taking out more than they put in. Just the opposite. People buy fire insurance hoping and expecting never to use it. But some will. What is leftover goes to the owners of the business. Think of it this way, insurance is similar to a credit union except that with a credit union people can take out their money on demand while with insurance they can take it out upon the occurence of an event.