Title: Financial/Investment News and Comments Source:
[None] URL Source:[None] Published:Feb 9, 2018 Author:To be determined Post Date:2018-02-09 07:55:59 by A K A Stone Keywords:None Views:11031 Comments:58
This is the place for financial talk. A place to share entrepreneuial ideas. To discuss investment strategies whether they be stocks, real estate or starting a new business. Or improving an existing business. Anything money and finance related is welcome to be shared right here.
Here's a list of things you could invest in. With all investments there are transaction costs. With all but one there are taxes. With many there are holding costs as well.
To be able to compare investments, a benchmark is needed.
I think that the yield on triple-tax-free municipal bonds is the best benchmark because it is a "safe" investment, with no taxes on it, so it's "pure".
Everything else can be compared to the TTF bonds to see how each stacks up.
This is a response to your post on another thread and more fitting for discussion on this new thread.
You posted to me:
I always figured if they were any good, they could hire a bunch of people to work directly for them and clean up on making money and forget about selling advice.
Exactly! I have the same view about gold hoarding. If these companies advertising for people to buy their gold because of the imminent meltdown of the economy and hyperinflation of the dollar really believed their own hype, why are they selling the gold in exchange for those soon-to-be-worthless dollars? They sure want dollars rather than holding onto their piles of gold, so THEY obviously don't believe what they say.
I was speaking about those who have ideas on investments and make their money selling those ideas instead of hiring a staff and primarily working those “great” ideas.
As far as the hawkers of precious metals are concerned, they are playing percentages. They are going for volume and percentage using the “60/40 Rule.”
They have to buy the metals to sell them. As the market fluctuates, they will actually at times sell some metals at below their cost. But with the volume and by playing the ups and downs like Swing Traders do.....they will over a period of time sell more metals higher than they do lower.
If they have a million dollars of gold, instead of holding it and hoping for a ten percent increase....they will turn it multiple times while making a percent off each sale. Therefore, as merchants....they will make more money buying and selling than buying and holding. Holding (hoarding) gold is for the individuals who wish to preserve assets. But as we discusses, undeveloped land with extremely low property taxes, like farm land, is a much better investment.
I wasn't suggesting that the gold sellers are foolish. I was suggesting that the people who buy the hype that they're buying gold against Armageddon are, and that the gold sellers who press that hype (and they DO! I see the commercials and hear the arguments) are not honest.
Gold will still be around a hundred years from now. but we can't say that for sure about bitcoin.
However, bitcoin is the one likelier to be up 1,000% three years from now.
So the answer is to own both.
Gold bugs are rarely, if ever, bearish on gold. To them, it’s the only real currency in a world of money-printing central banks endlessly devaluing their fiat (that is, paper) currencies. There are few people who believe so fervently as gold bugs.
But bitcoin fanatics come pretty close. These folks believe that this decentralised digital currency is the ultimate means of easily transferring value without the need for centralised entity, intermediary, or central bank. Bitcoin is a libertarian dream.
Now, given that gold bugs and bitcoin fanatics share a common desire – a completely independent store of value – and a common enemy (central banks), you’d think they might be the best of friends. But they’re not.
In fact, they’re more like dogs and cats – or chalk and cheese. They don’t mix well, at all.
I know this because I’m privy to a private mailing list that’s run by an old family friend who’s a consigliere of one of Hong Kong’s wealthiest families. He, along with a couple dozen business and financial gurus and veterans, some with names you recognise, share their investment ideas and opinions on all things related to global finance and investing.
And recently the topic of cryptocurrencies and bitcoin came up. After watching carefully thought-out emails travel back and forwards within the group, I drew a few conclusions.
Gold bugs don’t like bitcoin
Most of the guys (and they’re almost all men) on this email list are grizzled investors, and they like their gold. To be precise, their physical gold. They dismiss bitcoin as a fad, a craze, all hype and no substance.
As I said, bitcoin is frequently compared to gold. They’re the only two widely distributed, decentralised methods of exchanging value as currency. There is no central authority issuance like there is with U.S. dollars or any other fiat currency.
That doesn't surprise me at all. Gold bugs also like physical possession. It's the form of wealth that ranks among the highest in personal security. If you have gold in your home or possession then it can be very highly secured against theft or loss, even considered more secure than a bank vault or safe deposit box.
Cryptocurrency is not so secure. It doesn't have that tangibility that gold has, or the history, and it's value is much more variable and dependent upon public demand. And its a lot easier to understand solid weight than a computer program.
However, everyone who likes bitcoin will also like gold.
It may surprise you to learn, that I am starting to warm up to bitcoin. I kept reading bad articles before and now I am running across some good articles. I will post one next. Let me go fetch it.
Bitcoin, the heavyweight of the cryptocurrency world, has billed itself as digital gold —a safe haven for investors to park their assets.
Apparently that image is having an impact. While Bitcoin’s status as a potential substitute investment to the shiny precious metal with thousands of years of human history is debatable, some investors are foregoing physical gold for its significantly younger brethren.
As Bitcoin prices inched toward an all-time high price above $19,500 in December, Byron Salamida, 48, of San Diego took some of his gold coins and decided to sell them at a local precious metals dealer. He planned to take the cash and purchase cryptocurrencies including Bitcoin—as he had been doing for the past two years. After all, while his gold coins were simply sitting there, with roughly the same value minute after minute, the price of the cryptocurrencies he owned was shooting up—seemingly into the stratosphere.
“Why keep something in gold? It’s stable. But why keep it in gold when it stays in a $100 range, when I could buy Bitcoin when it is increasing everyday? ” Salamida said.
He was surprised to find when he got to the precious metals seller where he planned to offload his wares that he wasn’t the only gold owner who had the same idea.
The shop owner bought the gold from Salamida for about $5 to $10 below spot price, citing low demand. The owner mentioned he had noticed a recent surge in customers who were selling gold in a bid to buy Bitcoin.
“There was definitely a trend where it seemed like for a month people were selling precious metals for cryptocurrencies,” says Michael McConnell, the owner of precious metal seller San Diego Coin and Bullion, where Salamida has been selling his gold coins for the past two years. “It seemed like it was every day—some days two or three times—[customers] would talk about Bitcoin.”
While McConnell says that the price at which he bought and sold Salamida’s coins had little to do with Bitcoin demand (those prices are actually determined by yet another, larger precious metal dealer), recent research reports have pointed to a larger trend at play.
“The rapidly accelerating popularity and price in cryptocurrencies, such as Bitcoin…diverted substantial amounts of capital away from precious metals last year,” Thomson Reuters analysts wrote of gold demand in the U.S. in their 2017 Gold Survey released in January. “Retail investors tend to have a shorter investment horizon these days and with cryptocurrencies recording parabolic increases over the year, many consumers were not able to withstand the temptation to get on board.”
It’s a relatively recent development, says RBC Capital Markets Commodity Strategist Christopher Louney, who said he has noticed a potential correlation between cryptocurrency prices and the value of gold. While the relationship appeared nonexistent before, Louney said the trend emerged late in 2017 and continued into early 2018—suggesting that as the price of Bitcoin soared into the quadruple digits, some investors may have been offloading gold to pay for cryptocurrencies.
There’s some logic behind the correlation. Gold and Bitcoin certainly have their differences, but in several ways, they also appeal to the same set of investor sensibilities.
“They’re stateless, with some people perceiving both as stores of value,” says Louney. “There’s a similar psychology happening among the investors.”
For Salamida, the two assets did tug at similar heartstrings. One of the reasons why he was attracted to gold was because he didn’t trust the existing financial powers that be.
“I got foreclosed on in 2011. The banks weren’t really working with me to come to a resolution. I was just laid off in 2010. It just snowballed,” he said. “I kind of had a distrust of banks and the monetary system.”
He then made a living off of selling goods on eBay and buying into gold. In 2014, Salamida met Bitcoin, and “everything just clicked into place.”
But Bitcoin’s proponents should stay their hands before crowning the cryptocurrency the new gold.
Louney stresses that the correlation is minor—not quite enough to move gold prices, and not quite enough to say that investors are currently seriously considering Bitcoin as gold’s replacement. Another caveat: the data is sparse. The same macroeconomic factors that have traditionally affected gold prices still dominate the playing field, with stock market performance being one of those factors. Mostly due to rising equity returns, Louney says he expects gold prices to end the year lower than they started, and at around $1,303 on average for the year.
Bitcoin is, after all, far more volatile than gold, and still relatively unknown compared to other investment assets. Gold, on the other hand, is well established with institutional investors and has quite a bit of liquidity. While Bitcoin trading volumes tallied up to just over $3 billion daily in recent trading, gold trading volumes reach $250 billion a day, according to the World Gold Council.
Though that’s not to say a Bitcoin-gold correlation won’t deepen with time, says Looney, who admits he will continue tracking the relationship. Though the emerging relationship also means that the converse may one day also be true—spooked Bitcoin investors could cash in their cryptocurrency in hard times for a less volatile asset.
So it wouldn’t be strange if Salamida, to some extent, wished he had held his assets in something steadier than Bitcoin. After all, the cryptocurrency’s ups and downs have occasionally left him queasy, with the asset soaring to $20,000 on some exchanges in December, before falling below $6,000 earlier this month. Now, it rests just above $8,000.
But Salamida said he is holding tight and waiting for the bottom. He is saving cash from his day job in cybersecurity and from gold sales. He maintains, however, that he would never go into debt to buy cryptocurrency, or use his credit card account to purchase the digital assets.
“I am loading up on cash on the sidelines to accumulate crypto on the dips. Like the old saying from Rothschild, ‘the time to buy is when there’s blood in the streets,’ ” he said.
And to those who have left the fold of the gold bugs for the den of the “crypto crazies“? You’re always welcome back.
“We wish you luck. More power to you,” precious metal retailer McConnell said, professing that he himself knows little about Bitcoin and its peers. “But if you want gold, we’re here.”
